§ 21-252 — Distributions to shareholders

(MBCA 6.40) (a) A board
of directors may authorize and the corporation may make distributions to its
shareholders subject to restriction by the articles of incorporation and the
limitation in subsection (c) of this section.
(b) If the board of directors
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, it is the date the board of directors authorizes the
distribution.
(c)
No distribution may be made if, after giving it effect:
(1) The corporation would
not be able to pay its debts as they become due in the usual course of business;
or
(2)
The corporation's total assets would be less than the sum of its total liabilities
plus, unless the articles of incorporation permit otherwise, the amount that
would be needed, if the corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of shareholders
whose preferential rights are superior to those receiving the distribution.
(d) The board of directors
may base a determination that a distribution is not prohibited under subsection
(c) of this section 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.
(e) Except as provided in
subsection (g) of this section, the effect of a distribution under subsection
(c) of this section is measured:
(1) In the case of distribution by purchase, redemption,
or other acquisition of the corporation's shares, as of the earlier of (i)
the date money or other property is transferred or debt incurred by the corporation
or (ii) the date the shareholder ceases to be a shareholder with respect to
the acquired shares;
(2)
In the case of any other distribution of indebtedness, as of the date the
indebtedness is distributed; and
(3) In all other cases, as of (i) the date the distribution
is authorized if the payment occurs within one hundred twenty days after the
date of authorization or (ii) the date the payment is made if it occurs more
than one hundred twenty days after the date of authorization.
(f) 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.
(g) Indebtedness of a corporation,
including indebtedness issued as a distribution, is not considered a liability
for purposes of determinations under subsection (c) of this section if its
terms 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 the indebtedness 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.
(h) This section shall not
apply to distributions in liquidation under sections 21-2,184 to 21-2,202 .

Legislative History

Source: Laws 2014, LB749, § 52.