Arizona Arizona Revised Statutes

§ 10-640 — Distribution to shareholders

ARS § 10-640Title 10. Corporations and Associations · Ch. 6. SHARES AND DISTRIBUTIONS · Art. 4. Distributions

Statute text

10-640. Distribution to shareholders A. A board of directors may authorize and the corporation may make distributions to its shareholders subject to restriction by the articles of incorporation and the limitation in subsection C. B. If the board of directors does not fix the record date for determining shareholders entitled to a distribution, other than one involving any purchase, redemption or other acquisition of the corporation's shares, it is the date the board of directors authorizes the distribution. C. A distribution shall not be made if, after giving it effect, either: 1. The corporation would not be able to pay its debts as they become due in the usual course of business. 2. The corporation's total assets would be less than the sum of its total liabilities plus, unless the articles of incorporation permit otherwise, the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights on dissolution of shareholders whose preferential rights are superior to those receiving the distribution. D. The board of directors may base a determination that a distribution is not prohibited under subsection C either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances, which in the absence of special circumstances shall be generally accepted accounting principles or applicable regulatory accounting principles, or on a fair valuation or other method that is reasonable in the circumstances. E. Except as provided in subsection G, the effect of a distribution under subsection C is measured: 1. In the case of distribution by purchase, redemption or other acquisition of the corporation's shares, as of the earlier of either:

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