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Obligations in the Shade: The Application of Fiduciary Directors’ Duties to Shadow Directors

Moore, Colin R. (2016) Obligations in the Shade: The Application of Fiduciary Directors’ Duties to Shadow Directors. Legal Studies, 36 (2). pp. 326-353. ISSN 0261-3875. E-ISSN 1748-121X. (doi:10.1111/lest.12110) (KAR id:43802)

Abstract

This paper argues that shadow directors, as defined in English law, ought to owe the full range of directors’ duties, both fiduciary and non-fiduciary, enacted in the Companies Act 2006 (CA 2006), ss 171-177, to the relevant company under their influence. Following the enactment of the recent Small Business, Enterprise and Employment Act (SBEEA) 2015, these general duties are likely to apply to shadow directors, although there is still a case to be made as to why shadow directors should owe fiduciary duties to the relevant company. It is argued here that such a relationship is fiduciary in nature, but the current approach deployed in the English courts, based upon the application of Finn’s originally formulated ‘undertaking’ test alone, is inadequate.

Given these inadequacies, it is proposed that the Canadian ‘power and discretion’ test be deployed alongside the ‘undertaking’ test, in order to provide a far more comprehensive justification for the application of fiduciary obligations to shadow directors. This position is supported by establishing a theoretical basis for the ‘power and discretion’ test, via Paul Miller’s ‘fiduciary powers theory’, as well as considering the application of such a test to shadow directors.

Item Type: Article
DOI/Identification number: 10.1111/lest.12110
Subjects: K Law > K Law (General)
K Law > KD England and Wales
Divisions: Divisions > Division for the Study of Law, Society and Social Justice > Kent Law School
Depositing User: Colin Moore
Date Deposited: 30 Oct 2014 16:55 UTC
Last Modified: 16 Feb 2021 12:56 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/43802 (The current URI for this page, for reference purposes)

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