Companies Act 2014 section 973

Capacity not limited by a DAC's constitution

Section 973 establishes that a designated activity company's (DAC's) legal capacity to act is not limited by the objects set out in its constitution, while preserving the duty of directors to respect those objects.

• A DAC's actions cannot be invalidated solely because they fall outside the scope of its stated objects
• Directors must still observe limitations arising from the DAC's objects, and any action beyond those objects can only be ratified by special resolution
• Ratification of an ultra vires action does not relieve directors or others of liability — a separate special resolution is needed for that
• Third parties dealing with a DAC are not obliged to check whether a transaction falls within the DAC's objects