2023 New York Laws › BSC - Business Corporation › Article 7 - Directors and Officers › 719 - Liability of Directors in Certain Cases.

§ 719. Liability of directors in certain cases.
(a) Directors  of  a  corporation who vote for or concur in any of the
following corporate actions shall be jointly and severally liable to the
corporation for the benefit of its creditors  or  shareholders,  to  the
extent of any injury suffered by such persons, respectively, as a result
of such action:
(1) The  declaration  of  any  dividend  or  other distribution to the
extent that it is contrary to the provisions of paragraphs (a)  and  (b)
of section 510 (Dividends or other distributions in cash or property).
(2) The  purchase  of the shares of the corporation to the extent that
it is contrary to the provisions of section 513 (Purchase or  redemption
by a corporation of its own shares).
(3) The  distribution  of  assets to shareholders after dissolution of
the corporation without paying or adequately  providing  for  all  known
liabilities  of  the  corporation,  excluding  any  claims  not filed by
creditors within the time limit set in a notice given to creditors under
articles 10 (Non-judicial dissolution) or 11 (Judicial dissolution).
(4) The  making  of  any  loan  contrary  to  section  714  (Loans  to
directors).
(b) A  director  who  is  present  at  a  meeting of the board, or any
committee thereof, when action specified in paragraph (a) is taken shall
be presumed to have concurred in the action unless his  dissent  thereto
shall  be  entered  in  the  minutes  of the meeting, or unless he shall
submit his written dissent to the person acting as the secretary of  the
meeting  before  the  adjournment  thereof,  or shall deliver or send by
registered mail  such  dissent  to  the  secretary  of  the  corporation
promptly  after  the  adjournment  of the meeting. Such right to dissent
shall not apply to a director who voted  in  favor  of  such  action.  A
director  who  is  absent  from a meeting of the board, or any committee
thereof, when such action is taken shall be presumed to  have  concurred
in  the  action  unless  he shall deliver or send by registered mail his
dissent thereto to the secretary of the corporation or shall cause  such
dissent  to be filed with the minutes of the proceedings of the board or
committee within a reasonable time after learning of such action.
(c) Any director against whom a claim is successfully  asserted  under
this  section shall be entitled to contribution from the other directors
who voted for or concurred  in  the  action  upon  which  the  claim  is
asserted.
(d) Directors against whom a claim is successfully asserted under this
section  shall be entitled, to the extent of the amounts paid by them to
the corporation as a result of such claims:
(1) Upon payment to the corporation  of  any  amount  of  an  improper
dividend  or  distribution,  to  be  subrogated  to  the  rights  of the
corporation  against  shareholders  who  received   such   dividend   or
distribution  with  knowledge  of  facts  indicating  that  it  was  not
authorized by section 510, in proportion to the amounts received by them
respectively.
(2) Upon payment to the corporation of  any  amount  of  the  purchase
price of an improper purchase of shares, to have the corporation rescind
such  purchase  of  shares  and  recover for their benefit, but at their
expense, the amount of such purchase price from any seller who sold such
shares with knowledge of facts indicating that such purchase  of  shares
by the corporation was not authorized by section 513.
(3) Upon  payment  to  the corporation of the claim of any creditor by
reason of a violation of subparagraph (a) (3), to be subrogated  to  the
rights  of the corporation against shareholders who received an improper
distribution of assets.
(4) Upon payment to the corporation of the amount  of  any  loan  made
contrary  to  section  714,  to  be  subrogated  to  the  rights  of the
corporation against a director who received the improper loan.
(e) A  director  shall  not  be  liable  under this section if, in the
circumstances, he performed his duty to the corporation under  paragraph
(a) of section 717.
(f) This  section  shall not affect any liability otherwise imposed by
law upon any director.