Doctrines Of Ultra Vires / Constructive Notice / Indoor Management

An ultra vires transaction is void ab initio (void ab initio means “to be treated as invalid from the outset) and therefore cannot become intra vires by reason of ratification. No company can be held liable for obligations arising out of such a contact.
If a director of a company makes an ultra vires payment he is personally liable to the company and he can be compelled to refund the money. In the case of deliberate misapplication, criminal action can also be taken for fraud.

When a company exercises its powers to promote and/or realise any of its objectives stated in the memorandum of association, it is intra vires (i.e. within the powers of) the company. However, any other act of the company which is outside the scope of the objects clause of the memorandum of association is known as ultra vires (i.e. beyond the powers of) the company.

Accounting & Finance for Banking

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Accounting and Finance for Banking Module A Pdf

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