Liability for unlawful distribution

(a) Unless a director complies with the applicable standards of conduct described in Code Section 14-3-830, a director who votes for or assents to a distribution made in violation of this chapter is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating this chapter. (b) A director held liable for an unlawful distribution under subsection (a) of this Code section is entitled to contribution: (1) From every other director who voted for or assented to the distribution without complying with the applicable standards of conduct described in Code Section 14-3-830; and (2) From each person who received an unlawful distribution for the amount of the distribution whether or not the person receiving the 677 14-3-831 CORPORATIONS & PARTNERSHIPS T.14, C.3, A.8, P.4 distribution knew it was made in violation of this chapter. (Code 1981, § 14-3-831, enacted by Ga. L. 1991, p. 465, § 1.) COMMENT This section is based on the Model Act. It differs from its Business Code counterpart, section 14-2-832, in that it does not contain a limitation period for proceedings brought under it. In addition, the Business Code statement that ‘‘[i]n any proceeding commenced under this Code section, a director has all of the defenses ordinarily available to a director’’ was omitted. This omission should not alter the availability of defenses, such as the common law business judgment rule, to directors in a proceeding under this section, because liability under this section is predicated on a violation of the standards contained in section 14-3-830. All defenses to an alleged violation of the standards contained in section 14-3-830 are necessarily available to a director in a proceeding under this section. Section 14-3-1301 prohibits distributions except those authorized by section 14-3-1302. ‘‘Distribution’’ is defined in section 14-3-140(9).