{"id":6382,"date":"2022-05-24T18:11:56","date_gmt":"2022-05-24T18:11:56","guid":{"rendered":"https:\/\/crowdsourcelawyers.com\/california-statutes\/?page_id=6382"},"modified":"2022-05-24T18:24:12","modified_gmt":"2022-05-24T18:24:12","slug":"california-corporations-code-section-500","status":"publish","type":"page","link":"https:\/\/crowdsourcelawyers.com\/california-statutes\/california-statutes\/california-corporations-code-section-500\/","title":{"rendered":"California Corporations Code Section 500"},"content":{"rendered":"\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-l3kh2wxf-07fa909d68db45298245d3975cb9c6f1\">\n#top .av-special-heading.av-l3kh2wxf-07fa909d68db45298245d3975cb9c6f1{\npadding-bottom:10px;\n}\nbody .av-special-heading.av-l3kh2wxf-07fa909d68db45298245d3975cb9c6f1 .av-special-heading-tag .heading-char{\nfont-size:25px;\n}\n.av-special-heading.av-l3kh2wxf-07fa909d68db45298245d3975cb9c6f1 .av-subheading{\nfont-size:22px;\n}\n<\/style>\n<div  class='av-special-heading av-l3kh2wxf-07fa909d68db45298245d3975cb9c6f1 av-special-heading-h1 blockquote modern-quote  avia-builder-el-0  el_before_av_hr  avia-builder-el-first '><div class='av-subheading av-subheading_above'><p>California<\/p>\n<\/div><h1 class='av-special-heading-tag '  itemprop=\"headline\"  >Corporations Code &#8211; CORP \u00a7 500<\/h1><div class=\"special-heading-border\"><div class=\"special-heading-inner-border\"><\/div><\/div><\/div>\n\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-av_hr-3a876428eececa9d35452247ddb053af\">\n#top .hr.hr-invisible.av-av_hr-3a876428eececa9d35452247ddb053af{\nheight:50px;\n}\n<\/style>\n<div  class='hr av-av_hr-3a876428eececa9d35452247ddb053af hr-invisible  avia-builder-el-1  el_after_av_heading  el_before_av_textblock '><span class='hr-inner '><span class=\"hr-inner-style\"><\/span><\/span><\/div>\n<section  class='av_textblock_section av-av_textblock-e878f05c31dff72941bf1e49a00d9ff5 '   itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/CreativeWork\" ><div class='avia_textblock'  itemprop=\"text\" ><p><a href=\"https:\/\/crowdsourcelawyers.com\/\">CrowdSourceLawyers.com<\/a><\/p>\n<\/div><\/section>\n\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-avia_sc_search-4ee94ae86cde3b232e718bb4ac84e6ad\">\n#top .avia_search_element.av-avia_sc_search-4ee94ae86cde3b232e718bb4ac84e6ad .av_searchform_wrapper{\nborder-color:#edae44;\nbackground-color:#edae44;\n}\n#top .avia_search_element.av-avia_sc_search-4ee94ae86cde3b232e718bb4ac84e6ad #s.av-input-field{\ncolor:#edae44;\n}\n#top .avia_search_element.av-avia_sc_search-4ee94ae86cde3b232e718bb4ac84e6ad .av-input-field-icon.av-search-icon{\ncolor:#edae44;\n}\n#top .avia_search_element.av-avia_sc_search-4ee94ae86cde3b232e718bb4ac84e6ad .av-input-field-icon.av-search-icon.avia-svg-icon svg:first-child{\nfill:#edae44;\nstroke:#edae44;\n}\n#top .avia_search_element.av-avia_sc_search-4ee94ae86cde3b232e718bb4ac84e6ad #searchsubmit{\nbackground-color:#edae44;\n}\n#top .avia_search_element.av-avia_sc_search-4ee94ae86cde3b232e718bb4ac84e6ad .av_searchsubmit_wrapper{\nbackground-color:#edae44;\n}\n<\/style>\n<div  class='avia_search_element av-avia_sc_search-4ee94ae86cde3b232e718bb4ac84e6ad  avia-builder-el-3  el_after_av_textblock  el_before_av_hr '><search><form action='https:\/\/crowdsourcelawyers.com\/california-statutes\/' id='searchform_element' method='get' class='' data-element_id='av-avia_sc_search-4ee94ae86cde3b232e718bb4ac84e6ad' ><div class='av_searchform_wrapper'><input type='search' value='' id='s' name='s' placeholder='Search CA statutes' aria-label='Search CA statutes' class='av-input-field ' required \/><div class='av_searchsubmit_wrapper '><input type='submit' value='Find' id='searchsubmit' class='button ' title='View results on search page' aria-label='View results on search page' \/><\/div><input type='hidden' name='numberposts' value='10' \/><input type='hidden' name='results_hide_fields' value='' \/><\/div><\/form><\/search><\/div>\n\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-av_hr-3a876428eececa9d35452247ddb053af\">\n#top .hr.hr-invisible.av-av_hr-3a876428eececa9d35452247ddb053af{\nheight:50px;\n}\n<\/style>\n<div  class='hr av-av_hr-3a876428eececa9d35452247ddb053af hr-invisible  avia-builder-el-4  el_after_avia_sc_search  el_before_av_textblock '><span class='hr-inner '><span class=\"hr-inner-style\"><\/span><\/span><\/div>\n<section  class='av_textblock_section av-l3kh55yk-bf258c9d81b016eb4ea50b27cbc749d7 '   itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/CreativeWork\" ><div class='avia_textblock'  itemprop=\"text\" ><div class=\"row\">\n<div class=\"subsection\"><\/div>\n<div class=\"subsection\">\n<div class=\"subsection\">\n<p>(a)\u2002Neither a corporation nor any of its subsidiaries shall make any distribution to the corporation&#8217;s shareholders (<span class=\"cite\">\u00a0Section 166\u00a0<\/span>) unless the board of directors has determined in good faith either of the following:<\/p>\n<div class=\"subsection\">\n<p>(1)\u2002The amount of retained earnings of the corporation immediately prior to the distribution equals or exceeds the sum of (A) the amount of the proposed distribution plus (B) the preferential dividends arrears amount.<\/p>\n<\/div>\n<div class=\"subsection\">\n<p>(2)\u2002Immediately after the distribution, the value of the corporation&#8217;s assets would equal or exceed the sum of its total liabilities plus the preferential rights amount.<\/p>\n<\/div>\n<\/div>\n<div class=\"subsection\">\n<p>(b)\u2002For the purpose of applying paragraph (1) of subdivision (a) to a distribution by a corporation, \u201c<span class=\"wordphrase\">preferential dividends arrears amount<\/span>\u201d means the amount, if any, of cumulative dividends in arrears on all shares having a preference with respect to payment of dividends over the class or series to which the applicable distribution is being made, provided that if the articles of incorporation provide that a distribution can be made without regard to preferential dividends arrears amount, then the preferential dividends arrears amount shall be zero. \u2002For the purpose of applying paragraph (2) of subdivision (a) to a distribution by a corporation, \u201c<span class=\"wordphrase\">preferential rights amount<\/span>\u201d means the amount that would be needed if the corporation were to be dissolved at the time of the distribution to satisfy the preferential rights, including accrued but unpaid dividends, of other shareholders upon dissolution that are superior to the rights of the shareholders receiving the distribution, provided that if the articles of incorporation provide that a distribution can be made without regard to any preferential rights, then the preferential rights amount shall be zero. \u2002In the case of a distribution of cash or property in payment by the corporation in connection with the purchase of its shares, (1) there shall be added to retained earnings all amounts that had been previously deducted therefrom with respect to obligations incurred in connection with the corporation&#8217;s repurchase of its shares and reflected on the corporation&#8217;s balance sheet, but not in excess of the principal of the obligations that remain unpaid immediately prior to the distribution and (2) there shall be deducted from liabilities all amounts that had been previously added thereto with respect to the obligations incurred in connection with the corporation&#8217;s repurchase of its shares and reflected on the corporation&#8217;s balance sheet, but not in excess of the principal of the obligations that will remain unpaid after the distribution, provided that no addition to retained earnings or deduction from liabilities under this subdivision shall occur on account of any obligation that is a distribution to the corporation&#8217;s shareholders (<span class=\"cite\">\u00a0Section 166\u00a0<\/span>) at the time the obligation is incurred.<\/p>\n<\/div>\n<div class=\"subsection\">\n<p>(c)\u2002The board of directors may base a determination that a distribution is not prohibited under subdivision (a) or under\u00a0<span class=\"cite\">Section 501\u00a0<\/span>on any of the following:<\/p>\n<div class=\"subsection\">\n<p>(1)\u2002Financial statements prepared on the basis of accounting practices and principles that are reasonable under the circumstances.<\/p>\n<\/div>\n<div class=\"subsection\">\n<p>(2)\u2002A fair valuation.<\/p>\n<\/div>\n<div class=\"subsection\">\n<p>(3)\u2002Any other method that is reasonable under the circumstances.<\/p>\n<\/div>\n<\/div>\n<div class=\"subsection\">\n<p>(d)\u2002The effect of a distribution under\u00a0<span class=\"added-material\">paragraph<\/span>\u00a0(1) or (2) of subdivision (a) is measured as of the date the distribution is authorized if the payment occurs within 120 days after the date of authorization.<\/p>\n<\/div>\n<div class=\"subsection\">\n<div class=\"subsection\">\n<p>(e)(1)\u2002If terms of indebtedness provide that payment of principal and interest is to be made only if, and to the extent that, payment of a distribution to shareholders could then be made under this section, indebtedness of a corporation, including indebtedness issued as a distribution, is not a liability for purposes of determinations made under paragraph (2) of subdivision (a).<\/p>\n<\/div>\n<div class=\"subsection\">\n<p>(2)\u2002If indebtedness is issued as a distribution, each payment of principal or interest on the indebtedness shall be treated as a distribution, the effect of which is measured on the date the payment of the indebtedness is actually made.<\/p>\n<\/div>\n<\/div>\n<div class=\"subsection\">\n<p>(f)\u2002This section does not apply to a corporation licensed as a broker-dealer under Chapter 2 (commencing with\u00a0<span class=\"cite\">Section 25210\u00a0<\/span>) of Part 3 of Division 1 of Title 4, if immediately after giving effect to any distribution the corporation is in compliance with the net capital rules of the Commissioner of Corporations and the Securities and Exchange Commission.<\/p>\n<\/div>\n<p><br class=\"avia-permanent-lb\" \/><br class=\"avia-permanent-lb\" \/><\/p>\n<\/div>\n<\/div>\n<hr \/>\n<p><a href=\"https:\/\/crowdsourcelawyers.com\/\">CrowdSourceLawyers.com<\/a><\/p>\n<\/div><\/section>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":7,"featured_media":0,"parent":2019,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-6382","page","type-page","status-publish","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO 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