Rhode Island General Laws 7-6-10. Defense of ultra vires
No act of a corporation and no conveyance or transfer of real or personal property to or by a corporation shall be invalid because the corporation was without capacity or power to do the act or to make or receive the conveyance or transfer, but the lack of capacity or power may be asserted:
(1) In a proceeding by a member or a director against the corporation to enjoin the doing or continuation of unauthorized acts, or the transfer of real or personal property by or to the corporation. If the unauthorized acts or transfer sought to be enjoined are being, or are to be, performed pursuant to any contract to which the corporation is a party, the court may, if all of the parties to the contract are parties to the proceeding and if it deems it to be equitable, set aside and enjoin the performance of the contract, and in doing so may allow to the corporation or the other parties to the contract compensation for the loss or damage sustained by either of them that results from the action of the court in setting aside and enjoining the performance of the contract, but anticipated profits to be derived from the performance of the contract are not to be awarded by the court as a loss or damage sustained.
(2) In a proceeding by the corporation, whether acting directly or through a receiver, trustee, or other legal representative, or through members in a representative suit, against the officers or directors of the corporation for exceeding their authority.
(3) In a proceeding by the secretary of state, as provided in this chapter, to revoke the certificate of incorporation of the corporation, or in a proceeding by the secretary of state to enjoin the corporation from performing unauthorized acts, or in any other proceeding by the secretary of state.
History of Section.
P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.
Terms Used In Rhode Island General Laws 7-6-10
- Contract: A legal written agreement that becomes binding when signed.
- 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.
- Director: means a member of a board of directors. See Rhode Island General Laws 7-6-2
- 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
- Member: means one having membership rights in a corporation in accordance with the provisions of its articles of incorporation or bylaws regardless of the name by which the person is designated. See Rhode Island General Laws 7-6-2
- Personal property: All property that is not real property.
- Trustee: A person or institution holding and administering property in trust.