Getting Money out of Corporation Flashcards
1
Q
Two forms of distribution
A
1) board declares dividend (usually cash)
2) board can buy back shares
2
Q
Who has power to authorize dividends?
A
BOARD OF DIRECTORS
3
Q
Do shareholders have right to dividends?
A
NO
4
Q
Board CANNOT declare dividends under following two circumstances:
A
1) if corp is INSOLVENT or
2) if corp will BECOME INSOLVENT by issuing dividend
5
Q
What liability for directors who vote to authorize unlawful dividend?
A
PERSONAL LIABILITY
Joint & several liability
for amount in excess of lawful amount
6
Q
Defense to authorization of unlawful dividend?
A
When director relied IN GOOD FAITH on financial statements, he will not be liable
