I was reminded by a thread over on Usenet (that home of the unruly and the obsessive) of a bit of ground-breaking that we once did. We were allocated a trial under a then brand-new Companies Act (1986 I think) that brought in the concept of a Shadow Director, that is to say someone who exercises control over a company even though there are different directors named at Companies' House. Before we started the clerk told us that this was the very first prosecution under the new Act, so there was no case law or precedent to help us. In a nutshell, the defendants were accused of being Shadow Directors of Bystander Timber Merchants Ltd, whose official directors were in the Punjab, from whence they had not budged these nine years. The day to day managers were, oddly enough, the children of the absentees. The company ran into financial trouble, and was liquidated. The business was seamlessly transferred to Bystander Timber Supplies Ltd., operated by the very same people. This fell foul, or so the Crown alleged, of the so-called Phoenix provisions in the Act. In evidence we heard that the business seemed to have operated under both names for a period and that the owners had been imprudent enough to invoice goods in either name from one day to the next.
We convicted them, and imposed substantial fines as well as disqualifying both defendants from acting as company directors for (I think) five years. The conviction had, we were advised, the effect of removing the limited liability of the shadow directors, leaving the duped trade suppliers of the first company free to sue them personally for their losses. It was a very interesting case, and I don't suppose that I shall ever see another like it. I was quietly proud of having sat on the first-ever case of its type though.
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