The correct answer is B. Ultra vires.
Ultra vires is a Latin phrase that means “beyond the powers.” In the context of corporate law, it refers to a situation where a company acts outside of the powers granted to it by its memorandum of association. This can happen when a company enters into a contract that is not authorized by its memorandum of association, or when it takes on a debt that is not authorized by its memorandum of association.
If a company acts ultra vires, the contract or debt may be void. This means that the company may not be able to enforce the contract, or that the other party to the contract may not be able to enforce the debt. In addition, the directors of the company may be personally liable for the debts that the company incurs.
There are a few ways to avoid acting ultra vires. One way is to make sure that the company’s memorandum of association is up-to-date and accurately reflects the company’s activities. Another way is to obtain the approval of the shareholders before entering into a contract or taking on a debt.
If you are unsure whether a particular action is ultra vires, you should consult with a lawyer.