Companies Act 2014 section 1183

Capacity not limited by a CLG's constitution

Section 1183 deals with the principle that a company limited by guarantee (CLG) cannot have its actions invalidated simply because those actions fall outside the scope of its stated objects.

• A CLG's acts cannot be declared invalid merely because they go beyond what its objects clause permits — third parties dealing with the CLG are protected.
• Members may seek a court order to prevent an act that exceeds the CLG's objects, but not if the CLG is already legally obliged to carry out that act because of a prior commitment.
• Directors remain duty-bound to respect the limitations in the CLG's objects, and any act that would otherwise exceed the CLG's capacity can only be ratified by a special resolution.
• A ratifying special resolution does not relieve directors or others of personal liability — a separate special resolution is needed if the CLG wishes to waive such liability.