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Are you a Shadow Director?

December 5, 2014

If you are involved in a commercial dispute, you should seek legal advice. The information in this fact sheet is intended for informational purposes only and should not be taken as legal advice.

What is a Shadow Director?

Whilst you may not have been formally appointed as a company director or listed on the ASIC website, you may be a shadow director if you:

Act in the role of a director; or

The other directors of the company follow your instructions.

However, you are not considered a shadow director if your advice is followed by other directors because the advice is given in your professional capacity. To be considered a shadow director, you must have the potential to control decisions of the other directors and exercise the power to do so.

Please note that a company can be a shadow director.

Duties of a Shadow Director

A shadow director holds the same duties as a formally appointed director, and is liable for any breaches of said duties. The relevant duties include:

Duty to prevent insolvent trading;

Duty to act in good faith;

Duty to not gain an advantage at the expense of the company;

Duty to exercise care and skill;

Duty to disclose any material personal interests that relates to the affairs of the company.

If you are concerned as to whether you are a shadow director, please contact D'Angelo Legal on 9381 1147 or to obtain advice.

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