The Doctrine Of Ultra Vires

•The Limited Liability Act was subsequently passed in 1855. This introduced the concept of general limited liability for shareholders i.e.their liability for the company’s debts, if it became bankrupt, was limited to the amount of share capital which they had invested. It was felt important that the company’s creditors should be aware of the limited liability status of the company, and the requirement for companies to have “limited” or “ltd” in their name dates from this time.

The Act dictated that relevant supervisory agencies ensure depository banks fulfill the credit and lending needs in the areas in which they were chartered. The Act goes on to state that all business must continue to be conducted within sound operating practices. Compliance (or lack thereof) would be taken into account when approving applications for expansion through new charters, mergers and acquisitions. The law makes no attempt to evaluate the performance of any given institution, nor does it establish minimum criteria for granting an individual or business a loan. The CRA does not mandate that an institution take on any particular types of loans, or approve certain applicants.

-Where no amount was stated the court focused on the grossly undercapitalized (THE STANDARD) corporation in order to defraud and harm creditors

Tomasic, R. Jackson, J. & Woellner, R. (2002). Corporations Law: Principles, Policy and Process. 4th ed. Sydney: Butterworths

“Corporations are said to be “creatures of statute;” they exist because state laws allow human beings to organize themselves into entities that separate ownership and management functions as the outline above delineates. The business rule is there a presumption that making a business decision, the offices act in good faith with the belief that their actions is what is best for the company (Halbert/Ingulli, 2012 pg. 31).”

Ever since the outset of the industrial revolution, corporations have been an inherent constituent in American society. However, due to this heavy influence, corporations have ever since created a struggle with individuals for social, political, and economic power. At present, this issue is only being addressed at the economic level. Presidential candidates such as Donald Trump and Hillary Clinton are putting a considerable amount of attention towards corporate taxes but are neglecting the legal aspects of corporate personhood. The main issue besetting the United States as a whole, is legal reform among corporations because it is affecting the political values, freedoms, and security of the American people.

its owners and managers, like a real person, to conduct business in its own name, acquire

In addition (Chen-Wishart n.d), notes that a company is categorized as a legal personal and operates as distinct from its shareholders. Based on these statements, Betty had not right to act on behalf of Bechdo Pty Ltd and Bechdo has the capacity to sue Betty for acting contrary to the company constitution. Based on the case study, Betty had breach the contract which existed between her and the company laws. If an act carried is outside the objects for which the company was founded to as contained in the company’s memorandum of association which is this case is the company’s constitution, then the acts are deemed to be ultra vires. In other words, the acts are beyond the capacity of the organization. In addition, contracts which are deemed ultra vires are categorized as void (Palmiter 2009, p.59). This can be referenced to Ashbury Railway Carriage and Iron Co v Richie 1875. The doctrine of ultra vires which have deemed the contracts between Bechdo Pty Ltd and BB Ltd, Jillo Pty Ltd, and Con Development Ltd as void has been applied with the aim of protecting the interests of lenders and company shareholders. As noted by Chen-Wishart (n.d), ultra vires is necessary in protecting the interest of its shareholders who depend on objective clause of the constitution to limit the acts in which their money may be used.

United States, the courts look at whether there was an identity of interest between creditors and shareholders and the timing of the advances during the corporation’s organization. They test for a debtor-creditor relationship based off a enforceable obligation to pay a fixed amount of money. They look at the motivation of the taxpayer to see if the advances were made for ulterior tax purposes. If repayment was contingent upon the success of the company advances were made toward, it would be more than likely considered equity than loans. This case also adds that because no promises were made to repay at a fixed interest rate or certain time, and did not pay interest and gave no security for the advances made, the case sees the taxpayers as the sole shareholders gaining equity in the

(b) Establish the rules of reorganization for firms with projected cash flows that eventually will be sufficient to meet debt payments.

The law gives corporate managers a great deal of flexibility in determining their capital and governance structure, relying on the market for capital to create competition that will allow shareholders to "choose" the one they think is best.

In order to analyses the statement that “our current insolvency laws put too much focus on penalizing and stigmatizing the failures,” the purpose of insolvency laws and the situation of the laws should be acknowledged first.

William O. Douglas said, “Common sense often makes good law.” Well that is what laws essentially are, rules and regulations that make sure common sense is followed. One could even say that laws are enforced ethics. Laws serve several roles and functions in business and society, and this paper will discuss those roles and functions.

Foss v Harbottle case was a foundation of development of derivative action that enables a minority shareholder to bring a legal action in order to recover from a wrong done to the company. Two principles, so-called Foss v Harbottle rule, were made to corporate law in related to a minority shareholder’s right. The first principle was the internal management rule preventing floodgates open to multitude actions by individual shareholders dissatisfied with operation of a company. Under the internal management rule, complaining on internal management by minority shareholders was taken by a board of directors. A decision for the complaint was also decided by the majority rule. The second principle was the proper

This doctrine has been seen as a “two- edged sword,” reason being that at a general level while it was seen as a good decision in that by establishing that corporations are separate legal entities, Salomon 's case endowed the company with the entire requisite attributes with which to become the powerhouse of capitalism. At a particular level, however, it was a bad decision. By extending the benefits of incorporation to small private enterprises, Salomon 's case has promoted fraud and the evasion of legal obligations.