Doctrine of Ultra Vires

Pvt ltd 1609 views 4 replies

Is borrowing power of a private Ltd. company should be specified in MOA? My company has lend a sum of Rs. 1.00 lakh to a private ltd. company. However, now we are being adviced, since borrowing power is stipulated in Articles of the company and not in Memorandum, the act is Ultra Vires and as such not enforceable in the court of law.

 

I want the advice from experts about the case. Can I have any judgement as my reference for my claim?

Replies (4)

I understant to borrow money in furtherence of company's objects is company's inherent power and need not to be mentioned in AOA or MOA. Further, if Table A is not debarred by your MAOA, the provisions of Table A automatically applies which allows the same.

Regards- Sudhir

Firstly, you should see what is the business of the company ? If the main activity concerns with borrowing or lending or if the borrowing-lending is done for the profit making purpose, then definitely it should be mentioned in the objects of the company in MOA.

However, in general course of business, borrowing and lending power is given by the Articles of the company to its BOD. So mentioning the same in MOA is not compulsory.

Originally posted by : Shridhi Jain

Firstly, you should see what is the business of the company ? If the main activity concerns with borrowing or lending or if the borrowing-lending is done for the profit making purpose, then definitely it should be mentioned in the objects of the company in MOA.

However, in general course of business, borrowing and lending power is given by the Articles of the company to its BOD. So mentioning the same in MOA is not compulsory.

 

 

I  Agree with Shridhi.

Borrowing powers of company are deemed to be inherent for a company to carry out its activity.

So such borrowing / lending power for pvt ltd will be part of articles and not necessary be repeated in MOA.

That in this case does not mean ultravirus act of the company.

The articles can have the limits upto which it can borrow or lend, so ensure that limits

does not exceed if clause is as such in the articles mentioned.

 

Other views welcome.

 

regards

Santosh Shah

Originally posted by : Shridhi Jain

Firstly, you should see what is the business of the company ? If the main activity concerns with borrowing or lending or if the borrowing-lending is done for the profit making purpose, then definitely it should be mentioned in the objects of the company in MOA.

However, in general course of business, borrowing and lending power is given by the Articles of the company to its BOD. So mentioning the same in MOA is not compulsory.


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
Featured 28 March 2026
CA Final

Ashok Amol & Associates

New Delhi

CA Final

View Details
Company
Featured 14 April 2026
GST CONSULTANT

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 19 March 2026
Article Assistant

Gupta Sachdeva & Co. Chartered Accountants

New Delhi

CA Final

View Details
Company
Featured 28 March 2026
Accountant

Ashok Amol & Associates

New Delhi

B.Com

View Details
Company
Featured 14 March 2026
Article Trainee

N N V Satish&co

Hyderabad

CA Inter

View Details
Company
Featured 13 April 2026
GST CONSULTANCY

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 12 March 2026
Customer Relationship Executive

TAXLET

Calicut

B.Com

View Details
Company
Featured 14 March 2026
Associate CA

N N V Satish&co

Hyderabad

CA

View Details