§ 2-311. Limitations on distributions
West's Annotated Code of MarylandCorporations and AssociationsEffective: October 1, 2009
Effective: October 1, 2009
MD Code, Corporations and Associations, § 2-311
§ 2-311. Limitations on distributions
(a)(1) No distribution may be made if, after giving effect to the distribution:
(ii) Except as provided in paragraph (2) of this subsection, the corporation's total assets would be less than the sum of the corporation's total liabilities plus, unless the charter permits 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 upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the distribution.
(b) The board of directors may base a determination that a distribution is not prohibited under subsection (a) of this section either on:
(c) Except as provided in subsection (e) of this section, the effect of a distribution under subsection (a) of this section is measured:
(d) A corporation's indebtedness to a stockholder, incurred by reason of a distribution made in accordance with this section, is at parity with the corporation's indebtedness to the corporation's general, unsecured creditors, except to the extent subordinated by agreement.
(e)(1) If terms of the indebtedness provide that payment of principal and interest is to be made only if and to the extent that payment of a distribution to stockholders could then be made under this section, indebtedness of a corporation, including indebtedness issued as a distribution, is not a liability for purposes of determinations made under subsection (a) of this section.
Credits
Added by Acts 1988, c. 280, § 1; Acts 1988, c. 281, § 1. Amended by Acts 1992, c. 621; Acts 2009, c. 295, § 1, eff. Oct. 1, 2009; Acts 2009, c. 296, § 1, eff. Oct. 1, 2009.
MD Code, Corporations and Associations, § 2-311, MD CORP & ASSNS § 2-311
Current through legislation effective through April 9, 2023, from the 2024 Regular Session of the General Assembly. Some statute sections may be more current, see credits for details.
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