Liability for Unlawful Distribution

1. Law
2. Georgia Code
3. Corporations, Partnerships, and Associations
4. Nonprofit Corporations
5. Directors and Officers
6. Standards of Conduct
7. Liability for Unlawful Distribution

1. Unless a director complies with the applicable standards of conduct described in Code Section 14-3-830, a director who votes for or assents to a distribution made in violation of this chapter is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating this chapter.
2. A director held liable for an unlawful distribution under subsection (a) of this Code section is entitled to contribution:
   1. From every other director who voted for or assented to the distribution without complying with the applicable standards of conduct described in Code Section 14-3-830; and
   2. From each person who received an unlawful distribution for the amount of the distribution whether or not the person receiving the distribution knew it was made in violation of this chapter.

(Code 1981, §14-3-831, enacted by Ga. L. 1991, p. 465, § 1.)

RESEARCH REFERENCES

Am. Jur. 2d.

- 6 Am. Jur. 2d, Associations and Clubs, § 60.

C.J.S.

- 7 C.J.S., Associations, § 59.

ALR.

- Right of court to interfere with amount of salaries voted to officers of private corporations by directors, 44 A.L.R. 570.

Right or duty of corporation to pay dividends; and liability for wrongful payment, 55 A.L.R. 8; 76 A.L.R. 885; 109 A.L.R. 1381.

Liability of payee who accepts checks of corporation in payment of personal debts of officer who was authorized to use corporate funds for that purpose, 100 A.L.R. 60.

Participation by corporate director in vote or meeting fixing compensation for his own services, 175 A.L.R. 577.

Distribution of funds by nonprofit corporation absent dissolution, 51 A.L.R.3d 1318.

PART 4 OFFICERS

JUDICIAL DECISIONS

Officer liable for participation in corporate tort.

- An officer who takes part in the commission of a corporate tort or who specifically directs the particular act to be done or who participates or cooperates therein is personally liable for the commission of the tort. Alexie, Inc. v. Old S. Bottle Shop Corp., 179 Ga. App. 190, 345 S.E.2d 875 (1986).

Cited in Riverdale Assembly of God, Inc. v. Advanced Refrigeration, Inc., 128 Ga. App. 718, 197 S.E.2d 767 (1973); Free For All Missionary Baptist Church, Inc. v. Southeastern Beverage & Ice Equip. Co., 135 Ga. App. 498, 218 S.E.2d 169 (1975).

RESEARCH REFERENCES

Am. Jur. 2d.

- 18B Am. Jur. 2d, Corporations, §§ 1318 et seq., 1335, 1368, 1369, 1505 et seq. 36 Am. Jur. 2d, Fraternal Orders and Benefit Societies, §§ 28 et seq. 66 Am. Jur. 2d, Religious Societies, §§ 7, 8.

C.J.S.

- 10 C.J.S., Beneficial Associations, §§ 31 et seq. 14 C.J.S., Charities, § 92 et seq. 19 C.J.S., Corporations, §§ 530, 531, 535, 552, 625, 685, 694. 77 C.J.S., Religious Societies, § 35 et seq.

ALR.

- When resignation of officer of private corporation becomes effective, 20 A.L.R. 267.

Authority of corporate officer to employ agent or broker to sell property, 159 A.L.R. 796.

Power of president of corporation to have litigation instituted by it where board of directors has failed or refused to grant permission, 10 A.L.R.2d 701.

Power of president of corporation to commence or to carry on arbitration proceedings, 65 A.L.R.2d 1321.

Power and authority of president of business corporation to execute commercial paper, 96 A.L.R.2d 549.

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