Secretary of State for Business, Energy and Industrial Strategy v Rahman

A person is not a de facto director merely because their name appears on a premises licence, they are described as an owner or boss, or they advertise a business alongside other restaurants. The court must assess what the person actually did and whether they assumed the responsibilities and duties of a director. Evidence should ordinarily demonstrate a role in the company’s governance or directorial management. The claim failed because the evidence did not establish, on the balance of probabilities, that the defendant had acted as a de facto director.

The Secretary of State sought a disqualification order under section 8 of the Company Directors Disqualification Act 1986. The allegation was that the defendant, although not the registered director or a shareholder, was a de facto director of a restaurant company that had employed workers without permission to work in the United Kingdom.

The Secretary of State relied on one worker’s reference to the defendant as an owner or boss, the defendant’s name on the premises alcohol licence, and a website advertising the restaurant with other restaurants associated with him. The central issue was whether the defendant had assumed the responsibilities of a director.

1. Claim dismissed. The evidence did not establish on the balance of probabilities that the defendant was a de facto director of the company.
2. The statutory definition of director is inclusive. A person who is not formally appointed may nevertheless be a de facto director. The court must focus on the person’s actual role and conduct, including whether the person assumed the responsibilities of a director, participated in the company’s governance, or acted on an equal footing with formally appointed directors. The question is one of fact and degree.
3. The evidence relied on was insufficient. The worker’s reference to a person named Rahman as an owner or boss did not show what the defendant did. The defendant’s name on the premises licence was plausibly explained as a favour to the registered director, and there was no evidence that he supervised the sale of alcohol. The shared advertising page showed, at most, an association between restaurants and did not establish responsibility for the company or assumption of directorial duties.
4. The Secretary of State owed no duty to investigate to a particular standard or to obtain evidence from third parties. The ultimate question remained whether the evidence placed before the court proved the case.
5. It was unnecessary to decide unfitness. However, the judge indicated that, if directorship had been established, the company’s serious failure to comply with immigration legislation would have demonstrated unfitness. A five-year disqualification order would then have been appropriate. No weight would have been given to non-payment of the civil penalty absent evidence of financial control or benefit.