What Is a “Shadow Committee Member”?

Many associations are run in fact by someone who is not on the committee: the founding pastor, the company that sponsors the club, the big man whose word the committee follows, the donor whose money keeps the NGO alive. The 2023 Act gives that person a name and a liability.

The three limbs

The first limb, acting in the role, catches the de facto committee member: the person who attends committee meetings, votes, signs and speaks for the association without ever having been appointed, or whose appointment was invalid. The second, directions or instructions, catches the controller behind the scenes: the committee “is required or is accustomed to act” on that person’s say-so. A single instance is not enough; the word “accustomed” implies a pattern. The third, otherwise exercises control, is a sweep-up for any other means of control, such as holding the chequebook or the bank passwords, or a funding agreement that gives a sponsor a veto over decisions. The definition follows section 108 of the Companies Act 1997 on deemed directors.

Liability as a committee member

Section 47(1) of the Associations Incorporation Act 2023 provides that a person who is not otherwise a committee member “may be liable as a committee member of the incorporated association under this Act if the person is a shadow committee member”, and the definition of “committee member” in section 3 expressly adopts this extended meaning “for purposes of liability”. The shadow committee member is therefore exposed to the duty of care (section 38), the disclosure rules (section 40), the confidentiality rule (section 43), the offence of bad-faith conduct (section 44), removal and disqualification by the Court (sections 32, 45), and the enforcement provisions (sections 50 to 52). Section 61(3) confirms that the limitation of members’ liability “does not affect any liability a person may have as a shadow committee member”, and section 57(3)(b) says the same of a public officer.

The defence

Section 47(2) gives a defence “if the shadow committee member shows that the committee member was not acting in accordance with the shadow committee member’s directions or instructions in acting or failing to act in the manner giving rise to liability”. The burden is on the shadow. If the committee usually did what the founder said but on this occasion made its own decision, the founder is not liable for it. Section 47(3) adds that “a person is not a shadow committee member to the extent that the person acts only in a professional capacity”: the association’s lawyer or accountant whose advice the committee follows is not thereby its controller.

Disclosure at incorporation

Section 6(2)(b)(ii) requires the notice of intention to give “the names of the initial committee members and any shadow committee members”, and Form 1 has a section for the shadow committee member’s full particulars. The Act thus asks the founders to declare, at the outset, who will really be in charge. Omitting a known controller is a statement that is misleading in a material particular, an offence under section 163 punishable by up to K50,000 or six months. There is no continuing obligation to file changes in shadow committee members, but the Registrar may require the information under section 152 and may inspect documents to find it under section 154.

Why the Act does this

The concept prevents evasion of the committee-member regime. Without it, the person who actually runs an association could avoid every duty, every disqualification and every penalty by keeping his name off the register and installing relatives on the committee. It also serves the anti-money-laundering purpose stated in the long title: the “beneficial owner” provisions in section 89 identify who really owns a membership, and the shadow committee member provisions identify who really controls the association.

Members acting collectively are protected

A member who votes at a general meeting does not thereby direct the committee. Section 48 provides that “if any action is approved by special resolution or written resolution in lieu of a meeting of the members, no member of an incorporated association is liable as a committee member or as a shadow committee member in respect of that action”. The protection attaches to the formal collective decision; a member who issues instructions to the committee outside a meeting is not covered.