TNAG-1645-FCO40-2292-Company-law-reform-in-Hong-Kong-Companies-(Amendment)-(No.-2-1987 — Page 130

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2.9

We agree with the Jenkins Committee that there should be no

general repeal of the ultra vires doctrine, and recommend that changes

in the existing law of ultra vires in relation to companies should be

limited to the enactment of a section similar to section 9(1) of the

European Communities Act 1972."

14.3

When the Companies (Amendment) Bill was published as a

White Paper in 1980 it contained a proposed new Section 6A implementing

the Companies Law Revision Committee's recommendation, but in a

considerably revised form, as follows:

"6A. (1) The validity of a transaction entered into by

a company after the commencement of the Companies

(Amendment) Ordinance 1980 shall not be impugned

by the company by reason of the fact

(a) that the transaction was not

within the capacity of the

company; or

(b) that the directors of the company

have exceeded their powers under

the memorandum or articles,

unless the other party to the transaction had

actual notice of the existence of that fact.

(2) Where a party to such a transaction has actual

notice of provisions of the company's memorandum

or articles which give rise to any such fact as is

mentioned in subsection (1) he shall nevertheless

be treated for the purposes of that subsection as

not having actual notice of the existence of that

fact if he shows that he did not understand those

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