Ultra Vires Corporate Action Beyond Power Information
Historical doctrine: at common law, corporations could only act within the powers granted by their charter (any act beyond those powers was void and unenforceable). Modern application: Florida's Business Corporation Act has largely eliminated ultra vires as a defense (most corporate charters grant broad general powers), but ultra vires may still be raised in limited circumstances: a shareholder may sue to enjoin an ultra vires act, the corporation may sue an officer or director who caused the corporation to act beyond its powers, and the attorney general may bring proceedings to dissolve the corporation for repeatedly engaging in ultra vires acts. Impact: corporate actions beyond the charter are no longer automatically void (third parties who dealt with the corporation in good faith are protected).
Florida Legal Definition
Ultra vires in Florida is governed by Florida Statutes §607.0304 (Ultra Vires). Under §607.0304(1): the validity of corporate action may not be challenged on the ground that the corporation lacks or lacked power to act. Under §607.0304(2): the corporation's power to act may be challenged only in: a proceeding by a shareholder to enjoin the act, a proceeding by the corporation against an officer or director for exceeding authority, or a proceeding by the attorney general to dissolve the corporation. Under §607.0302: Florida corporations have the power to engage in any lawful business activity (broad general powers).
How It's Used in Practice
Attorneys manage ultra vires issues for corporations and shareholders. For shareholders: file a petition to enjoin an ultra vires act (before the act is completed), demonstrate the proposed act exceeds the corporation's charter powers, and seek injunctive relief. For corporations: review the articles of incorporation to ensure the proposed action is within the corporation's powers, amend the articles if necessary (to expand the powers), and respond to ultra vires challenges. The attorney advises: the ultra vires doctrine has limited modern application; most Florida corporations have broad general powers; the doctrine is primarily used by shareholders to challenge unauthorized corporate actions.
Key Takeaways
- Ultra vires: corporate act beyond charter powers.
- §607.0304: validity of corporate action cannot be challenged on ultra vires grounds.
- Limited exceptions: shareholder injunction, director liability, and AG dissolution.
- Modern FL corporations have broad general powers.
- Largely eliminated as a defense.
Disclaimer: The information and opinions provided are for general educational, informational or entertainment purposes only and should not be construed as legal advice or a substitute for consultation with a qualified attorney. Any information that you read does not create an attorney–client relationship with Barnes Walker, Goethe, Perron, Shea & Johnson, PLLC, or any of its attorneys. Because laws, regulations, and court interpretations may change over time, the definitions and explanations provided here may not reflect the most current legal standards. The application of law varies depending on your particular facts and jurisdiction. For advice regarding your specific situation, please contact one of our Florida attorneys for personalized guidance.
Business Attorneys
Real Estate Attorneys
Litigation Attorneys
Estate Planning Attorneys
Business Sale Closings
How to Sell a Business in Florida
Contact Information:
Tel: 941-867-7818
Email: info@barneswalker.com
Trust • Experience • Results