Question

Question 3

1. The parties to a contract are clothed with rights and obligations. These have certain effects on the parties. Each worker will vary by contract. Analyse how the effect of the ultra vires of directors could affect a company.

2. This duty is absorbed by another department. How does the principle of ‘lifting of the corporate veil’ in Company Law apply in Company Law?

                                                                                   

3. Certain documents are necessary to the registration of companies. Without these

documents the registration will not be complete. Critically analyse the legal effect of the Memorandum of association and Articles of association (Constitution) of a Company.                                                                                                                                                                                                                                   

Answer 1

Answering the first question as HOMEWORKLIB Guidelines:

1. Ultra vires act are the acts which lie beyond the scope of operation of the organization. However the shareholders are given leverage over the same. Usually if there is an act ultra vires the company, then it cannot be ratified by anyone. However if the act is ultra vires the directors of the company then the members of the company have the power to pass a resolution to ratify the same. This is probably done if the act is hampering the general flow of operations in the company. The directors use their ultra vires power to bring a path-breaking resolution in the company. However if the majority of company is not in favor of the same, they have the power to ratify it by passing a resolution.