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Shadow Directors of a Company
Meaning of Shadow Directors:
‘Shadow Director’ is not actually a person who is
appointed/designated as Director of a Company. But this is a
Person (mostly an employee of manager cadre), in accordance with whose
directions or instructions the Board of Directors of the company is accustomed
A Person, only because of the reason that he advices the Board in
his Professional Capacity, should not be considered as a Shadow Director.
This Shadow Director may be construed as the Real Decision maker
of the Company.
Liability of Shadow Directors:
These Shadow Directors are considered as 'Officer-in-Default' of a
Company as per Section 2(60) of the Companies Act, 2013 and they shall be
liable be to any punishment or penalty, whether by way of imprisonment,
fine or otherwise as may be prescribed under the Companies Act, 2013 for any
acts of such Officer-in-Default liable for penal action.