The Companies Act does not define the term “misfeasance” used in various
Sections e.g. 166 (b) and 324 (1).
This is a wrongful act or omission committed or omitted by a person charged with a specific
It is neither a crime nor a tort and does not cover acts or omissions of negligence.
It is a contravention of principles of law or equity.
Misfeasance proceedings may be instituted against directors, promoters, liquidator or officers of the company and Courts of Law are empowered to assess the damages payable by such persons for the act or omission e.g. in the course of winding up.
Examples of misfeasances include:
Making of secret profit by promoters or director
Making of improper payments made by promoters or directors
Application by directors of the company‟s assets for anultra vires or illegal object
Payment of dividend out of capital
Making of fraudulent preferences
Sale of company assets at undervalue