Doctrine of ultra vires

The doctrine of ultra vires, which is a Latin term meaning "beyond the powers," is a legal principle that limits the actions of corporations and other entities to the powers and purposes set out in their articles of association or governing documents.

Under this doctrine, any actions taken by a corporation that are outside the scope of its legal powers or purposes are considered invalid and unenforceable. For example, if a company's articles of association limit its business activities to manufacturing and selling shoes, any attempt by the company to invest in real estate would be considered ultra vires and therefore unlawful.

The doctrine of ultra vires is designed to protect the interests of shareholders and other stakeholders by preventing corporations from engaging in activities that are beyond their legal powers or that might be harmful to their financial health. It also provides a framework for holding directors and officers accountable for their actions by requiring them to act within the scope of their legal authority.

In many jurisdictions, the principle of ultra vires has been largely superseded by modern corporate law, which generally allows companies greater flexibility in their business activities. However, the doctrine may still be relevant in certain situations, such as when a company seeks to engage in a highly unusual or risky business venture or when there is a dispute over the authority of a company's directors.