What is the doctrine of Ultra Vires
Ultra vires is a Latin phrase which means ‘beyond the powers of’. The doctrine of ultra vires means that a Company cannot act beyond the powers which are conferred to it. The Memorandum of Association states the objects which can be undertaken by a Company. The Articles of Association state the guidelines on which the Company operates.
What is the impact of an Ultra Vires act
Any activity which is ultra vires the Memorandum of Association is void from the time it was entered into. It cannot be ratified by the shareholders. The shareholders can issue an injunction to prevent a company from engaging in ultra vires activities.
What are the exceptions to the doctrine of ultra vires
- An activity which is within the scope of the Memorandum of Association but outside the authority of the directors, can be ratified by the shareholders
- Any activity which is ultra vires the Articles of Association can be ratified by a special resolution at the general meeting
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