(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 (1) 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:
(i)The corporation would not be able to pay its
debts as they become due in the usual course of business; or
(ii)The corporation's total assets would be less
than the sum of its total liabilities plus (unless the articles
of incorporation p
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(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 (1) 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:
(i) The corporation would not be able to pay its
debts as they become due in the usual course of business; or
(ii) 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:
(i) In the case of distribution by purchase,
redemption, or other acquisition of the corporation's shares, as
of the earlier of:
(A) The date money or other property is
transferred or debt incurred by the corporation; or
(B) The date the shareholder ceases to be a
shareholder with respect to the acquired shares.
(ii) In the case of any other distribution of
indebtedness, as of the date the indebtedness is distributed;
and
(iii) In all other cases, as of:
(A) The date the distribution is authorized if
the payment occurs within one hundred twenty (120) days after
the date of authorization; or
(B) The date the payment is made if it occurs
more than one hundred twenty (120) 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 article 14 of this act.