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

Disadvantages of arbitration, Disadvantages of Arbitration F...

Disadvantages of Arbitration First is, Arbitral awards have no precedential value as that they cannot be relied on in subsequent proceedings Second is, Arbitrati

Articles of partnership - partnership law, Articles of Partnership - Partne...

Articles of Partnership - Partnership Law However a partnership need not be formed through written agreement, it is accustomed for 'Articles of Partnership' for be drawn up, s

Change of business name, Change of Business Name:  Section 17(4) of the...

Change of Business Name:  Section 17(4) of the Registration of Business Names Act provides that if - (a)     any company is, through inadvertence or otherwise, registered un

Classification of precedent, Classification of Precedent So as a prece...

Classification of Precedent So as a precedent may also be classified as like; An original precedent whether it is one that creates and applies a new legal rule; o

Government optimal long run policy - nash equilibrium, Government optimal l...

Government optimal long run policy - Nash equilibrium The government's optimal long run policy is associated with policy coordination at point C. However, as in the static mod

Determine about the mundell-fleming model, Determine about the Mundell-Flem...

Determine about the Mundell-Fleming model The basic two country Mundell-Fleming model assumes that both countries are small. It is this assumption that we modify and assume in

The policy process - advocacy coalitions and policy learning, The policy pr...

The policy process - Advocacy coalitions and Policy learning The mobilization of attention is what policy advocacy is primarily about. And the systematic mobilization of attent

Determine the name and elements of the tort, Sue owns a car that has 150,00...

Sue owns a car that has 150,000 miles on it, but otherwise looks to be in very good condition. She advertises to sell the car and Ken asks her how many miles are on the c

Business names, Business Names:                             If a compa...

Business Names:                             If a company has a place of business in Kenya and carries on business under a business name which does not consist of its corporate

Lanuzzi v. Phillip Morris_IRAC, Mrs. Lanuzzi began smoking in 1951 when she...

Mrs. Lanuzzi began smoking in 1951 when she was fifteen. She smoked two packs a day until her death from lung cancer in 1984. She had tried several times, unsuccessfully, to quit.

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