The disqualification regime applies to all directors.
A director is not precisely defined in legislation but refers to all individuals who hold the position of director by whatever name called (section 250 Companies Act 2006). This includes:
i) De Facto Directors – directors who are held out as directors or perform functions which could only be carried out by a director, but who are not formally recorded as director in the Company’s statutory records and at Companies House;
ii) Shadow Directors – those individuals who whilst not openly acting as a director may instruct the company’s directors in the performance of their duties and the direction of the company. This is defined by Section 251 Companies Act 2006;
iii) Corporate Directors – i.e. companies who sit on the board of directors and are appointed as such;
iv) Directors of corporate directors;
v) Non-executive directors – whose responsibilities in respect of the management and direction of the company, including its financial affairs, are no different to that of appointed De Jure directors;
If shareholders act in any of the above ways it will be extremely difficult to distance themselves from any allegations of unfitness as a director in director disqualification proceedings. As such, all individuals involved in the management of a company must be aware of what their role is and whether it is conduct that could only be performed by a director.
The general rule is that non-executive directors who fail to take part in the management of the affairs of the company can also be disqualified for unfitness. A non-executive director, as any other conventional director (see our comments above), can be disqualified for incompetence or any other finding of unfitness.
As a rule of thumb, non-executive directors in larger organisations are likely to be at less risk than those attached to smaller organisations. In larger organisations, non-executive directors are invited to attend board meetings and receive regular (and often better prepared) management information. However, there is still a duty on the non-executive director to ensure that the information before him at a board meeting is accurate and that directors act properly in determining how to deal with any issues which may give cause for concern.