West Virginia Code 31E-8-833 – Directors’ liability for unlawful distributions
(a) A director who votes for or assents to a distribution in violation of this chapter or the articles of incorporation is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating this chapter if the party asserting liability establishes that when taking the action the director did not comply with section eight hundred thirty of this article.
Terms Used In West Virginia Code 31E-8-833
- Articles of incorporation: includes , but is not limited to, amended and restated articles of incorporation and articles of merger. See West Virginia Code 31E-1-150
- board of directors: means the group of persons vested with management of the affairs of the corporation irrespective of the name by which the group is designated. See West Virginia Code 31E-1-150
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Distribution: means a direct or indirect transfer of money or other property or incurrence of indebtedness by a corporation to or for the benefit of its members in respect of any of its membership interests or to or for the benefit of its officers or directors: Provided, That the payment of reasonable compensation for services rendered, the reimbursement of reasonable expenses, the granting of benefits to members in conformity with the corporation'. See West Virginia Code 31E-1-150
- Proceeding: includes , but is not limited to, civil suits and criminal, administrative and investigatory actions. See West Virginia Code 31E-1-150
(b) A director held liable under subsection (a) of this section for an unlawful distribution is entitled to:
(1) Contribution from every other director who could be held liable under subsection (a) of this section for the unlawful distribution; and
(2) Recoupment from each recipient for the amount the recipient accepted, knowing the distribution was made in violation of this chapter or the articles of incorporation.
(c) A proceeding to enforce the liability of a director under subsection (a) of this section is barred unless it is commenced within two years after the date on which the distribution was made.
(d) For purposes of this section, a director is deemed to have voted for a distribution if the director was present at the meeting of the board of directors at the time the distribution was authorized and did not vote in dissent, or if the director consented to the vote pursuant to section eight hundred twenty-one of this article.