Colorado § 7-123-104 - Ultra vires.

§ 7-123-104. Ultra vires.

(1) Except as provided in subsection (2) of this section, the validity of corporate action may not be challenged on the ground that the nonprofit corporation lacks or lacked power to act.

(2) A nonprofit corporation's power to act may be challenged:

(a) In a proceeding against the nonprofit corporation to enjoin the act. The proceeding may be brought by a director or by a voting member or voting members in a derivative proceeding.

(b) In a proceeding by or in the right of the nonprofit corporation, whether directly, derivatively, or through a receiver, trustee, or other legal representative, against an incumbent or former director, officer, employee, or agent of the nonprofit corporation; or

(c) In a proceeding by the attorney general under section 7-134-301.

(3) In a proceeding under paragraph (a) of subsection (2) of this section to enjoin an unauthorized corporate act, the court may enjoin or set aside the act, if it would be equitable to do so and if all affected persons are parties to the proceeding, and may award damages for loss, including anticipated profits, suffered by the nonprofit corporation or another party because of the injunction.

Source: L. 97: Entire article added, p. 666, § 3, effective July 1, 1998.

ANNOTATION

Annotator's note. Since § 7-123-104 is similar to § 7-22-102 as it existed prior to the 1997 recodification of the "Colorado Revised Nonprofit Corporation Act", articles 121 to 137 of title 7, a case construing that provision has been included in the annotations to this section.

Ultra vires is not a defense under this section to an injunctive action. Am. Ski Ass'n v. Bergstedt, 682 P.2d 57 (Colo. App. 1984).

Court has the authority under subsection (2)(a) to enjoin a board of directors of a homeowners' association from conducting a meeting in violation of its bylaws. Anderson v. Applewood Water Ass'n, 2016 COA 162, 409 P.3d 611.