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California Law (Last Updated: March 4, 2014) |
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Corporations Code - CORP |
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Title 1. CORPORATIONS |
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Division 2. NONPROFIT CORPORATION LAW |
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Part 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS |
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Chapter 2. Directors and Management |
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ARTICLE 3. Standards of Conduct |
Section 5237.
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(a) Subject to the provisions of Section 5231, directors of a corporation who approve any of the following corporate actions shall be jointly and severally liable to the corporation for:
(1) The making of any distribution.
(2) The distribution of assets after institution of dissolution proceedings of the corporation, without paying or adequately providing for all known liabilities of the corporation, excluding any claims not filed by creditors within the time limit set by the court in a notice given to creditors under Chapters 15 (commencing with Section 6510), 16 (commencing with Section 6610) and 17 (commencing with Section 6710).
(3) The making of any loan or guaranty contrary to Section 5236.
(b) A director who is present at a meeting of the board, or any committee thereof, at which action specified in subdivision (a) is taken and who abstains from voting shall be considered to have approved the action.
(c) Suit may be brought in the name of the corporation to enforce the liability:
(1) Under paragraph (1) of subdivision (a) against any or all directors liable by the persons entitled to sue under subdivision (b) of Section 5420;
(2) Under paragraph (2) or (3) of subdivision (a) against any or all directors liable by any one or more creditors of the corporation whose debts or claims arose prior to the time of the corporate action who have not consented to the corporate action, whether or not they have reduced their claims to judgment;
(3) Under paragraph (1), (2) or (3) of subdivision (a), by the Attorney General.
(d) The damages recoverable from a director under this section shall be the amount of the illegal distribution, or if the illegal distribution consists of property, the fair market value of that property at the time of the illegal distribution, plus interest thereon from the date of the distribution at the legal rate on judgments until paid, together with all reasonably incurred costs of appraisal or other valuation, if any, of that property, or the loss suffered by the corporation as a result of the illegal loan or guaranty.
(e) Any director sued under this section may implead all other directors liable and may compel contribution, either in that action or in an independent action against directors not joined in that action.
(f) Directors liable under this section shall also be entitled to be subrogated to the rights of the corporation:
(1) With respect to paragraph (1) of subdivision (a), against the persons who received the distribution.
(2) With respect to paragraph (2) of subdivision (a), against the persons who received the distribution.
(3) With respect to paragraph (3) of subdivision (a), against the person who received the loan or guaranty.
Any director sued under this section may file a cross-complaint against the person or persons who are liable to the director as a result of the subrogation provided for in this subdivision or may proceed against them in an independent action.