Maine § 13-C §651 Distributions to shareholders

Maine Statutes

§ 13-C §651 — Distributions to shareholders

Maine·Title 13-C MAINE BUSINESS CORPORATION ACT·Ch. 6 SHARES AND DISTRIBUTIONS

1.Distributions. A board of directors of a corporation may authorize and the corporation may make distributions to its shareholders subject to restriction by the articles of incorporation and the limitation in subsection 3.

2.Record date. If the board of directors of a corporation does not fix the record date for determining shareholders entitled to a distribution, other than one involving a purchase, redemption or other acquisition of the corporation's shares, then the record date is the date the board of directors authorizes the distribution.

3.Distribution prohibited. A distribution may not be made if, after giving the distribution effect:

4.Basis for determination. The board of directors of a corporation may base a determination that a distribution is not prohibited under subsectio

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1.
Distributions.
A board of directors of a corporation may authorize and the corporation may make distributions to its shareholders subject to restriction by the articles of incorporation and the limitation in subsection 3.
2.
Record date.
If the board of directors of a corporation does not fix the record date for determining shareholders entitled to a distribution, other than one involving a purchase, redemption or other acquisition of the corporation's shares, then the record date is the date the board of directors authorizes the distribution.
3.
Distribution prohibited.
A distribution may not be made if, after giving the distribution effect:
4.
Basis for determination.
The board of directors of a corporation may base a determination that a distribution is not prohibited under subsection 3 either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances.
5.
Effect measured.
Except as provided in subsection 7, the effect of a distribution under subsection 3 is measured:
6.
Indebtedness to shareholder.
A corporation's indebtedness to a shareholder incurred by reason of a distribution made in accordance with this section is at parity with the corporation's indebtedness to its general, unsecured creditors except to the extent subordinated by agreement.
7.
Indebtedness issued as a distribution.
Indebtedness of a corporation, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations under subsection 3 if the terms of the indebtedness provide that payment of principal and interest are made only if and to the extent that payment of a distribution to shareholders could then be made under this section. If indebtedness on those terms is issued as a distribution, each payment of principal or interest is treated as a distribution, the effect of which is measured on the date the payment is actually made.
8.
Application.
This section does not apply to distributions in liquidation under chapter 14.