(uhl-trah veye-rehz) Latin adj. for “beyond powers” in company law and refers to the actions of a company and/or its directors outside the powers and/or powers permitted by law to a company. Example: Directors of Highfliers, Inc. operate a small bank for their employees and friends who are not permitted under corporate law without a bank charter, or sell shares to the public before approval is granted. (See: Company) These sample phrases are automatically selected from various online information sources to reflect the current use of the word “ultra vires”. The views expressed in the examples do not represent the views of Merriam-Webster or its editors. Send us your feedback. State laws in almost all jurisdictions have also significantly reduced the importance of ultra vires doctrine. For example, paragraph 3.04(a) of the revised Model Law on Business Corporations, drafted in 1984, states that “the validity of corporate actions may not be challenged on the basis that the Corporation has or does not have the authority to act”. There are three exceptions to this prohibition: it may be invoked by the corporation or its shareholders against current or former officers or directors of the corporation for exceeding their powers, by the State Attorney General in connection with proceedings to dissolve the corporation or to prohibit the transaction of unauthorized transactions. or by shareholders against the company, to order the imposition of ultra vires legislation or the ultra vires transfer of real estate or personal property. The situation was changed by the 1985 Act, which largely abolished the doctrine of commercial companies.
The situation is now regulated by sections 31 and 39 of the Companies Act 2006, which also severely limit the applicability of ultra vires in company law, although it can still apply to charities and a shareholder can only apply for an injunction in advance to prevent an act known as ultra vires. Companies have a variety of legal documents and policies that outline the parameters of actions allowed by each organization, its employees, and its directors. These documents may contain “statutes”. The memorandum is mainly used in Europe, but not in the United States. In the case of a private company, the act of a worker who is not authorized to act on behalf of the company may nevertheless be contractually binding on the enterprise if the worker is normally expected to have this power. However, in the case of a public authority, it is normally necessary to prove that the worker was actually authorised to act in order to prevent a contract from being declared null and void as ultra vires. If a government employee exceeds its authority, the government agency may attempt to terminate the contract on the basis of an ultra vires claim. Something that is ultra vires is done without the right authority or power. If the CEO of a company sells many of the company`s assets without consulting shareholders, it is an ultra vires action.
Under constitutional law, particularly in Canada and the United States, constitutions confer various powers on federal, provincial or state governments. To go beyond these powers would be ultra vires; For example, although the Court did not use this term to amend a federal statute in United States v. Lopez on the grounds that it exceeded the constitutional authority of Congress, the Supreme Court still declared the law ultra vires. [10] When people within a company use resources that are beyond their legal remit, this can be described as ultra vires. Such measures may include the appropriation of the proceeds of the company or shares of the company in which natural persons have no legal ownership. If a manager were to access the company`s bank accounts and use those assets for his personal needs, this would be qualified as ultra vires acts. If an auditor or other tax officer within a company has transferred ownership of the company`s shares, he has rights of control, this is also subject to ultra vires laws.