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.
Cal. Corp. Code § 501
Dividends and Reacquisitions of Shares
Known as the General Corporation Law
The act spans §§ 100 to 2319 (398 sections).
Repealed and added by Stats. 1975, Ch. 682.
Official source: California Legislative Information. Reproduced from public-domain California statutes; confirm against the official source for the current text. Not legal advice.