2.3.1.2. Shadow Directors/ De facto Directors

A Shadow Director/ De facto Director is a person who has not been officially appointed as a director but on whose instructions, or wishes, board members are accustomed to acting. A shadow director can face the same penalties as an officially appointed directors.

Implications of being a Shadow or De Facto Director

Both shadow directors and de facto directors have the same statutory duties and obligations as a director under the Corporations Act 2001 (Cth), and may also owe duties and obligations under common law, fiduciary duties, or a company constitution. Such duties and obligations include to:

• act in the best interests of the company and not for an improper purpose, or to gain an advantage for themselves;
• exercise powers and fulfil duties in good faith;
• avoid conflicts of interest;
• not improperly use company information or their position; and
• ensure that the company does not trade insolvently

Further information can be found here https://www.aicd.com.au/board-of-directors/roles/alternate/what-type-of-director-are-you.html