Texas Business Organizations Code

§ 21.316 — LIABILITY OF DIRECTORS FOR WRONGFUL DISTRIBUTIONS

BO § 21.316Title 2. CORPORATIONS · Ch. 21. FOR-PROFIT CORPORATIONS · Art. G. DISTRIBUTIONS AND SHARE DIVIDENDS

Statute text

(a)Subject to Subsection (c), the directors of a corporation who vote for or assent to a distribution by the corporation that is prohibited by Section 21. 303 are jointly and severally liable to the corporation for the amount by which the distribution exceeds the amount permitted by that section to be distributed.

(b)A director is not liable for all or part of the excess amount if a distribution of that amount would have been permitted by Section 21.303 after the date the director authorized the distribution.

(c)A director is not jointly and severally liable under Subsection (a) if, in voting for or assenting to the distribution, the director:

(1)relies in good faith and with ordinary care on:

(A)the statements, valuations, or information described by Section 21.314; or

(B)other information, opinions, reports, or statements, including financial statements and other financial data, concerning the corporation or another person that are prepared or presented by:

…

Legislative history

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.