Shadow Director meaning

Re Grosvenor Property Developers Ltd (in liquidation) Atkinson and another v Varma (also known as Sanjeev Varma) and others [2020] EWHC 1114 (Ch) What are the practical implications of this case? There are four practical consequences flowing from this ruling: It firmly affirms that a defendant who has been debarred may not at all advance submissions in their own defence, save to point out obvious, manifest errors. It also delineates how far, in practice, the claimant must go to properly establish the claim against such a party. It offers an instance of a highly persuasive forensic case, without any expert opinion or cross-examination, that both documents and individuals were inventions. It considers the line between de facto directors and shadow directors. It exemplifies an award of compound interest in a dispute concerning the misapplication of corporate funds. What was the background? The company raised approximately £7.5m from investors to transform a derelict hotel into student housing. By the...

When mini-bond investments fail—fraudulent trading and other claims (London Capital & Finance v Thomson) London Capital & Finance plc (in administration) and others v Thomson and others [2024] EWHC 2894 (Ch) What are the practical implications of this case? The clearest takeaway is that probity is paramount. In short, the defendants were undone by deceit and avarice. To expand, the court accepted a contention from the Claimants that LCF functioned, in effect, as a Ponzi scheme—defined as an arrangement whereby interest and other amounts owed to earlier investors are discharged using proceeds from later investment. The apparent purpose was to advantage four specific individuals by raising funds to be used for their benefit, or for companies in which they had an interest. The claims against two of those people, who were directors of recipient companies, were resolved. The remaining two were, respectively, a director of LCF at all relevant times and a shadow director of LCF. The scheme was heavily promoted by one of the two defendant companies,...

All eyes on the SFO after LC&F Ponzi scheme ruling On 14 November 2024, High Court Judge Robert Miles delivered a judgment concluding that former executives of the mini-bonds issuer deceived investors, spotlighting behaviour sure to interest the anti-fraud prosecuting agency. Running in parallel with those civil claims, the SFO has probed figures linked to the company since its 2019 collapse. Five people have been arrested, yet no charges have followed. While the court proceedings have provided a granular examination of the episodes in question, lawyers warn that how far the agency can leverage the findings remains uncertain. In this piece, Law360 surveys the key lessons from the 341-page ruling—and what they may signal for the SFO's inquiry. A Ponzi scheme London Capital & Finance plc, propelled by glossy promotions and assurances of steady, bank-beating yields, drew in over 11,600 backers—the biggest investment scheme of its type nationwide at the time. And, as Miles J put it, it was a Ponzi scheme. LC&F's chief executive, Michael 'Andy'...

Offence of re-using company name without permission The Insolvency Act 1986 (IA 1986) curtails the re-use of a company’s name for five years where, in the year leading up to insolvency, any director or shadow director of the insolvent company becomes involved with the successor entity (see Who is caught by the restriction?). A director must not participate in a business that adopts the identical legal or trading name, or a name so alike as to imply a link with the earlier company, unless an exception applies (see Scope of restriction). Importantly, this curb is imposed on the individual rather than the company itself, as there are numerous innocent or practical reasons why different companies may carry the same or a comparable name. Under IA 1986, s 216, breaching this curb constitutes a criminal offence, and section 217 is aimed at removing the financial attraction of exploiting insolvency by allowing creditors to seek to pierce the corporate veil and by rendering any director (or any accomplice) who contravenes section...

Use of terms ‘connected’ and ‘associate’ in pensions Although initially coined within the insolvency/bankruptcy regime set out in the Insolvency Act 1986 and underlying regulations, the notions of ‘association’ and ‘connection’—together with the allied idea of ‘control’—have, over time, been adopted and applied across various parts of the UK’s pensions legislation framework for practical purposes in appropriate cases. Examples include: Moral hazard powers — the terms are employed in the moral hazard provisions of the Pensions Act 2004, in practice to assess the degree of distance or proximity of entities from sponsoring employers of occupational pension schemes, and whether such entities might be susceptible to the Pensions Regulator’s moral hazard powers, for example the issue of financial support directions and contribution notices — for further information, see Practice Notes: Contribution notices and Financial support directions Employer-related investments — the terms are used in the employer-related investment framework in relation to the capacity of trustees of occupational pension schemes to enter into dealings with the schemes’...

This Practice Note provides an overview of the legal position relating to de facto and shadow directors of a company, pursuant to the Companies Act 2006 (CA 2006) as well as the common law. Definition of 'director' CA 2006 provides a broad, inclusive description of a director as 'any person occupying the position of director, by whatever name called'. On that footing, and within that definition, the courts have recognised two classes of director: de jure directors, namely those directors properly and validly appointed in line with the company’s articles of association and CA 2006; and de facto directors A further category, described as 'shadow directors', is separately defined in CA 2006. A single individual may simultaneously fall into both shadow and de facto categories, for example where they perform a director’s role in one area of the business whilst directing the board in respect of another. The remainder of this Practice Note considers the legal rules applicable...

Definitions CA 2006 means the Companies Act 2006; Company means [ insert name of target company ] Limited, incorporated in England and Wales under number [ insert company number ]; Director refers to a director of any Group Company, including a shadow or de facto director; Employee has the meaning in section 230(1) of ERA 1996 as applied to any Group Company; EqA 2010 means the Equality Act 2010; ERA 1996 means the Employment Rights Act 1996; [ Group means the Company and each of the Subsidiaries, and Group Company means any of them; ] [ Subsidiaries means the subsidiaries of the Company; ] [ subsidiary means [ a subsidiary as defined by section 1159 of CA 2006 OR a subsidiary undertaking as defined by section 1162 of CA 2006 ]; ] Contractor denotes any individual working in a Group Company’s business who is neither an Employee nor a Worker; TUPE 2006 means the Transfer of Undertakings...