Title 10 - Corporations and Associations

Chapter 31, Directors and Officers - Nonprofit Corporations, Sec. 10-3801-10-3864

Liability for unlawful distributions

Article 3, Standards of Conduct, § 10-3833

Source: Arizona Revised Statutes

  1. A director who votes for or assents to a distribution made in violation of sections 10-11301 and 10-11302 or the articles of incorporation is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating sections 10-11301 and 10-11302 or the articles of incorporation if it is established that the director’s duties were not performed in compliance with section 10-3830.
  2. A director of a corporation who is present at a meeting of its board of directors at which action on any distribution in violation of section 10-11301 is taken is presumed to have assented to the action taken unless his dissent is entered in the minutes of the meeting or unless he files his written dissent to the action with the secretary of the meeting before the adjournment of the meeting or forwards the dissent by registered or certified mail to the secretary of the corporation before 5:00 p.m. of the next business day after the adjournment of the meeting. The right to dissent does not apply to a director who voted in favor of the action.
  3. A director who is held liable under subsection A of this section for an unlawful distribution is entitled to contribution from:
    1. Every other director who could be held liable under subsection A of this section for the unlawful distribution.
    2. Each person who received an unlawful distribution for the amount of the distribution whether or not the person receiving the distribution knew it was made in violation of sections 10-11301 and 10-11302 or the articles of incorporation.
  4. A proceeding under this section is barred unless it is commenced within two years after the date on which the distribution is made.

Also in: Chapter 31, Sec. 10-3801-10-3864

View all Nonprofit Corporation Act statutes.

Source: This content is sourced from the online version of the Arizona Revised Statutes located at www.azleg.gov.

Disclaimer: These statutes are provided as a courtesy by CHDB Law LLP. CHDB Law cannot guarantee that the statutes set forth on the website or in our published guide will not be found to be defective by a court or other tribunal after the date the books or online material are published. The HOA Knowledge Base does not attempt to include every statute that could apply to a community association issue. There may be other statutes or applicable laws that have a bearing on a particular legal issue confronted by a community association. These statutes are provided as a reference only. If a particular legal issue is confronted by a community association, the association should seek legal advice from competent attorneys.

We help planned communities, homeowner associations, and condo associations.

Our accomplished attorneys are well-versed in navigating the intricacies of State and local regulations impacting your community association or business. If you have a question, we’re just a phone call away. Call our toll-free number at (800) 743-9324 or contact us via email to discuss your specific concerns and questions.

Contact us today