Liability of a de facto director: what to do in the first ten days starts with establishing, in writing, who actually took the decisions now under scrutiny. A person who never held a registered board seat can still face personal exposure under Swedish law as it currently stands if they exercised real control over the company's affairs. The first ten days decide what evidence will exist when that question is eventually tested, by a liquidator, a creditor, or the Tax Agency.
Who this concerns
The label "de facto director" describes a function, not a title. It applies to whoever, in substance, ran the company: gave instructions to staff, signed on the company's behalf without a formal mandate, negotiated directly with suppliers or lenders, or controlled the bank accounts while the registered board existed mostly on paper. Typical profiles include a majority shareholder who managed operations directly instead of delegating to an appointed board, an interim manager brought in during a crisis who kept acting after the formal engagement ended, and a family member who ran the business informally for years without ever being entered in the companies register.
The pattern repeats with a foreign element. When a Swedish subsidiary answers operationally to a parent company abroad, and the person giving day-to-day instructions sits outside Sweden or reports to a board that never meets locally, the individual who was physically negotiating with Swedish creditors, signing local documents, or managing the Swedish bank accounts is usually the first person examined, regardless of where the formal decision-making body is domiciled. Distance from the Swedish entity does not, on its own, remove exposure if control in substance ran through that person.
This matters most once a company is heading toward insolvency, faces a tax reassessment, or has a creditor pursuing recovery. At that point, the question stops being theoretical: someone will be asked to explain who was actually in charge.
What the law says
Swedish company law attaches formal duties and formal liability to the registered board. In practice, however, liability doctrine on continued trading despite capital deficiency, and representative liability for unpaid tax and social security contributions, has been extended by the authorities and the courts beyond the register. Practice in this area proceeds from the position that the operative question is control in substance, not registration in the companies register: whether a person had, and used, the authority to bind the company, direct its staff, and decide how it dealt with creditors.
The criteria courts and the Tax Agency look to are consistent across cases: signing authority actually exercised, instructions given to employees or contractors, direct dealings with the company's bank, and involvement in decisions about which creditors were paid and which were not. A person who ticks several of these boxes over a sustained period is treated, for liability purposes, as if they held the office, even where the formal appointment never happened or had already lapsed.
This is a functional test, applied after the fact, using whatever documentation exists. That is precisely why the first ten days matter: the record either supports a narrow, factual account of what the person actually did, or it does not exist, and the gap gets filled by inference.
How it works in practice
Freeze the paper trail before it moves
Do not delete, edit, or reorganise emails, messaging threads, or accounting records, even ones that look unhelpful. An altered or thinned record is worse than an unflattering one; it converts a factual dispute into a credibility problem.
Establish who signed what, and when
Pull every document bearing the person's name or signature over the relevant period: contracts, bank mandates, payment authorisations, correspondence with creditors. This is the raw material any liability claim will be built on, and it is the same material that can limit exposure if it shows the person's actual role was narrower than assumed.
Separate personal and company financial affairs immediately
Any commingling of personal and company funds, or any personal guarantee quietly given during the relevant period, should be identified and documented now, not explained later under pressure. Continuing to move money between personal and company accounts after concerns have surfaced is treated as a fresh act, not a continuation of an old pattern.
Put non-essential decisions on hold
Where the person is still involved with the company, new commitments, new payments to connected parties, and new instructions to staff should stop unless there is a documented business reason. Every decision taken during the period under review will be read with hindsight.
Check insurance and any indemnity arrangements
Confirm whether directors' and officers' cover, or any indemnity from the parent company, actually extends to someone who was never formally appointed. Many policies are drafted around registered office holders and exclude de facto arrangements entirely; this needs verifying in the first days, not after a claim is made.
Decide, deliberately, whether to formalise the role or exit it
Continuing to act informally after the exposure becomes apparent compounds it. The choice is binary: either the appointment is regularised, with proper board minutes and a clear mandate going forward, or the person steps back from every function that looks like direction and control, in writing, with a record of the date and scope of that withdrawal.
What to check in the first ten days
- Who had signing rights on the company's bank accounts during the relevant period, and who actually used them
- Whether any board minutes exist for decisions the person is said to have made, and whether those minutes match what actually happened
- Whether payments to creditors in the run-up to any insolvency followed an ordinary pattern or favoured connected parties
- Whether the person's name appears on supplier contracts, leases, or loan agreements as a signatory
- Whether any personal guarantees or comfort letters were given, formally or informally
- Whether the formal board members were meaningfully involved, or simply signed what they were given
- Whether insurance or indemnity cover names the individual or is limited to registered officers
Common questions in this position
#### What documents are typically requested when bookkeeping practices are questioned alongside a liability claim?
Where a liability question overlaps with alleged bookkeeping irregularities, the request usually covers the full accounting record for the relevant financial years, bank statements, supporting invoices, and any correspondence explaining entries that look unusual. The scope tends to expand once the initial documents raise further questions rather than close them.
#### Does resigning immediately remove exposure that has already accrued?
No. Resignation, formal or informal, only affects conduct after the date it takes effect and is properly recorded. Decisions and payments made while the person was in de facto control remain exposed regardless of what happens afterwards; a resignation without supporting documentation of the actual handover date often adds a dispute rather than resolving one.
#### How does liability for a de facto director compare with liability for a shadow director?
A de facto director acts openly as if formally appointed, signing and instructing in that capacity. A shadow director gives instructions that others follow without acting in the open role themselves. The practical exposure can be similar, but the evidence needed to establish each is different, and that distinction shapes how a defence is built.
The numbers
There is no statutory clock that starts running on a fixed day; the ten-day window described here is operational, reflecting how quickly evidence stops being reliable and how quickly informal accounts harden into fixed positions, not a filing deadline set by regulation. Any figure quoted for exposure is not set by statute as a percentage or a flat sum; it tracks the value of the specific decisions taken while the person was in de facto control, and, where insolvency follows, the timing of that filing relative to those decisions.
What drives cost in resolving one of these situations is not the label "de facto director" itself but the volume of material that has to be reviewed to establish the actual pattern of control: the number of counterparties involved, whether records exist in more than one language because a foreign parent or foreign counterparty is involved, whether a liquidator or the Tax Agency has already formed a preliminary view, and whether the informal decision-making stretched over months or years rather than a single transaction. A situation with a thin, contained record resolves faster and more cheaply than one where control was exercised inconsistently over a long period, because the latter requires reconstructing a pattern rather than confirming a snapshot.
Where it usually goes wrong
The functional test cuts both ways, and it stops applying in specific situations. Someone who gave isolated advice, on one occasion, without ongoing authority, is not a de facto director merely because that advice was followed. A person authorised only to operate a bank account for payroll, with no say in which creditors got paid or what contracts were signed, is a limited signatory, not a controller, and that distinction needs to be documented rather than assumed.
The doctrine also does not reach back further than the period of actual control. A formally appointed board member who was sidelined and genuinely excluded from decisions is not liable for what happened after their real influence ended, even if their name remained on the register; conversely, someone who resigned on paper but kept giving instructions afterwards remains exposed for the period they kept acting, regardless of the resignation date.
Where this most commonly goes wrong for the person under scrutiny is a resignation treated as a clean break with no supporting record of when instructions actually stopped, informal messages that read as directive years later even though they were meant as advice at the time, and a decision to "sort it out informally" with creditors that later reads as active control over which debts got paid. Each of these turns an arguable position into a settled one, against the person who created the record.
What to do next
Reviewing the first ten days is diagnostic work: it establishes whether the person's actual conduct supports a narrow account of a limited role, or whether the record already points to sustained control. That review, and the file it produces, is the foundation for any position taken afterwards, whether that position is negotiated with a creditor, presented to a liquidator, or defended in a formal claim.
Once the initial record is secured, the board documentation that limits personal exposure sets out how to structure the file going forward so that future decisions are not exposed to the same ambiguity: what protects a board through documentation. Where the facts are already contested, or where a claim has been raised, the next step is a direct review of the specific record rather than general guidance: book a position assessment. Broader context on how personal exposure attaches to those who direct a Swedish company sits in the director liability practice overview.