(1)  Except as provided in Subsection (2), the validity of corporate action may not be challenged on the ground that the nonprofit corporation lacks or lacked power to act.

non profit

Need help reviewing 501c forms?
Have it reviewed by a lawyer, get answers to your questions and move forward with confidence.
Connect with a lawyer now

Terms Used In Utah Code 16-6a-304

  • 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.
  • Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
  • Director: means a member of the board of directors. See Utah Code 16-6a-102
  • Employee: includes an officer of a nonprofit corporation. See Utah Code 16-6a-102
  • 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
  • Injunction: An order of the court prohibiting (or compelling) the performance of a specific act to prevent irreparable damage or injury.
  • Proceeding: includes :
(a) a civil suit;
(b) arbitration;
(c) mediation;
(d) a criminal action;
(e) an administrative action; or
(f) an investigatory action. See Utah Code 16-6a-102
  • Trustee: A person or institution holding and administering property in trust.
    • (2)  A nonprofit corporation’s power to act may be challenged:

    (a)  in a proceeding against the nonprofit corporation to enjoin the act brought by:

    (i)  a director; or

    (ii)  one or more voting members in a derivative proceeding;

    (b)  in a proceeding by or in the right of the nonprofit corporation, whether directly, derivatively, or through a receiver, trustee, or other legal representative, against an incumbent or former director, officer, employee, or agent of the nonprofit corporation; or

    (c)  in a proceeding by the attorney general under Section 16-6a-1414.

    (3)  In a proceeding under Subsection (2)(a) to enjoin an unauthorized corporate act, the court may:

    (a)  enjoin or set aside the act, if:

    (i)  it would be equitable to do so; and

    (ii)  all affected persons are parties to the proceeding; and

    (b)  award damages for loss, including anticipated profits, suffered by the nonprofit corporation or another party because of an injunction issued under this section.

    Enacted by Chapter 300, 2000 General Session

      Previous section
    Next section  
     Part 3 Contents