Ultra-vires acts can be generally of four types:
- Acts which are ultra-vires to the Companies Act.
- Acts which are ultra-vires to the Memorandum of the company.
- Acts which are ultra-vires to the Articles of the company but intra-vires the company.
- Acts which are ultra-vires to the directors of the company but intra-vires the company.
Acts which are ultra-vires to the Companies Act
Any act or contract which is entered by the company which is ultra-vires the Companies Act, is void-ab-initio, even if memorandum or articles of the company authorized it. Such act cannot be ratified in any situation. Similarly, some acts are deemed to be intra-vires for the company even if they are not mentioned in the memorandum or articles because the Companies Act authorizes them.
Acts which are ultra-vires to the memorandum of the company
An act is called ultra-vires the memorandum of the company if, it is done beyond the powers provided by the memorandum to the company. If a part of the act or contract is within the authority provided by the memorandum and remaining part is beyond the authority, and both the parts can be separated. Then only that part which is beyond the powers is considered as ultra-vires, and the part which is within the authority is considered as intra-vires. However, if they cannot be separated then whole contract or act will be considered as ultra-vires and hence, void. Such acts cannot be ratified even by shareholders as they are void-ab-initio.
Acts which are ultra-vires to the Articles but intra-vires to the memorandum
All the acts or contracts which are made or done beyond the powers provided by the articles but are within the powers and authority given by the memorandum are called ultra-vires the articles but intra-vires the memorandum. Such acts and contracts can be ratified by the shareholders (even retrospectively) by making alterations in the articles to that effect.
Acts which are ultra-vires to the directors but intra-vires to the company
All the acts or contracts which are made by the directors beyond the powers provided to them are called acts ultra-vires the directors but intra-vires the company. The company can ratify such acts and then they will be binding.