This sounds a bit like a “let bygones be bygones” approach to a company’s ultra vires acts.
The provision is basically saying that a company must not do anything that it is restricted from doing by its memorandum or articles, but that if the company does something that is restricted, that act will not be invalid just because it was prohibited from committing that act.
How do we reconcile section 33 with the decisions in Said v Butt, Einhorn and McFadden?
In McFadden, the directors were acting outside the scope of the company, and for their own interests. They were not acting for the interests of the corporation so they could not be said to be acting under the corporation. We can say, as per s. 33.1, that the directors acted outside of their mandate but the act was saved under s. 33.2. The Court found that the directors were personally liable because they acted on their own. The Court’s decision reveals that s. 33.2 has no teeth because even if 33.2 finds the act to be valid, the Court will still find liability, in this case of the directors not the corporation.
On the other hand, in Einhorn, the brothers committed an act that contravened s. 33.1. S. 33.2 would have saved that act but the Court still considered the Brothers could be separately liable because they had control and it looked like they interfered. In this case the Court pierced the corporate veil to get to the brothers directly. Again, s. 33.2 has to teeth before the Court’s will to find liability.
The exception would be the Said v Butt doctrine which excuses directors when they are acting bona fide under compulsion for the best interests of the company. If a director were to contravene s. 33.1 and have the act saved under s. 33.2, the Court could excuse that act, as long as it was in the interest of the company.
Confusing, still thinking about tying these concepts together.
