Shadow Director Agreement
Former directors – the courts have found that if a director has resigned from his position on the board of directors of a company, but in fact he retains control of the company`s affairs after his resignation, and the company continues to be a director, that person is treated as the current director. If a director wishes to resign while remaining active in the business of the company, he can do so as an advisor or advisor, although he must limit himself to giving advice that the company can freely accept or refuse. If he retains control over administrative decisions, the courts may consider him a de facto director. Is the risk worth it? Risks inherent in the activity of a de facto or shadow director It is not necessary to show that all the activities of the company are “controlled” by the shadow director or that the board of directors is subject to the director of the shadows, has given up all discretion or has become the “model” of the shadow director. Nor is it necessary to show that certain branches or instructions have indeed forced the House to do anything: it is sufficient for the House to be accustomed to acting accordingly. A shadow director is treated in many ways as a true director of the company concerned and is therefore subject to the same obligations and obligations. However, in most cases, the Shadow Director is not aware that he must comply with the laws relating to directors and therefore takes no protection. In addition, the shadow director should not be covered by directors` and senior executives` liability insurance (if any) and by the usual compensation companies of their directors. If you are a shadow director, the release of all relevant administrators` insurance helps manage your liability risk, as well as seeking legal advice on how to proceed in general. What are the liabilities imposed on shadow or de facto directors? A de facto director is a person who acts as a director of the company, although he or she has not been appointed effectively or effectively as such. In Re Hydrodam (Corby) Ltd, Millet J broadened this definition by saying: Holdings – where the board of directors of a subsidiary is accustomed to acting according to the instructions of its holding company, these are treated for most purposes as the shadow director of the subsidiary. This will not be the case if the holding company merely determines the commercial policy of the subsidiary.
When it is controlled more than the commercial policy of the subsidiary, the directors of the holding company are not themselves considered phantom directors of the subsidiary and are therefore personally responsible, unless those directors give individual or personal instructions to the board of directors of the subsidiary. Therefore, a business manager should ensure that all instructions given to a subsidiary have been approved by the entire board of directors and that he or she acts as a simple channel or representative of the holding company at the time of the discount. However, when a holding company is treated as the shadow director of a subsidiary, it is not considered a director for specific purposes, including the requirement to obtain shareholder approval for essential real estate transactions and the prohibition of loans to directors. With a few exceptions, all provisions of the Insolvency Act 1985 and the Insolvency Act of 1986 that apply to directors and directors of the act. They are also subject to the obligations of Common Law directors to exercise the required expertise and diligence, as well as fiduciary duties such as the duty to act in the best interests of the business, avoid conflicts of interest and not generate secret profits. Shadow and de facto directors may also be disqualified as directors. Note that a person could be both a shadow director and a de facto director, z.B. if he assumes the functions of director of part of the company`s activity and gives instructions to the board of directors regarding another part of the company`s activity.