Shadow Director - The definition - What is a shadow director?

Liquidation - Insolvency - What is a shadow director? - The Insolvency Act 1986

For insolvency law purposes a Shadow Director is defined in The Insolvency Act 1986 as 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.

In 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.

These examples assist in better understanding the definition of a shadow director. A shadow director though not registered as a director at Companies House is treated for all insolvency purposes as if he were an actual director of the company - and is subject to the same legal exposure as an actual director to the provisions of The Insolvency Act 1986 and The Companies Act 2006.


Chris Parkman
Chris Parkman
BSc Hons, FABRP, MIPA, FCCA, Insolvency Practitioner

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