Investment in virtual digital assets without corresponding main object clause amendment is ultra vires and unratifiable.

The Appellant, an IT training company listed on the BSE, amended its Memorandum of Association (MoA) in September 2024 to include "investing/trading in virtual digital assets (VDAs)" under its ancillary objects (Clause III(B)), which was approved by the RoC on November 4, 2024

In May 2025, after receiving "in-principle" approval from the BSE, the Appellant raised funds through a preferential issue and immediately invested the proceeds into VDAs

On June 10, 2025, the Appellant applied for listing of these shares

On July 7, 2025, a second amendment to the MoA was approved by the RoC, this time elevating VDA activities to the "Main Objects" (Clause III(A))

The BSE returned the listing application on September 23, 2025, contending that the investment was ultra vires as the main objects did not permit VDA business at the time the investment was made

1. Whether, based on the first amendment to the MoA (ancillary objects), the Appellant Company was legally authorized to utilize preferential issue proceeds for VDA investments prior to the RoC's approval of the second amendment

The Tribunal applied Section 4 and Schedule I of the Companies Act, 2013, which distinguishes between "The objects to be pursued" (Main Objects) and "Matters necessary for furtherance of the objects" (Ancillary/Incidental Matters)

The court relied on the doctrine established in Dr. A. Lakshmanaswami Mudaliar v. LIC, which holds that an act not within the memorandum is ultra vires, and that incidental clauses do not set up independent objects

It further applied the Apex Court’s ruling in SEBI v. Terrascope Ventures Limited, confirming that an ultra vires act is absolutely void and cannot be ratified by shareholders

The Tribunal noted that while the first amendment permitted VDA dealings, it was placed under Clause III(B) as an ancillary matter intended only to further the existing IT training business

The Appellant’s decision to utilize capital from a preferential issue to trade in VDAs constituted an independent business activity, which was not reflected in the "Main Objects" (Clause III(A)) until the second amendment was certified by the RoC on July 7, 2025

The Tribunal reasoned that because the investment occurred in May 2025—after the first amendment but before the second—the Company lacked the corporate capacity to treat VDA trading as a primary business activity at that time

Consequently, the investment was deemed ultra vires the MoA, and as per Terrascope Ventures, such void actions cannot be cured by subsequent approvals or shareholder consent

The Tribunal upheld the BSE's decision to return the listing application and the appeal was dismissed with no orders as to costs