Subdivision 1. Distribution restrictions. A limited liability company may not make a distribution if after the distribution:
(1) the company would not be able to pay its debts as they become due in the ordinary course of the company's activities; or
(2) the company's total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the company were to be dissolved, wound up, and terminated at the time of the distribution, to satisfy the preferential rights upon dissolution, winding up, and termination of members whose preferential rights are superior to those of persons receiving the distribution.
Subd. 2. Basis for decision. A limited liability company may base a determination that a distribution is not prohibited under subdivision 1 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 under the circumstances.
Subd. 3. Effect of distribution. Except as otherwise provided in subdivision 6, the effect of a distribution under subdivision 1 is measured:
(1) in the case of a distribution by purchase, redemption, or other acquisition of a transferable interest in the company, as of the date money or other property is transferred or debt incurred by the company; and
(2) in all other cases, as of the date:
(i) the distribution is authorized, if the payment occurs within 120 days after that date; or
(ii) the payment is made, if the payment occurs more than 120 days after the distribution is authorized.
Subd. 4. Equivalent to unsecured creditors. A limited liability company's indebtedness to a member incurred by reason of a distribution made according to this section is at parity with the company's indebtedness to its general, unsecured creditors.
Subd. 5. Exclusion from calculated indebtedness. A limited liability company's indebtedness, including indebtedness issued in connection with or as part of a distribution, is not a liability for purposes of subdivision 1 if the terms of the indebtedness provide that payment of principal and interest are made only to the extent that a distribution could be made to members under this section.
Subd. 6. Indebtedness as distribution. If indebtedness is issued as a distribution, each payment of principal or interest on the indebtedness is treated as a distribution, the effect of which is measured on the date the payment is made.
Subd. 7. Compensation not distribution. In subdivision 1, "distribution" does not include amounts constituting reasonable compensation for present or past services or reasonable payments made in the ordinary course of business under a bona fide retirement plan or other benefits program.
2014 c 157 art 1 s 34
Structure Minnesota Statutes
Chapters 300 - 323A — Business, Social, And Charitable Organizations
Chapter 322C — Minnesota Revised Uniform Limited Liability Company
Section 322C.0102 — Definitions.
Section 322C.0103 — Knowledge; Notice.
Section 322C.0104 — Nature, Purpose, And Duration Of Limited Liability Company.
Section 322C.0106 — Governing Law.
Section 322C.0107 — Supplemental Principles Of Law.
Section 322C.0108 — Limited Liability Company Name.
Section 322C.0109 — Reserved Name.
Section 322C.0110 — Operating Agreement; Scope, Function, And Limitations.
Section 322C.0113 — Office And Agent For Service Of Process.
Section 322C.0114 — Change Of Registered Office Or Agent For Service Of Process.
Section 322C.0115 — Resignation Of Agent For Service Of Process.
Section 322C.0116 — Service Of Process On Limited Liability Company.
Section 322C.0117 — Legal Recognition Of Electronic Records And Signatures.
Section 322C.0201 — Formation Of Limited Liability Company; Articles Of Organization.
Section 322C.0202 — Amendment Or Restatement Of Articles Of Organization.
Section 322C.0203 — Signing Of Records To Be Filed With Secretary Of State.
Section 322C.0204 — Signing And Filing Pursuant To Judicial Order.
Section 322C.0205 — Filing Of Records With Secretary Of State; Effective Time And Date.
Section 322C.0206 — Liability For Inaccurate Information In Filed Record.
Section 322C.0207 — Certificate Of Existence Or Authorization.
Section 322C.0208 — Annual Report For Secretary Of State.
Section 322C.0301 — No Agency Power Of Member As Member.
Section 322C.0302 — Statement Of Authority.
Section 322C.0303 — Statement Of Denial.
Section 322C.0304 — Liability Of Members, Managers, And Governors.
Section 322C.0401 — Becoming A Member.
Section 322C.0402 — Form Of Contribution.
Section 322C.0403 — Liability For Contributions.
Section 322C.0404 — Sharing Of And Right To Distributions Before Dissolution.
Section 322C.0405 — Limitations On Distribution.
Section 322C.0406 — Liability For Improper Distributions.
Section 322C.0407 — Management Of Limited Liability Company.
Section 322C.0408 — Indemnification And Insurance.
Section 322C.0409 — Standards Of Conduct For Members, Managers, And Governors.
Section 322C.0410 — Right Of Members, Managers, Governors, And Dissociated Members To Information.
Section 322C.0501 — Nature Of Transferable Interest.
Section 322C.0502 — Transfer Of Transferable Interest.
Section 322C.0503 — Charging Order.
Section 322C.0504 — Power Of Personal Representative Of Deceased Member.
Section 322C.0601 — Member's Power To Dissociate; Wrongful Dissociation.
Section 322C.0602 — Events Causing Dissociation.
Section 322C.0603 — Effect Of Person's Dissociation As Member.
Section 322C.0701 — Events Causing Dissolution.
Section 322C.0702 — Winding Up.
Section 322C.0703 — Known Claims Against Dissolved Limited Liability Company.
Section 322C.0704 — Other Claims Against Dissolved Limited Liability Company.
Section 322C.0705 — Administrative Termination.
Section 322C.0706 — Reinstatement.
Section 322C.0707 — Distribution Of Assets In Winding Up Limited Liability Company's Activities.
Section 322C.0708 — Action By Attorney General.
Section 322C.0801 — Governing Law.
Section 322C.0802 — Application For Certificate Of Authority.
Section 322C.0803 — Transactions Not Constituting Transacting Business.
Section 322C.0804 — Filing Of Certificate Of Authority.
Section 322C.0805 — Noncomplying Name Of Foreign Limited Liability Company.
Section 322C.0806 — Revocation Of Certificate Of Authority.
Section 322C.0807 — Withdrawal Of Foreign Limited Liability Company.
Section 322C.0808 — Effect Of Failure To Have Certificate Of Authority.
Section 322C.0809 — Action By Attorney General.
Section 322C.0810 — Amendment Of Foreign Registration Statement.
Section 322C.0901 — Direct Action By Member.
Section 322C.0902 — Derivative Action.
Section 322C.0903 — Proper Plaintiff.
Section 322C.0905 — Special Litigation Committee.
Section 322C.0906 — Proceeds And Expenses.
Section 322C.1001 — Definitions.
Section 322C.1002 — Merger; Exchange.
Section 322C.1003 — Action On Plan Of Merger Or Exchange By Constituent Limited Liability Company.
Section 322C.1004 — Filings Required For Merger Or Exchange; Effective Date And Time.
Section 322C.1005 — Effect Of Merger.
Section 322C.1006 — Effect Of Exchange.
Section 322C.1007 — Conversion.
Section 322C.1008 — Action On Plan Of Conversion By Converting Limited Liability Company.
Section 322C.1009 — Filings Required For Conversion; Effective Date And Time.
Section 322C.1010 — Effect Of Conversion.
Section 322C.1011 — Domestication.
Section 322C.1012 — Action On Plan Of Domestication By Domesticating Limited Liability Company.
Section 322C.1013 — Filings Required For Domestication; Effective Date.
Section 322C.1014 — Effect Of Domestication.
Section 322C.1015 — Restrictions On Approval Of Mergers, Exchanges, Conversions, And Domestications.
Section 322C.1016 — Merger Of Wholly Owned Subsidiaries.
Section 322C.1101 — Nonprofit Limited Liability Companies.
Section 322C.1201 — Uniformity Of Application And Construction.
Section 322C.1202 — Relation To Electronic Signatures In Global And National Commerce Act.
Section 322C.1203 — Savings Clause.