YSC, Title 23.  Corporations, Partnerships & Associations
 
 
 
Chapter 6:  Rights,
Duties, and Liabilities

601.   Rights, duties, and liabilities of directors; dividends.
602.   Rights, duties and liabilities of subscribers and stockholders;
             assessments; liability to  corporation and creditors.
603.   Liability for debts.
604.   Annual exhibit; inspection.
605.   Fees; authority to set.

     601.  Rights, duties, and liabilities of directors; dividends.

     (a)  The directors or managers of any corporation may authorize the payment of dividends in cash or in property owned by the corporation only from the profits and earned surplus of the corporation and only when the corporation does not have and the payment of a dividend would not create a capital deficit; provided that the foregoing shall not be interpreted to prohibit any distribution of assets permitted by section 411 of this division, upon the reduction of the capital stock of a corporation, or to prohibit a distribution and division of the balance of the assets of the corporation in accordance with law, upon the dissolution of a corporation or the expiration of its charter.

     (b)  The directors or managers of any corporation may authorize the payment of dividends in shares of the authorized capital stock of the corporation only from the earned surplus or paid-in or contributed surplus or other surplus of the corporation, and the shares issued by the stock dividend shall be fully paid and nonassessable to the extent of the amount of surplus capitalized by the issuance thereof.

     (c)  In case of any dividend payment or other distribution of assets in violation of this division, the directors or managers who authorized the payment or distribution shall in their individual and private capacities be jointly and severally liable to the corporation and its creditors, in the event of its bankruptcy or insolvency, or in the event of its dissolution, for the loss suffered by reason of the payment or other distribution in an amount not exceeding the amount so paid or distributed.

Source:  YSL 2-51 53, modified.

Cross-reference:  Section 411 of chapter 4 of this division is on reduction of capital. Chapter 7 of this division is on dissolution.

     602.  Rights, duties and liabilities of subscribers and stockholders; assessments; liability to corporation and creditors.

     (a)  Every subscriber to shares whose subscription has not been released or canceled pursuant to section 411, and, except as otherwise provided in this section, every other person to whom shares were originally issued shall be liable to the corporation for the unpaid portion of the full consideration agreed to be paid for the shares, but in any event for not less than the unpaid portion of the amount of capital of the corporation attributable to the shares. Any transferee of the shares who has acquired the shares in good faith without knowledge that they were not paid in full or to the extent stated in the certificate for the shares, shall not be liable for any amount beyond that shown by the certificate to be unpaid; any holder who derives his title through such a transferee and who is not himself a party to any fraud affecting the issuance of the shares shall have all the rights of his transferor.

     (b)  Every transferee of partly paid shares who acquired them under a certificate showing the fact of part payment on the shares, and every transferee of the shares who acquired them with actual knowledge that the shares were not paid in full or to the extent stated in the certificate, shall be personally liable to the corporation for calls made or for installments of the amount unpaid becoming due until he transfers them to one who becomes liable therefor.  When a shareholder makes a transfer of shares in good faith which is duly registered on the corporate books to one who is liable therefor, he shall thereby be discharged from liability to the corporation for the portion of the subscription price or attributable capital which remains uncalled for at the time of registration, unless it is otherwise provided in the certificate or unless the shareholders have executed a subscription contract for the issuance of the shares.  After a transfer has been registered there shall be no lien upon the shares for calls already made or installments of the price due at the time of transfer and registration except as reserved in the certificate.

     (c)  The liability under subscription contracts, written or oral, of shareholders imposed by this section shall be an asset of the corporation and may be enforced by any appropriate proceedings.  No release or cancellation executed by the corporation of any such liability, excepting those pursuant to section 411, shall be effective in any action brought by or on behalf of any creditor to reach and apply the liability.  In the event the corporation purchases from any stockholder (other than bona fide officers or employees of the corporation who have purchased the shares from the corporation under agreements reserving to the corporation the option to repurchase or obligating it to repurchase the shares) shares of stock which have not been fully paid, the transferor of the partly paid shares shall, nevertheless, remain liable to the corporation for the amount unpaid upon the stock in any action brought by or on behalf of any creditor to reach and apply the debt for the amount unpaid upon the stock at the time of repurchase.

     (d)  No person holding shares in good faith as executor, administrator, guardian, trustee, receiver, or any other representative or fiduciary capacity shall be personally liable as a shareholder by reason of so holding the shares, but the estate and funds in the hands of the fiduciary or representative shall be so liable to the extent provided in this section.

     (e)  No pledgee or other holder of shares as collateral security shall be personally liable as a shareholder, but the person pledging the shares shall be considered a holder thereof and shall be liable as a shareholder.

     (f)  The dissolution of the corporation shall not affect the subscribers. or shareholders. liability and any subscriber or shareholder who makes payment to the corporation or to any creditor of the corporation in discharge in whole or in part of any debt or liability of the corporation shall have full rights of subrogation to the end that the contribution of the subscriber or shareholder shall not exceed the proportionate contributions made by other subscribers and shareholders for the discharge of the debts of the corporation.

Source:  YSL 2-51 54, modified.

Cross-reference:  Section 411 of chapter 4 of this division is on reduction of capital. Chapter 7 of this division is on dissolution.

     603.  Liability for debts.
     All the property of any corporation shall be liable for the just debts thereof, but no subscriber or shareholder shall be liable for debts of the corporation other than as specifically provided in this division.

Source:  YSL 2-51 55, modified.

     604.  Annual exhibit; inspection.

     (a)  Every corporation organized under this division shall annually, between January 1 and April 1, file with the Registrar a full and accurate exhibit of its state of affairs.  The exhibit shall be made as of December 31 of each year, unless the corporation has adopted a fiscal year basis, in which case the exhibit shall be made as of the end of its fiscal year, and filed within 90 days immediately following the fiscal year date.  Upon a timely request, the Registrar may grant a reasonable extension of time for making and filing the annual exhibits.

     (b)  The Registrar may either himself, or by one or more persons appointed by him, call for the production of books and papers of the corporation, and examine its officers, members, and others touching its affairs, under oath.  In case any corporation refuses to produce its books and papers upon the request of the Registrar, the Registrar may apply to the State Court for an order compelling production.

Source:  YSL 2-51 56, modified.

Cross-reference:  The statutory provisions on the Registrar of Corporations are found in chapter 2 of this division.  The statutory provisions on the State Court and Judiciary are found in Title 4 of this Code.

     605.  Fees; authority to set.
     The Registrar shall set fees to be charged upon the filing of corporate documents.  A copy of the schedule of fees shall be prepared by the Registrar and made available at the office where corporate documents are to be filed.

Source:  YSL 2-51 57.

Cross-reference:  The statutory provisions on the Registrar of Corporations are found in chapter 2 of this division.
                                                                                                                                                                                                                                                                                                           
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