LAW CASES STATUE PERSON EXTRA
2. DIRECTORS, SHAREHOLDERS AND THE
BALANCE OF POWER
What is a Director:
De jure director: someone who has been formally appointed as a director
De facto director: s250 Companies Act 2006: “Director includes any person
occupying the position of a director, by whatever name called.” This spreads the net
widely to try and catch all the different groups.
o Re Gemma: Must attend board meetings and perform the normal functions
o S250 means that de facto directors are the same as de jure directors
Shadow director: s251 CA 2006: A person in accordance with those directions or
instructions the directors of the company are accustomed to act
o Will not turn up to board meetings
o Offer advice that is taken in to account: s251(2)(a) CA
o Ultraframe: must tell the governing majority what to do
o Liability depends on whether a statute extends to them, for example wrongful
trading does: s214(7) CA
o General duties of directors apply to shadows to the same extend they are
capable of applying to shadows: s270(5) IA 1986
Dixon: Mills v Mills: Directors act as an agent of the company as well as having
fiduciary duties
Directors’ powers:
Articles 3 and 4 of the Model Articles of Association are the most important as they
deal with the balance of powers
Model Article 3: Directors’ general authority: Subject to the articles, the directors are
responsible for the management of the company’s business for which purpose they
may exercise all the powers of the company
Shareholders’ powers:
These powers operate as exceptions to the powers of the directors
S168 Companies Act 2006: SH has the power to remove Directors by ordinary
resolution1
o This is the ultimate control and sanction that the SH have
o This section makes it easy to use this ultimate power
o Simply majority has set the bar low for SH
Model Article 17 (private companies), Article 20 (public companies): SH have the
power to appoint Directors
Generally have a power to interfere and tell Directors what to do
1
Ordinary resolution: anything over 50% (simple majority). Special resolution: over 75%
Page 1 of 2
2. DIRECTORS, SHAREHOLDERS AND THE
BALANCE OF POWER
What is a Director:
De jure director: someone who has been formally appointed as a director
De facto director: s250 Companies Act 2006: “Director includes any person
occupying the position of a director, by whatever name called.” This spreads the net
widely to try and catch all the different groups.
o Re Gemma: Must attend board meetings and perform the normal functions
o S250 means that de facto directors are the same as de jure directors
Shadow director: s251 CA 2006: A person in accordance with those directions or
instructions the directors of the company are accustomed to act
o Will not turn up to board meetings
o Offer advice that is taken in to account: s251(2)(a) CA
o Ultraframe: must tell the governing majority what to do
o Liability depends on whether a statute extends to them, for example wrongful
trading does: s214(7) CA
o General duties of directors apply to shadows to the same extend they are
capable of applying to shadows: s270(5) IA 1986
Dixon: Mills v Mills: Directors act as an agent of the company as well as having
fiduciary duties
Directors’ powers:
Articles 3 and 4 of the Model Articles of Association are the most important as they
deal with the balance of powers
Model Article 3: Directors’ general authority: Subject to the articles, the directors are
responsible for the management of the company’s business for which purpose they
may exercise all the powers of the company
Shareholders’ powers:
These powers operate as exceptions to the powers of the directors
S168 Companies Act 2006: SH has the power to remove Directors by ordinary
resolution1
o This is the ultimate control and sanction that the SH have
o This section makes it easy to use this ultimate power
o Simply majority has set the bar low for SH
Model Article 17 (private companies), Article 20 (public companies): SH have the
power to appoint Directors
Generally have a power to interfere and tell Directors what to do
1
Ordinary resolution: anything over 50% (simple majority). Special resolution: over 75%
Page 1 of 2
