Elena is a major shareholder in a tech firm but is not officially appointed to the board of directors. However, she regularly attends board meetings, issues instructions to the appointed directors, and the board consistently acts in accordance with her directions. Under the Companies Act 2006, what is Elena's legal status?

Answer options:

She is a de jure director.

She is a de facto director.

She is a shadow director.

She is merely an active shareholder with no fiduciary duties.

How to approach this question

Distinguish between de jure, de facto, and shadow directors based on their appointment and behavior.

Full Answer

C.She is a shadow director.✓ Correct

Section 251 of the Companies Act 2006 defines a shadow director as 'a person in accordance with whose directions or instructions the directors of the company are accustomed to act'. Because the official board consistently follows Elena's instructions, she is a shadow director and is subject to many of the same statutory duties and liabilities as officially appointed directors.

Common mistakes

Confusing a shadow director (who instructs the board) with a de facto director (who openly acts as a director without valid appointment).

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