13.1-692 - Liability for unlawful distributions. - Virginia Statutes

§ 13.1-692. Liability for unlawful distributions.

A. A director who votes for or assents to a distribution made in violation ofthis chapter or the articles of incorporation is personally liable to thecorporation and its creditors for the amount of the distribution that exceedswhat could have been distributed without violating this chapter or thearticles of incorporation if the party asserting liability establishes thatwhen taking the action the director did not comply with § 13.1-690.

B. A director held liable for an unlawful distribution under subsection A isentitled to:

1. Contribution from every other director who could be held liable undersubsection A for the unlawful distribution; and

2. Recoupment from the shareholders who received the unlawful distribution inproportion to the amounts of such unlawful distribution received by themrespectively.

C. No suit shall be brought against any director for any liability imposed bysubsection A except within two years after the right of action shall accrue.

D. Contribution or recoupment under subsection B is barred unless it iscommenced within one year after the liability of the claimant has beenfinally adjudicated under subsection A.

(Code 1950, §§ 13-206, 13-207, 13.1-44; 1956, c. 428; 1985, c. 522; 2005, c.765.)