<html xmlns="http://www.w3.org/1999/xhtml"><head><meta charset="UTF-8" /><meta http-equiv='content-language' content='en-us'/><title>SDLRC - Codified Law 47-1A-640 - Distributions to shareholders authorized--Distribution entitlement date. </title><meta name="Generator" content="PowerTools for Open XML" /><style>span { white-space: pre-wrap; } p.s2068141Normal { margin-top: 0; margin-bottom: 0; text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-left: 0; margin-right: 0; } span.s2068141SENU { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.s2068141CL { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } p.s2068141Normal-000000 { margin-top: 0; margin-bottom: 0; text-indent: 0.50in; text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-left: 0; margin-right: 0; } span.s2068141DefaultParagraphFont { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } span.s2068141000001 { font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } span.s2068141SCL { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.s2068141SCL-000002 { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } </style></head><body><div><p dir="ltr" class="s2068141Normal"><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640"><span class="s2068141SENU">47-1A-640</span></a><span xml:space="preserve" class="s2068141SENU">. </span><span class="s2068141CL">Distributions to shareholders authorized--Distribution entitlement date.</span></p><p dir="ltr" class="s2068141Normal-000000"><span xml:space="preserve" class="s2068141DefaultParagraphFont">A board of directors may authorize, and the corporation may make, distributions to its shareholders subject to restriction by the articles of incorporation and the limitation in § </span><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640.1"><span class="s2068141DefaultParagraphFont">47-1A-640.1</span></a><span class="s2068141DefaultParagraphFont">. If the board of directors does not fix the record date for determining shareholders entitled to a distribution, other than one involving a purchase, redemption, or other acquisition of the corporation's shares, it is the date the board of directors authorizes the distribution.</span></p><p dir="ltr" class="s2068141Normal"><span xml:space="preserve" class="s2068141000001"> </span></p><p dir="ltr" class="s2068141Normal"><span class="s2068141SCL">Source:</span><span xml:space="preserve" class="s2068141SCL-000002"> SL 2005, ch 239, § 80.</span></p></div></body></html><br /><hr><br /><html xmlns="http://www.w3.org/1999/xhtml"><head><meta charset="UTF-8" /><meta http-equiv='content-language' content='en-us'/><title>SDLRC - Codified Law 47-1A-640 - Distributions to shareholders authorized--Distribution entitlement date. </title><meta name="Generator" content="PowerTools for Open XML" /><style>span { white-space: pre-wrap; } p.s2068142Normal { text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-top: 0; margin-left: 0; margin-right: 0; margin-bottom: .001pt; } span.s2068142SENU { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.s2068142CL { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } p.s2068142Normal-000000 { text-indent: 0.50in; text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-top: 0; margin-left: 0; margin-right: 0; margin-bottom: .001pt; } span.s2068142DefaultParagraphFont { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } p.s2068142Normal-000001 { margin-left: 0.70in; text-indent: -0.45in; text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-top: 0; margin-right: 0; margin-bottom: .001pt; } p.s2068142Normal-000002 { text-indent: 0.25in; text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-top: 0; margin-left: 0; margin-right: 0; margin-bottom: .001pt; } span.s2068142000003 { font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } span.s2068142SCL { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.s2068142SCL-000004 { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } </style></head><body><div><p dir="ltr" class="s2068142Normal"><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640.1"><span class="s2068142SENU">47-1A-640.1</span></a><span xml:space="preserve" class="s2068142SENU">. </span><span class="s2068142CL">Distribution to shareholders prohibited if certain financial conditions result.</span></p><p dir="ltr" class="s2068142Normal-000000"><span class="s2068142DefaultParagraphFont">No distribution may be made if, after giving it effect:</span></p><p dir="ltr" class="s2068142Normal-000001"><span class="s2068142DefaultParagraphFont">(1)    The corporation would not be able to pay its debts as they become due in the usual course of business; or</span></p><p dir="ltr" class="s2068142Normal-000001"><span class="s2068142DefaultParagraphFont">(2)    The corporation's total assets would be less than the sum of its total liabilities plus, unless the articles of incorporation permit otherwise, the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution.</span></p><p dir="ltr" class="s2068142Normal-000002"><span class="s2068142DefaultParagraphFont">The board of directors may base a determination that a distribution is not prohibited under this section either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable under the circumstances.</span></p><p dir="ltr" class="s2068142Normal"><span xml:space="preserve" class="s2068142000003"> </span></p><p dir="ltr" class="s2068142Normal"><span class="s2068142SCL">Source:</span><span xml:space="preserve" class="s2068142SCL-000004"> SL 2005, ch 239, § 81.</span></p></div></body></html><br /><hr><br /><html xmlns="http://www.w3.org/1999/xhtml"><head><meta charset="UTF-8" /><meta http-equiv='content-language' content='en-us'/><title>SDLRC - Codified Law 47-1A-640 - Distributions to shareholders authorized--Distribution entitlement date. </title><meta name="Generator" content="PowerTools for Open XML" /><style>span { white-space: pre-wrap; } p.s2068143Normal { text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-top: 0; margin-left: 0; margin-right: 0; margin-bottom: .001pt; } span.s2068143SENU { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.s2068143CL { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } p.s2068143Normal-000000 { text-indent: 0.50in; text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-top: 0; margin-left: 0; margin-right: 0; margin-bottom: .001pt; } span.s2068143DefaultParagraphFont { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } p.s2068143Normal-000001 { margin-left: 0.70in; text-indent: -0.45in; text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-top: 0; margin-right: 0; margin-bottom: .001pt; } span.s2068143000002 { font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } span.s2068143SCL { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.s2068143SCL-000003 { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } </style></head><body><div><p dir="ltr" class="s2068143Normal"><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640.2"><span class="s2068143SENU">47-1A-640.2</span></a><span xml:space="preserve" class="s2068143SENU">. </span><span class="s2068143CL">Factors used to measure effect of distribution.</span></p><p dir="ltr" class="s2068143Normal-000000"><span xml:space="preserve" class="s2068143DefaultParagraphFont">Except as provided in § </span><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640.4"><span class="s2068143DefaultParagraphFont">47-1A-640.4</span></a><span xml:space="preserve" class="s2068143DefaultParagraphFont">, the effect of a distribution under § </span><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640.1"><span class="s2068143DefaultParagraphFont">47-1A-640.1</span></a><span xml:space="preserve" class="s2068143DefaultParagraphFont"> is measured:</span></p><p dir="ltr" class="s2068143Normal-000001"><span class="s2068143DefaultParagraphFont">(1)    In the case of distribution by purchase, redemption, or other acquisition of the corporation's shares, as of the earlier of the date money or other property is transferred or debt incurred by the corporation, or the date the shareholder ceases to be a shareholder with respect to the acquired shares;</span></p><p dir="ltr" class="s2068143Normal-000001"><span class="s2068143DefaultParagraphFont">(2)    In the case of any other distribution of indebtedness, as of the date the indebtedness is distributed; and</span></p><p dir="ltr" class="s2068143Normal-000001"><span class="s2068143DefaultParagraphFont">(3)    In all other cases, as of the date the distribution is authorized if the payment occurs within one hundred twenty days after the date of authorization, or the date the payment is made if it occurs more than one hundred twenty days after the date of authorization.</span></p><p dir="ltr" class="s2068143Normal"><span xml:space="preserve" class="s2068143000002"> </span></p><p dir="ltr" class="s2068143Normal"><span class="s2068143SCL">Source:</span><span xml:space="preserve" class="s2068143SCL-000003"> SL 2005, ch 239, § 82.</span></p></div></body></html><br /><hr><br /><html xmlns="http://www.w3.org/1999/xhtml"><head><meta charset="UTF-8" /><meta http-equiv='content-language' content='en-us'/><title>SDLRC - Codified Law 47-1A-640 - Distributions to shareholders authorized--Distribution entitlement date. </title><meta name="Generator" content="PowerTools for Open XML" /><style>span { white-space: pre-wrap; } p.s2068144Normal { margin-top: 0; margin-bottom: 0; text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-left: 0; margin-right: 0; } span.s2068144SENU { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.s2068144CL { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } p.s2068144Normal-000000 { margin-top: 0; margin-bottom: 0; text-indent: 0.50in; text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-left: 0; margin-right: 0; } span.s2068144DefaultParagraphFont { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } span.s2068144000001 { font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } span.s2068144SCL { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.s2068144SCL-000002 { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } </style></head><body><div><p dir="ltr" class="s2068144Normal"><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640.3"><span class="s2068144SENU">47-1A-640.3</span></a><span xml:space="preserve" class="s2068144SENU">. </span><span class="s2068144CL">Indebtedness to shareholder by reason of distribution at parity with indebtedness to general unsecured creditor.</span></p><p dir="ltr" class="s2068144Normal-000000"><span xml:space="preserve" class="s2068144DefaultParagraphFont">A corporation's indebtedness to a shareholder incurred by reason of a distribution made in accordance with §§ </span><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640"><span class="s2068144DefaultParagraphFont">47-1A-640</span></a><span xml:space="preserve" class="s2068144DefaultParagraphFont"> to </span><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640.5"><span class="s2068144DefaultParagraphFont">47-1A-640.5</span></a><span class="s2068144DefaultParagraphFont">, inclusive, is at parity with the corporation's indebtedness to its general, unsecured creditors except to the extent subordinated by agreement.</span></p><p dir="ltr" class="s2068144Normal"><span xml:space="preserve" class="s2068144000001"> </span></p><p dir="ltr" class="s2068144Normal"><span class="s2068144SCL">Source:</span><span xml:space="preserve" class="s2068144SCL-000002"> SL 2005, ch 239, § 83.</span></p></div></body></html><br /><hr><br /><html xmlns="http://www.w3.org/1999/xhtml"><head><meta charset="UTF-8" /><meta http-equiv='content-language' content='en-us'/><title>SDLRC - Codified Law 47-1A-640 - Distributions to shareholders authorized--Distribution entitlement date. </title><meta name="Generator" content="PowerTools for Open XML" /><style>span { white-space: pre-wrap; } p.s2068145Normal { margin-top: 0; margin-bottom: 0; text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-left: 0; margin-right: 0; } span.s2068145SENU { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.s2068145CL { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } p.s2068145Normal-000000 { margin-top: 0; margin-bottom: 0; text-indent: 0.50in; text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-left: 0; margin-right: 0; } span.s2068145DefaultParagraphFont { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } span.s2068145000001 { font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } span.s2068145SCL { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.s2068145SCL-000002 { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } </style></head><body><div><p dir="ltr" class="s2068145Normal"><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640.4"><span class="s2068145SENU">47-1A-640.4</span></a><span xml:space="preserve" class="s2068145SENU">. </span><span xml:space="preserve" class="s2068145CL">Indebtedness of corporation for purposes of determinations under § </span><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640.1"><span class="s2068145CL">47-1A-640.1</span></a><span class="s2068145CL">.</span></p><p dir="ltr" class="s2068145Normal-000000"><span xml:space="preserve" class="s2068145DefaultParagraphFont">Indebtedness of a corporation, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations under § </span><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640.1"><span class="s2068145DefaultParagraphFont">47-1A-640.1</span></a><span xml:space="preserve" class="s2068145DefaultParagraphFont"> if its terms provide that payment of principal and interest are made only if and to the extent that payment of a distribution to shareholders could then be made under this section. If the indebtedness is issued as a distribution, each payment of principal or interest is treated as a distribution, the effect of which is measured on the date the payment is actually made.</span></p><p dir="ltr" class="s2068145Normal"><span xml:space="preserve" class="s2068145000001"> </span></p><p dir="ltr" class="s2068145Normal"><span class="s2068145SCL">Source:</span><span xml:space="preserve" class="s2068145SCL-000002"> SL 2005, ch 239, § 84.</span></p></div></body></html><br /><hr><br /><html xmlns="http://www.w3.org/1999/xhtml"><head><meta charset="UTF-8" /><meta http-equiv='content-language' content='en-us'/><title>SDLRC - Codified Law 47-1A-640 - Distributions to shareholders authorized--Distribution entitlement date. </title><meta name="Generator" content="PowerTools for Open XML" /><style>span { white-space: pre-wrap; } p.s2068146Normal { margin-top: 0; margin-bottom: 0; text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-left: 0; margin-right: 0; } span.s2068146SENU { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.s2068146CL { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } p.s2068146Normal-000000 { margin-top: 0; margin-bottom: 0; text-indent: 0.50in; text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-left: 0; margin-right: 0; } span.s2068146DefaultParagraphFont { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } span.s2068146000001 { font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } span.s2068146SCL { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.s2068146SCL-000002 { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } body { text-decoration-skip-ink: none; } </style></head><body><div><p dir="ltr" class="s2068146Normal"><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640.5"><span class="s2068146SENU">47-1A-640.5</span></a><span xml:space="preserve" class="s2068146SENU">. </span><span xml:space="preserve" class="s2068146CL">Application of provisions in §§ </span><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640"><span class="s2068146CL">47-1A-640</span></a><span xml:space="preserve" class="s2068146CL"> to </span><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640.4"><span class="s2068146CL">47-1A-640.4</span></a><span class="s2068146CL">.</span></p><p dir="ltr" class="s2068146Normal-000000"><span xml:space="preserve" class="s2068146DefaultParagraphFont">The provisions of §§ </span><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640"><span class="s2068146DefaultParagraphFont">47-1A-640</span></a><span xml:space="preserve" class="s2068146DefaultParagraphFont"> to </span><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-640.4"><span class="s2068146DefaultParagraphFont">47-1A-640.4</span></a><span xml:space="preserve" class="s2068146DefaultParagraphFont">, inclusive, do not apply to distributions in liquidation under §§ </span><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-1402"><span class="s2068146DefaultParagraphFont">47-1A-1402</span></a><span xml:space="preserve" class="s2068146DefaultParagraphFont"> to </span><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=47-1A-1501"><span class="s2068146DefaultParagraphFont">47-1A-1501</span></a><span class="s2068146DefaultParagraphFont">, inclusive.</span></p><p dir="ltr" class="s2068146Normal"><span xml:space="preserve" class="s2068146000001"> </span></p><p dir="ltr" class="s2068146Normal"><span class="s2068146SCL">Source:</span><span xml:space="preserve" class="s2068146SCL-000002"> SL 2005, ch 239, § 85.</span></p></div></body></html>