2.8 Doctrine of Ultra Vires

The doctrine: an act beyond the company's objects (as the MOA states them) is void — the company cannot ratify what it had no power to do (the Ashbury era — name only). The rationale: creditor-and-shareholder protection (capital only risked in the stated business). The critiques andthe modern cures: the objects-list's fiction (the "independent contractors" clauses), the transaction-costs and third-party injustice; the legislative relaxations — the modern companies statutes' wider objects and the indoor ratification faces; the shareholder-validation practice. Nepal: the Companies Act 2063 requires the MOA's objects, and the doctrine survives in the authority's discipline — acts beyond the constitutional or statutory power do not bind (the TaraPrasad Lamichhane application — 2.2; the guarantee-autonomy's counterpart where a bank guarantee's validity meets the issuer's authority).