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Essay / Research Paper Abstract
This 5 page paper is written with reference to Australian law, looking at when, how and why individuals that are not appointed as directors of a firm may be deemed to be directors in terms of liabilities. The concept of shadow directors and de facto directors are all discussed with reference to case law. The bibliography cites 9 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEnonappdir.doc
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Unformatted sample text from the term paper:
the company and the liabilities of the owners and managers. This separation was firmly established wit the case of Solomon v A Salomon & Co Ltd.[1897] AC 22. However, the
incorporated entity will need to be entrusted it humans in order to operate, as it is a theoretical rather than an actual personality and needs to be directed. It is
for this purpose directors are appointed. To balance the limited liability that accompanies this separation there are some significant duties placed on the directors of the companies (Davies, 2010).
The need for those who have an influence on the running of a company to be held accountable was emphasised in the comment by
Onley J in Chew v NCSC (No 2)(1985) 3 ACLC 212 where he stated "those in a position to take advantage of the special position they may exercise in
the promotion or management of companies must always act with the utmost care, diligence and honesty" (at 218) (quoted Hobson, 1998). The concept of fiduciary duties on directors is
well known1. However, there is the potential for third parties to have a major influence in the way on which a firm behaves, not just the directors or the officers
of a company. Individuals that are not on the board may still be at the locus of the decision making, these are
in appointed directors who may be classified as either shadow directors of de facto directors. The term shadow director has also
been used interchangeably with the term de facto director, which may also apply to third parties. The term shadow director is included within the definition of director in the Corporations
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