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Shadow directors must face up to risks

The UK government has signalled its intention to crack down on the roles played by shadow or de facto directors in companies under investigation. David Parsley looks at the risks involved in making board level decisions while not being a formal director of an organisation.

The news follows moves by the Insolvency Service to disqualify Camila Batmanghelidjh, founder of Kids Company, which collapsed in 2015, just a month after it had received a £3m government grant backed by the then prime minister, David Cameron.

Despite Batmanghelidjh, the former chief executive, not formally holding a role as a director at the time the charity collapsed, the Insolvency Service alleges she acted as a de facto or shadow  director, and should therefore also be disqualified from running or controlling other companies for up to six years.