The Law Determining Who Is A De Facto Director

2588 Words Oct 29th, 2014 11 Pages
Assignment

QUESTION 1:
Critically examine the view that the law determining who is a de facto director is unclear.
Introduction
Directors may be of three kinds: de jure directors, that is to say, those who have been validly appointed to the office; de facto directors, that is to say, directors who assume to act as directors without having been appointed validly or at all; and shadow directors who are persons with whose directions of instructions the directors of the company are accustomed to act (cite Re Hydrodam). De Jure directors are easy to recognize as they have officially been appointed as a director and there is no uncertainty that they are a director of the company. This is not the case with de facto and shadow directors. Although de facto and shadow directors appear mutually exclusive, there is some overlap and it can be a difficult task proving that a person is a de facto or a shadow director. As these persons may be liable for making negligent decisions in the management of the company it is important that the law is clear in identifying them. The Trinidad and Tobago Companies Act s.85 provides that “An act of a director or officer is valid notwithstanding any irregularity in his election or appointment, or any defect in his qualification.” It is not necessary for a director to be validly appointed for their actions to be valid therefore making their actions liable for any malfeasance perpetrated by their instruction. This essay is solely interested…
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