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

Explain the modes of acquiring territory, Explain the modes of  acquiring ...

Explain the modes of  acquiring territory There are certain modes of  acquiring territory. Before 1948, there were a  lot  of  territories available and mostly areas were unkno

Advertising gambit, Bagra Used Cars Ltd. has as the most prominent show on ...

Bagra Used Cars Ltd. has as the most prominent show on its lot an immaculate, highly polished model which rotates slowly on a raised circular platform under powerful floodlights. T

Empowers directors - company management, Empowers directors - company manag...

Empowers directors - company management: In the case of companies which have adopted Table A, Article 107 empowers directors to appoint a managing director "for such period an

Compensation for removal - company management, Compensation for Removal: ...

Compensation for Removal: Subsection (6) provides that nothing in s.185 shall be taken as depriving a removed director of compensation or damages payable to him in respect of

What is the dispute resolving mechanism, What is the dispute resolving mech...

What is the dispute resolving mechanism Obligation to follow a treaty between states arises only when it has been concluded in a written form. Moreover, a treaty must be in a

State the policies of convergence, State the policies of convergence Ex...

State the policies of convergence Explained here in the simplest case with assumption that there is full representation of voters; information is symmetric and single peaked pr

Fraud or improper conduct, Fraud or improper conduct: English courts h...

Fraud or improper conduct: English courts have intervened on numerous occasions and lifted the veil of incorporation in order to circumvent a fraudulent or improper design by

Describe the social conditions of multiple streams, Describe the Social con...

Describe the Social conditions of multiple streams Social conditions that are not defined as problems, and for which alternatives are never proposed, never become policy issues

Characteristics of contract of guarantee, Characteristics of Contract of Gu...

Characteristics of Contract of Guarantee (a) There have be three parties: as the creditor, as the debtor and as like the surety or like guarantor. (b) There have be as a pr

Determine the example of a relational contract, Determine the example of a ...

Determine the example of a relational contract A characteristic macro example of a relational contract with a strong lock-in effect is membership of a currency community. Self-

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