Tennessee § 56-3-109 - Dividends — Illegal division — Directors' liability to creditors.
Full text of Tennessee Tennessee Code Annotated § 56-3-109 — Dividends — Illegal division — Directors' liability to creditors., with citation guidance and answers to common questions.
§ 56-3-109. Dividends — Illegal division — Directors' liability to creditors.
Moneys received as premiums upon risks undetermined and outstanding, at the time of declaring any dividend, shall not be considered as profits, earned and divided as such; and if any loss should happen impairing the capital stock, no dividend shall be declared until the capital stock is made good; and if a dividend is declared, contrary to this prohibition, the directors consenting to the dividend shall be liable to make good to the creditors of the company, if their claims cannot otherwise be satisfied, the amount of dividends thus illegally divided. Acts 1875, ch. 142, § 10; Shan., § 2266; Code 1932, § 3978; T.C.A. (orig. ed.), §§ 56-235, 56-330.
Source: official Tennessee text · Last verified 2026-08-27
Frequently Asked Questions About Tennessee § 56-3-109
What does Tennessee Code Annotated § 56-3-109 cover?
Section 56-3-109 ("Dividends — Illegal division — Directors' liability to creditors.") is part of the Tennessee Code Annotated, the codified statutory law of Tennessee. 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 Tennessee § 56-3-109?
A common citation format is "Tennessee Code Annotated § 56-3-109" (Tennessee). 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 Tennessee law?
No. This page is for research and education and may not include the most recent amendments. For official current law, check the Tennessee official source linked on this page or consult a licensed Tennessee attorney.
How does Tennessee § 56-3-109 apply to my situation?
Statutes are interpreted in context, and application depends on your specific facts. Only a licensed attorney in Tennessee 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 Tennessee.