Company On Behalf Of The Directors Of Ultra Vires Problem

With the development of company, the power of company concentrates on the board of directors gradually. The representative director (s) possesses wide range of power. Because the application of his authority and power will have a heavy impact on his company and the third -party, how to decide the effect of the representative director's acts which has done beyond his authority and how to prevent these acts become an important theme in the perfection of corporate government structure.Though our country has enacted Company Law, it still lacks in detailed and practicable stipulations. After researching on the relevant foreign countries' stipulations and our companies' operation, the author provides some suggestions on prevention of representative director's power exceeding.This article, which is totally 31090 words, is divided into four parts. The author adopted method of comparison, method of historical analysis, etc. to his research.The first part is about the representative power of director. It begins with the relatiqnship between director and company and expounds the responsibility of the director. As representative of company, what kind of power dose the director own? What action can the director take on behalf of the company?Secondly, why dose the director exceed his power? There are lots of reasons, including some about the system of company and some about the company's actual operation. The author summarizes them into three aspects, i.e. system reason, economic reason, supervisory reason.Thirdly, director exceeds his power and authority and the legal liabilities. With respect to the director's acts of exceeding power and authority, we can't judge them void according to the Doctrine of ultra vires or valid. The right method is that their effectsdepend on whether the third party is in bona fides. If the appearance of the director's acts make the third party think he has power and authority, and the third party trust him and do business with' him, the director's acts shall be considered as the company's ones. Otherwise the acts shall be judged as legal ones between the director and the third party (i.e. non-authority representation in narrow sense). Given the director have faults in his acts, he shall be imposed some legal liabilities. This paragraph's emphasis is how to judge the bona fides of the third party.Fourthly, how to prevent directors exceed their power and authorities. This part is the purpose of the article. The author provides some advises to make up the defects of our Company Law.