AI-assisted research summary: The section limits challenges to a corporation’s power to act, allows certain proceedings to challenge that power, lets a court enjoin or set aside an unauthorized act and award some damages, and makes certain unauthorized officers or directors personally liable for resulting debts and liabilities.
10-304 - Validity of actions 10-304 . Validity of actions A. Except as provided in subsection B of this section, the validity of corporate action may not be challenged on the ground that the corporation lacks or lacked power to act. B. A corporation's power to act may be challenged either: 1. In a proceeding by a shareholder against the corporation to enjoin the act. 2. In a proceeding by the corporation, directly, derivatively or through any receiver, trustee or other legal representative, against an incumbent or former director, officer, employee or agent of the corporation. 3. In a proceeding by the attorney general as provided in chapters 1 through 17 of this title to dissolve the corporation or in a proceeding by the attorney general to enjoin the corporation from the transaction of unauthorized business. C. In a shareholder's proceeding under subsection B, paragraph 1 of this section to enjoin an unauthorized corporate act, the court may enjoin or set aside the act, if equitable and if all affected persons are parties to the proceeding, and may award damages for loss, other than anticipated profits, suffered by the corporation or another party because of enjoining the unauthorized act. D. Except as provided in sections 10-831 and 10-845, any person who purports to act on behalf of a corporation as an officer or a director and who knew or should have known that the person did not have authority to act is liable for all debts and liabilities incurred by the act. This subsection does not apply to a person who acts on behalf of a corporation that has been administratively dissolved unless the person has actual knowledge of the dissolution.