JurisdictionWyomingTitle 17Corporations, Partnerships and Associations
Ch. 29WYOMING LIMITED LIABILITY COMPANY ACT
Art. 4RELATIONS OF MEMBERS TO EACH OTHER AND TO THE
This text of Wyoming § 17-29-405 (Limitations on distribution) is published on Counsel Stack Legal Research, covering Wyoming primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
(a)A limited liability company shall not make a
distribution if after the distribution:
(i)The company would not be able to pay its debts as
they become due in the ordinary course of the company's
activities; or
(ii)The company's total assets would be less than
the sum of its total liabilities plus the amount that would be
needed, if the company were to be dissolved, wound up and
terminated at the time of the distribution, to satisfy the
preferential rights upon dissolution, winding up and termination
of members whose preferential rights are superior to those of
persons receiving the distribution.
(b)A limited liability company may base a determination
that a distribution is not prohibited under subsection (a) of
this section on financial statements prepared on the basis of
accounting
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(a) A limited liability company shall not make a
distribution if after the distribution:
(i) The company would not be able to pay its debts as
they become due in the ordinary course of the company's
activities; or
(ii) The company's total assets would be less than
the sum of its total liabilities plus the amount that would be
needed, if the company were to be dissolved, wound up and
terminated at the time of the distribution, to satisfy the
preferential rights upon dissolution, winding up and termination
of members whose preferential rights are superior to those of
persons receiving the distribution.
(b) A limited liability company may base a determination
that a distribution is not prohibited under subsection (a) of
this section 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.
(c) Except as otherwise provided in subsection (f) of this
section, the effect of a distribution under subsection (a) of
this section is measured:
(i) In the case of a distribution by purchase,
redemption or other acquisition of a transferable interest in
the company, as of the date money or other property is
transferred or debt incurred by the company; and
(ii) In all other cases, as of the date:
(A) The distribution is authorized, if the
payment occurs within one hundred twenty (120) days after that
date; or
(B) The payment is made, if the payment occurs
more than one hundred twenty (120) days after the distribution
is authorized.
(d) Except as otherwise expressly agreed in writing, a
limited liability company's indebtedness to a member incurred by
reason of a distribution made in accordance with this section is
at parity with the company's indebtedness to its general,
unsecured creditors.
(e) A limited liability company's indebtedness, including
indebtedness issued in connection with or as part of a
distribution, is not a liability for purposes of subsection (a)
of this section if the terms of the indebtedness provide that
payment of principal and interest are made only to the extent
that a distribution could be made to members under this section.
(f) If indebtedness is issued as a distribution, each
payment of principal or interest on the indebtedness is treated
as a distribution, the effect of which is measured on the date
the payment is made.
(g) In subsection (a) of this section, "distribution" does
not include amounts constituting reasonable compensation for
present or past services or reasonable payments made in the
ordinary course of business under a bona fide retirement plan or
other benefits program.