N.Y. Business Corporation Law § 510: Dividends or other distributions in cash or property

§ 510. Dividends or other distributions in cash or property.

(a) A corporation may declare and pay dividends or make other

distributions in cash or its bonds or its property, including the shares

or bonds of other corporations, on its outstanding shares, except when

currently the corporation is insolvent or would thereby be made

insolvent, or when the declaration, payment or distribution would be

contrary to any restrictions contained in the certificate of

incorporation.

(b) Dividends may be declared or paid and other distributions may be

made either (1) out of surplus, so that the net assets of the

corporation remaining after such declaration, payment or distribution

shall at least equal the amount of its stated capital, or (2) in case

there shall be no such surplus, out of its net profits for the fiscal

year in which the dividend is declared and/or the preceding fiscal year.

If the capital of the corporation shall have been diminished by

depreciation in the value of its property or by losses or otherwise to

an amount less than the aggregate amount of the stated capital

represented by the issued and outstanding shares of all classes having a

preference upon the distribution of assets, the directors of such

corporation shall not declare and pay out of such net profits any

dividends upon any shares until the deficiency in the amount of stated

capital represented by the issued and outstanding shares of all classes

having a preference upon the distribution of assets shall have been

repaired. A corporation engaged in the exploitation of natural resources

or other wasting assets, including patents, or formed primarily for the

liquidation of specific assets, may declare and pay dividends or make

other distributions in excess of its surplus, computed after taking due

account of depletion and amortization, to the extent that the cost of

the wasting or specific assets has been recovered by depletion reserves,

amortization or sale, if the net assets remaining after such dividends

or distributions are sufficient to cover the liquidation preferences of

shares having such preferences in involuntary liquidation.