What Is A Shadow Director

[traveller]

What is a shadow director ?

Are there any learned contributors out there who can inform us what a shadow director is??

thanks

[Observer]

A shadow director is a person who is not recorded in the statutory records as a director of the company but who is instrumental in the decision making of the company.

 

So, in short, they make decisions for the company which are sanctioned by the directors of the company.

[Stavros]

Details are here: GOOGLE HATES ME

 

Stav.

[traveller]

okay, so if, in the IOM, you get disqualified as a company director does the disqualifiaction apply if you act as a shadow director?

[joeyconcrete]

I'm no expert, but I think the term Shadow Director is exactly that, a term. You could call him an advisor or consultant too. But then again, I may be wrong.

[The Old Git]

does the disqualifiaction apply if you act as a shadow director

 

No, because the whole point is that you aren't legally a director even though you may be acting as if you were one

[Observer]

A Shadow Director is not a position as such, it is recognition of a key role being played by that person in the decision making of the company and yes, they can be held accountable in much the same way as a duly appointed Director, if proven. As they are not appointed to the board of Directors it does not matter whether they are disqualified or not.

[Grumble]

I think it goes deeper than that.

 

If you're disqualified from acting as a director of a company, or are a bankrupt, you may not be entitled to exercise the privileges of running a business for a period of time.

 

So if you're found to be doing just that, being found to be a Shadow Director means that you're trying to have your cake and eat it...which is A Very Bad Thing.

 

For example, Mr X is found guilty of running a scam, is disqualified, bankrupted and goes to jail. While eating porridge, he finds a stooge on the outside to front a new off-the-shelf company operating the same scam.

 

As far as the authorities are concerned, there's no link - but if they recognise the modus operandi and can prove Mr X is the mastermind of the new scam, he can be found to be acting illegally as a Shadow Director.

 

I think that's the situation but could be wrong.

[ian rush]

does the disqualifiaction apply if you act as a shadow director

 

No, because the whole point is that you aren't legally a director even though you may be acting as if you were one

<{POST_SNAPBACK}>

 

Bol locks

 

Most Isle of Man DQ orders have a catch all provision to prevent those who are disqualified being concerned in or taking part, whether directly or indirectly, with the promotion, formation or management of a company. This is in addition to a prohibition that person from holding the office of director, secretary, liquidator or receiver.

 

Section 26 of the Companies Act 1992 of Tynwald establishes your prohibitions.

 

http://www.fsc.gov.im/enforcement/disqualified_directors.xml

[The Old Git]

Most Isle of Man DQ orders have a catch all provision to prevent people being in concerned in or taking part, whether directly or indirectly, with the promotion, formation or management of a company.

 

But actually proving that's happening and taking action about are a different thing. A bit link when Brian (?) was banned from being licensee of the Phoenix Club

[Observer]

To Grumble and Ian (Because OG got a post in first... DOH!)

 

That's why I said they would be held accountable if proven to be acting in such a way.

[traveller]

thank you for the contributions so far -

 

So what now if we see in the local press that a recently disqualifed director has

1.

come out of semi retirement to look after the business side of "X Limited"

and has

2. said ".in drawing up our business plan....." and " have modelled our operation on...."

 

Does anyone think that's a 'shadow director' doing what he shouldn't ?????

[The Old Git]

Does anyone think that's a 'shadow director' doing what he shouldn't ?????

 

Taking it at face value, and assuming he's still banned as a director, then I'd say yes

 

Edit to add - On re reading the thread, in my previous comment I'd meant to say that you can't be banned from being a shadow director, you are either a director or you are not, although you might be making the decisions of a directory when you aren't legally classed as one. Anyway my clarification is probably no clearer that my first post.

[traveller]

I think the Old Git has it exactly right - but what can be done about it ?? someone who has been disqualified from acting as a director but is acting as a shadow director in a new business venture as though nothing was wrong?

[ian rush]

...and up for a possible extension of the existing order and / or contempt of court (and possible imprisonment or a fine) if they were found to be in breach of an existing Isle of Man disqualification order.

 

However, as most responsible / licensed CSP's wouldn't have anything to do with a DQ'd director - who will have been disqualified because they've been judged by the Court to be unfit to hold corporate office - the likelihood is that anyone acting as a 'shadow director' whilst disqualified will likely be running a relatively small local operation (shop, trade etc.).