TUTORIAL 3

Corporate Law & Governance

1) Explain the doctrine of ultra vires in company

law. To what extent is it applicable in Malaysia.
Any act by the company that is beyond the cos
object clause is regarded as ultra vires(uv) .
At common law, Ashburys case state an uv
transaction is null and void.
In Malaysia , a transaction is still binding on
the co even if it is ultra vires. But there are 3
exceptions.

3 Exceptions
Section 20(2)(a)
A member can apply to court to stop an uv act.

Section 20(2)(b)
A member or the company may sue the directors/
officers for uv if they breach the object clauses.

Section 20(2)(c)
The minister can petition to wind up the company
if the company acted uv.

2) Discuss the effect of section 33 of the

Companies Act 1965.
Effect of M&A (S33).
Member can enforce provisions in the AA only in their
capacity as a member and not in any other capacity
such as director, solicitor or promoter.
Eley v Positive Government Security Life Assurance Co

The M&A has the effect of binding the members

among themselves
Rayfield v Hands

Outsiders are not privy to the contract and thus cannot

enforce any right.
Eleys case.