Listen to a Business English Dialogue About Ultravires activities
Victoria: Hi Ariel, have you ever heard of ultravires activities in business and finance?
Ariel: No, what are they?
Victoria: Ultravires activities are actions taken by a company that exceed its legal authority or powers as defined in its charter or articles of incorporation.
Ariel: Oh, I see. So, it’s like when a company engages in activities that are outside the scope of its permitted business operations?
Victoria: Exactly. Ultravires activities can include entering into contracts beyond the company’s authority, making investments not authorized by its charter, or engaging in activities prohibited by law.
Ariel: Are there any consequences for a company engaging in ultravires activities?
Victoria: Yes, engaging in ultravires activities can have legal consequences, such as the nullification of contracts, fines, or lawsuits against the company and its directors.
Ariel: That sounds serious. How can companies avoid engaging in ultravires activities?
Victoria: Companies can avoid ultravires activities by ensuring that their actions are consistent with their articles of incorporation, seeking legal advice when entering into significant transactions, and regularly reviewing and updating their corporate documents.
Ariel: Thanks for explaining, Victoria. Ultravires activities seem like an important consideration for companies to avoid legal risks.
Victoria: No problem, Ariel. It’s essential for companies to understand and comply with their legal obligations to operate effectively and avoid legal liabilities.