N.Y. Business Corporation Law § 719: Liability of directors in certain cases

§ 719. Liability of directors in certain cases.

(a) Directors of a corporation who vote for or concur in any of the

following corporate actions shall be jointly and severally liable to the

corporation for the benefit of its creditors or shareholders, to the

extent of any injury suffered by such persons, respectively, as a result

of such action:

(1) The declaration of any dividend or other distribution to the

extent that it is contrary to the provisions of paragraphs (a) and (b)

of section 510 (Dividends or other distributions in cash or property).

(2) The purchase of the shares of the corporation to the extent that

it is contrary to the provisions of section 513 (Purchase or redemption

by a corporation of its own shares).

(3) The distribution of assets to shareholders after dissolution of

the corporation without paying or adequately providing for all known

liabilities of the corporation, excluding any claims not filed by

creditors within the time limit set in a notice given to creditors under

articles 10 (Non-judicial dissolution) or 11 (Judicial dissolution).

(4) The making of any loan contrary to section 714 (Loans to

directors).

(b) A director who is present at a meeting of the board, or any

committee thereof, when action specified in paragraph (a) is taken shall

be presumed to have concurred in the action unless his dissent thereto

shall be entered in the minutes of the meeting, or unless he shall

submit his written dissent to the person acting as the secretary of the

meeting before the adjournment thereof, or shall deliver or send by

registered mail such dissent to the secretary of the corporation

promptly after the adjournment of the meeting. Such right to dissent

shall not apply to a director who voted in favor of such action. A

director who is absent from a meeting of the board, or any committee

thereof, when such action is taken shall be presumed to have concurred

in the action unless he shall deliver or send by registered mail his

dissent thereto to the secretary of the corporation or shall cause such

dissent to be filed with the minutes of the proceedings of the board or

committee within a reasonable time after learning of such action.

(c) Any director against whom a claim is successfully asserted under

this section shall be entitled to contribution from the other directors

who voted for or concurred in the action upon which the claim is

asserted.

(d) Directors against whom a claim is successfully asserted under this

section shall be entitled, to the extent of the amounts paid by them to

the corporation as a result of such claims:

(1) Upon payment to the corporation of any amount of an improper

dividend or distribution, to be subrogated to the rights of the

corporation against shareholders who received such dividend or

distribution with knowledge of facts indicating that it was not

authorized by section 510, in proportion to the amounts received by them

respectively.

(2) Upon payment to the corporation of any amount of the purchase

price of an improper purchase of shares, to have the corporation rescind

such purchase of shares and recover for their benefit, but at their

expense, the amount of such purchase price from any seller who sold such

shares with knowledge of facts indicating that such purchase of shares

by the corporation was not authorized by section 513.

(3) Upon payment to the corporation of the claim of any creditor by

reason of a violation of subparagraph (a) (3), to be subrogated to the

rights of the corporation against shareholders who received an improper

distribution of assets.

(4) Upon payment to the corporation of the amount of any loan made

contrary to section 714, to be subrogated to the rights of the

corporation against a director who received the improper loan.

(e) A director shall not be liable under this section if, in the

circumstances, he performed his duty to the corporation under paragraph

(a) of section 717.

(f) This section shall not affect any liability otherwise imposed by

law upon any director.