shadow director

A shadow director is an individual who is not registered as a company director, but who exercises some influence or control over the business. The company’s registered directors often act on the shadow director’s instructions. Most commonly, this situation arises when the person doesn’t wish to be formally registered as a director, or cannot be for reasons such as they’re employed by another company that prevents their appointment as a director. However, under the Companies Act, provisions that apply to directors also apply to shadow directors, meaning that they don’t enjoy the same benefits awarded to those formally running the company but are still subject to the same responsibilities and can be held accountable for director-level wrongdoings and their legal consequences. In some cases, shadow directors are unaware of their need to comply with the same laws imposed on statutory directors, and neither do they have the same protections, meaning they can face heightened risk of personal liability for the company’s failings.