The directors of Usafi Ltd. Diverted some funds meant for the extension of the commercial wing of the company‟s business premises to fund the expensive wedding of a son of one of the directors. At that particular time Juma was eth secretary. Eventually became a director. At Juma‟s very first board meeting, the earlier breach was ratified. To what extent, would Juma be liable for the earlier breach.

The act of Usafi Ltd was ultravires in the wides sense which is nothing but an abuse of power of the company its officers often described as “Excess of directors‟ or transactions.

• Ultravires the directors or transactions the objects of the company and be ratified members in the general meeting where upon it becomes an enforceable transactions.

• If directors exceed or improperly exercise their powers, their action can be ratified an ordinary resolution of the company in general meeting.

• If they act contrary to the company‟s articles or memorandum, it must be ratified a special resolution.

• In Banford V. Banford (1970) way of defense to a takeover bid, directors allotted 500,000 shares at par for cash to a third company which was the principal distributor of the products of the company to be taken over. The articles provided that the unissued shares were to be at the director‟s disposal. Two shareholders brought an action against the three directors, the third company, and the company, claiming a declaration that the allotment was invalid in that the directors had not acted bonafide in the interests of the company.

• Add; assuming that the allotment was intravires the company and the directors but not bonafide in the interests of the company and therefore voidable, it could after full disclose be ratified an ordinary resolution at a general meeting.

• In the case of Usafi Limited, Juma ratified the earlier breach therefore making the transaction enforceable.

• He therefore cannot be held liable for the earlier breach.

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