What is the doctrine of ultra vires under the Companies

Solution

The doctrine of ultra vires under company law provides that acts performed by a company beyond its stated powers in the Memorandum are void ab initio and cannot bind the company. The Memorandum defines the company's objects and scope; any transaction outside this scope is ultra vires and unenforceable. Even if shareholders and directors unanimously approve an ultra vires act, it remains void (Ashbury Railway Carriage Co. v. Riche principle). However, the Companies Act, 1956 (Section 43A and others) has relaxed strict ultra vires doctrine, allowing companies wider powers. Innocent third parties who contract with the company have limited remedies; they can claim against directors personally for misrepresentation but not against the company for ultra vires acts.