The Doctrine of Ultra Vires is a legal principle primarily applicable to corporate and administrative law. The term "ultra vires" is derived from Latin, meaning "beyond powers." Under this doctrine, any act or decision taken by a corporation, organization, or individual that exceeds the powers granted to them by law or their governing documents is considered invalid and unenforceable.
Key Features of the Doctrine:
- Corporate Law Application:
In corporate law, this doctrine ensures that a company acts within the scope of its Memorandum of Association (MOA) or Articles of Association (AOA).
Acts beyond the objects or purposes specified in the MOA are deemed ultra vires and, hence, void.
- Purpose:
Protects shareholders by ensuring the company's capital is used only for authorized purposes.
Safeguards creditors by preventing misuse of the company's assets.
- Administrative Law Application:
In administrative law, the doctrine limits the actions of public authorities to those explicitly authorized by the constitution or statute.
Any administrative action beyond their legal authority is ultra vires.
- Types of Ultra Vires:
Substantive Ultra Vires: When an act goes beyond the powers defined in the company's or authority's constituting documents.
Procedural Ultra Vires: When an act is performed without following the required legal procedures.
Legal Implications:
- Nullity of Actions:
Any ultra vires act is null and void. It cannot be ratified or enforced, even with the consent of all stakeholders.
- Personal Liability:
Directors or officers who commit ultra vires acts may be held personally liable.
- Judicial Review:
Courts can declare ultra vires actions as invalid upon a challenge by an interested party.
Example in Corporate Law:
If a company is incorporated to engage in manufacturing but starts investing in speculative stock trading without authorization in its MOA, such activities would be ultra vires and void.
Example in Administrative Law:
If a government department imposes a tax without legislative authorization, the imposition would be ultra vires and subject to judicial review.
The Doctrine of Ultra Vires emphasizes adherence to the boundaries of authority and prevents misuse of powers by entities or individuals.
मुख्यतः कम्पनी र प्रशासनिक कानुनमा लागू हुने कानुनी सिद्धान्त हो। "Ultra Vires" ले ल्याटिन भाषामा "क्षमताभन्दा बाहिर" भन्ने अर्थ दिन्छ। यस सिद्धान्तअनुसार, कुनै कम्पनी, संगठन, वा व्यक्तिले कानून वा तिनको नियमावलीमा उल्लेखित शक्तिभन्दा बाहिर गएर गरेको कुनै पनि काम अवैध र अमान्य मानिन्छ।
