The Doctrine of Ultra Vires and the Protection of Shareholders, Creditors and Third Parties in Ghana: A Balancing Act
Commonwealth Law Bulletin, Vol. 35, No. 3, September 2009, 535–543
Posted: 25 Feb 2014
Date Written: September 18, 2009
Abstract
The doctrine of ultra vires was at common law invoked to frustrate expectations of innocent parties that entered into transactions with companies outside their object clause. The common law doctrine of ultra vires is applicable in Ghana but with necessary modification under the Companies Code and it is an effective tool for the protection of shareholders, creditors and third party’s interest in the company. Whilst third parties acting in good faith and without notice are protected under the law, shareholders and creditors may restrain the company from dealing with the third party in the case of future transactions. This ensures balance and in any event when an action is instituted the court is obliged to look at the equities involved.
Keywords: Ultra Vires, Company Law, Ghana, Corporate Law, Shareholders, Creditors
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