South Dakota § 47-1A-640.1 - Distribution to shareholders prohibited if certain financial conditions result.
Full text of South Dakota South Dakota Codified Laws § 47-1A-640.1 — Distribution to shareholders prohibited if certain financial conditions result., with citation guidance and answers to common questions.
§ 47-1A-640.1. Distribution to shareholders prohibited if certain financial conditions result.
No distribution may be made if, after giving it effect:
(1) The corporation would not be able to pay its debts as they become due in the usual course of business; or
(2) The corporation's total assets would be less than the sum of its total liabilities plus, unless the articles of incorporation permit 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 shareholders whose preferential rights are superior to those receiving the distribution.
The board of directors may base a determination that a distribution is not prohibited under this section either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable under the circumstances.
Source: SL 2005, ch 239, § 81.
Source: official South Dakota text · Last verified 2026-08-27
Frequently Asked Questions About South Dakota § 47-1A-640.1
What does South Dakota Codified Laws § 47-1A-640.1 cover?
Section 47-1A-640.1 ("Distribution to shareholders prohibited if certain financial conditions result.") is part of the South Dakota Codified Laws, the codified statutory law of South Dakota. It sets out the legal rule or procedure described in the text above. Statutes are amended regularly, so always verify against the official source.
How do I cite South Dakota § 47-1A-640.1?
A common citation format is "South Dakota Codified Laws § 47-1A-640.1" (South Dakota). Legal writing may require the code abbreviation, section number, and year or edition. Match the style required by your court, professor, or publisher.
Is this the official text of South Dakota law?
No. This page is for research and education and may not include the most recent amendments. For official current law, check the South Dakota official source linked on this page or consult a licensed South Dakota attorney.
How does South Dakota § 47-1A-640.1 apply to my situation?
Statutes are interpreted in context, and application depends on your specific facts. Only a licensed attorney in South Dakota can advise on how this section applies to you. Contact your state or local bar association for a referral.
Sources & Verification
Not legal advice. Verify against the official source and consult a licensed attorney in South Dakota.