Understanding Misfeasance Claims: A Director's Guide

Misfeasance is performing a lawful act improperly, malfeasance is performing an unlawful act, and nonfeasance is failing to perform a required act. Misfeasance often involves good intentions but poor execution or judgment.

Yes, in certain circumstances. If misfeasance involves wrongful trading, breach of fiduciary duty, or fraudulent conduct, directors may lose the protection of limited liability and become personally responsible for company debts and damages.

Coverage varies by policy. Most D&O insurance covers negligent acts but may exclude intentional wrongdoing, criminal acts, or personal profit. Review your policy carefully and consider additional coverage for gaps.

Limitation periods vary by jurisdiction and claim type, typically ranging from 3-6 years from when the cause of action arose or was discovered. Some claims may have longer periods, so seek legal advice promptly if concerned.

Document your concerns, seek independent legal advice immediately, consider your disclosure obligations, and avoid participating in questionable activities. Early action can help minimize liability and protect stakeholders.

Yes, all directors have fiduciary duties regardless of their executive status. Non-executive directors must exercise reasonable care and oversight. However, courts may consider their different roles and access to information when assessing liability.