In general law, "management power" refers to the legal authority, rights, or capacities granted to an individual, entity, or governing body to perform specific acts, make decisions, or enforce rules under a contract, law, or governing document. [1] These powers can be explicitly defined in agreements, such as corporate bylaws, or implied by legal or contractual obligations. [1]

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Within a corporate context, management power is distributed among various parties, primarily directors, officers, and shareholders. [2] Directors are typically responsible for managing the corporation, while officers handle day-to-day decisions and work more closely with employees. [2] Shareholders, as the owners, generally have limited decision-making authority. [2]

Corporations possess two main types of powers:

• Express Powers: These are powers explicitly granted to a corporation by statute and its articles of incorporation. [2] Examples include the power to sue and be sued, purchase and sell property, make contracts, borrow money, issue bonds, and establish pension plans. [2] [3] These powers do not necessarily need to be listed in the articles of incorporation if they are provided by statute. [2]
• Implied Powers: These powers extend beyond those explicitly defined as express powers and are necessary or appropriate for the corporation to carry out its stated purpose. [2] For instance, if a bookstore's purpose is "to operate a bookstore," it has the implied power to hire employees, advertise, and lease trucks. [2]

When a corporation acts outside its prescribed powers, it is considered to be acting ultra vires (literally "beyond the powers"). [2] While the ultra vires doctrine has lost some significance with broadly stated corporate powers and modern statutes, it still holds force in certain circumstances. [2] For example, shareholders can sue to prevent the corporation from acting beyond its powers, the corporation itself can sue officers or directors for causing ultra vires acts, and the state attorney general can assert the doctrine to dissolve the corporation or enjoin unauthorized business. [2]

Directors, as fiduciaries, derive their power to manage the corporation from statutory law and are entrusted with protecting shareholder investments, selecting and removing officers, delegating operating authority, and supervising the company. [2] They owe two primary fiduciary duties: the duty of loyalty and the duty of care. [2]

• Duty of Loyalty: This requires directors and officers to prioritize the corporation's interests over their personal interests, especially in situations involving contracts with the corporation or corporate opportunities. [2]
• Duty of Care: This obligates directors to perform their duties "with the care an ordinarily prudent person in a like position would exercise under similar circumstances." [2] This includes attending meetings, reviewing information, and monitoring performance. [2]

The business judgment rule generally protects directors' decisions made in good faith and with due care from being second-guessed by courts. [2] However, this protection is not absolute, and directors can face liability for breaches of their fiduciary duties. [2]

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