What is Shadow director?
A shadow director is an individual who is not officially appointed as a director of a company but whose instructions or advice are followed by the officially appointed directors. In Switzerland, the concept of a shadow director is recognized in the context of corporate governance and liability, and the person acting as a shadow director can still be held responsible for the actions of the company, particularly if their influence is significant in decision-making.
Key Characteristics of a Shadow Director
A shadow director may not hold the formal title of director but exerts control over the company’s decision-making process. This can include giving advice, instructions, or suggestions that the official directors act upon. In practice, a shadow director may be someone with significant business influence, such as an investor or a senior executive, whose views are highly regarded by the company’s management.
- Influence on Decision-Making: A shadow director’s power comes from their ability to influence or control the actions of the official board of directors.
- No Formal Appointment: Unlike regular directors, shadow directors are not formally appointed and do not have the legal rights and responsibilities associated with the role of a director.
- Potential Liability: In Switzerland, shadow directors can be held liable for their actions, especially if they were responsible for a decision that resulted in legal violations or financial harm to the company or its shareholders.
In Switzerland, while shadow directors are not formally recognized as directors, they may still face legal consequences under corporate governance laws, especially if their influence leads to actions that harm the company or violate regulations.