What is a de jure company director?

Determining whether someone is a legally appointed director is straightforward in most UK companies, but confusion can arise when you hear the term ‘de jure company director’. What does it mean? Are all company directors de jure, or does the term only apply to executive and managing directors?

We explain what it means to be a de jure director, whether all types of directors are classified as such, and the difference between de jure and de facto directors.

De jure company directors explained

De jure is the Latin expression for ‘by law’ or ‘by right’, which goes a small way to explaining the meaning of the term ‘de jure company director’.

Simply, a de jure director is a person who has been formally appointed to the board and registered as a director at Companies House in accordance with the Companies Act 2006 and the articles of association. 

This means that:

• The person has consented to act as a director of the company. 
• The document containing the person’s appointment has been completed and filed at Companies House – form IN01 for an appointment during the company formation process, or form AP01 for an appointment after incorporation.
• The company passed the necessary resolution to appoint the director (post-incorporation requirement only).
• If applicable, minutes of the meeting at which the resolution was passed were taken and stored in accordance with company law and the articles.
• The director’s details are publicly available on the register of companies.
• The director has an official role within the company, and they are legally responsible for the actions they perform. 

A de jure company director is sometimes informally referred to as a ‘registered director’, a ’director in law’, or a ‘true director’.

It is also possible to appoint a corporate body as a de jure director, provided that the necessary steps have been followed and the company also has at least one natural director.

That said, it should be noted that corporate directors have been outlawed and that this ban will soon be enforced with only limited exemptions. So, if you are appointing a corporate director, you should keep an eye out for these developments.

To inform Companies House of the appointment of a corporate director after incorporation, the company must complete and file form AP02 rather than form AP01. 

What responsibilities does a de jure director have?

Since limited company directors are responsible for managing a company’s day-to-day affairs, they must adhere to various duties prescribed by (where applicable):

• The Companies Act 2006
• A company’s articles of association
• A shareholders’ agreement 
• Directors’ contracts of employment or service agreements
• Resolutions passed by the company’s members (i.e. shareholders’ formal decisions)

Under the Companies Act 2006 (sections 171 to 177), all directors must comply with the following seven general duties of directors: 

1. Act within their powers in accordance with the company’s constitution 
2. Promote the company’s success for the benefit of its members as a whole
3. Exercise independent judgment
4. Exercise reasonable care, skill, and diligence in their role
5. Avoid or manage conflicts of interest that may affect their objectivity 
6. Not accepting benefits from any third parties 
7. Declare direct or indirect interests in any proposed transactions or arrangements with the company

Beyond these statutory duties, many companies also define directors’ collective or individual responsibilities and decision-making powers in shareholders’ agreements, members’ resolutions, service agreements or employment contracts.

Difference between a de jure director and a de facto director 

Unlike a de jure director, a de facto director is not formally appointed to a company or registered at Companies House, but they perform many similar duties, such as signing contracts and making decisions on the company’s behalf. 

Essentially, a de facto director assumes the status and duties of a director ‘in fact’, even though they have not been properly appointed as a director. As a result, they share the same duties and responsibilities as de jure directors. 

Are executive and managing directors de jure?

Executive directors and managing directors are not formal terms defined in the Companies Act 2006. Often, though, companies will refer to certain directors under these terms. 

An executive director is formally appointed by a company, sits on the board of directors, is responsible for some or all of the company’s day-to-day management activities and strategy, and is usually a full-time employee.

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The role and responsibilities of a limited company director

The managing director is often a senior director who takes on responsibility for managing the company’s activities and strategic direction on a full-time basis. In most cases, they will also be appointed as a statutory director and, therefore, would be considered de jure in this regard.

Are non-executive directors de jure?

A non-executive director (NED) is a director with a particular expertise, who assists executive and managing directors with a specific area or challenge within the company by providing independent oversight and constructive challenge. 

They often work part-time in the role, so they don’t tend to oversee or assist with general day-to-day business activities. Nevertheless, non-executive directors are considered de jure because they are formally appointed and registered at Companies House.

They have the same legal duties and responsibilities as executive directors. Indeed, the law does not actually distinguish between ‘executive’ directors and ‘non-executive’ directors.  

Are alternate directors considered de jure?

An alternate director is an individual who steps in to substitute for a director who will be incapacitated for a period of time (e.g., if they are unwell or on holiday). The alternate will act on the director’s behalf during their absence. 

Alternate directors are considered de jure because they must be formally appointed to the company and registered at Companies House. However, the company’s articles of association must permit the use of alternate directors.

Is a shadow director a de jure director?

Section 251 of the Companies Act 2006 defines a shadow director as “a person in accordance with whose directions or instructions the directors of the company are accustomed to act.” However, unlike a de facto director, a shadow director does not perform those actions personally – rather, they exert influence and control over the board. 

Some examples of a shadow director include:

• A majority shareholder who gives instructions to the directors but has no direct involvement in the company’s management.
• A person who participates actively in board meetings, regularly secures loans or borrowings on the company’s behalf, approves expenditures, or is responsible for a specific area of the business (e.g., finances) 

In practice, a shadow director usually acts behind the scenes, often because something prevents their formal appointment as a company director.

Is a nominee director considered de jure?

A nominee director is a person nominated by a shareholder or other person or body to represent their interests on a company’s board of directors. They may be a de jure director or a de facto director, although they are most commonly the former. 

An example of when a nominee director may be used is during a joint venture, where the shareholders of each party to the joint venture company appoint a nominee to represent them on the new company’s board of directors. 

Summary of different directors’ de jure status

Type of director	Considered de jure?
Registered director	Yes
Executive director	Yes
Managing director	Usually
De facto director	No
Non-executive director	Yes
Alternate director	Yes
Shadow director	No
Nominee director	Sometimes

De jure, de facto, or shadow director – why does it matter?

It all comes down to accountability. As we have seen, de facto directors and de jure directors are subject to the same legal duties and responsibilities. So, if things go wrong, they could be in trouble.  

If the company is involved in any wrongdoing and the board of directors is found to have breached its duties, the de jure and de facto directors would be held responsible. In some cases, they can even be personally liable. 

Further, if a court finds that shadow directors were in place, those individuals may be held liable for any wrongdoing they were involved in. 

Need to appoint a director?

We hope you’ve found this post helpful. Please comment below if you have any questions, or get in touch if you need help appointing or removing a company director.

With our Director Appointment & Resignation Service (available for only £29.99), we will prepare the appointment letter and board resolution, and submit the necessary appointment documents to Companies House. This helps ensure any new director is de jure.