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

Define accession and ratification, Define  Accession and ratification ...

Define  Accession and ratification Another area/aspect that needs to be highlighted with regards to a Treaty is the difference between signing and ratifying a particular treaty

Perpetual succession, Perpetual Succession:                      Accor...

Perpetual Succession:                      According to the Concise Oxford Dictionary, "perpetual" means, inter alia, "applicable, valid, for ever or for indefinite time " wh

Name the legislations passed regarding state succession, There are certain ...

There are certain legislations passed regarding state succession. For example, The continuance of legal Proceedings Act 1950; The Pakistan Currency Act 1950; The Pakistan

Discuss the professional and ethical issues, John, a young CPA and one of t...

John, a young CPA and one of the audit team members for Moulberg Electrical Appliances Ltd, has developed very good insights into the company's systems in the last 12 months and wa

Re london and general bank, RE LONDON AND GENERAL BANK:           An a...

RE LONDON AND GENERAL BANK:           An auditor represented a confidential report to the directors calling their attention to the insufficiency of the securities in which the

State article 22 of air and outer space law, State Article 22 of air and ou...

State Article 22 of air and outer space law Article  22  states  that  all  the  States  should  prevent  unnecessary  delays  to  aircraft,  crews, passengers and  cargo,  esp

Advantages - take-over bid, Advantages - Take-over bid: A non-acceptin...

Advantages - Take-over bid: A non-accepting shareholder who applies to the court to set aside the proposed compulsory acquisition of his shares under s.210 will fail unless he

Purpose of a trial period in a contract of employment, QUESTION 1 S.38(...

QUESTION 1 S.38(2) and S.38(3) of the Employment Relations Act require that an employee should be given the "opportunity to answer the charge" before the employer decides to te

State article 2 of air and outer space law, State Article 2 of air and oute...

State Article 2 of air and outer space law Article 2 states that for the purposes of this Convention the territory of a state shall be deemed to be the land areas and territori

Financial year of holding company and subsidiary, Financial Year of Holding...

Financial Year of Holding Company and Subsidiary: S.153(1) provides that a holding company's directors shall ensure that, except where in their opinion there are good reasons

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