Kentucky Statutes 271B.8-330 – Liability for unlawful distributions
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(1) A director who votes for or who assents to a distribution made in violation of KRS
271B.6-400 or the articles of incorporation shall be personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating KRS § 271B.6-400 or the articles of incorporation if it is established that he did not perform his duties in compliance with KRS § 271B.8-300. In any proceeding commenced under this section, a director shall have all of the defenses ordinarily available to a director.
(2) A director held liable under subsection (1) of this section for an unlawful distribution shall be entitled to contribution:
(a) From every other director who could be held liable under subsection (1) of this section for the unlawful distribution; and
(b) From each shareholder for the amount the shareholder accepted knowing the distribution was made in violation of KRS § 271B.6-400 or the articles of incorporation.
(3) A proceeding under this section shall be barred unless it is commenced within two (2) years after the date on which the effect of the distribution was measured under subsection (5) or (7) of KRS § 271B.6-400.
Effective: January 1, 1989
History: Created 1988 Ky. Acts ch. 23, sec. 88, effective January 1, 1989.
271B.6-400 or the articles of incorporation shall be personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating KRS § 271B.6-400 or the articles of incorporation if it is established that he did not perform his duties in compliance with KRS § 271B.8-300. In any proceeding commenced under this section, a director shall have all of the defenses ordinarily available to a director.
Terms Used In Kentucky Statutes 271B.8-330
- Articles of incorporation: include amended and restated articles of incorporation and articles of merger. See Kentucky Statutes 271B.1-400
- Distribution: means a direct or indirect transfer of money or other property (except its own shares) or incurrence of indebtedness by a corporation to or for the benefit of its shareholders in respect of any of its shares. See Kentucky Statutes 271B.1-400
- Proceeding: includes civil suit and criminal, administrative, and investigatory action. See Kentucky Statutes 271B.1-400
- Shareholder: means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation. See Kentucky Statutes 271B.1-400
(2) A director held liable under subsection (1) of this section for an unlawful distribution shall be entitled to contribution:
(a) From every other director who could be held liable under subsection (1) of this section for the unlawful distribution; and
(b) From each shareholder for the amount the shareholder accepted knowing the distribution was made in violation of KRS § 271B.6-400 or the articles of incorporation.
(3) A proceeding under this section shall be barred unless it is commenced within two (2) years after the date on which the effect of the distribution was measured under subsection (5) or (7) of KRS § 271B.6-400.
Effective: January 1, 1989
History: Created 1988 Ky. Acts ch. 23, sec. 88, effective January 1, 1989.