What are ultra vires acts by a corporation?

The term “ultra vires” refers to an act that is beyond the powers conferred upon a corporation by its articles of incorporation or by the laws of the state of incorporation. It used to be the case that a third party could assert the ultra vires doctrine as a defense to liability on a contract with the corporation. The doctrine has long since been abolished, however, as it relates to third parties dealing with the corporation. See Cal. Corp. Code § 208(a) (“No limitation upon the business, purposes or powers of the corporation or upon the powers of the shareholders, officers or directors, or the manner of exercise of such powers … shall be asserted as between the corporation or any shareholder and any third person[.]”). For example, California law provides that any contract or conveyance made in the name of the corporation that is authorized or ratified by the board, or is made by an officer acting within the scope of her authority conferred by the board, binds the corporation and the corporation acquires rights under the contract or conveyance, except as the board’s authority may be limited by some other law. Cal. Corp. Code § 208(b). The ultra vires doctrine may, however, still be asserted in a proceeding (1) by a shareholder or the state to (a) dissolve the corporation or (b) enjoin the doing or continuation of unauthorized business by the corporation or its officers, or both, in cases where third parties have not acquired rights thereby, or (2) by the corporation, or by a shareholder suing derivatively on behalf of the corporation, against the officers or directors for violating their authority.