South Dakota § 47-1A-640.1 Distribution to shareholders prohibited if certain financial conditions result.

South Dakota Statutes

§ 47-1A-640.1 — Distribution to shareholders prohibited if certain financial conditions result.

South Dakota § 47-1A-640.1

Title 47CORPORATIONS

Ch. 47-1SOUTH DAKOTA BUSINESS CORPORATION ACT

This text of South Dakota § 47-1A-640.1 (Distribution to shareholders prohibited if certain financial conditions result.) is published on Counsel Stack Legal Research, covering South Dakota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

S.D. Codified Laws § 47-1A-640.1 (2026).

Text

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. The board of directors may base a determination that a distribution is not prohibited under this section either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circum

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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. The board of directors may base a determination that a distribution is not prohibited under 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 under the circumstances.