It is a requirement according to section 14 of Table A of the Companies Regulations 1985 (Companies Regulations 1985, 2014) that joint holders of shares meaning more than one person existing as owners of a company need to adhere to all calls of a share purchase or sale jointly and not otherwise. This is a stringent requirement in this scenario since it is owned by three owners and Nick did not inform David and George when he mortgaged one property of Scottish Holdings Ltd to Royal Bank of Scotland (RBS). Further, the RBS bank also put in a clause which gave them the first and only charge on the property in case of a default and if anyone in the future tries to raise money by again mortgaging it, a floating charge to the owners will stipulate immediately on the owners attempting to create another charge on the property. When this is applied to one property of Scottish Holdings ltd, it has given a disadvantage to David and George if they ever decide to raise money to repay their debts. Thus, they need to research the conduct of Nick and accordingly appeal in the court against the actions of Nick.
Since companies are creations of the law, they are pre-dominantly required to be governed by the use of law (Omar, 2004). Thus, the governance of companies is inevitably dependent on the formation of fruitful law and its stringent enforcement. Ultra Vires is the doctrine of allowing a company to act in a way which seems to be beyond their powers, and this doctrine has been abandoned with the growing investor participation and with the rise of social inclusive policies. Since Nick has been trying to sell his shares without consulting a David and George, he is simply trying to act in way that is beyond his powers, because he is not having nay power to go out and sell his shares to an outsider when he did not attempt to sell it to existing shareholders. Further, he also mortgaged the property owned by Scottish Holdings ltd without the knowledge of David and George, and raised money from a bank by giving it the sole charge on the property. Nick acted in a way which gave him powers beyond his actual limits as he could not mortgage any company property without informing other partners and create a single charge on it, along with using the raised money for personal use.