The Effect of Transcending the Scope of Activities of Joint- stock Companies by their Directors:A Comparative Study in Iranian and English Law

One of the issues that have caused debates in various legal systems is the effect of transcending the scope of activities of business companies by their directors. British law in this area has undergone a marked transformation. In the past, legal acts outside the scope of the activities of the company under "Ultra vires Rule" were considered void. However, today, the rule is more flexible in practice and if the legal actions of the company’s directors with contracting third parties are beyond the scope of the activities of the company, such legal acts will be binding on the company. In Iranian law, many lawyers, by accepting and applying the "Principle of Expertise", believe that the scope of the activities of the company should be considered a form of limitation of the jurisdiction of such legal persons, and, as a result, legal actions beyond the limits of the said should be considered absolutely void and irrevocable. Considering the rules of the British legal system, as well as the Iranian trade law and its amending law, indicates the necessity of legislative reform in Iran.