Effect on the Doctrine of Ultra Vires :Research -Essay Writing Assignment

Internal Code:MAS15

Essay Writing Assignment:

Description: Historically, companies were regarded as having limited legal capacity because they were artificial creations, rather than natural persons. Therefore, in the eyes of the law, a company was seen as capable of engaging only on those businesses and activities for which it had been established and which were identified in its objects clause. By restricting the company’s activities only to those matters set out in its objects, the shareholders and creditors could be fully informed about the scope of the company’s commercial potential. Ultra vires means “beyond the power”. An ultra vires act is beyond the legal power of the holder of the power, and therefore invalid. If a company went beyond the powers stated in its objects clause, it was acting ultra vires. (Business and Corporations Law, paragraph 9.19 at page 504.) Question: Explain the effect on the doctrine of ultra vires of the changes made to Corporations Law from 1 July 1998. Do you agree that the doctrine of ultra vires has been substantially abolished?