California · Corporations Code

CORP §501: Neither a corporation nor any of its subsidiaries shall make any distribution to the corporation’s shareholders (Section 166) if the corporation or the subsidiary making the distribution is, or as a r

What this law says, in plain English

Corporations and subsidiaries are prohibited from distributing funds to shareholders under certain financial conditions specified in Section 166.

Read the full statutory text

Neither a corporation nor any of its subsidiaries shall make any distribution to the corporation’s shareholders (Section 166) if the corporation or the subsidiary making the distribution is, or as a result thereof would be, likely to be unable to meet its liabilities (except those whose payment is otherwise adequately provided for) as they mature.

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