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Section 44 Companies and Allied Matters Act 2020

Section 44 CAMA 2020

Section 44 Companies and Allied Matters Act is about Effect of ultra vires acts. It is under Chapter 1 (Capacity and Powers of Companies) of PART B (INCORPORATION OF COMPANIES AND INCIDENTAL MATTERS) of the Act.

Effect of ultra vires acts

(1) A company shall not, carry on any business expressly prohibited by its memorandum and shall not exceed the powers conferred upon it by its memorandum or this Act.

(2) A breach of subsection (1), may be asserted in any proceeding under sections 344-358 of this Act or under subsection (4) of this section.

(3) Notwithstanding the provisions of subsection (1), no act of a company, conveyance or transfer of property to or by a company shall be invalid by reason of the fact that such act, conveyance or transfer was not done or made for the furtherance of any of the authorised business of the company or that the company was otherwise exceeding its objects or powers.

(4) On the application of—
(a) any member of the company, or
(b) the holder of any debenture secured by a floating charge over all or any of the company’s property or by the trustee of the holders of any such debentures, the Court may prohibit, by injunction, the doing of, any act, conveyance or transfer of any property in breach of subsection (1).

(5) If the transactions sought to be prohibited in any proceeding under subsection (4) are being, or are to be performed or made pursuant to any contract to which the company is a party, the Court may, if it deems the same to be equitable and if all the parties to the contract are parties to the proceedings, set aside and prohibit the performance of such contract, and may allow compensation to the company or to the other parties to the contract for any loss or damage sustained by them by reason of the setting aside or prohibition of the performance of such contract but no compensation shall be allowed for loss of anticipated profits to be derived from the performance of such contract.

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