... objects clauses which allowed companies to do anything which the board of directors thought advantageous, including those activities which would strictly be construed as the powers of the company and incidental to the main objects; see Cotman v Brougham (3). The courts then held that as creditors could check a companies documents they were deemed to know or should have foreseen that the act was ultra vires, thus their claims failed. However the courts resurrected ultra vires by reintroducing the concept of 'main' and 'incidental' objects. The Court of Appeal in Rolled Steel Products (Holdings) Ltd v British Steel Corp (4) indicated judicial distaste for the resurgence and as a result the Department of Trade and Industry asked Dr. D. Prentice to 'examine the legal and commercial implications of abolishing the ultra vires rule as it applies to registered companies.' The Companies Act 1989 attempted to give effect to the ...

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