#corporatelaw #reemabaruah
The Doctrine of Ultra Vires is a legal principle that states that a company can only do things that are within the scope of its powers. If a company does something that is outside of its powers, then that act is void and unenforceable.
The Doctrine of Ultra Vires is based on the idea that companies are artificial legal persons, and as such, they cannot have any powers that are not specifically granted to them by law. The Memorandum of Association (MOA) and Articles of Association (AOA) of a company are the documents that define the company's powers.
The MOA is a public document that is filed with the government when a company is formed. It contains the company's name, registered office, and the objects for which the company is formed. The AOA is a private document that is not filed with the government. It contains the company's internal rules and regulations, such as the voting rights of shareholders, the appointment and removal of directors, and the distribution of profits.
If a company does something that is outside of the scope of its powers, then that act is void and unenforceable. This means that the company cannot sue or be sued on the contract, and the other party to the contract cannot enforce the contract against the company.
There are a few exceptions to the Doctrine of Ultra Vires. One exception is that a company can ratify an ultra vires act, provided that all of the shareholders consent to the ratification. Another exception is that a company can be estopped from denying its authority to do something, if it has represented to a third party that it has the authority to do it.
The Doctrine of Ultra Vires is an important principle of company law. It helps to protect the interests of creditors and shareholders by preventing companies from entering into contracts that they cannot fulfill. It also helps to ensure that companies are run in a responsible and orderly manner.