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Tex. Bus. Orgs. Code § 20.002 (2026)

Ultra Vires Acts

✓ laws through the 89th Legislature (2025)
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Sec. 20.002. ULTRA VIRES ACTS. (a) Lack of capacity of a corporation may not be the basis of any claim or defense at law or in equity.

(b) An act of a corporation or a transfer of property by or to a corporation is not invalid because the act or transfer was:

(1) beyond the scope of the purpose or purposes of the corporation as expressed in the corporation's certificate of formation; or

(2) inconsistent with a limitation on the authority of an officer or director to exercise a statutory power of the corporation, as that limitation is expressed in the corporation's certificate of formation.

(c) The fact that an act or transfer is beyond the scope of the expressed purpose or purposes of the corporation or is inconsistent with an expressed limitation on the authority of an officer or director may be asserted in a proceeding:

(1) by a shareholder or member against the corporation to enjoin the performance of an act or the transfer of property by or to the corporation;

(2) by the corporation, acting directly or through a receiver, trustee, or other legal representative, or through members or shareholders in a representative suit, against an officer or director or former officer or director of the corporation for exceeding that person's authority; or

(3) by the attorney general to:

(A) terminate the corporation;

(B) enjoin the corporation from performing an unauthorized act; or

(C) enforce divestment of real property acquired or held contrary to the laws of this state.

(d) If the unauthorized act or transfer sought to be enjoined under Subsection (c)(1) is being or is to be performed or made under a contract to which the corporation is a party and if each party to the contract is a party to the proceeding, the court may set aside and enjoin the performance of the contract. The court may award to the corporation or to another party to the contract, as appropriate, compensation for loss or damage resulting from the action of the court in setting aside and enjoining the performance of the contract, excluding loss of anticipated profits.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2023, 88th Leg., R.S., Ch. 27 (S.B. 1514), Sec. 21, eff. September 1, 2023.

Notes of Decisions
Cited in 11 cases (5 in the last 5 years), 2014–2026 · leading case: Episcopal Church v. Franklin Salazar, 547 S.W.3d 353 (Tex. App.—Fort Worth 2018).
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Episcopal Church v. Franklin Salazar, 547 S.W.3d 353 (Tex. App.—Fort Worth 2018). “Laws 286 , 290 (listing who may bring a proceeding against the corporation with regard to an ultra vires act—a member, the corporation itself through a receiver, trustee, or other legal representative, or the Attorney General) (current version at Tex. Bus. Orgs. Code Ann. §…”
In re Lonestar Logo & Signs, LLC, 552 S.W.3d 342 (Tex. App.—Austin 2018). “2 (quoting Tex. Bus. Orgs. Code § 20.002(c)(1) ). Id.”
James D. Scudday v. Austin King, No. 04-20-00562-CV (Tex. App.—San Antonio June 22, 2022). · cites it 3× “See TEX. BUS. ORG. CODE § 20.002(c); see also TEX.”
S. Methodist Univ. & Paul J. Ward v. South Cent. Jurisdictional Conf. of the United Methodist Church & Bishop Scott Jones, 716 S.W.3d 475 (Tex. 2025). · cites it 3× “” TEX. BUS. ORGS. CODE § 20.002(b). However, “[t]he fact that an act or transfer is beyond the scope of the expressed [corporate] purpose .”
Sec. & Exch. Comm'n v. Sethi Petroleum LLC, No. 4:15-cv-00338 (E.D. Tex. Jan. 22, 2020). · cites it 2× “” TEX. BUS. ORGS. CODE ANN. § 20.002(a). Section 20.”
Rio Grande H2O Guardian & Albert Furney Muller, Jr. v. Robert Muller Fam. P'ship LTD, No. 04-13-00441-CV (Tex. App.—San Antonio Jan. 29, 2014). · cites it 2× “TEX. BUS. ORGS. CODE ANN. § 20.002(b) (West 2012).”
Jay H. Cohen v. Newbiss Prop., L.P, No. 01-19-00397-CV (Tex. App.—Houston [1st Dist.] Nov. 24, 2020). “See TEX. BUS. ORGS. CODE § 20.002. No such cause of action exists for partnerships.”
LIA Network v. City of Kerrville, No. 5:24-cv-00403 (W.D. Tex. Sept. 6, 2024). “But Tex. Bus. Org. Code § 20.002(b)(1) appears to state that an act of a corporation is not invalid because the act was “beyond the scope of the purpose or purposes of the corporation as “Associational standing is a three-part test: (1) the association’s members would…”
S. Methodist Univ. & Paul J. Ward v. South Cent. Jurisdictional Conf. of the United Methodist Church & Bishop Scott Jones, 716 S.W.3d 475 (Tex. 2025). “The Court observes that nonmember nonprofits operate “to benefit the public.” 22 This purpose, it recognizes, is incongruent with recognizing the Conference as a contracting party who could require SMU to act for its private benefit in a nonprofit charter.”
Lawrence A. Traw v. Walden Town House Ass'n, No. 09-24-00271-CV (May 28, 2026). “]” Tex. Bus. Orgs. Code Ann. § 20.002 (c). Section 20.”
Victor S. Elgohary, Representatively v. Lakes on Eldridge North Cmty. Ass'n, No. 01-14-00216-CV (Tex. App.—Houston [1st Dist.] Mar. 20, 2015). “1 Even if this Court finds that Elgohary was authorized to bring representative claims under Tex. Bus. Org. Code §20.002, Elgohary’s claims should still be dismissed based on his failure to meet his evidentiary burden in response to Appellees’ no-evidence summary judgment motion.”
Tex. Bus. Orgs. Code § 20.002(a): 1 case
Sec. & Exch. Comm'n v. Sethi Petroleum LLC, No. 4:15-cv-00338 (E.D. Tex. Jan. 22, 2020). “” TEX. BUS. ORGS. CODE ANN. § 20.002(a). Section 20.”
Tex. Bus. Orgs. Code § 20.002(b): 2 cases
Rio Grande H2O Guardian & Albert Furney Muller, Jr. v. Robert Muller Fam. P'ship LTD, No. 04-13-00441-CV (Tex. App.—San Antonio Jan. 29, 2014). “TEX. BUS. ORGS. CODE ANN. § 20.002(b) (West 2012).”
S. Methodist Univ. & Paul J. Ward v. South Cent. Jurisdictional Conf. of the United Methodist Church & Bishop Scott Jones, 716 S.W.3d 475 (Tex. 2025). “” TEX. BUS. ORGS. CODE § 20.002(b). However, “[t]he fact that an act or transfer is beyond the scope of the expressed [corporate] purpose .”
Tex. Bus. Orgs. Code § 20.002(b)(1): 1 case
LIA Network v. City of Kerrville, No. 5:24-cv-00403 (W.D. Tex. Sept. 6, 2024). “But Tex. Bus. Org. Code § 20.002(b)(1) appears to state that an act of a corporation is not invalid because the act was “beyond the scope of the purpose or purposes of the corporation as “Associational standing is a three-part test: (1) the association’s members would…”
Tex. Bus. Orgs. Code § 20.002(c): 1 case
James D. Scudday v. Austin King, No. 04-20-00562-CV (Tex. App.—San Antonio June 22, 2022). “See TEX. BUS. ORG. CODE § 20.002(c); see also TEX.”
Tex. Bus. Orgs. Code § 20.002(c)(1): 2 cases
In re Lonestar Logo & Signs, LLC, 552 S.W.3d 342 (Tex. App.—Austin 2018). “2 (quoting Tex. Bus. Orgs. Code § 20.002(c)(1) ). Id.”
S. Methodist Univ. & Paul J. Ward v. South Cent. Jurisdictional Conf. of the United Methodist Church & Bishop Scott Jones, 716 S.W.3d 475 (Tex. 2025). “The Court observes that nonmember nonprofits operate “to benefit the public.” 22 This purpose, it recognizes, is incongruent with recognizing the Conference as a contracting party who could require SMU to act for its private benefit in a nonprofit charter.”
Tex. Bus. Orgs. Code § 20.002(c)(2): 1 case
James D. Scudday v. Austin King, No. 04-20-00562-CV (Tex. App.—San Antonio June 22, 2022). “See TEX. BUS. ORG. CODE § 20.002(c); see also TEX.”
Tex. Bus. Orgs. Code § 20.002(c)(3)(A): 1 case
S. Methodist Univ. & Paul J. Ward v. South Cent. Jurisdictional Conf. of the United Methodist Church & Bishop Scott Jones, 716 S.W.3d 475 (Tex. 2025). “” TEX. BUS. ORGS. CODE § 20.002(b). However, “[t]he fact that an act or transfer is beyond the scope of the expressed [corporate] purpose .”
Tex. Bus. Orgs. Code § 20.002(c)(3)(B): 1 case
S. Methodist Univ. & Paul J. Ward v. South Cent. Jurisdictional Conf. of the United Methodist Church & Bishop Scott Jones, 716 S.W.3d 475 (Tex. 2025). “” TEX. BUS. ORGS. CODE § 20.002(b). However, “[t]he fact that an act or transfer is beyond the scope of the expressed [corporate] purpose .”
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