North Carolina § 55-8-33 - Liability for unlawful distributions.

§ 55-8-33. Liability for unlawful distributions.

A director who votes for or assents to a distribution made in violation of G.S. 55-6-40 or the articles of incorporation is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating G.S. 55-6-40 or the articles of incorporation if it is established that he did not perform his duties in compliance with G.S. 55-8-30. In any proceeding commenced under this section, a director has all of the defenses ordinarily available to a director. A director held liable under subsection (a) for an unlawful distribution is entitled to: Contribution from every other director who could be held liable under subsection (a) for the unlawful distribution; and Reimbursement from each shareholder for the amount the shareholder accepted knowing the distribution was made in violation of G.S. 55-6-40 or the articles of incorporation. A proceeding under subsection (a) is barred unless it is commenced within three years after the date on which the effect of the distribution was measured under G.S. 55-6-40(e) or (g). History (Code, s. 681; 1901, c. 2, ss. 33, 52; Rev., s. 1192; C.S., s. 1179; 1927, c. 121; 1933, c. 354, s. 1; G.S., s. 55-116; 1955, c. 1371, s. 1; 1959, c. 1316, s. 35; 1989, c. 265, s. 1.) NORTH CAROLINA COMMENTARY This section is substantially the same as the revised version of the comparable section in the Model Act as published in the November 1986 issue of The Business Lawyer. Subsection (b) was modified for greater precision in terminology. The limitation period in subsection (c) was increased to three rather than two years, and the subsection was clarified to ensure that the rights of individual directors to contribution and reimbursement under subsection (b) cannot be cut off before their own liability or lack thereof is determined.