Cal. Codes » Corporations Code / TITLE 1. CORPORATIONS / DIVISION 1. GENERAL CORPORATION LAW / CHAPTER 1. General Provisions and Definitions
California Codes

Cal. Corporations Code § 166 (2026)

General Provisions and Definitions — General Corporation Law

✓ leginfo export of Sept. 26, 2026 (applied Oct. 1, 2026)
Find cases: SyfertCases citing this section CA-LEGleginfo.legislature.ca.gov JustiaCode on Justia CornellLII Search CasesGoogle Scholar

“Distribution to its shareholders” means the transfer of cash or property by a corporation to its shareholders without consideration, whether by way of dividend or otherwise, except a dividend in shares of the corporation, or the purchase or redemption of its shares for cash or property, including the transfer, purchase, or redemption by a subsidiary of the corporation. The time of any distribution by way of dividend shall be the date of declaration thereof and the time of any distribution by purchase or redemption of shares shall be the date cash or property is transferred by the corporation, whether or not pursuant to a contract of an earlier date; provided, that where a debt obligation that is a security (as defined in Section 8102 of the Commercial Code) is issued in exchange for shares the time of the distribution is the date when the corporation acquires the shares in the exchange. In the case of a sinking fund payment, cash or property is transferred within the meaning of this section at the time that it is delivered to a trustee for the holders of preferred shares to be used for the redemption of the shares or physically segregated by the corporation in trust for that purpose. “Distribution to its shareholders” shall not include (a) satisfaction of a final judgment of a court or tribunal of appropriate jurisdiction ordering the rescission of the issuance of shares, (b) the rescission by a corporation of the issuance of it shares, if the board determines (with any director who is, or would be, a party to the transaction not being entitled to vote) that (1) it is reasonably likely that the holder or holders of the shares in question could legally enforce a claim for the rescission, (2) that the rescission is in the best interests of the corporation, and (3) the corporation is likely to be able to meet its liabilities (except those for which payment is otherwise adequately provided) as they mature, or (c) the repurchase by a corporation of its shares issued by it pursuant to Section 408, if the board determines (with any director who is, or would be, a party to the transaction not being entitled to vote) that (1) the repurchase is in the best interests of the corporation and that (2) the corporation is likely to be able to meet its liabilities (except those for which payment is otherwise adequately provided) as they mature.

Notes of Decisions
Cited in 10 cases, 1985–2017 · leading case: Nahman v. Jacks (In Re Jacks), 266 B.R. 728 (B.A.P. 9th Cir. 2001).
Sort: Relevance Newest Treatment
Nahman v. Jacks (In Re Jacks), 266 B.R. 728 (B.A.P. 9th Cir. 2001). “*737 Here, the bankruptcy court rejected the notion that Jacks had any relevant common law fiduciary duties to Nahman and other creditors, concluding that Cal. Corp. Code §§ 166 , 500, and 501 (prohibiting unauthorized distributions by directors) “covers the field” of these…”
Maudlin v. Pac. Decision Sciences Corp., 137 Cal. App. 4th 1001 (Cal. Ct. App. 2006). · cites it 2× “Corporations Code section 166, which is embedded in the text of section 500 to ensure the reader does not miss its significance, defines the term “distribution to its shareholders.”
Arnold L. Kupetz v. Morris A. Wolf, 845 F.2d 842 (9th Cir. 1988). “Cal.Corp.Code § 166 (West 1977 & Supp.1988); 1 Ballantine & Sterling, California Corporation Laws § 143.”
Aceituno v. Vowell, 518 B.R. 579 (E.D. Cal. 2014). · cites it 2× ““Distribution” is defined in California Corporations Code section 166 as “the transfer of cash or property by a corporation to its shareholders without consideration, whether by way of dividend or otherwise.”
Off. Comm. of Unsecured Creditors of Buckhead Am. Corp. v. Reliance Capital Grp., Inc. (In Re Buckhead Am. Corp.), 178 B.R. 956 (D. Del. 1994). “Cal.Corp.Code §§ 166, 500-03.” Id. at 6-17 n.”
Houng v. Tatung Co., 499 B.R. 751 (C.D. Cal. 2013). “(citing Cal. Corp.Code §§ 166, 500, and 501). The few state court decisions that have discussed California’s "trust fund doctrine” following Pacific Scene support the Jades panel's approach.”
Bay Plastics, Inc. v. BT Com. Corp. (In Re Bay Plastics, Inc.), 187 B.R. 315 (Bankr. C.D. Cal. 1995). “, Cal.Corp.Code § 166 (West Supp. 1995). If the price paid to selling shareholders is higher, however, there may be insufficient assets remaining to satisfy creditors.”
Stuhley v. Dunoco Dev. Corp. (In Re Dunoco Corp.), 56 B.R. 137 (Bankr. C.D. Cal. 1985). “Although the statute apparently provides for monetary relief, trustee seeks reconveyance of the distributed property or, alternative, the value of the property.”
Nahman v. Jacks (In Re Jacks), 243 B.R. 385 (Bankr. C.D. Cal. 1999). “15 In this case, the court finds that Jacks had no relevant common law fiduciary duties as a director of Zeus that were owing to Nahman and other creditors, except those that are codified in California Corporations Code §§ 166, 500 and 501.”
California Bank & Trust v. Licursi (In re Licursi), 573 B.R. 786 (Bankr. C.D. Cal. 2017). “Here, the bankruptcy court rejected the notion that Jacks had any relevant common law fiduciary duties to Nahman and other creditors, concluding that Cal. Corp. Code §§ 166 , 500, and 501 (prohibiting unauthorized distributions by directors) “covers the field” of these duties.”
Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.