Ultra Vires Acts

 

What Are Ultra Vires Acts?

Ultra vires acts are any acts that lie beyond the authority of a corporation to perform. Ultra vires acts fall outside the powers that are specifically listed in a corporate charter or law. This can also refer to any action that is specifically prohibited by the corporate charter. 

(Image source from: https://saylordotorg.github.io/text_business-law-and-the-legal-environment-v1.0-a/section_48/5611bfe9dc6496c1a8d60491f58ec772.jpg)


The roots of the term are from a Latin phrase that means beyond the power. It is the opposite of under proper authority—intra vires. You will also find the term in the legal profession.

Excessive Use of Power

Ultra vires acts can also be defined as any excessive use of corporate power that has been granted. These acts cannot be legally defended in court. They will, in fact, leave the corporation vulnerable to lawsuits by employees or other parties.

Companies have a variety of legal documents and directives that outline the parameters of what actions are permitted by each organization, its employees, and directors. These documents can include what is known as a "memorandum of association." The memorandum is largely used in Europe but not in the United States.

The memorandum combined with articles of association can serve as a constitution for companies that outlines the conditions by which the organization may operate and interact with shareholders. The memorandum offers guidance on the external matters the company can engage in. Articles of incorporation also define the nature of a company, its purpose, and the type of organization it will be.

If other types of entities such as government bodies also take actions beyond the scope of their legal powers, their deeds can also be described as ultra vires acts.

Examples of Ultra Vires Actions

Actions that breach the above directives can be classified as ultra vires. For example, a company’s constitution might outline the procedure for appointing directors to its board. If board members are added or removed without following those procedures, then those actions would be described as ultra vires.

If individuals within a company make use of resources that go beyond the scope of their legal purview, this can be called ultra vires. Such actions may include appropriating company revenue or shares of the company that the individuals do not have legal ownership of. If a manager were to access the bank accounts of the company and use those assets for personal needs this would be classified as ultra vires acts. If an accountant or another financial officer within a company transferred ownership of company shares they have rights to control, this also falls under ultra vires acts.

When government bodies or agencies take action, the scope of their powers is determined by laws that can include a constitution. If branches of government go beyond those outlined powers, their actions can be deemed ultra vires and may face legal repercussions.


(Article source from: https://www.investopedia.com/terms/u/ultra-vires-acts.asp)

If you need any types of CPA assistance please visit us @ www.cpacb.com

Comments

Post a Comment

Popular posts from this blog

How to Configure Firewall and Security Settings for QuickBooks Desktop?

Image
  If you are facing the issue that your firewall blocks internet access for some of the specified QuickBooks programs, then there is a probability that you will face further errors that could hinder smooth working of QuickBooks desktop. You can get rid of these errors by either updating the firewall to the latest version or by configuring the firewall software. Moreover, you can also   add some exceptions for QuickBooks firewall ports . There can be various other steps that you might require to carry out, in order to get rid of various errors. In this article we are going to discuss the process to  configure Firewall and security settings for QuickBooks desktop . If you are looking for the same, then make sure to read this post till the end. However, you can connect with our  QuickBooks enterprise support  team using our support line for further assistance. Read this Also:   How to Fix QuickBooks error 6000, 832? What is Firewall? Before you explore the ...
Read more

What is Cash Flow ?

Image
  What is Cash Flow ? Cash flow is the net amount of cash and cash equivalents being transferred into and out of a business. Cash received represents inflows, while money spent represents outflows. ( Image source from :  https://thumbs.dreamstime.com/b/cash-flow-concept-idea-financial-growth-development-money-investment-profit-invest-earnings-get-increase-isolated-cartoon-137829450.jpg ) At a fundamental level, a company’s ability to create value for shareholders is determined by its ability to generate positive cash flows or, more specifically, maximize long-term free cash flow (FCF). FCF is the cash that a company generates from its normal business operations after subtracting any money spent on capital expenditures (CapEx). Cash Flow Categories: 1. Cash Flows from Operations (CFO):  CFO, or operating cash flow, describes money flows involved directly with the production and sale of goods from ordinary operations. CFO indicates whether or not a company has enough ...
Read more

Knowledge Economy

Image
  What Is the Knowledge Economy? The knowledge economy is a system of consumption and production that is based on  intellectual capital . In particular, it refers to the ability to capitalize on scientific discoveries and basic and applied research. This has come to represent a large component of all economic activity in most developed countries. In a knowledge economy, a significant component of value may thus consist of  intangible assets  such as the value of its workers' knowledge or intellectual property. KEY TAKEAWAYS The knowledge economy describes the contemporary commercialization of science and academic scholarship. In the knowledge economy, innovation based on research is commodified via patents and other forms of intellectual property. In the Information Age, the global economy has moved further toward the knowledge economy. The Knowledge Economy Explained Less developed countries tend to have agriculture and manufacturing-based economies. A developing co...
Read more