§ 4-38-406 — Liability for improper distributions

(a) Except as otherwise provided in subsection (b), if a member of a member-managed limited liability company or manager of a manager-managed limited liability company consents to a distribution made in violation of § 4-38-405 and in consenting to the distribution fails to comply with § 4-38-409 , the member or manager is personally liable to the company for the amount of the distribution which exceeds the amount that could have been distributed without the violation of § 4-38-405 . (b) To the extent the operating agreement of a member-managed limited liability company expressly relieves a member of the authority and responsibility to consent to distributions and imposes that authority and responsibility on one or more other members, the liability stated in subsection (a) applies to the other members and not the member that the operating agreement relieves of the authority and responsibility. (c) A person that receives a distribution knowing that the distribution violated § 4-38-405 is personally liable to the limited liability company but only to the extent that the distribution received by the person exceeded the amount that could have been properly paid under § 4-38-405 . (d) A person against which an action is commenced because the person is liable under subsection (a) may: (1) implead any other person that is liable under subsection (a) and seek to enforce a right of contribution from the person; and (2) implead any person that received a distribution in violation of subsection (c) and seek to enforce a right of contribution from the person in the amount the person received in violation of subsection (c). (e) An action under this section is barred unless commenced not later than two years after the distribution.

Legislative History

Added by Act 2021, No. 1041,§ 26, eff. 7/28/2021.