Corporate Director and Shareholder Liability for Unlawful Distributions in Connecticut

At a glance

Requirements one by one

Director liability and amount

Conn. Gen. Stat. § 33-757(a) requires a vote or assent to a distribution that violates § 33-687, § 33-887b(a), or the certificate of incorporation, plus failure to perform duties under § 33-756 or § 33-887b(a). The director owes the corporation only the amount above what could have been distributed without the violation. The subsection preserves ordinary director defenses. Section 33-756(a) requires good faith and a reasonable belief in the corporation’s best interests; subsection (b) sets the care standard when directors become informed for a decision or attend to oversight.

Recovery from recipients and other directors

Under § 33-757(b), a director held liable may seek contribution from another director who could also be liable. The director may also seek from each shareholder the amount that shareholder accepted knowing of a violation of § 33-687, § 33-887b(a), or the certificate. The provision gives that recovery right to the liable director; § 33-757(a) makes the director liable to the corporation.

Filing periods

Section 33-757(c)(1) bars the director-liability proceeding unless filed within two years of the relevant § 33-687(e) or (g) measurement date, the date of a certificate-restriction violation under § 33-687(a), or a § 33-887b(a) shareholder payment. Subsection (c)(2) sets a separate one-year period for contribution or recoupment after the claimant’s liability has been finally adjudicated.

What trips people up

A director present when the board or committee authorizes the distribution is deemed to have voted for it unless the director votes in dissent; consenting under § 33-749 also counts (§ 33-757(d)). Under § 33-687(e), the measurement date can precede payment: for an ordinary distribution paid within 120 days of authorization, authorization is the measurement date. Share acquisitions and distributed indebtedness use different dates.

Common questions

Does a dissolved corporation follow the ordinary distribution test?

Section 33-687(h) excludes distributions in the course of dissolution. Section 33-887b(a) instead tells directors to discharge or make reasonable provision for claims before distributing assets to shareholders; § 33-757(a) expressly includes that duty.

Can a director rely on financial reports?

Section 33-756(e)-(f) permits reliance on qualifying financial information from specified personnel, experts, or a board committee when the director lacks knowledge making reliance unwarranted. The actual information and the director’s knowledge matter.

Statutes and sources

• Conn. Gen. Stat. § 33-602(8), accessed September 27, 2026: defines a distribution and names dividends, share acquisitions, and indebtedness.
• Conn. Gen. Stat. § 33-687, accessed September 27, 2026: states the distribution limit, measurement dates, and dissolution exception.
• Conn. Gen. Stat. § 33-756, accessed September 27, 2026: states director duties and reliance rights.
• Conn. Gen. Stat. § 33-757, accessed September 27, 2026: “A director who votes for or assents to a distribution” may be liable for the excess; subsections (b)-(d) govern contribution, filing periods, and dissent.
• Conn. Gen. Stat. § 33-887b, accessed September 27, 2026: requires payment or provision for dissolved-corporation claims before shareholder asset distributions.
• Conn. Gen. Stat. § 33-749, accessed September 27, 2026: governs action without a board meeting.