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

Void contracts - law of contract, Void Contracts - Law of Contract Whe...

Void Contracts - Law of Contract Whereas  the Infant's Relief Act 1874 of the UK applies to the US as a statute of general application such was in force in the UK on date 12 A

Analyse the major changes brought to industrial relations, Question 1: ...

Question 1: Critically analyse the major changes brought to Industrial Relations by the Employment Relations Act 2008? Question 2: Write short notes on the followings:

Effect of voluntary winding up, Effect of Voluntary Winding Up: The ma...

Effect of Voluntary Winding Up: The main difference in legal consequences between a compulsory and voluntary winding up are: (a) A voluntary winding up commences on the day

Problem question in law, how do i answer a problem question in law about th...

how do i answer a problem question in law about the law of contract

Explain court of final appeal arrived, Read Fateh Muhammad v Commissioner o...

Read Fateh Muhammad v Commissioner of Registration [2001] 2 HKLRD 659 which can be found in the westlaw HK website of our library database in which there is a summary of what the c

Which two fundamental treaties that provide substantive law, Which two fund...

Which two fundamental treaties that provide substantive law Agency Statute The International Atomic Energy Agency Statute 1957 (IAEA) and the Nuclear Non-Proliferation Treaty 1

Preferential debts, PREFERENTIAL DEBTS: These unsecured debts which ra...

PREFERENTIAL DEBTS: These unsecured debts which rank ahead of a floating charge and non-preferential debts are: (a) one year's taxes, i.e. corporation tax, PAYE income tax de

State articles of universal declaration of human rights, Normal 0 ...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Powers of managing director, Powers of Managing Director:             ...

Powers of Managing Director:             Article 109 offers that "the directors may entrust to and confer upon a managing director any of the powers exercisable by them upon s

Alternative dispute resolution, "The liability of third party neutrals has ...

"The liability of third party neutrals has been a topic of concern ever since the formalisation of dispute resolution in Australia.  Although there are no known cases in Australia

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