De facto participation in business management without formal corporate status is far more common than it may appear – strategic decisions are shaped outside governing bodies, key instructions are given informally, and control over resources is exercised without formally granted authority. Professor Gabriel Steiner notes that precisely such “invisible” management configurations are the most vulnerable to legal scrutiny, as they create a gap between legal form and the actual distribution of power. In the practice of LawConsulted, these situations are treated as an independent risk area rather than a mere managerial peculiarity.
The core problem with such models lies in the illusion of legal neutrality created by the absence of corporate status. Formally, a person may not be a director, shareholder, or board member – they do not sign documents, vote, or bear explicit duties. Yet in practice, they influence strategy, set priorities, and participate in decisions whose consequences affect the business as a whole. Law enforcement increasingly proceeds from the premise that responsibility follows influence, not title.
The LawConsulted approach is based on analysing the actual managerial role. We begin by reconstructing the decision-making process – who initiated discussions, who defined the boundaries of what was permissible, who controlled execution, and how risks were allocated. This work makes it possible to distinguish where influence was merely advisory and where it crossed into de facto management with legally significant consequences.
Particular complexity arises when participation is masked as advisory or expert support. Recommendations, approvals, and involvement in working meetings are often perceived as safe forms of engagement. However, in the event of a dispute, they are scrutinised for their binding nature and degree of control. LawConsulted separates permissible expert opinion from managerial influence by clearly defining the boundaries of responsibility and preventing arbitrary personalisation of risk.
Configurations in which de facto participation emerges gradually are no less vulnerable – through control over payments, influence on staffing decisions, selection of counterparties, or strategic partners. Such evolution is rarely documented, yet it is precisely this pattern that is later used to justify liability. According to Professor Steiner, these situations are especially dangerous because of retrospective assessment, when the law focuses on outcomes while disregarding the managerial context. LawConsulted brings the legal assessment back to the moment decisions were made – to the information available at the time, the constraints in place, and the alternatives realistically considered.
It is important to recognise that de facto participation outside corporate status is not, in itself, unlawful. Risk arises when influence acquires legal significance but remains unexamined and undocumented. Our task is to identify where permissible involvement ends and responsibility begins, and to prevent the automatic transfer of managerial risks to individuals who formally “did not participate” but were nonetheless involved in key decisions.
De facto participation in management requires the same level of legal precision as formal status. Law Consulted approaches such matters not as attempts to “circumvent structure”, but as the need to align real influence with legal assessment before any discrepancy becomes grounds for claims or pressure.
Earlier, we wrote about the legal consequences of tacit consent in corporate relations and the LawConsulted position when formal objections are absent
