/ˈʌltrə ˈvaɪərɪz/
Ultra vires (Latin: 'beyond the powers') refers to acts done outside the scope of the powers conferred by a company's memorandum of association, its constitution, or by statute. Acts that are ultra vires are void and cannot be ratified. The doctrine protects shareholders and creditors by ensuring companies act within their authorised scope.
Under the Companies Act 2013, the Memorandum of Association (MoA) defines the company's objects. Acts outside these objects are ultra vires. However, Section 4(1)(c) of CA 2013 allows an unlimited objects clause, significantly reducing ultra vires challenges. Directors acting ultra vires may be personally liable.
Companies Act 2006 Section 31 allows companies to adopt unrestricted objects, largely abolishing the ultra vires doctrine for third parties (Section 39 CA 2006 — validity of acts). However, shareholders can still restrain proposed ultra vires acts.
Model Business Corporation Act (MBCA) § 3.04 limits the ultra vires doctrine — acts cannot be challenged on grounds of ultra vires except in specific circumstances (shareholder suit, action by the state, or suit against directors).
Less so since CA 2013 allows unlimited object clauses. However, if a company has a specific objects clause in its MoA and acts outside it, the act remains void and unenforceable. Directors can be personally liable for ultra vires acts causing loss.
No. Unlike voidable acts (which can be ratified), ultra vires acts are void — they have no legal effect and cannot be made valid by subsequent ratification, even by a unanimous shareholder vote.
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