Can a director or officer be stopped from acting beyond authority?

Corporate Legal Consultancy

Yes. Section 138 of the Companies Act allows a shareholder to seek court relief restraining a director or officer from unauthorized action on behalf of the company.

Examples

  • entering a transaction without required approval
  • disposing of assets beyond delegated authority
  • acting contrary to the Articles
  • disregarding valid shareholder restrictions
  • undertaking an unauthorized corporate act

Authority issues can be more complex where a third party dealt with the company in good faith.

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