Kentucky Statutes 271B.3-040 – Ultra vires
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(1) Except as provided in subsection (2) of this section, the validity of corporate action shall not be challenged on the ground that the corporation lacks or lacked power to act.
(2) A corporation‘s power to act may be challenged in a proceeding by: (a) A shareholder against the corporation to enjoin the act;
(b) The corporation, directly, derivatively, or through a receiver, trustee, or other legal representative, against an incumbent or former director, officer, employee, or agent of the corporation; or
(c) The Attorney General under KRS § 271B.14-300.
(d) In a shareholder’s proceeding under subsection (2)(a) of this section to enjoin an unauthorized corporate act, the court may enjoin or set aside the act, if equitable and if all affected persons are parties to the proceeding, and may award damages for loss (other than anticipated profits) suffered by the corporation or another party because of enjoining the unauthorized act.
Effective: January 1, 1989
History: Created 1988 Ky. Acts ch. 23, sec. 25, effective January 1, 1989.
(2) A corporation‘s power to act may be challenged in a proceeding by: (a) A shareholder against the corporation to enjoin the act;
Terms Used In Kentucky Statutes 271B.3-040
- Action: includes all proceedings in any court of this state. See Kentucky Statutes 446.010
- Attorney: means attorney-at-law. See Kentucky Statutes 446.010
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Corporation: may extend and be applied to any corporation, company, partnership, joint stock company, or association. See Kentucky Statutes 446.010
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Employee: includes an officer but not a director. See Kentucky Statutes 271B.1-400
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- Proceeding: includes civil suit and criminal, administrative, and investigatory action. See Kentucky Statutes 271B.1-400
- Shareholder: means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation. See Kentucky Statutes 271B.1-400
- Trustee: A person or institution holding and administering property in trust.
(b) The corporation, directly, derivatively, or through a receiver, trustee, or other legal representative, against an incumbent or former director, officer, employee, or agent of the corporation; or
(c) The Attorney General under KRS § 271B.14-300.
(d) In a shareholder’s proceeding under subsection (2)(a) of this section to enjoin an unauthorized corporate act, the court may enjoin or set aside the act, if equitable and if all affected persons are parties to the proceeding, and may award damages for loss (other than anticipated profits) suffered by the corporation or another party because of enjoining the unauthorized act.
Effective: January 1, 1989
History: Created 1988 Ky. Acts ch. 23, sec. 25, effective January 1, 1989.