Dividends; declaration and payment; determination of net profits by "wasting assets" corporation

17-6420. Dividends; declaration and payment; determination of net profits by "wasting assets" corporation. (a) The directors of every corporation, subject to any restrictions contained in its articles of incorporation, may declare and pay dividends upon the shares of its capital stock either: (1) Out of its surplus, as defined in and computed in accordance with K.S.A. 17-6404 and 17-6604, and amendments thereto; or (2) in case there shall be no such surplus, out of its net profits for the fiscal year in which the dividend is declared or the preceding fiscal year, or both. If the capital of the corporation, computed in accordance with K.S.A. 17-6404 and 17-6604, and amendments thereto, shall have been diminished by depreciation in the value of its property, or by losses, or otherwise, to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets, the directors of such corporation shall not declare and pay out of such net profits any dividends upon any shares of any classes of its capital stock until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets shall have been repaired. Nothing in this subsection shall invalidate or otherwise affect a note, debenture or other obligation of the corporation paid by it as a dividend on shares of its stock, or any payment made thereon, if at the time such note, debenture or obligation was delivered by the corporation, the corporation had either surplus or net profits as provided in paragraph (1) or (2) from which the dividend could lawfully have been paid. (b) Subject to any restrictions contained in its articles of incorporation, the directors of any corporation engaged in the exploitation of wasting assets, including but not limited to a corporation engaged in the exploitation of natural resources or other wasting assets, including patents, or engaged primarily in the liquidation of specific assets, may determine the net profits derived from the exploitation of such wasting assets or the net proceeds derived from such liquidation without taking into consideration the depletion of such assets resulting from lapse of time, consumption, liquidation or exploitation of such assets. History: L. 1972, ch. 52, § 47; L. 1988, ch. 99, § 18; Revived and amended, L. 1988, ch. 100, § 18; L. 2004, ch. 143, § 20; L. 2016, ch. 110, § 43; July 1. Source or Prior Law: 17-3501, 17-3502, 17-3503; 8 Del. C. § 170. Cross References to Related Sections: Dividends on preferred or special stock, see 17-6401 (c). Declaration of dividends on partly paid shares, see 17-6406. Special purpose reserves, see 17-6421. Reliance by directors or designees upon books and records of corporation in declaring and paying dividends, see 17-6422. Method of paying dividends, see 17-6423. Law Review and Bar Journal References: The problem of lack of uniformity in financial statements and corporate statutes, 16 W.L.J. 655, 664, 665, 667, 668, 669, 671 (1977). CASE ANNOTATIONS 1. On question certified relative to K.S.A. 60-258a, standards of duty on savings and loan association officers discussed. Federal Savings & Loan Ins. Corp. v. Huff, 237 Kan. 873, 880, 704 P.2d 372 (1985). Previous | Next LEGISLATIVE COORDINATING COUNCIL General Policies 2026 Archived LCC Documents Archived LCC Meetings REVISOR OF STATUTES Archived Session Documents Archived School Finance Documents USEFUL LINKS Session Laws Kansas Administrative Regulations OTHER LEGISLATIVE SITES Kansas Legislature Administrative Services Division of Post Audit Research Department Contact Us PDF Help www.ksrevisor.gov 2026