Ultra vires (in the context of corporate law)

An exceeding of legal powers. Ultra vires is often classified as narrow or broad, where the action taken is literally outside the scope of the legal powers conferred on the actor; broad, where although the action itself is within the actor’s legal powers, the manner in which it was done is the vitiating factor (as where there was improper motive, unreasonableness, an irrelevant consideration, or abuse of discretionary power).

In corporate law, ultra vires acts of directors may attract penalties contained in the Corporations Act 2001 (Cth). The principle of ultra vires is reflected in the explicit provisions relating to director’s duties within that Act. Given the Act’s specificity, this originating term is rarely used with regard to corporate law. Ultra vires is virtually obsolete in relation to a company as a whole, as there is no longer any mandatory limitation to a company’s powers.

Ultra vires is therefore primarily invoked in two (non-corporate) contexts:

  1. In the judicial review of delegated legislation; and
  2. In administrative law, as a ground for complaints against public bodies and officials (and possibly private bodies), the appropriate remedies are mandamus, declaratory judgment and injunction.