Director Liability: The Use Of Corporate Directors

Commercial Thinking

A company can act as a director of an English company (known as a 'corporate director'). Individuals, who would otherwise be directly appointed as directors, can ring fence their liabilities by acting through a corporate director. The Companies Act 2006 (the '2006 Act') introduced a requirement that at least one director of a company be an individual person. However, any remaining directors can be corporate directors. In Holland v Revenue and Customs & Anor (2010) UKSC 51 the Supreme Court considered whether the directors of a corporate director could be liable to the underlying company for the actions of that corporate director.

The Holland case, decided in February 2011, related to events that occurred before the implementation of the 2006 Act. Following an investigation HMRC had claimed approximately £3.5 million in unpaid tax from a...