The Arm of Justice Lifts the Corporate Veil – Part II: A Warning for Shadow Directors

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The Arm of Justice Lifts the Corporate Veil – Part II: A Warning for Shadow Directors

Published 9 December 2022

In part two of our update on the exceptional case of Powers -v- Greymountain Management Ltd (in liquidation) [2022] IEHC 599, we discuss the High Court’s decision to lift the corporate veil in finding two shadow directors personally liable in a multinational fraud case.

The High Court’s decision to pierce the corporate veil

In our earlier article (available here) we discuss how the High Court concluded that the Irish company, Greymountain Management Ltd (“Greymountain”), was used as an instrument of fraud with the sole purpose of defrauding unsuspecting individuals of their money through a fictitious and illicit binary option trading scheme. The relief sought by the plaintiff, Mr Powers, was for the High Court to pierce Greymountain’s corporate veil on the basis that he and other investors were deprived of funds which they had invested in the scheme. Mr Powers sought an order making four individuals (including two shadow directors) personally liable for the fraud committed by the company.

Shadow directors under Irish company law

Under Irish company law a shadow director is a person (while not formally appointed as a director, nor necessarily held out as one) in accordance with whose directions or instructions the directors of a company are accustomed to acting.

The Companies Act 2014 (the “Act”) provides that a shadow director shall be treated in all respects as a director of the company and, as such, may held liable for certain sanctions normally reserved for directors—this includes potential exposure to personal liability.

The Greymountain case serves as a cautious reminder that shadow directors may be held personally liable in circumstances where justice demands the lifting of the corporate veil.

Shadow directors of Greymountain

The court spent some time exploring the anatomy of the binary options scam and concluded from the evidence before it that the shadow directors had acted as the controllers or the “masterminds” behind the fraudulent scheme. By their inaction, the passive directors had entirely abrogated their duties and handed over the running of the company to the shadow directors.

Unlike the passive directors (who were unwitting parties to the fraudulent scheme), the shadow directors had directly benefited from the scheme. Expert evidence before the court showed that the shadow directors had siphoned investors’ funds and diverted them into their own bank accounts via third party “binary option” websites.

Twomey J highlighted a number of obiter dicta comments from prior High Court cases which indicated that the Irish courts would contemplate piercing the corporate veil in circumstances related to fraud, misapplication of money, directors siphoning off large sums of money, negligence, impropriety and misrepresentation—he saw no reason in this case to distinguish affixing liability to the shadow directors (versus the directors) of a company when the conditions to pierce the corporate veil had been met.

On this basis, the court reasoned that justice demanded that the veil be lifted to make the shadow directors personally liable to Mr Powers. The court’s view was that it would be an affront to justice if the doctrine of separate legal personality shielded the shadow directors from personal liability in the circumstances.


In a compelling conclusion, Twomey J expressed his concern that a failure to impose personal liability on the shadow directors would send out a message that individuals could use an Irish company to carry out wholesale and massive international fraud and then evade personal liability on the basis that it was the company, and not the individuals, that as a matter of law carried out the fraud.

This case sends a strong message that the courts will not permit Irish companies to act as a shield for fraudulent activities.

For more information please contact a member of DAC Beachcroft Dublin’s Corporate & Commercial Team

This article is intended to provide a general overview and guidance on a particular topic. It is provided wholly without any liability or responsibility on the part of DAC Beachcroft and does not replace the necessity to obtain specific legal advice.


Sharon McCaffrey

Sharon McCaffrey


+ 353 (0)1 588 2554

Sarah Flanagan

Sarah Flanagan


+353 (0)1 231 9695

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