(1) Unless otherwise provided in the articles of incorporation, shares may be issued pro rata and without consideration to the shareholders or to the shareholders of one or more classes or series of its shares. An issuance of shares pursuant to this subsection (1) is a share dividend.
(2) Shares of one class or series may not be issued as a share dividend in respect of shares of another class or series unless:
(a) The articles of incorporation so authorize;
(b) Such issuance is approved by a majority of the votes entitled to be cast by the class or series to be issued; or
(c) There are no outstanding shares of the class or series to be issued.
(3) The bylaws or, in the absence of an applicable bylaw, the board of directors may fix a future date as the record date for determining shareholders entitled to a share dividend. If no future record date is so fixed, the record date is the date the board of directors authorizes the share dividend.
Source: L. 93: Entire article added, p. 757, § 1, effective July 1, 1994.
ANNOTATION
Law reviews. For article, "Corporate Dividend Limitations", see 27 Dicta 99 (1950). For note, "Surpluses Which May Be Used For Paying Dividends under the New Colorado Corporation Act", see 31 Rocky Mt. L. Rev. 49 (1958). For article, "1959 Amendments to the Colorado Corporation Code", see 36 Dicta 489 (1959). For article, "Depreciation Policy and Its Effect in Determining Earnings Available for Dividends", see 36 U. Colo. L. Rev. 143 (1963). For article, "Counseling the Corporation In Financial Crisis", see 17 Colo. Law. 631 (1988). For article, "Counseling the Corporation In Financial Crisis", see 17 Colo. Law. 631 (1988). For article, "Corporate Director Liability", see 65 Den. U. L. Rev. 59 (1988).
Annotator's note. Since § 7-106-204 is similar to § 7-5-110 as it existed prior to the 1993 recodification of the "Colorado Business Corporation Act", articles 101 to 117 of title 7, cases construing that provision and its predecessors have been included in the annotations to this section.
This section does not impose a fiduciary duty within the meaning of 11 U.S.C.A. § 523 (a)(4) of the bankruptcy code. In re Anzman, 73 B.R. 156 (Bankr. D. Colo. 1986).
Directors expressly made personally liable to corporation. This section and §§ 7-3-102 and 7-5-114 (1)(d) expressly make directors personally liable to the corporation. Sec. Nat'l Bank v. Peters, Writer & Christensen, Inc., 39 Colo. App. 344, 569 P.2d 875 (1977).
Absolute liability. Liability under this section and §§ 7-3-102 and 7-5-114 (1)(d) is absolute. Sec. Nat'l Bank v. Peters, Writer & Christensen, Inc., 39 Colo. App. 344, 569 P.2d 875 (1977).
A showing of fraud is not required to impose liability under this section and §§ 7-3-102 and 7-5-114 (1)(d). Sec. Nat'l Bank v. Peters, Writer & Christensen, Inc., 39 Colo. App. 344, 569 P.2d 875 (1977).