Doctrine Of Ultra Vires

Ultra vires doctrine in the companies act 1965.

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. Section associated with the doctrine of ultra vires of the companies act is section 20 1 20 2 a b c and 20 3. There are three types of ultra vires acts which. The ultra vires doctrine is a kind of insurance policy that reassures a company s shareholders and creditors that the company will not use their assets or funds for any purposes other than those that are afforded to it and specified within the ultra vires doctrine.

The earliest legal view was that such acts were void. Beyond the powers is a latin phrase used in law to describe an act which requires legal authority but is done without it. It states that the objects of a company as specified in its memorandum of association can be departed from only to the extent permitted by the act. Though largely obsolete in modern private corporation law the doctrine remains in full force for government entities.

In this case the directors of the company i e ashbury railway carriage iron co. Acts that are intra vires may equivalently be termed valid and those that are ultra vires termed invalid. The doctrine of ultra vires is the basic doctrine in administrative 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.

The doctrine of ultra vires is a fundamental rule of company law. The doctrine of ultra vires however has its genesis in the english case of ashbury railway carriage and iron company ltd vs riche. Types of ultra vires acts. The doctrine of ultra vires could not be established firmly until 1875 when the directors c of the ashbury railway carriage and iron company limited v hector riche 1874 75 l r.

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 envisages that an authority can exercise only so much power as is conferred on it by law. The doctrine of ultra vires played an important role in the development of corporate powers. An ultra vires act is one beyond the purposes or powers of a corporation.

The doctrine of ultra vires is which adopted from a latin word is the basic doctrine in the law of administration meaning beyond its power or beyond the power of any type of action or any transaction beyond the scope of any organization mainly the company or the authority endowed upon a manager of the company will fall under the ambit of the doctrine of ultra vires and will be.