Interesting things on the liability of various corporate actors in a recent decision on amendments to pleadings: McKillen v Misland (Cyprus) Investments Ltd,  EWHC 521 (Ch). The case concerned the proposed take-over by Sir David Barclay and his brother Sir Frederick Barclay of Coroin Ltd, which indirectly controls a stable of posh London hotels. In a challenge to the actions of the Barclay brothers, it fell to be decided whether they were de facto or ‘shadow’ directors of the company (and thus potentially in breach of their fiduciary duties) and whether they owed fiduciary duties to the other shareholders of Coroin (specifically the claimant, McKillen).
Richards J provides a helpful overview of how one becomes a director de facto (which can happen in Canada as well, when a person assumes the responsibilities of a director without holding the actual office) and of shadow directors (non-directors – other than professional advisers – who instruct or influence actual directors, whether from the shadows or more openly). An individual may fall in one category or both, and with respect to selected functions, depending on the facts. De facto directors are liable as fiduciaries to the extent they assume the powers and functions of directors; shadow directors are liable only to the limited extent provided in the Companies Act. Shareholders do not typically owe each other a fiduciary duty, although one may be imposed where there is the requisite degree of trust and confidence – subject to any limitations imposed by a shareholders agreement. On the facts, Sir David could not be a de facto director but might be a shadow director; a claim for shareholder fiduciary duty was unsustainable. As ever, good review of the jurisprudence by an English judge.
[Link available here].