Companies Act 2014 section 1240

Capacity not limited by the constitution of an unlimited company

Section 1240 establishes that the actions of an unlimited company cannot be challenged simply because they fall outside the scope of the company's stated objects, while preserving certain safeguards for members and directors.

• An unlimited company's acts cannot be invalidated on the grounds that they exceed the company's stated objects
• Members may seek a court order to prevent an act that would otherwise be beyond the company's capacity, but not where the act fulfils a legal obligation arising from a previous act of the company
• Directors must still observe the limitations set out in the company's objects, and any action beyond those limits can only be ratified by special resolution
• Third parties dealing with an unlimited company are not required to check whether a transaction falls within the company's objects