Iowa § 491.41 Diversion of funds — unlawful dividends

Iowa Statutes

§ 491.41 — Diversion of funds — unlawful dividends

Iowa § 491.41

Title XIIBUSINESS ENTITIES

Ch. 491CORPORATIONS FOR PECUNIARY PROFIT

This text of Iowa § 491.41 (Diversion of funds — unlawful dividends) is published on Counsel Stack Legal Research, covering Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Iowa Code § 491.41 (2026).

Text

The diversion of the funds of the corporation to other objects than those mentioned in its
articles and in the notice published, if any person be injured thereby, and the payment of
dividends which leaves insufficient funds to meet the liabilities thereof, shall be such fraud
as will subject those guilty thereof to the penalties of section 491.40; and such dividends,
or their equivalent, in the hands of stockholders, shall be subject to such liabilities. If the
directors or other officers or agents of any corporation shall declare and pay any dividend
when such corporation is known by them to be insolvent, or any dividend the payment of
which would render it insolvent, or which would diminish the amount of its capital stock, all
directors, officers, oragentsknowinglyconsentingtheretoshallb

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The diversion of the funds of the corporation to other objects than those mentioned in its
articles and in the notice published, if any person be injured thereby, and the payment of
dividends which leaves insufficient funds to meet the liabilities thereof, shall be such fraud
as will subject those guilty thereof to the penalties of section 491.40; and such dividends,
or their equivalent, in the hands of stockholders, shall be subject to such liabilities. If the
directors or other officers or agents of any corporation shall declare and pay any dividend
when such corporation is known by them to be insolvent, or any dividend the payment of
which would render it insolvent, or which would diminish the amount of its capital stock, all
directors, officers, oragentsknowinglyconsentingtheretoshallbejointlyandseverallyliable
for all the debts of such corporation then existing, but dividends made in good faith before
knowledge of the occurring of losses shall not come within the provisions of this section.

Legislative History

[C51, §687, 688; R60, §1164, 1165; C73, §1072, 1073; C97, §1621; C24, 27, 31, 35, 39, §8378; C46, 50, 54, 58, 62, 66, 71, 73, 75, 77, 79, 81, §491.41]