A recent Supreme Court judgement has confirmed that where an individual, Mr X, acts as director of company A, and company A is the sole director of company B, that will not necessarily make Mr X a “de facto” director of company B.

The Court decided that the mere fact of acting as a director of a corporate director was not enough to render the individual a de-facto director, “something more” would be required, such as the director holding himself out in correspondence as a director of company B.

As a consequence of the decision, the individual in question could not be found liable under the Insolvency Act 1986, on grounds of misfeasance and breach of duty, to make a contribution to the assets of an insolvent company from which he was one layer removed.

The reforms introduced by the Companies Act 2006 mean that all companies must now have at least one individual director.

Holland v Revenue and Customs & Anor