Ancillary Powers: a bona fide board opinion brings related activities intra vires, so ancillary contracts are upheld.

The text explains that where a company's objects clause authorises activities that are advantageous in the board's bona fide opinion, those activities fall within the memorandum and are intra vires. The board (or chairman under properly delegated authority) may lawfully conclude an activity is ancillary or conducive to the company's existing business; such a conclusion brings transactions that turn a company asset or opportunity to account within corporate powers. Applied to a commission for introducing bridging finance, the activity was ancillary and not a new separate business, so the contract is intra vires and upheld.

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Issues: Whether the contract under which the plaintiff company claimed a commission of 20,000 was ultra vires the plaintiff company and therefore void.

Analysis: Clause 3(c) of the plaintiff's memorandum authorised the company "to carry on any other trade or business whatsoever which can, in the opinion of the board of directors, be advantageously carried on by the company in connection with or as ancillary to" its general business. That provision, read with sub-clauses (q) and (u), includes powers to "turn to account" and to do things incidental or conducive to the company's objects. The bona fide opinion of the board (or of the chairman acting under properly delegated board authority) that an activity is advantageous in connection with the company's business is sufficient to bring the activity within the memorandum. The particular transaction - introducing a financier to obtain bridging finance which assisted the company's development operations and turned a valuable asset (knowledge of finance sources) to account - fell within sub-clauses (c), (q) and (u) and did not amount to embarking on a new, separate business or abandonment of the company's main objects. Earlier authorities on substratum and ultra vires do not displace the clear effect of an objects clause qualified by the board's opinion where the activity genuinely relates to and is ancillary to the company's existing business.

Conclusion: The contract was intra vires the plaintiff company; the appeal is allowed and the preliminary point decided in favour of the plaintiff company.

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