N.Y. Business Corporation Law § 203: Defense of ultra vires

§ 203. Defense of ultra vires.

(a) No act of a corporation and no transfer of real or personal

property to or by a corporation, otherwise lawful, shall be invalid by

reason of the fact that the corporation was without capacity or power to

do such act or to make or receive such transfer, but such lack of

capacity or power may be asserted:

(1) In an action by a shareholder against the corporation to enjoin

the doing of any act or the transfer of real or personal property by or

to the corporation. If the unauthorized act or transfer sought to be

enjoined is being, or is to be, performed or made under any contract to

which the corporation is a party, the court may, if all of the parties

to the contract are parties to the action and if it deems the same to be

equitable, set aside and enjoin the performance of such contract, and in

so doing may allow to the corporation or to the other parties to the

contract, as the case may be, such compensation as may be equitable for

the loss or damage sustained by any of them from the action of the court

in setting aside and enjoining the performance of such contract;

provided that anticipated profits to be derived from the performance of

the contract shall not be awarded by the court as a loss or damage

sustained.

(2) In an action by or in the right of the corporation to procure a

judgment in its favor against an incumbent or former officer or director

of the corporation for loss or damage due to his unauthorized act.

(3) In an action or special proceeding by the attorney-general to

annul or dissolve the corporation or to enjoin it from the doing of

unauthorized business.