The Limits of Corporate Power: A Comparative Analysis of Trading Powers and the Ultra Vires Doctrine in both Common and Civil Law Jurisdictions

The courts created the ultra vires doctrine to restrict a registered company's authority to the things specified in its objects clause. It states that any action that went beyond those goals was not just outside the company's capabilities but also void, meaning it had no impact at all. This paper examines the effect of the ultra vires doctrine on the trading powers of a company at both common and civil law jurisdictions and the impact of the statutory reforms across jurisdictions aimed at reducing its deleterious effect on corporate transactions entered into by company in violation of the doctrine. The doctrinal research method was used. Reliance was placed on primary sources such as companies acts in jurisdictions in focus and relevant case law. Secondary sources such as journals both online and offline were used in the research. It also employs a comparative functional approach in analysing the applicable law in the selected jurisdictions. It was found that the doctrine had hitherto a strong hold on the trading powers of the company which have now been whittled down a great deal and in some cases relaxed to enable full realisation of the power of a natural person which a corporation should have. It comes to the conclusion that as the doctrine of constructive notice is abolished, a company should be allowed to enjoy the liberty to contract without worrying about being constrained by the ultra vires doctrine.