§ 719 — Liability of directors in certain cases

§ 719. Liability of directors in certain cases.\n (a) Directors of a corporation who vote for or concur in any of the\nfollowing corporate actions shall be jointly and severally liable to the\ncorporation for the benefit of its creditors or members or the ultimate\nbeneficiaries of its activities, to the extent of any injury suffered by\nsuch persons, respectively, as a result of such action, or, if there be\nno creditors or members or ultimate beneficiaries so injured, to the\ncorporation, to the extent of any injury suffered by the corporation as\na result of such action:\n (1) The distribution of the corporation's cash or property to members,\ndirectors or officers, other than a distribution permitted under section\n515 (Dividends prohibited; certain distributions of cash or property\nauthorized).\n (2) The redemption of capital certificates, subvention certificates or\nbonds, to the extent such redemption is contrary to the provisions of\nsection 502 (Member's capital contributions), section 504 (Subventions),\nor section 506 (Bonds and security interests).\n (3) The payment of a fixed or contingent periodic sum to the holders\nof subvention certificates or of interest to the holders or\nbeneficiaries of bonds to the extent such payment is contrary to the\nprovisions of section 504 or section 506.\n (4) The distribution of assets in violation of section 1002-a\n(Carrying out the plan of dissolution and distribution of assets) or\nwithout paying or adequately providing for all known liabilities of the\ncorporation, excluding any claims not filed by creditors within the time\nlimit set in a notice given to creditors under articles 10 (Non-judicial\ndissolution) or 11 (Judicial dissolution).\n (5) The making of any loan contrary to section 716 (Loans to directors\nand officers).\n (b) A director who is present at a meeting of the board, or any\ncommittee thereof, at which action specified in paragraph (a) is taken\nshall be presumed to have concurred in the action unless his dissent\nthereto shall be entered in the minutes of the meeting, or unless he\nshall submit his written dissent to the person acting as the secretary\nof the meeting before the adjournment thereof, or shall deliver or send\nby registered mail such dissent to the secretary of the corporation\npromptly after the adjournment of the meeting. Such right to dissent\nshall not apply to a director who voted in favor of such action. A\ndirector who is absent from a meeting of the board, or any committee\nthereof, at which such action is taken shall be presumed to have\nconcurred in the action unless he shall deliver or send by registered\nmail his dissent thereto to the secretary of the corporation or shall\ncause such dissent to be filed with the minutes of the proceedings of\nthe board or committee within a reasonable time after learning of such\naction.\n (c) Any director against whom a claim is successfully asserted under\nthis section shall be entitled to contribution from the other directors\nwho voted for or concurred in the action upon which the claim is\nasserted.\n (d) Directors against whom a claim is successfully asserted under this\nsection shall be entitled, to the extent of the amounts paid by them to\nthe corporation as a result of such claims:\n (1) Upon reimbursement to the corporation of any amount of an improper\ndistribution of the corporation's cash or property, to be subrogated to\nthe rights of the corporation against members, directors or officers who\nreceived such distribution with knowledge of facts indicating that it\nwas not authorized by this chapter, in proportion to the amounts\nreceived by them respectively.\n (2) Upon reimbursement to the corporation of an amount representing an\nimproper redemption of a capital certificate, subvention or bond, to\nhave the corporation rescind such improper redemption and recover the\namount paid, for their benefit but at their expense, from any member or\nholder who received such payment with knowledge of facts indicating that\nsuch redemption by the corporation was not authorized by this chapter.\n (3) Upon reimbursement to the corporation of an amount representing\nall or part of an improper payment of a fixed or contingent periodic sum\nto the holder of a subvention certificate, or of interest to the holder\nor beneficiary of a bond, to have the corporation recover the amount so\npaid, for their benefit but at their expense, from any holder or\nbeneficiary who received such payment with knowledge of facts indicating\nthat such payment by the corporation was not authorized by this chapter.\n (4) Upon payment to the corporation of the claim of the attorney\ngeneral or of any creditor by reason of a violation of subparagraph (a)\n(4), to be subrogated to the rights of the corporation against any\nperson who received an improper distribution of assets.\n (5) Upon reimbursement to the corporation of the amount of any loan\nmade contrary to section 716 (Loans to directors and officers), to be\nsubrogated to the rights of the corporation against a director or\nofficer who received the improper loan.\n (e) A director or officer shall not be liable under this section if,\nin the circumstances, he discharged his duty to the corporation under\nsection 717 (Duty of directors and officers).\n (f) This section shall not affect any liability otherwise imposed by\nlaw upon any director or officer.\n