''Re Hydrodan (Corby) Ltd''

994 Year 994 ( CMXCIV) was a common year starting on Monday (link will display the full calendar) of the Julian calendar. Events By place Byzantine Empire * September 15 – Battle of the Orontes: Fatimid forces, under Turkish gener ...

2 BCLC 180 is a

UK company law The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary legal ...

case, concerning the meaning of a

shadow director A board of directors (commonly referred simply as the board) is an executive committee that jointly supervises the activities of an organization, which can be either a for-profit or a nonprofit organization such as a business, nonprofit organi ...

. It is sometimes incorrectly cited in sources as ''Re: Hydrodam''.

Facts

There were two corporate directors of a parent company of Hydrodan (Corby) Ltd, which was a wholly owned subsidiary of Landsaver MCP Ltd, itself a wholly owned subsidiary of Midland City Partnerships Ltd, which was, finally, a wholly owned subsidiary of Eagle Trust plc, a TV conglomerate chaired by

David James, Baron James of Blackheath David Noel James, Baron James of Blackheath (born 7 December 1937) is a British businessman and corporate troubleshooter and Conservative life peer. Career James has had a varied career in the City of London. He trained with Lloyds Bank be ...

. The liquidator alleged that the two directors of Eagle Trust, Leslie Thomas and Dr Hardwick, were liable for wrongful trading, and contended they were liable as shadow directors under the Companies Act 2006 section 251.

Judgment

Millett J held the directors of the parent were not shadow directors of the subsidiary, just by being members of the parent company’s board. It would need to be shown that they personally instructed and directed the subsidiary’s board. The first step is to identify the de jure and de facto directors, then to say that they had been directed, then that the real directors acted in accordance with the directions, and then that they were accustomed to do so. For instance there must be a pattern ‘in which the board did not exercise any discretion or judgment of its own but acted in accordance with the directions of others’. De facto directors are those who ‘undertook functions in relation to the company which could properly be discharged only by a director. It is not sufficient to show that he was concerned in the management of the company’s affairs or undertook tasks in relation to its business which can properly be performed by a manager below board level.’

References

*{{cite news , url=https://www.independent.co.uk/news/business/shareholders-angry-as-eagle-trust-is-wound-up-1286437.html , title=Shareholders angry as Eagle Trust is wound up , author= Andrew Yates , date=2 December 1997 , newspaper=

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United Kingdom company case law High Court of Justice cases 1993 in case law 1993 in British law

Facts

Judgment

See also

References