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Louisiana Revised Statutes Tit. 12, § 1-833. Directors' liability for unlawful distributions

Current as of January 01, 2023 | Updated by Findlaw Staff

A. A director who votes for or assents to a distribution in excess of what may be authorized and made pursuant to R.S. 12:1-640(A) or 1-1409(A) is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating R.S. 12:1-640(A) or 1-1409(A) if the party asserting liability establishes that when taking the action the director did not comply with R.S. 12:1-830.

B. A director held liable under Subsection A of this Section for an unlawful distribution is entitled to both of the following:

(1) Contribution from every other director who could be held liable under Subsection A of this Section for the unlawful distribution.

(2) Indemnity from each shareholder, for the pro-rata portion of the amount of the unlawful distribution the shareholder received.

C. (1) A proceeding to enforce the liability of a director under Subsection A of this Section is barred unless it is commenced within two years after the relevant one of the following dates:

(a) The date on which the effect of the distribution was measured under R.S.12:1-640(E) or (G).

(b) The date as of which the violation of R.S. 12:1-640(A) occurred as the consequence of disregard of a restriction in the articles of incorporation.

(c) The date on which the distribution of assets to shareholders under R.S. 12:1-1409(A) was made.

(2) A proceeding to enforce contribution or indemnity under Subsection B of this Section is barred unless it is commenced within one year after the liability of the claimant has been finally adjudicated under Subsection A of this Section.

D. The time limits provided in Subsection C of this Section are peremptive.

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Cite this article: FindLaw.com - Louisiana Revised Statutes Tit. 12, § 1-833. Directors' liability for unlawful distributions - last updated January 01, 2023 | https://codes.findlaw.com/la/revised-statutes/la-rev-stat-tit-12-sect-1-833/

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