Liability Upon Wrongful Distribution

  1. Law
  2. Georgia Code
  3. Corporations, Partnerships, and Associations
  4. Limited Liability Companies
  5. Finance
  6. Liability Upon Wrongful Distribution

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  1. A member or manager who votes for or expressly consents to a distribution that is made in violation of Code Section 14-11-407 is personally liable to the limited liability company for the amount of the distribution that exceeds what could have been distributed without violating Code Section 14-11-407, if it is established that such member or manager did not act in compliance with Code Section 14-11-407 and violated a duty owed under Code Section 14-11-305 (without regard to any limitation on such duty permitted by paragraph (4) of Code Section 14-11-305).
  2. Each member or manager held liable under subsection (a) of this Code section for an unlawful distribution is entitled to contribution:
    1. From each other member or manager who could be held liable under subsection (a) of this Code section for the unlawful distribution; and
    2. From each member for the amount the member received knowing that the distribution was made in violation of Code Section 14-11-407.
  3. A proceeding under this Code section is barred unless it is commenced within two years after the date on which the effect of the distribution is measured under Code Section 14-11-407.

(Code 1981, §14-11-408, enacted by Ga. L. 1993, p. 123, § 1; Ga. L. 2009, p. 108, § 6/HB 308.)


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