De facto director

A de facto director is a person who runs a company without holding office, and whom the law exposes to the same actions as a de jure director. Article L. 651-2 of the French Commercial Code names de jure "or de facto" directors in so many words. Article L. 246-2 extends the criminal offenses applicable to SAs (sociétés anonymes) to anyone who, directly or through an intermediary, has in fact exercised the management, administration or running of the company. With no statutory definition, case law relies on a settled formula. A de facto director is someone who carries out, in full independence, a positive activity of management and direction. All three terms count. An adviser who suggests is not caught; nor is an employee who carries out orders. The profiles that recur in the files are the majority shareholder who signs in the gérant's place, and the parent company that runs its subsidiary's treasury. There is also the banker who makes every drawdown subject to its approval, and the founder who left office but kept control. English law has two distinct figures. The de facto director acts as a director without valid appointment. The shadow director, defined in section 251 of the Companies Act 2006, is a person in accordance with whose directions or instructions the directors are accustomed to act. Advice given in a professional capacity is excluded, along with a few other statutory carve-outs. In D&O (directors and officers), the individual de facto director is insured only if the definition of insured names him, sometimes on condition that he is sued in that capacity. A corporate de facto director, usually the parent, stays outside the subsidiary's policy unless expressly worded in.