§216. Redemption, purchase and cancellation of shares

A. A corporation shall not purchase or redeem its shares when it is insolvent; or when such purchase or redemption would render it insolvent or would reduce its net assets below the aggregate amount payable on liquidation upon any issued shares, which have a preferential right to participate in the assets in event of liquidation, remaining after the purchase or redemption and cancellation of any shares in connection therewith; or at a price, in the case of shares subject to redemption, exceeding the redemption price thereof; or, except when authorized by the articles, unless a purchase of its shares has been authorized by affirmative vote of two-thirds in interest of the members of each class, regardless of limitations or restrictions on the voting power of any of such classes. Subject to the provisions of this subsection, a corporation may purchase its own shares, or redeem its shares subject to redemption, as provided in the following subsections of this section.

B. Subject to the provisions of R.S. 12:221(F), a corporation may purchase its own shares, or redeem its shares subject to redemption, out of surplus; provided that a corporation which is not permitted to distribute net assets to its members or shareholders on dissolution shall not pay any premium in connection with the redemption or purchase of its own shares, but shall pay not more than the consideration received by it upon issuance of each share redeemed or purchased.

C. To the extent that there is no surplus available for the purpose, a corporation may apply, to the redemption of its shares subject to redemption, such amount out of stated capital as will not reduce stated capital below the aggregate allocated value of the issued shares remaining after the redemption and cancellation of any shares in connection therewith.

D. To the extent that there is no surplus available for the purpose, a corporation may purchase its own shares out of stated capital for the purpose of paying dissenting shareholders entitled to payment for their shares under the provisions of this Chapter. Shares so purchased out of stated capital shall be cancelled.

E. To the extent that there is no surplus available for the purpose, a corporation may apply to the purchase of its shares:

(1) For the purpose of eliminating fractions of shares; or

(2) For the purpose of collecting or compromising indebtedness to the corporation;

such amount out of stated capital as will not reduce stated capital below the aggregate allocated value of the issued shares remaining after the purchase and cancellation of any shares in connection therewith.

F. Shares which are cancelled are thereby restored to the status of authorized and unissued shares, unless the articles provide otherwise.

Acts 1968, No. 105, §1.