Corporate Directors And The Limits Of Responsibility

De facto directors are persons who have not been formally appointed as directors of a company but have 'assumed the status and functions of directors'.¹

Persons who are determined to be de facto directors may find themselves subject to the same duties to the company as formally appointed directors, exposed to claims for breach of director duties and potentially liable for a company's unsatisfied tax liabilities. A company in one jurisdiction may also find itself deemed to be tax resident in another jurisdiction from which the de facto director exerts control resulting in a significant unexpected tax liability.

The two questions this article explores are:

• In what circumstances can or should individuals who are directors of one company (such as a corporate director) be determined to be de facto directors of a second company?