Doctrine Of Ultra Vires Diagram
2 an ultra vires act cannot be made intra vires by way of ratification and.
Doctrine of ultra vires diagram. Effect of the doctrine of ultra vires this doctrine mainly exists to protect shareholders and creditors of the company and to set limits on the power of the company and its members. The ultra vires act is completely different from an illegal act. The motive behind the doctrine of ultra vires is to protect the investors and creditors of the company. However both are void.
First th2 ande academic s weighed in. An act ultra vires the company cannot be ratified even by the unanimous consent of all shareholders. Section associated with the doctrine of ultra vires of the companies act is section 20 1 20 2 a b c and 20 3. 1 the doctrine of ultra vires is null and void and cannot be ratified by the directors or the company itself.
Ultra vires doctrine in the companies act 1965. The doctrine of ultra vires is the basic doctrine in administrative law. Summing up the doctrine of ultra vires. 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.
First the academics weighed in and increasingly eminent judges speaking or writing extra judicially have described the doctrine as a fairy tale or a fig leaf and declared its redundancy and lack of. The ultra vires doctrine the sovereignty of parliament and judicial review christopher forsyth i. It is evident from the above research paper that the doctrine of ultra vires plays an important in the companies and the findings are as follows. The doctrine envisages that an authority can exercise only so much power as is conferred on it by law.
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. 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. Hence it is null and void. An action of the authority is intra vires when it falls within the limits of the power conferred on it but ultra vires if it goes outside this limit.
The doctrine of ultra vires has been aptly described by sir william wade as the central principle of administrative law but in recent years it has been subjected to criticism. In case there is an act of ultra vires or if it is seen that the company or its members are acting beyond their powers then the affected party can avail a few remedies.