47-34A-407. Liability for improper distributions.

304 words·~1 min read·/sd/title-47/chapter-47-34/47-34a-407

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

(a)Any member of a member-managed company, or a manager of a manager-managed company who votes for or assents to a distribution made in violation of § 47-34A-406 , the articles of organization, or the operating agreement is personally liable to the company for the amount of the distribution which exceeds the amount that could have been distributed without violating § 47-34A-406 , the articles of organization, or the operating agreement if it is established that the member or manager did not perform the member's or manager's duties in compliance with § 47-34A-409 .

(b)To the extent the operating agreement of a member-managed limited liability company expressly relieves a member of the authority and responsibility to consent to distributions and imposes that authority and responsibility on one or more other members, the liability stated in subsection

(a)applies to the other members and not the member that the operating agreement relieves of authority and responsibility.

(c)A member of a manager-managed company who knew a distribution was made in violation of § 47-34A-406 , the articles of organization, or the operating agreement is personally liable to the company, but only to the extent that the distribution received by the member exceeded the amount that could have been properly paid under § 47-34A-406 .

(d)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).

(e)A proceeding under this section is barred unless it is commenced within two years after the distribution.