Tuesday 7 July 2009

UK: England and Wales: a de facto director?

The Court of Appeal gave judgment in Holland v Revenue and Customs & Anor [2009] EWCA Civ 625 last week. The court was required to consider whether a director of a company that acted as a corporate director of over 40 insolvent companies was a de facto director of those insolvent companies. At first instance ([2008] EWHC 2200 (Ch)), the trial judge found that the director was a de facto director of the insolvent companies. A unanimous Court of Appeal disagreed. Rimer LJ observed (para. [74]):

I emphasise that nothing that I have said is intended to suggest that there can never be circumstances in which a director of a corporate director can or will so act as to cause himself to be regarded as a de facto director of the subject company. But something more will be required than the mere performance by him of his duties as a de jure director of the corporate director. On the facts accepted by the judge, there was nothing more in the present case".

Notes: 

[1] The case has been summarised here by the ICLR as part of its WLR(D) service (this summary will be removed should the case be reported in one of the ICLR's series of law reports). 

[2] Section 155 of the Companies Act (2006) provides that "A company must have at least one director who is a natural person". This was brought into force on 1 October 2008 by the Companies Act 2006 (Commencement No. 5, Transitional Provisions and Savings) Order 2007. This Order provides, however, that companies which did not have at least one natural person as a director on 8 November 2006 (the date on which the Companies Act (2006) received Royal Assent) have until 1 October 2010 to comply (see Part 3 of Schedule 4). 

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