ultra vires

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Related to Ultra virus: intra vires, Ultra Vires Act

Ultra Vires Activities

Activities in which a publicly-traded company engages that are outside the powers delegated to it in its charter and/or bylaws. Every publicly-traded company has a charter and bylaws, which both outline the powers of executives and the board of directors and actions they are allowed to take. While both the charter and the bylaws can be amended by shareholders, companies sometimes take actions outside the scope of their charters without first receiving permission to do so. If shareholders deem ultra vires activities to be harmful to them or to have the potential of harm, they may sue the company for damages.

ultra vires

(of an action by a JOINT-STOCK COMPANY) exceeding its powers as defined in its MEMORANDUM OF ASSOCIATION. For example, if a company's memorandum authorizes it to trade in the motorcar business, and its directors then set up an ice-cream business, then they may be regarded as trading ultra vires and the company's CONTRACTS with ice-cream suppliers and customers may be regarded as void. To avoid falling foul of the ultra vires doctrine, companies now tend to draw up very wide-ranging business powers in the MEMORANDUM OF ASSOCIATION.
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