(a) A director who votes for or assents to a distribution in excess of what may be authorized and made pursuant to Section 10A-2A-6.40(a) or Section 10A-2A-14.08(a) is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating Section 10A-2A-6.40(a) or Section 10A-2A-14.08(a) if the party asserting liability establishes that when taking the action the director did not comply with Section 10A-2A-8.30.

Attorney's Note

Under the Alabama Code, punishments for crimes depend on the classification. In the case of this section:
ClassPrisonFine
Violationup to 30 daysup to $200
For details, see Ala. Code § 13A-5-7

Terms Used In Alabama Code 10A-2A-8.32

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • certificate of incorporation: as used in this chapter is synonymous to the term "certificate of formation" used in Chapter 1. See Alabama Code 10A-2A-1.40
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • year: means a calendar year; but, whenever the word "year" is used in reference to any appropriations for the payment of money out of the treasury, it shall mean fiscal year. See Alabama Code 1-1-1
(b) A director held liable under subsection (a) for an unlawful distribution is entitled to:

(1) contribution from every other director who could be held liable under subsection (a) for the unlawful distribution; and
(2) recoupment from each stockholder of the pro-rata portion of the amount of the unlawful distribution the stockholder accepted, knowing the distribution was made in violation of Section 10A-2A-6.40(a) or Section 10A-2A-14.08(a).
(c) A proceeding to enforce:

(1) the liability of a director under subsection (a) is barred unless it is commenced within two years after the date (i) on which the effect of the distribution was measured under Section 10A-2A-6.40(e) or (g), (ii) as of which the violation of Section 10A-2A-6.40(a) occurred as the consequence of disregard of a restriction in the certificate of incorporation, or (iii) on which the distribution of assets to stockholders under Section 10A-2A-14.08(a) was made; or
(2) contribution or recoupment under subsection (b) is barred unless it is commenced within one year after the liability of the claimant has been finally adjudicated under subsection (a).
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