48-18-304 - Liability for unlawful distributions. - Tennessee Statutes

48-18-304. Liability for unlawful distributions.

(a)  A director who votes for or assents to a distribution made in violation of § 48-16-401 or the charter is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating such section or the charter if it is established that the director did not perform such director's duties in compliance with § 48-18-301. In any proceeding commenced under this section, a director has all of the defenses ordinarily available to a director.

(b)  A director held liable under subsection (a) for an unlawful distribution is entitled to contribution from:

     (1)  Every other director who could be held liable under subsection (a) for the unlawful distribution; and

     (2)  Each shareholder for the amount the shareholder accepted knowing the distribution was made in violation of § 48-16-401 or the charter.

(c)  A proceeding under this section is barred unless it is commenced within two (2) years after the date on which the effect of the distribution was measured under § 48-16-401.

[Acts 1986, ch. 887, § 8.33; 1994, ch. 776, § 33; 1996, ch. 618, § 1.]