contending instead to act upon the directions and
instructions of the alleged shadow di-rector as a matter of
practice over a period of time.
In the present context, whilst both ''de facto directors''
and ''shadow directors'' are persons who have not been
formally appointed to the relevant board of di-rectors, they
are conceptually different and distinct. A de facto
director is a per-son who assumes the functions of a
di-rector. He is held out by the relevant company as its
director, and personally claims and purports to act as such,
although never formally appointed. In contrast, a shadow
director does not claim or purport to act as a director.
Indeed, he claims not to be a director. To borrow the
language used in an English case, ''He lurks in the shadows, sheltering behind others who, he claims, as the only directors of the company to the exclusion of himself.'' The Articles of Association of a com-pany usually provide for the appointment of alternate or substitute directors. When duly appointed, an alternate or substitute director will, in the absence of the di-rector who appointed him, be entitled to perform all the functions of the latter. Functionally, directors may be cate-gorised either as an executive director or a non-executive director. Basically, exe-cutive directors are those directors con-cerned with the actual management of the company. Ordinarily, the Articles of Association of the company will confer upon them wide management powers. It is usual for executive directors to enter into service contracts with the company. Non-executive directors are commonly found in large companies, in particular, listed companies. Non-executive di-rectors invariably restrict themselves to purely advisory and supervisory roles. An ''independent director'' is a director who should be in a position to exercise in-dependent judgment in carrying out the functions of the Audit Committee of a listed company. We shall review in grea-ter detail the legal position of non-executive directors and independent di-rectors, and the important functions which they discharge, when the issues relating to an Audit Committee are examined. (The writer is the Senior Partner of Loo & Partners. He qualified as a Barrister-at-Law at Lincoln's Inn, London, and obtained his Master of Laws from London University. Mr Loo is also a fellow of the Chartered Institute of Arbitrators, London.)