The directors must not make or declare dividends, except from the surplus profits arising from the business of the corporation; nor must they withdraw, divide or pay to the stockholders, or any of them, any part of the capital stock, nor must they create debts beyond their subscribed capital stock, or reduce or increase the capital stock, except as hereinafter specially provided. For a violation of the provisions of this section, the directors under whose administration the same may have happened, except those who may have caused their dissent therefrom to be entered at large on the minutes of the proceedings of the directors at the time, or were not present when the same did happen, shall be, in their individual and private capacity, jointly and severally liable to the corporation, and to the creditors thereof in the event of its dissolution, to the full amount of the capital stock so divided, withdrawn, paid out or reduced or debt contracted; and no statute of limitations shall be a bar to any suit against such directors for any sums for which they are made liable by this section. There may, however, be a division and distribution of the capital stock and property of the corporation which may remain after the payment of all its debts, upon the dissolution of the corporation or the expiration of its term of existence.

History: Laws 1878, ch. 1, ch. [tit.] 3, § 5; C.L. 1884, § 2637; C.L. 1897, § 3819; Code 1915, § 4678; C.S. 1929, § 116-126; 1941 Comp., § 74-118; 1953 Comp., § 69-1-18.

Bracketed material. — The bracketed material was inserted by the compiler and is not part of the law.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 18A Am. Jur. 2d Corporations §§ 463 to 483; 18B Am. Jur. 2d Corporations §§ 1168 to 1170, 1173, 1175 to 1183, 1185.

18 C.J.S. Corporations §§ 188 to 192.