Misfeasance - winding up, Business Law and Ethics

Assignment Help:

Misfeasance:

Under s.324, misfeasance proceedings may be instituted against a director, promoter, manager, liquidator or "officer" (including an auditor) of a company in liquidation either to recover the company's property from him or to claim compensation for the loss to the company caused by his misfeasance.

The most obvious case of misfeasance is where a director or other officer of the company is found to have misappropriated property of the company.  He can be compelled by misfeasance proceedings to return it.  His conduct may also be criminal misappropriation of property for which he can be prosecuted.

The other type of misfeasance case is where the company has suffered loss owing to the incompetence or neglect of a director or other officer.  It is not however easy to establish that there has been breach of a fiduciary duty such that an order should be made (on grounds of misfeasance) for payment of compensation.  For some lesser default the liquidator could bring an action for negligence.

In the context of misfeasance proceedings an auditor is exceptionally an "officer" who can be liable: he is not an "officer" in any other situation since he has no management functions.

A receiver is not an "officer" who can be held liable (if the company later goes into liquidation) for misfeasance.

                                      Case. RE B JOHNSON & JOHNSON CO (BUILDERS) (1955)

Misfeasance proceeds were brought against a receiver on the ground that he had in his management of the company's business taken decisions which were "detrimental from the company's point of view", eg. closing down parts of its business. 

Held:

A receiver is a representative of the secured creditors by or for whom he is appointed.  He is not an officer of the company who can be liable for misfeasance. If however a receiver does not act bona fide (ie. honestly) the company might have a claim against him but not misfeasance.


Related Discussions:- Misfeasance - winding up

Cross agency actions - addressing phoenix activity, Q. Cross agency actions...

Q. Cross agency actions - addressing phoenix activity? the ASIC, ATO and FWO all have responsibilities in investigating and monitoring elements of phoenix activity. This means

Important points - contractual capacity of drunken persons, Important point...

Important points - Contractual Capacity of Drunken Persons Here the following points should be notice for as: Ratification Well a drunken man who enters into

Delays and inadequate remedies - equity, Delays: However certain stand...

Delays: However certain standard defences knows as "essoins" caused considerable delay earlier than a case could be heard.  Now for a certain condition like the hearing of a c

Describe journal in chronological order, For the transactions provided belo...

For the transactions provided below for the Braves Corporation during 2011, complete the following steps of the accounting cycle (round all answers and journal entries to the neare

Explain the difference between liquidation and receivership, QUESTION 1 ...

QUESTION 1 The principle of law set out in Salomon v Salomon & Co. Ltd is not always applied. Discuss when the judiciary or statutory provisions will not take into account of

Show the criminal conduct definition of phoenix activity, Q. Show the Crimi...

Q. Show the Criminal conduct definition of phoenix activity? Master Builders argued that the definition of phoenix activity should focus on the existing sections of corporation

Special courts, Special Courts However in addition to the courts dealt...

Special Courts However in addition to the courts dealt into paragraphs as 2.1 - 2.7 above, there exist in England a number of other institutions that are called "courts" or "t

Article 5 - state responsibilty, Article 5 - State Responsibilty Articl...

Article 5 - State Responsibilty Article 5. Acts of persons authorized by a state to act on their behalf then the state is responsible for the actions of that person. For exampl

How international law regulating state succession, STATE SUCCESSION Int...

STATE SUCCESSION International law regulating state succession deals with the situation where there is a change in sovereignty over a particular territory. State succession occ

Transfer of immovable property, Transfer of Immovable Property By S.54...

Transfer of Immovable Property By S.54 Property Act, 1882 as Note: This Act is applicable in the US requires that a transfer of immovable property worth over as 100 rupees mus

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd