Directors Powers:

Equity regards directors as holding their powers on trust for the company. They can only exercise those powers for the benefit of the company, otherwise the purported exercise will be regarded as "ultra vires" and unacceptable. In such cases there the court would regard the transaction as having been entered into for an "extraneous purpose". This is illustrated by-

i. Re Roith Ltd (73). The extraneous purpose was consideration of the widow's welfare rather than the company's benefit.

ii. Hutton v West Cork Railway Co. (74). The resolutions had not given adequate consideration to the question whether the company would benefit from the proposed payments.

iii. Hogg v Cramphorn (75). The extraneous purpose was the desire to pre-empt the take-over bid. The directors had not exercised their power for the benefit of the company.