California Corporations Code

§ 500

CORP § 500 Effective Jan 1, 2023Div. 1 · Title 1 · Ch. 5

Statute text

(a)Neither a corporation nor any of its subsidiaries shall make any distribution to the corporation’s shareholders (Section 166) unless the board of directors has determined in good faith either of the following:

(1)The amount of retained earnings of the corporation immediately prior to the distribution equals or exceeds the sum of (A) the amount of the proposed distribution plus (B) the preferential dividends arrears amount.

(2)Immediately after the distribution, the value of the corporation’s assets would equal or exceed the sum of its total liabilities plus the preferential rights amount.

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Legislative history

Amended by Stats. 2022, Ch. 452, Sec. 45. (SB 1498) Effective January 1, 2023.