Hidden Risks of Economic Abuse through Company Directorships

Abstract

Economic abuse is a form of family violence that severely inhibits victim survivors’ capacities to rebuild their lives. Although its effects are widely felt, it remains a hidden problem. This article contributes to the burgeoning scholarship on economic abuse by investigating its perpetuation through family-owned companies. Victim survivors commonly bear the liability for business failure and phoenix activity as ‘straw’ directors. Recent reforms introduced to deter and penalise illegal phoenix activity have increased the risks for survivors who are coerced or defrauded into becoming directors. The study examines how corporate law and the courts have responded to straw directors in the context of family companies. It interrogates the notion that victim survivors assume responsibility for business decisions voluntarily, as rational economic men with relatively equal bargaining power. This article proposes reforms to disrupt harm from economic abuse through coerced directorships, and to militate against the unintended consequence of recent reforms.