ACCA Applied Skills · Corporate and Business Law (Global)

Company directors: formula sheet

Key formulas

Director test: Director = anyone who acts in the position of director, whatever the title; Function over label. Applies to de facto directors too.
De facto director: Acts as a director + not validly appointed = treated as a director; Owes duties and can face liability like a validly appointed director.
Shadow director: Board accustomed to act on a person's instructions = shadow director; Professional advice given in that capacity is normally excluded.
Alternate director: Director appoints alternate → alternate acts only while the appointor is absent; Only if the articles permit. The appointor usually remains responsible for choosing the alternate.
Appointment routes: Articles/statute → first directors named, then members' resolution or board appointment; Check what the articles actually say in the question.
Eligibility: Natural person + meets age and capacity rules + not disqualified; Rules vary by jurisdiction. Follow the facts given in the question.

A company acts only through people, and directors are the people who manage it.
A director is defined by the role performed, not by the job title used.
Know who appoints the first directors and who appoints later ones.
Shareholders normally appoint directors by passing a resolution.
The board can often fill a vacancy if the company's constitution allows it.
Check the company's constitution first, because it may add rules on appointment.
Know the basic qualifications and disqualifications for holding the office.
An appointment must be properly made to be valid.
Know the difference between an executive and a non-executive director.
A shadow director is someone whose instructions the board habitually follows.
Always state the rule, apply it to the facts, then give your conclusion.
In objective questions, read all four options before choosing, as there is no partial credit.

Confusing de facto and shadow directors. Fix: De facto directors act openly as directors. Shadow directors are not appointed and do not act as directors themselves. They direct the board from behind the scenes.
Saying a person is not a director because they have no formal appointment. Fix: Look at what the person does. Acting in the role is enough for de facto status.

Read for verbs. "Acts as", "instructs", "stands in for" point to the type of director.
In Section A, use elimination. Only one type fits each short description.
In Section B, cite the articles first, then statute, when asked how a director is appointed.
Do not argue about titles. The law looks at function.
In written answers, define the type in one sentence, apply the facts, then conclude.