{"data":{"id":"us-ky/krs-271b.6-400","jurisdiction":"us-ky","citation":"KRS 271B.6-400","heading":"Distributions to shareholders.","body":"(1) A board of directors may authorize and the corporation may make distributions to\nits shareholders subject to restriction by the articles of incorporation and the\nlimitation in subsection (3) of this section.\n(2) If the board of directors does not fix the r ecord date for determining shareholders\nentitled to a distribution (other than one involving a purchase, redemption or other\nacquisition of the corporation's shares), it shall be the date the board of directors\nauthorizes the distribution.\n(3) No distribution shall be made if, after giving it effect:\n(a) The corporation would not be able to pay its debts as they become due in the\nusual course of business; or\n(b) The corporation's total assets would be less than the sum of its total liabilities\nplus (unless the articles of incorporation permit otherwise) the amount that\nwould be needed, if the corporation were to be dissolved at the time of the\ndistribution, to satisfy the preferential rights upon dissolution of shareholders\nwhose preferential rights are superior to those receiving the distribution.\n(4) The board of directors may base a determination that a distribution is not prohibited\nunder subsection (3) of this section either on financial statements prepared on the\nbasis of accounting practices and principles that are reasonable in the circumstances\nor on a fair valuation or other method that is reasonable in the circumstances.\n(5) Except as provided in subsection (7) of this section, the effect of a distribution\nunder subsection (3) of this section shall be measured:\n(a) In the case of distribution by purchase, redemption, or other acquisition of the\ncorporation's shares, as of the earlier of:\n1. The date money or other property is transferred or debt incurred by the\ncorporation; or\n2. The date the shareho lder ceases to be a shareholder with respect to the\nacquired shares;\n(b) In the case of any other distribution of indebtedness, as of the date the\nindebtedness is distributed; and\n(c) In all other cases, as of:\n1. The date the distribution is authorized if the payment occurs within one\nhundred twenty (120) days after the date of authorization; or\n2. The date the payment is made if it occurs more than one hundred twenty\n(120) days after the date of authorization.\n(6) A corporation's indebtedness to a shareholder incurred by a reason of a distribution\nmade in accordance with this section shall be at parity with the corporation's\nindebtedness to its general creditors except to the extent subordinated by agreement.\n(7) Indebtedness of a corporation, including indebtedness issued as a distribution, shall\nnot be considered a liability for purposes of determinations under subsection (3) of\nthis section if its terms provide that payment of principal and interest are made only\nif and to the extent that payment of a distribution to shareholders could then be\nmade under this section. If the indebtedness is issued as a distribution, each\npayment of principal or interest shall be treated as a distribution, the effect of which\nis measured on the date the payment is actually made.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=13351","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:53:18Z","sha256":"12d0caed60eec03dde144c6e80209e48bcc9c0af5613816dee8275099c57ab52","source_id":"us-ky","stale":false,"prev":"us-ky/krs-271b.6-310","next":"us-ky/krs-271b.7-010"},"notice":"GroundRules: Original legal text. Not legal advice."}