equitable for the loss or damage sustained by any of them which may result from the action of the court in setting aside and enjoining the performance of such contract
(2) Can sue officers or directors for engaging in unauthorized acts (3) Ultra vires can be asserted by the attorney general in a proceeding to protect the public if a corporation is engaging in ultra vires activities Objective & Conduct of a Corporation To what extent could/should a corporation act in a manner that’s not intended to maximize wealth/shareholder profits? What should the role of the corporation be in society? Some states have constituency statutes that says that corporate directors can think about other people besides just their shareholders (i.e. employees, local community); NY statute does this, DE doesn’t Dodge v. Ford Ford was privately held at the point H. Ford owned 58%, Dodge brothers owned 10% (later formed Chrysler) Ford Motor was so incredibly profitable Ford decided not to pay regular dividends, only to pay special dividends. Instead of paying all the $ to the shareholders, he’s going to employ more men and spread the benefits of the industrial system to help people enjoy their homes. He decided to lower the price and improve the quality of his cars, so he could benefit mankind. The Dodge brothers thought he was turning Ford into a charity; sued to get extra money paid out in the form of dividends. Maybe lowered the price of the car to get people hooked on buying cars Trial Court ordered that of the surplus be paid out in dividends. MI Supreme Court agrees. A business corporation is organized and carried on primarily for the profit of stockholders. The powers of the directors are to be employed for that end.
Ford’s Argument: thought there was no problem, he did nothing wrong, corporations have a duty to carry out charitable works (impliedly allowed) as long as its incidental to the primary purpose of the corporation=to make profits for shareholders.
October 17 th , 2012 27/08/2012 12:19:00 Preemptive rights Allow you to preserve your ownership percentage NY and DE do not provide this automatically it has to be in your charter Certificate of incorporation Statutes tell you what you can, may, and must put into them Focused mostly on NY o Ex: the name- there are words you cant use, etc Ultra Vires Doctrine Prohibit corps from operating beyond their corporate charters In Britain- Any ultra vires act by a corp would be void – even if the shareholders approved If a corp in US lacked the express power to do the specific action the courts would often find implied powers or other equitable relief to enforce the action Illegal acts are always against the law and always beyond the corporate power – all illegal acts are ultra vires but not all ultra vires acts are illegal Goodman Case Where the corp essentially indirectly guaranteed a loan to a corp director Everyone agreed that was beyond the corp’s power but the court
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