Texas Business Corporation Act - Article 2.38-4. Date Of Determination Of Surplus
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Art. 2.38-4. Date of Determination of Surplus
A. In the case of a distribution by a corporation or the payment of a
share dividend, the surplus of the corporation shall be determined,
and the determination whether the corporation would be insolvent
after giving effect to the distribution shall be made:
(1) on the date that action is authorized by the board of directors
if the action is taken on or before the 120th day after the date of
authorization;
(2) if the action is taken after the 120th day after the date of
authorization and the board of directors designates a date, within
120 days before the date the action is taken, on which the
determination is to be made, on the date so designated by the board
of directors; or
(3) if the action is taken after the 120th day after the date of
authorization and the board of directors does not make the
designation described by Subsection (2) of this section, on the
date the action is taken.
B. For the purposes of this Article, a distribution that involves
the incurrence by a corporation of any indebtedness or deferred
payment obligation or that involves a requirement in the
corporation's articles of incorporation or other contract by the
corporation to redeem, exchange, or otherwise acquire any of its
own shares is deemed to have been made on the date the indebtedness
or obligation is incurred or, in the case of a provision in the
articles of incorporation of a corporation or other contract to
purchase, redeem, exchange, or otherwise acquire shares, at the
option of the corporation, is deemed to have been made on either the
date the provision or other contract is made or takes effect or the
date on which the shares to be redeemed, exchanged, or acquired are
redeemed, exchanged, or acquired.
Added by Acts 1987, 70th Leg., ch. 93, Sec. 16, eff. Aug. 31, 1987.
Sec. B amended by Acts 1997, 75th Leg., ch. 375, Sec. 15, eff. Sept.
1, 1997.
Article: 2.35-1 2.36 2.37 2.38 2.38-1 2.38-2 2.38-3 2.38-4 2.41 2.42 2.43 2.44 3.01 3.02 3.03
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Last modified: August 10, 2007
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