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Ultra Vires Acts

Ultra Vires Acts

Definition

Acts that are beyond the powers conferred upon a corporation by its charter or by the laws of its state of incorporation. Corporate directors are not only liable for their own ultra vires acts but can also be held liable for ultra vires acts authorized by the board as a whole. For example, if a corporation's charter bans loans to directors and officers, the granting of such a loan by the board would constitute an ultra vires act for which all board members could be held legally liable. Coverage for ultra vires acts are excluded by directors and officers (D&O) liability policies if they are considered to have been dishonest, fraudulent, or malicious or if such acts violate criminal statutes.

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