BUSINESS CORPORATION ACT
Act 284 of 1972
450.1551 Liability of directors for corporate actions; liability of shareholders accepting or receiving share dividend or distribution.
Sec. 551.
(1) Directors who vote for, or concur in, any of the following corporate actions are jointly and severally liable to the corporation for the benefit of its creditors or shareholders, to the extent of any legally recoverable injury suffered by its creditors or shareholders as a result of the action but not to exceed the difference between the amount paid or distributed and the amount that lawfully could have been paid or distributed:
(a) Declaration of a share dividend or distribution to shareholders contrary to this act or contrary to any restriction in the articles of incorporation.
(b) Distribution to shareholders during or after dissolution of the corporation without paying or providing for debts, obligations, and liabilities of the corporation as required by section 855a.
(c) Making a loan to a director, officer, or employee of the corporation or of a subsidiary of the corporation contrary to this act.
(2) A director is not liable under this section if he or she has complied with section 541a.
(3) A shareholder who accepts or receives a share dividend or distribution with knowledge of facts indicating it is contrary to this act, or any restriction in the articles of incorporation, is liable to the corporation for the amount accepted or received in excess of the shareholder's share of the amount that lawfully could have been distributed.
History: 1972, Act 284, Eff. Jan. 1, 1973 ;-- Am. 1989, Act 121, Eff. Oct. 1, 1989 ;-- Am. 1993, Act 91, Eff. Oct. 1, 1993 ;-- Am. 1997, Act 118, Imd. Eff. Oct. 24, 1997
Notes of Decisions
Wells v. Sleep (In Re Michigan Mach. Tool Control Corp.), 381 B.R. 657 (Bankr. E.D. Mich. 2008).
· cites it 4× “Because Defendants did not receive prohibited distributions under the Act, Defendants did not violate MCL § 450.1551(3), and are not liable to Debtor’s estate for the payments they received.”
Christner v. Anderson, Nietzke & Co., Pc, 444 N.W.2d 779 (Mich. 1989).
· cites it 3× “200(855), MCL 450.1551; MSA 21.200(551). Thus, the trial judge erred when he concluded that the shareholder-directors were not liable to plaintiff as a creditor because he was not a judgment creditor at the time the corporation liquidated its assets.”
Sudden Serv., Inc. v. Brockman Forklifts, Inc., 647 F. Supp. 2d 811 (E.D. Mich. 2008).
· cites it 2× “It requires the Court to analyze the following factors: (1) the names given to the instruments, if any, evidencing the indebtedness; (2) the presence or absence of a fixed maturity date and schedule of payments; (3) the presence or absence of a fixed rate of interest and…”
Regan v. Carrigan, 486 N.W.2d 57 (Mich. Ct. App. 1992).
· cites it 5× “887, and § 551 of the Business Corporation Act, MCL 450.1551; MSA 21.200(551) (since amended by 1989 PA 121 ).”
Baks v. Moroun, 576 N.W.2d 413 (Mich. Ct. App. 1998).
· cites it 2× “§ 450.1551; M.S.A. § 21.200(551) (establishing a three-year limitations period in § 554 for suits arising from certain corporate actions).”
Travelers Ins. v. Jacob C. Mol, Inc., 898 F. Supp. 528 (W.D. Mich. 1995).
“Travelers own brief states: The cause of action against the director does not accrue at the same time as the debt to the creditor, but rather when the director approves the distribution in violation of § 450.1551. Since Mol Inc. did not dissolve until January 8, 1993, it is…”
City of Muskegon v. Amec, Inc., 233 N.W.2d 688 (Mich. Ct. App. 1975).
“Having decided that plaintiffs’ amended complaint states a cause of action under § 3605 of the Revised Judicature Act and § 551 of the Business Corporation Act, we need not consider whether plaintiffs have also stated a claim upon which relief can be granted under common law…”
— Mich. Comp. Laws § 450.1551(1) — 1 case
Christner v. Anderson, Nietzke & Co., Pc, 444 N.W.2d 779 (Mich. 1989).
“200(855), MCL 450.1551; MSA 21.200(551). Thus, the trial judge erred when he concluded that the shareholder-directors were not liable to plaintiff as a creditor because he was not a judgment creditor at the time the corporation liquidated its assets.”
— Mich. Comp. Laws § 450.1551(1)(b) — 1 case
— Mich. Comp. Laws § 450.1551(3) — 2 cases
Wells v. Sleep (In Re Michigan Mach. Tool Control Corp.), 381 B.R. 657 (Bankr. E.D. Mich. 2008).
“Because Defendants did not receive prohibited distributions under the Act, Defendants did not violate MCL § 450.1551(3), and are not liable to Debtor’s estate for the payments they received.”
— Mich. Comp. Laws § 450.1551(l)(a) — 1 case
— Mich. Comp. Laws § 450.1551(l)(c) — 1 case
Regan v. Carrigan, 486 N.W.2d 57 (Mich. Ct. App. 1992).
“887, and § 551 of the Business Corporation Act, MCL 450.1551; MSA 21.200(551) (since amended by 1989 PA 121 ).”
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.