What is it about?

Individuals are sometimes prevented from acting as directors for various reasons - sometimes due to previous conduct in running a business, or sometimes because it is necessary for an individual to avoid conflicts of interest. However, sometimes these individuals decide to influence a Board of Directors, and when they do this they are termed shadow directors. My argument is that these individuals, because of the influence over a company they possess (fiduciary power), ought to owe the same duties to the company as normal directors. This is because they have by their conduct, opted to use their power and discretion (fiduciary power), to influence the Board of Directors and therefore run the company.

Featured Image

Why is it important?

This piece is important, because it demonstrates clear reasoning as to why those individuals who control a company, ought to then owe obligations to the company, even if they have not been formally appointed as directors. It resolves a problem that English courts have been struggling with for some time, by demonstrating that shadow directors ought to owe fiduciary duties to the company.

Perspectives

It is exciting to see how English and Canadian approaches to Fiduciary law, and indeed the equitable jurisdiction more generally, vary so drastically. But by combining the different approaches from these two legal systems, it becomes possible to solve problematic issues in commercial law.

Colin Moore
University of Essex

Read the Original

This page is a summary of: Obligations in the shade: the application of fiduciary directors' duties to shadow directors, Legal Studies, June 2016, Cambridge University Press,
DOI: 10.1111/lest.12110.
You can read the full text:

Read

Contributors

The following have contributed to this page