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 §§ 100–2319 (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Repealed and added by Stats. 1975, Ch. 682.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.