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A shadow director is defined as
"a person in accordance with whose directions or instructions
the directors of the company are accustomed to act".
However, a person is not treated
as a shadow director merely because the directors act on advice
he gives in a professional capacity. The fact that one member
of a board acts on the instructions of a third party does
not necessarily mean that the third party is a shadow director;
the capacity to influence the whole board (or at least a majority)
is the key issue.
Re: M C Bacon (case law) the Judge
described two examples of a shadow director:
- The fraudster who operates
through shelf companies controlled by nominees, and
- The bankrupt (or disqualified
director) who continues to manage a company through their
spouse.
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