What is a de facto director?

• A. A non-executive director with no voting rights.
• B. A person formally appointed and registered as a director.
• C. An employee serving as a member of the board.
• D. A person who acts as a director without formal appointment.

Answer: (D)

A de facto director is someone who acts as a director and makes board-level decisions without being formally appointed or registered as a director. They participate in meetings, influence strategy, and exercise director-level authority even though their name isn’t on the official director register. Because they effectively perform the duties and responsibilities of a director, the law treats them as a director for fiduciary duties and potential liability.

The other descriptions miss the key element. A formally appointed and registered director is a de jure (not de facto) director, since there is formal appointment. An employee serving on the board may be a board member, but unless they are exercising director duties without formal appointment, they aren’t a de facto director. A non-executive director with no voting rights is still a director by appointment; their lack of formal appointment is what would matter for being a de facto director, and that scenario doesn’t match the de facto concept.