Nevada § 78.288 - Distributions to stockholders

§ 78.288. Distributions to stockholders

1. Except as otherwise provided in subsection 2 and the articles of incorporation,

a board of directors may authorize and the corporation may make distributions to the

holders of any class or series of the capital stock of the corporation, including

distributions on shares that are partially paid. 2. No distribution may be made if, after giving it effect: (a) The corporation would not be able to pay its debts as they become due in the usual

course of business; or (b) Except as otherwise specifically allowed by the articles of incorporation, the

corporation's total assets would be less than the sum of its total liabilities plus

the amount that would be needed, if the corporation were to be dissolved immediately

after the time of the distribution, to satisfy the preferential rights upon such dissolution

of holders of shares of any class or series of the capital stock of the corporation

having preferential rights superior to those receiving the distribution. 3. The board of directors may base a determination that a distribution is not prohibited

pursuant to subsection 2 on: (a) Financial statements prepared on the basis of accounting practices that are reasonable

in the circumstances; (b) A fair valuation, including, but not limited to, unrealized appreciation and depreciation;

or (c) Any other method that is reasonable in the circumstances. 4. The effect of a distribution pursuant to subsection 2 must be measured: (a) In the case of a distribution by purchase, redemption or other acquisition of

shares of the capital stock of the corporation, as of the earlier of: (1) The date money or other property is transferred or debt incurred by the corporation;

or (2) The date upon which the holder of such shares ceases to hold the acquired shares. (b) In the case of any other distribution of indebtedness, as of the date the indebtedness

is distributed. (c) In all other cases, as of: (1) The date the distribution is authorized if the payment occurs within 120 days

after the date of authorization; or (2) The date the payment is made if it occurs more than 120 days after the date of

authorization. 5. A corporation's indebtedness to a holder of shares of one or more classes or series

of the capital stock of the corporation incurred by reason of a distribution made

in accordance with this section is at parity with the corporation's indebtedness to

its general unsecured creditors except to the extent subordinated by agreement. 6. Indebtedness of a corporation, including indebtedness issued as a distribution,

is not considered a liability for purposes of determinations pursuant to subsection

2 if its terms provide that payment of principal and interest are made only if and

to the extent that payment of a distribution could then be made pursuant to this section. If the indebtedness is issued as a distribution, each payment of principal or interest

must be treated as a distribution, the effect of which must be measured on the date

the payment is actually made. 7. The board of directors may fix a record date for determining holders of shares

of one or more classes or series of the capital stock of the corporation entitled

to a distribution authorized by the board of directors pursuant to this section, which

record date must not precede the date upon which the resolution fixing the record

date is adopted. 8. This section does not apply to any distribution in liquidation pursuant to NRS 78.590 . 9. The provisions of chapter 112 of NRS do not apply to any distribution made by a corporation in accordance with this chapter.