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Sir as we know that articles can bind the company only with members
Then how articles are able to give powers to directors
Won’t they be able to claim that since we are not members the articles are not binding to us???That’s a fair question. However, if / when a director chooses to ignore any limitation imposed by the Articles on their powers, it would be interesting to see the reaction of the major shareholders when that abuse of power came to light!
In addition, although the ultra vires actions of a director in the course of business will bind the company, that does not absolve the director from personal liability to compensate the company for any loss suffered by the company as a consequence of that excess abuse of power.
OK?
So articles only bind with members
But they also define powers of directors
If they act in breach of it they will have to compensate right??Or face non-re-election the next time when it’s their turn. If it’s a serious breach and recurrent, it could be that the members decide to remove the director by ordinary resolution
OR, if by exceeding the powers, the director’s action result in potential good fortune for the company, the company MAY choose to ratify the director’s abuse
OK?
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