CHAPTER 28. DISTRIBUTIONS TO SHAREHOLDERS
IC 23-1-28
Chapter 28. Distributions to Shareholders
IC 23-1-28-1
Distributions
Sec. 1. A board of directors may authorize and the corporation
may make distributions to its shareholders subject to restriction by
the articles of incorporation and the limitation in section 3 of this
chapter.
As added by P.L.149-1986, SEC.12.
IC 23-1-28-2
Record date, declaration date, and payment date
Sec. 2. The board of directors may fix a record date, declaration
date, and payment date with respect to any share dividend or
distribution to a corporation's shareholders. If the board of directors
does not fix the record date for determining shareholders entitled to
a distribution (other than one involving a repurchase or reacquisition
of shares), it is the date the board of directors authorizes the
distribution.
As added by P.L.149-1986, SEC.12.
IC 23-1-28-3
Prohibited distributions
Sec. 3. A distribution may not 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.
As added by P.L.149-1986, SEC.12.
IC 23-1-28-4
Basis for determination that distribution not prohibited
Sec. 4. The board of directors may base a determination that a
distribution is not prohibited under section 3 of this chapter 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 in the circumstances.
As added by P.L.149-1986, SEC.12.
IC 23-1-28-5
Measuring effect of distribution; date
Sec. 5. The effect of a distribution under section 3 of this chapter
is measured:
(1) in the case of distribution by purchase, redemption, or other
acquisition of the corporation's shares, as of the earlier of:
(A) the date money or other property is transferred or debt
incurred by the corporation; or
(B) the date the shareholder ceases to be a shareholder with
respect to the acquired shares;
(2) in the case of any other distribution of indebtedness, as of
the date the indebtedness is distributed; and
(3) in all other cases, as of:
(A) the date the distribution is authorized if the payment
occurs within one hundred twenty (120) days after the date
of authorization; or
(B) the date the payment is made if it occurs more than one
hundred twenty (120) days after the date of authorization.
As added by P.L.149-1986, SEC.12.
IC 23-1-28-6
Indebtedness to shareholder; priority
Sec. 6. A corporation's indebtedness to a shareholder incurred by
reason of a distribution made in accordance with this chapter is at
parity with the corporation's indebtedness to its general, unsecured
creditors except to the extent subordinated by agreement.
As added by P.L.149-1986, SEC.12.