What is the Law in Your Life?

5 things you need to know about de facto company directors:

You have probably heard the term “de facto director”, but what does that expression mean?

1.   When a person is appointed a company director, their appointment is usually made by the company’s board of directors (or, sometimes, by the shareholders). Notification of the appointment should always be made to Companies House.

2.   However, a person may be deemed a company director without ever having been formally appointed as such or without their position being notified to Companies House. This is because such person has acted as a director, so as to become a director “in fact”- i.e. a de facto director.

3.   This is confirmed by the Companies Act 2006, which provides that the definition of a director includes “any person occupying such a position, by whatever name called”. A person occupying such a position without expressly being named as a director is referred to as a de facto director.

4.   The Court of Appeal in England has confirmed recently that there is no one definitive test for whether someone is a de facto director. In determining the matter, the court will ask whether that person was part of the corporate governance system of the company and whether that person assumed the status and function of a director so as to make himself responsible as if he were a director.

5.   It is important to note that if someone is deemed to be a de facto director, such person will be subject to the same duties and responsibilities (and face the same potential personal liabilities) as if they had been formally appointed a director.

What is the Law in your Life?

5 things you need to know about Insurance Obligations under a Lease:

1.   The landlord usually accepts the obligation to insure the leased subjects for specified insured risks.

2.   The tenant reimburses the landlord in respect of the premiums paid.

3.   The definition of the insured risks should be considered carefully so as to ensure that all relevant risks are insured against and that there is no element of double insurance.

4.   The landlord will generally have the obligation to reinstate the leased subjects in the event of damage to or destruction thereof - provided that said damage or destruction has not been caused by the act or default of the tenant.

5.   During any period of reinstatement, there should be rent abatement with the landlord receiving the benefit of loss of rent insurance effected in terms of the lease. The lease may provide for the termination of the lease if the leased subjects are not reinstated within a specified period. The common law of rei interitus is usually excluded from operation.