The Memorandum of Association (MOA), also referred to as a company’s constitution, encompasses the powers, scope of work, and crucial objectives of the company. It serves as a guideline for employees to ensure they understand the boundaries to which they must adhere. Any action taken by the company beyond the powers outlined in the MOA is considered an ultra vires act. The Doctrine of Ultra Vires provides assurance to shareholders and creditors that funds and assets will not be misused for activities outside the scope defined in the company’s Memorandum.
This doctrine is foundational in corporate law, stipulating that a company’s activities must align with its stated purposes in the Articles of Association, as permitted by the law. Any action or contract undertaken beyond the authority granted to the directors or the company itself is considered void and not legally binding.
