Who is a Shadow Director ?

Question 28 of 33

Q. Who is a Shadow Director ?

Tamil Nadu DgeTamil Nadu HSC (DGE) Commerce Board 2024Subjective· 3mImportance★★★★★

85% · 28/33 Questions

🔒 Locked · start free trial →

You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.

Start your 14-day free trial to unlock the full solution →

A shadow director is a person, though not officially appointed a director, on whose directions the Board is accustomed to act; the Companies Act, 2013 treats him as an officer in default.

The idea of a shadow director is studied in the Company Management chapter of the Tamil Nadu HSC Class-12 Commerce syllabus and deals with people who really control a company without holding the formal post.

Meaning: A shadow director is a person who has not been formally appointed as a director of a company, but in accordance with whose directions or instructions the Board of Directors is accustomed to act. In other words, he controls the Board from behind the scenes.

Key points:

He is not officially named as a director, yet he effectively directs the affairs of the company.
Since he exercises real control, the Companies Act, 2013 [Section 2(60)] treats such a person as an 'officer who is in default', making him liable for defaults like a director. …

Start your 14-day free trial to unlock the full solution →

Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

CBSE 2024Set MARCH1 markMCQ
$Q. Directors are ______ of the company's money.$
(a) Agent
(b) Banker
(c) Trustees
(d) Holder
›Reveal solutionSolution
Directors hold and manage the company's money for the benefit of the company and its shareholders, so in law they are regarded as trustees of that money — option (c).

Under the Companies Act, directors occupy a fiduciary position. Their legal status is described in three ways:

Agents of the company when they enter into contracts on its behalf.

Trustees of the company's money and property — they hold and control the funds not for themselves but for the company, and must apply them only for proper corporate purposes.

Officers/managing partners in running the day-to-day affairs. …
Start your 14-day free trial to see the full solution →
CBSE 2023Set MARCH1 markMCQ
$Q. Public Company shall have a minimum number of ______ Directors.$
(a) 5
(b) 2
(c) 6
(d) 3
›Reveal solutionSolution
The correct answer is (d) 3, because a public company must have at least three directors under the Companies Act, 2013.

As studied in the TN HSC Commerce chapter on Company Management, the Board of Directors manages the affairs of a company, and the Companies Act, 2013 fixes the minimum number of directors:

Public company — minimum 3 directors.

Private company — minimum 2 directors. …
Start your 14-day free trial to see the full solution →
CBSE 2022Set MARCH1 markMCQ
$Q. A private company shall have a minimum of ______ Directors.$
(a) 3
(b) 7
(c) 2
(d) 5
›Reveal solutionSolution

A private company must have a minimum of two directors, so the answer is (c).

Under the Companies Act, 2013, the minimum number of directors required depends on the type of company: a One Person Company needs at least one director, a private company needs at least two directors, and a public company needs at least three directors. The maximum is generally fifteen.

…

Start your 14-day free trial to see the full solution →

←Previous questionQ14 — What kind of resolutions are required to implement the following decis…→Next questionQ16 — What do you mean by Statutory Meeting ?

Q.Who is a Shadow Director ?

Concept understanding — Board of Directors

Q.Who is a Shadow Director ?

🎓Unlock everything free for 14 days

Unlock everything free for 14 days