The Role of Object in The Capacity of Commercial Companies in English Law With a Look Into The Iranian And Australian law

In the past, capacity of companies in the UK and Australia based on the rule of ultra vires, was limited to the object. This rule which was applied to protect the rights of partners, was not compatible with the business world which required speed and security in commercial trades. Now with the advent of economic development, countries seek to reduce the complicated legal forms and to use the simple forms, to guarantee the speed and security in trades. In this regard, in the UK and Australia unlimited capacity is given to companies and capacity is not limited to object. In Iran explicit regulations do not exist and most lawyers, based on the principle of expertise, limit the capacity of company to its object. The new bill of Commercial Code has not provided a solution for this problem. Existence of companies with wide range of objects in one hand and lack of a strong and effective supervision of the company on the other hand shows that the limitation of capacity is not an appropriate tool to monitor companies’ affairs. In this article we try to study legal developments regarding the capacity of company in English legal system; and with a look at Australian and Iranian law, we analyze effects of limitation of capacity of company on trade relations and rights of partners.