2021 Georgia Code
Title 14 - Corporations, Partnerships, and Associations
Chapter 2 - Business Corporations
Article 3 - Purposes and Powers
§ 14-2-304. Ultra Vires

1. Except as provided in subsection (b) of this Code section, the validity of corporate action may not be challenged on the ground that the corporation lacks or lacked power to act.
2. A corporation's power to act may be challenged:
   1. In a proceeding by a shareholder against the corporation to enjoin the act;
   2. In a proceeding by the corporation, directly, derivatively, or through a receiver, trustee, or other legal representative, against an incumbent or former director, officer, employee, or agent of the corporation; or
   3. In a proceeding by the Attorney General under Code Section 14-2-1430.
3. In a shareholder's proceeding under paragraph (1) of subsection (b) of this Code section to enjoin an unauthorized corporate act, the court may enjoin or set aside the act, if equitable and if all affected persons are parties to the proceeding, and may award damages for loss, other than anticipated profits, suffered by the corporation or another party because of enjoining the unauthorized act.

(Code 1981, §14-2-304, enacted by Ga. L. 1988, p. 1070, § 1.)

- For article analyzing legal basis for corporate contributions to private educational institutions, see 5 Mercer L. Rev. 249 (1954). For article discussing liability of corporate directors, officers, and shareholders under the Georgia Business Corporation Code, and as affected by provisions of the Georgia Civil Practice Act, see 7 Ga. St. B. J. 277 (1971). For note, "Ultra Vires in Georgia," see 16 Mercer L. Rev. 320 (1964).

RESEARCH REFERENCES

Am. Jur. 2d.

- 18B Am. Jur. 2d, Corporations, § 1712 et seq.

- 19 C.J.S., Corporations, §§ 673, 676, 677, 678.

- Liability of corporation on contracts of promoters, 17 A.L.R. 452; 49 A.L.R. 673; 123 A.L.R. 726.

Right of obligor to challenge assignment or transfer by corporation as ultra vires, 45 A.L.R. 1509.

Release by corporation resting for consideration on detriment to release without benefit to corporation as ultra vires the corporation, 52 A.L.R. 579.

Contract in relation to corporate stock as binding upon the corporation or personally upon the officers who sign it, 54 A.L.R. 1388.

Doctrine of ultra vires as applied to torts of private corporation, 57 A.L.R. 302.

Contract by national bank for purchase of stock in another corporation as ultra vires, 89 A.L.R. 1308.

Assumption of mortgage or lien by bank or other corporation as ultra vires, 91 A.L.R. 177.

Right of corporation to perform or to hold itself out as ready to perform functions in the nature of legal services, 157 A.L.R. 282.

Power of corporation or its officers with respect to payment of remuneration, bonus, and the like, to widow or family of deceased officer, 29 A.L.R.2d 1262.

Right of corporation to indemnity for civil or criminal liability incurred by employee's violation of antitrust laws, 37 A.L.R.3d 1355.

Validity of obligation given by corporation incident to purchase of entire stock by sole shareholder, 71 A.L.R.3d 639.

Power of corporation to make political contribution or expenditure under state law, 79 A.L.R.3d 491.