[§428-407] Liability for unlawful distributions.

257 words·~1 min read·/hi/chapter-428/428-407

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(a)A member of a member-managed limited liability company or a member or manager of a manager-managed company who votes for or assents to a distribution made in violation of section 428-406, the articles of organization, a written operating agreement, or a signed record is personally liable to the company for the amount of the distribution which exceeds the amount that could have been distributed without violating section 428-406, the articles of organization, a written operating agreement, or a signed record if it is established that the member or manager did not perform the member's or manager's duties in compliance with section 428-409.

(b)A member of a manager-managed limited liability company who knew a distribution was made in violation of section 428-406 is personally liable to the limited liability company, but only to the extent that the distribution received by the member exceeded the amount that could properly have been paid under section 428-406.

(c)A member or manager against whom an action is brought under this section may implead in the action all:

(1)Other members or managers who voted for or assented to the distribution in violation of subsection

(a)and may compel contribution from them; and

(2)Members who received a distribution in violation of subsection

(b)and may compel contribution from the member in the amount received in violation of subsection (b).

(d)A proceeding under this section is barred unless it is commenced within two years after the distribution. [L 1996, c 92, pt of §1]