Minnie (article assistent) (39 Points)
30 August 2012SHADOW DIRECTORS ARE DIRECTORS ON WHOSE INSTRUCTIONS AND DIRECTIONS THE "BOARD OF DIRECTORS 'ARE ACCOSTUMED TO ACT.
MY QUESTION IS
IS THERE IS A HOLDING COMPANY , AND SUBSIDIARY COMPANY ACTS ON DIRECTION OF HOLDING, THEN WHO WILL BE THE SHADOW DIRECTOR?
BECAUSE A COMPANY CANNOT BECOME A DIRECTOR AS PER COMPANY'S LAW.
Ankit
(CA, CS)
(3064 Points)
Replied 30 August 2012
Dear Minnie,
in case of a holding company, the HC is presumed to exercise control over the subsidiary company by the reason of its holding in the SC. it does not amount to the company or its directors (of the HC) becoming shadow directors as per section 307 (10) of the co. act.
Shadow director is someone who remains outside the board but controls the board. this influence he may exercise not only on account of his share holding but also on account of any other influence that he may have. e.g. say a company ABC limited, all the decissions are taken by the board after consulting Mr. X, who is the chairman of the largest supplier of the company.
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