(a) A director who votes for or assents to a distribution made in violation of § 414-111 or the articles of incorporation is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating § 414-111 or the articles of incorporation, if it is established that the director did not perform the director’s duties in compliance with § 414-221. In any proceeding commenced under this section, a director has all of the defenses ordinarily available to a director.

Terms Used In Hawaii Revised Statutes 414-223

  • Articles of incorporation: include amended and restated articles of incorporation and articles of merger. See Hawaii Revised Statutes 414-3
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • 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.
  • Distribution: means a direct or indirect transfer of money or other property (except its own shares) or incurrence of indebtedness by a corporation to or for the benefit of its shareholders in respect of any of its shares. See Hawaii Revised Statutes 414-3
  • Proceeding: includes civil suit and criminal, administrative, and investigatory action. See Hawaii Revised Statutes 414-3
  • Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
  • Shareholder: means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation. See Hawaii Revised Statutes 414-3
  • United States: includes district, authority, bureau, commission, department, and any other agency of the United States. See Hawaii Revised Statutes 414-3
(b) A director held liable under subsection (a) for an unlawful distribution is entitled to contribution:

(1) From every other director who could be held liable under subsection (a) for the unlawful distribution; and
(2) From each shareholder for the amount the shareholder accepted knowing the distribution was made in violation of § 414-111 or the articles of incorporation.
(c) A proceeding under this section is barred unless it is commenced within two years after the date on which the effect of the distribution was measured under section 414-111(e) or (g).
(d) Nothing in this chapter shall prohibit the distribution of assets to shareholders permitted or authorized by the Federal Housing Commissioner by any corporation organized for the purpose of providing housing for rent pursuant to regulations of the Federal Housing Commissioner under the provisions of Title VIII of the National Housing Act, as amended, where the principal assets of the corporation consist of real property belonging to the United States and leased to the corporation pursuant to Title VIII of the National Housing Act as amended or supplemented from time to time.

  Previous
Next  
 STANDARDS OF CONDUCT Contents