This chapter discusses the appointment and removal of directors, including corporate directors, and especially considers the recently enacted requirements for identity verification on appointment and addresses the consequences of appointments where the individual’s identity has not been verified. It also considers directors’ remuneration. This chapter addresses the three classes of directors: the de jure director, the de facto director, and the shadow director. The chapter considers the behaviour which will result in being classified as a de facto or a shadow director, explores the extensive case law on these issues, and identifies the duties and liabilities which attach or potentially attach to each category.
Chapter
7. Board composition—appointment and removal of directors
Chapter
6. Corporate governance—board structure and shareholder engagement
This chapter discusses the appointment and removal of directors. Directors are responsible for the management of the company’s business, for which purpose they may exercise all the powers of the company. The chapter considers three classes of directors: the de jure director, the de facto director, and the shadow director. It identifies the characteristics of each category and the liabilities which attach in the event that someone is classed as being a director. It also considers whether fiduciary duties are owed by shadow directors. The position of corporate directors is also considered. In addition, the remuneration of directors is addressed.
Chapter
7. Board composition—appointment and removal of directors
This chapter discusses the appointment and removal of directors. Directors are responsible for the management of the company’s business, for which purpose they may exercise all the powers of the company. This chapter considers three classes of directors: the de jure director, the de facto director, and the shadow director. It identifies the characteristics of each category and the liabilities which attach in the event that someone is classed as being a director. It also considers whether fiduciary duties are owed by shadow directors. The position of corporate directors is also considered. In addition, the remuneration of directors is addressed.
Chapter
7. Classifications of director
This chapter assesses what a director is and the different types of director that exist. Section 250 of the Companies Act 2006 (CA 2006) provides that a director ‘includes any person occupying the position of director, by whatever name called’. A person validly appointed as a director is known as a de jure director, whereas a person who has not been validly appointed, but who acts as a director, is known as a de facto director. A shadow director is ‘a person in accordance with whose directions or instructions the directors of a company are accustomed to act’. Other types of director include executive director, non-executive director, and alternate director. Meanwhile, certain persons such as major shareholders or creditors may have power to nominate a person to the board, and this nominated person is known as a nominee director. Many companies appoint some of their directors to specific board roles.
Chapter
5. Directors’ Duties
The Concentrate Questions and Answers series offers the best preparation for tackling exam questions and coursework. Each book includes typical questions, suggested answers with commentary, illustrative diagrams, guidance on how to develop your answer, suggestions for further reading, and advice on exams and coursework. This chapter examines the very important topic of directors’ duties. The chapter considers the main duties, as codified in the Companies Act 2006, including: the duty to act within powers (the proper purposes rule); the duty to promote the success of the company; the duty to exercise independent judgment; the duty to exercise reasonable care, skill, and diligence; the duty to avoid conflicts of interest; and the duty to disclose an interest in a proposed transaction with the company. Related areas such as substantial property transactions and liability for breach are considered. This chapter considers who is a ‘director’, examining the concepts of de facto and shadow directors and how far they owe duties to the company.
Chapter
12. Mixed Topic Questions
The Concentrate Questions and Answers series offers the best preparation for tackling exam questions and coursework. Each book includes typical questions, suggested answers with commentary, illustrative diagrams, guidance on how to develop your answer, suggestions for further reading, and advice on exams and coursework. This chapter looks at mixed topic questions and provides four example questions and suggested answers. The questions require the consideration of a variety of topics, including: directors’ duties, shareholder remedies, derivative claims, unfair prejudice, de facto and shadow directors, corporate personality, lifting/piercing the veil of incorporation, pre-incorporation contracts, wrongful trading, disqualification, and the articles of association.
