16-6a-304. Ultra vires

(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.

(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


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