Directors' duties - de facto directors

The National Kidney Foundation (NFK) case was one case which cast the spotlight on de facto directors - please see the posting on 3rd March, 2009.

Another case which will again turn the spotlight on such directors is the Raffles Town Club case against its former directors. Included among the defendants is former top remiser Peter Lim. He is being sued as a de facto director and the allegations are that he and the others breached their directors' duties to the company.

Who can be held to be a de facto director? Some possible persons - major shareholders, and major creditors. It should be noted that being a major shareholder or major creditor does not make one automatically a de facto or shadow director. It is inteference with the management of the company that may. So watch out if you are not a director but you often give instructions to the directors or even attend board meetings. However, professional advisers like auditors or lawyers will normally not be classified as de facto directors.