s necessarily incidental to such
employment; but it is quite another matter when directors pay dividends
out of capital, or return capital to the shareholders, or spend money of
the company in "rigging" the market, or in buying the company's shares
or paying commission for underwriting the shares of the company except
where such commission is authorized under acts of 1900 and 1907,
incorporated in the Companies Act 1908. Directors who in these or any
other ways misapply the funds of the company are guilty of what is
technically known as "misfeasance" or breach of trust, and all who join
in the misapplication are jointly and severally liable to replace the
sums so misapplied. The remedy of the company for misfeasance, if the
company is a going concern, is by action against the delinquent
directors; but where a company is being wound up, the legislature has,
under the Winding-up Act 1890, provided a summary mode of proceeding, by
which the official receiver or liquidator, or any creditor or
contributory of the company, may take out what is known as a misfeasance
summons, to compel the delinquent director or officer to repay the
misapplied moneys or make compensation. The departmental committee of
the Board of Trade in its report (July 1906) recommended that the court
should be given a discretionary power, analogous to that it already
possesses in the case of trustees under the Judicial Trustees Act 1896,
s. 3, to relieve a director (or a promoter) in certain cases from
liability. This recommendation has been given effect to by s. 279 of the
Companies Act 1908, which provides that, "If in any proceeding against a
director of a company for negligence or breach of trust it appears to a
court that the director is or may be liable in respect of the negligence
or breach of trust, but has acted honestly and reasonably and ought
fairly to be excused for the negligence or breach of trust, the court
may relieve him either wholly or partly from his liability on such terms
as the court may think proper."

Directors who circulate a prospectus containing statements which they
know to be false, with intent to induce any person to become a
shareholder, may be prosecuted under S 84 of the Larceny Act 1861. They
are also liable criminally for falsification of the company's books, and
for this or any other criminal offence the court in winding up may, on
the application of the liquidator, direct a prosecution. As to the
liability of directo