Doctrine Of Ultra Vires Slideshare

The motive behind the doctrine of ultra vires is to protect the investors and creditors of the company.

Doctrine of ultra vires slideshare. Section associated with the doctrine of ultra vires of the companies act is section 20 1 20 2 a b c and 20 3. Meaning of doctrine of ultra vires. Doctrine of ultra vires under indiancompanies act 1956 presentation by mohit garg nischay bhargava bba 3rd sem a 2. However both are void.

Doctrine ofultra vires s. Lavanya 121202064 slideshare uses cookies to improve functionality and performance and to provide you with relevant advertising. Hence it is null and void. Summing up the doctrine of ultra vires.

The memorandum of association contains the permitted range of activities in its objects clause and a company cannot practice any other activity which is not defined under the scope of objectives mentioned in the memorandum any activity done out of the purview of the memorandum. An act ultra vires the company cannot be ratified even by the unanimous consent of all shareholders. Having seen the rational behind the ultra vires doctrine and the rules developed by courts to temper this doctrine it should be understood that there is always a thin line separating what is incidental or consequential to a certain power already granted and what is clearly ultra vires and as a result there is a lot of subjectivity involved in deciding what is ultra vires and what is not. An act legal in itself but not authorized by the object clause of the memorandum of association of a company or statute is ultra vires the company.

Ultra vires doctrine in the companies act 1965. Under the companies act 1965 ca 1965 the ultra vires doctrine played a limited role in light of section 20 which provides that no act or purported act of a company and no conveyance or transfer of property to or by a company shall be invalid by reason only of the fact that the company was without capacity or power to do the act or to execute or take the conveyance or transfer. Introduction ultra means beyond vires means powers an act of the company which beyond the objects clause. An ultra vires act is void and cannot be ratified even if all the directors wish to ratify it.

Section 20 1 provides no action prosecuted as an act of shall be invalid by reason only the fact that the company does not have the ability or authority to act. The doctrine of ultra vires however has its genesis in the english case of ashbury railway carriage and iron company ltd vs riche. Doctrine of ultra vires. The doctrine of ultra vires applies to the memorandum of association of a company.

If you continue browsing the site you agree to the use of cookies on this website. The memorandum being the constitution of the company sets out the principal objectives powers scope and its area of operation both internal and external. In this case the directors of the company i e ashbury railway carriage iron co. A company therefore can do anything within the scope of the powers specified in the memorandum.