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

Implementation of open method of coordination, Implementation of open metho...

Implementation of open method of coordination It is emphasised that OMC might contribute to the dissemination of best practice in the implementation of national development po

Explain passive personality principle, Explain passive personality principl...

Explain passive personality principle passive personality principle states that jurisdiction may be exercised in respect of events occurring outside a State's own territory whe

Reserve capital, RESERVE CAPITAL: The reserve capital is defined by S....

RESERVE CAPITAL: The reserve capital is defined by S.62 of the Act as the portion of the issued but uncalled capital of a limited company which the company's members, by speci

Challenging an arbitral award, Challenging an Arbitral Award Conversel...

Challenging an Arbitral Award Conversely a party dissatisfied through an arbitral award any challenge that it in the High Court and the High Court might set it aside whether i

Quantifying phoenix activity, Many stakeholders emphasised that it would be...

Many stakeholders emphasised that it would be difficult to quantify phoenix activity as phoenix operators are very skilled at 'flying under the radar'. Impacts, beyond those listed

Articles of partnership - authority of partners, Articles of Partnership - ...

Articles of Partnership - Authority of Partners The relations of partners to one other are governed through the Articles of Partnership.  Like third parties are not allowed fo

Employment law, Humungus Retailing Co is a large retailing organization th...

Humungus Retailing Co is a large retailing organization that has expanded rapidly over the last 2 years. It now has some 50 high street outlets each employing a small core of ful

Law and morality, Law and Morality: Since morality contain of prescrip...

Law and Morality: Since morality contain of prescriptions of the society and is not enforceable, hence rules of law are enforceable.  However wrongs in society are contraventi

restraint of trade clause, a) Explain two scenarios in which a restraint o...

a) Explain two scenarios in which a restraint of trade clause would typically be used. b) Suppose your employer wanted to include a restraint of trade clause in your employment

Principles and presumptions of construction, Principles and Presumptions of...

Principles and Presumptions of Construction: However in the course of settling some of these disputes the courts in England have elaborated the rules that they will utilized i

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