Iowa Code

Iowa Code § 490.832 (2026)

Directors’ liability for unlawful distributions

✓ current as of July 2026

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1. A director who votes for or assents to a distribution in excess of what may be authorized and made pursuant to section 490.640, subsection 1, or section 490.1409, subsection 1, is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating section 490.640, subsection 1, or section 490.1409, subsection 1, if the party asserting liability establishes that when taking the action the director did not comply with section 490.830.

2. A director held liable under subsection 1 for an unlawful distribution is entitled to all of the following:

a. Contribution from every other director who could be held liable under subsection 1 for the unlawful distribution.

b. Recoupment from each shareholder of the pro rata portion of the amount of the unlawful distribution the shareholder accepted, knowing the distribution was made in violation of section 490.640, subsection 1, or section 490.1409, subsection 1.\n\nTue Dec 09 22:07:43 2025 Iowa Code 2026, Chapter 490 (142, 1) 65 BUSINESS CORPORATIONS, §490.842\n\n 3. a. A proceeding to enforce the liability of a director under subsection 1 is barred unless it is commenced within two years after any of the following:

(1) The date on which the effect of the distribution was measured under section 490.640, subsection 5 or 8.

(2) The date as of which the violation of section 490.640, subsection 1, occurred as the consequence of disregard of a restriction in the articles of incorporation.

(3) The date on which the distribution of assets to shareholders under section 490.1409, subsection 1, was made.

b. A proceeding to enforce contribution or recoupment under subsection 2 is barred unless it is commenced within one year after the liability of the claimant has been finally adjudicated under subsection 1. 89 Acts, ch 288, §92 CS89, §490.833 2002 Acts, ch 1154, §40, 125; 2021 Acts, ch 165, §105, 216, 230 C2022, §490.832 Referred to in §490.202, 490.831, 491.16A \n

Notes of Decisions

Cited in 5 cases (1 in the last 5 years), 1991–2022 · leading case: HOK Sport, Inc. v. FC Des Moines, L.C., 495 F.3d 927 (8th Cir. 2007).

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HOK Sport, Inc. v. FC Des Moines, L.C., 495 F.3d 927 (8th Cir. 2007). “See Iowa Code § 490.832 (1999); id. § 496A.49(13) (1989).”

Hanrahan v. Kruidenier, 473 N.W.2d 184 (Iowa 1991). · cites it 2× “A director is not liable for any action taken as a director, or any failure to take any action, if the director performed the duties of the director's office in compliance with this section, or if, and to the extent that, liability for any such action or failure to act has been…”

Kendall J. Meade, Individually & on behalf of all others similarly situated v. Peter S. Christie, Stephen A. Crane, Jonathan R. Fletcher, & Gretchen H. Tegeler (Iowa 2022). · cites it 2× “(c) A violation of section 490.832. (d) An intentional violation of criminal law.”

Carolyn Ahrens, Substituted for Richard Ahrens v. Ahrens Agric. Indus. Co., A/K/A Miraco & B. Carter Thomson, & Mike Witt & Susan Witt (Iowa Ct. App. 2015). · cites it 2× “See Iowa Code § 490.832 . B. Oppression Richard claims the district court erred in failing to find Mike and Susan’s actions of issuing treasury stock, granting bonuses to key employees, and denying Richard’s request for employment constituted oppression.”

HOK Sport, Inc v. FC Des Moines (8th Cir. 2007). “See Iowa Code § 490.832 (1999); id. § 496A.49(13) (1989).”

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