ExpertMedium1 markMultiple Choice
Management, administration and the regulation of companiesManagement, administration and the regulation of companiesDirectors
ACCA · Question 37 · Management, administration and the regulation of companies
Section A
What is a 'shadow director'?
Section A
What is a 'shadow director'?
Answer options:
A.
A director who rarely attends board meetings.
B.
A person in accordance with whose directions or instructions the directors of the company are accustomed to act.
C.
An alternate director appointed to step in when a regular director is ill.
D.
A director appointed by the employees.
How to approach this question
Identify the statutory definition of someone who controls the board from behind the scenes.
Full Answer
B.A person in accordance with whose directions or instructions the directors of the company are accustomed to act.✓ Correct
Under s.251 of the Companies Act 2006, a shadow director is a person in accordance with whose directions or instructions the directors of the company are accustomed to act. They are not officially appointed but exert control over the board, and are subject to many of the same legal duties as de jure directors.
Common mistakes
Confusing a shadow director with a de facto director (someone who acts as a director but hasn't been validly appointed).
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