The role and liability of Non-Executive and Shadow Directors

A Non-Executive Director is a director who does not hold an executive office nor is an employee of the company. These directors will often just devote part of their time to the business of the company in some form of independent advisory role. Despite their limited role, Non-Executive Directors have the same duties and attract the same liabilities as Executive Directors.

A Shadow Director is any person on whose instructions the board of directors (or the majority of the board) are accustomed to act. For example, a majority shareholder who the board always obey without exercising its own judgement will likely by a Shadow Director. Despite not being a formally appointed Director, a Shadow Director may be liable for wrongful trading, fraudulent trading or breaches of fiduciary duty, and can be subject to disqualification under the Company Directors Disqualification Act 1986.