Ky. Rev. Stat. » Chapter 271B
Kentucky Revised Statutes

Ky. Rev. Stat. § 271B.6-400 (2026)

Distributions to shareholders

✓ current as of May 2026
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(1) 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 subsection (3) of this section.

(2) 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 shall be the date the board of directors authorizes the distribution.

(3) No distribution shall be made if, after giving it effect:

(a) The corporation would not be able to pay its debts as they become due in the usual course of business; or

(b) 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.

(4) The board of directors may base a determination that a distribution is not prohibited under subsection (3) of 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 in the circumstances.

(5) Except as provided in subsection (7) of this section, the effect of a distribution under subsection (3) of this section shall be measured:

(a) In the case of distribution by purchase, redemption, or other acquisition of the corporation's shares, as of the earlier of:

1. The date money or other property is transferred or debt incurred by the corporation; or

2. The date the shareholder ceases to be a shareholder with respect to the acquired shares;

(b) In the case of any other distribution of indebtedness, as of the date the indebtedness is distributed; and

(c) In all other cases, as of:

1. The date the distribution is authorized if the payment occurs within one hundred twenty (120) days after the date of authorization; or

2. The date the payment is made if it occurs more than one hundred twenty

(120) days after the date of authorization.

(6) A corporation's indebtedness to a shareholder incurred by a reason of a distribution made in accordance with this section shall be at parity with the corporation's indebtedness to its general creditors except to the extent subordinated by agreement.

(7) Indebtedness of a corporation, including indebtedness issued as a distribution, shall not be considered a liability for purposes of determinations under subsection (3) of this section 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 shall be treated as a distribution, the effect of which is measured on the date the payment is actually made. Effective: January 1, 1989 History: Created 1988 Ky. Acts ch. 23, sec. 48, effective January 1, 1989.

Notes of Decisions
Cited in 4 cases (1 in the last 5 years), 1996–2025 · leading case: Wilson v. Paine, 288 S.W.3d 284 (Ky. 2009).
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Wilson v. Paine, 288 S.W.3d 284 (Ky. 2009). “8-330 provides in pertinent part: “A proceeding under this section shall be barred unless it is commenced within two (2) years after the date on which the effect of the distribution was measured under subsection (5) or (7) of KRS 271B.6-400.” It does not appear that Appellant…”
Peoples Bank & Trust Co. v. Penick (In Re Penick), 199 B.R. 16 (Bankr. E.D. Ky. 1996). “The plaintiff looks to KRS 271B.6-400(3) to establish the trust relationship between the defendant and his creditors that would make him a fiduciary.”
Granite State Ins. Co. v. Taylor (W.D. Ky. 2025). · cites it 9× “8-330 includes: (1) A director who votes for or who assents to a distribution made in violation of KRS 271B.6-400 or the articles of incorporation shall be personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed…”
John R. Wilson Tr. for Fcs v. David B. Paine (Ky. 2009). “8-330 provides in pertinent part: "A proceeding under this section shall be barred unless it is commenced within two (2) years after the date on which the effect of the distribution was measured under subsection (S) or (7) of KRS 271B.6-400 ." It does not appear that Appellant…”
— Ky. Rev. Stat. § 271B.6-400(3) — 2 cases
Peoples Bank & Trust Co. v. Penick (In Re Penick), 199 B.R. 16 (Bankr. E.D. Ky. 1996). “The plaintiff looks to KRS 271B.6-400(3) to establish the trust relationship between the defendant and his creditors that would make him a fiduciary.”
Granite State Ins. Co. v. Taylor (W.D. Ky. 2025). “8-330 includes: (1) A director who votes for or who assents to a distribution made in violation of KRS 271B.6-400 or the articles of incorporation shall be personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed…”
— Ky. Rev. Stat. § 271B.6-400(4) — 1 case
Granite State Ins. Co. v. Taylor (W.D. Ky. 2025). “8-330 includes: (1) A director who votes for or who assents to a distribution made in violation of KRS 271B.6-400 or the articles of incorporation shall be personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed…”
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