| dc.description.abstract | Ultra Vires (hereinafter “UV”) is the doctrine which confines the capacity of companies to their objectives. Originated in English law, UV was believed to be applicable in its full rigor in Sri Lanka for more than a century, until it was said to be partially abolished through the Companies Act No.7 of 2007.
Be that as it may, the majority decision of the Supreme Court of Sri Lanka in People’s Bank v. Yashodha Holdings (Pvt) Ltd. seriously calls in to question, the long-lived credence that UV was part of Sri Lankan corporate law, at least, as far as the Companies Act No.17 of 1982 is concerned. Focusing on this controversial decision, this paper examines whether the application of doctrine of UV in Sri Lanka remains a controversial watershed.
While the Companies Act No.7 of 2007 has partially abolished UV, the Yashodha Holdings decision has the potential of (mis)construing the legal position that courts in Sri Lanka have undermined the application of UV even under a legal regime which had not abolished it. This might constitute a call for the present courts to take the same approach. The main objective of this paper is to resolve this point. Through an extensive doctrinal research, the paper examines the status, scope and application of the doctrine of UV under the current Sri Lankan law while pointing out, with all due respect, that the reasoning of the majority decision in Yashodha Holdings is inexact and unsound. | |
