Corporate Director and Shareholder Liability for Unlawful Distributions in Florida

At a glance

Requirements one by one

Director conduct and the recoverable amount

Fla. Stat. § 607.0834(1) ties recovery to a director's vote or assent and to proof that the director failed the § 607.0830 duty standard. The statute says the director is liable for the amount exceeding what could have been distributed without the violation and preserves ordinary director defenses. Section 607.0830(1) requires good faith and a reasonable belief that the act serves the corporation's best interests; subsection (2) describes the care required when directors become informed for a decision.

Claims against directors and recipients

Section 607.0834(1) makes the director liable to the corporation. Under subsection (2), a director held liable may seek contribution from every other director who could be liable, and from each shareholder for the amount that shareholder accepted knowing it violated § 607.06401 or the articles. The shareholder clause does not name § 607.1410(1), although the director liability clause does.

Filing periods

Section 607.0834(3) gives three distinct two-year starts for the primary claim: the § 607.06401(6) or (8) measurement date, the date an articles restriction was disregarded, or the date of a § 607.1410(1) liquidation distribution. A contribution or recoupment claim has a separate one-year period after the claimant's liability is finally adjudicated.

What trips people up

The measurement date can differ from the payment date. For example, § 607.06401(6)(c) uses authorization when an ordinary distribution is paid within 120 days, but uses payment when it is paid later. A share acquisition or distribution of indebtedness uses its own date rule. The relevant date matters because § 607.0834(3)(a) measures one filing period from it.

Common questions

Can directors rely on financial information supplied by others?

Section 607.0830(4) permits reliance on specified information, including financial data, when the director lacks knowledge making reliance unwarranted; subsection (5) identifies qualified corporate personnel, retained experts, and a qualifying board committee. Whether those conditions hold in a particular dispute depends on the actual record.

Does the distribution rule apply unchanged during liquidation?

No. Section 607.06401(9) excludes liquidation distributions from that section. For a dissolved corporation, § 607.1410(1) directs payment or reasonable provision for claims before shareholder liquidation distributions, and § 607.0834(1) separately reaches a distribution that violates that duty.

Statutes and sources

• Fla. Stat. § 607.0834, accessed September 27, 2026: “A director who votes for or assents to a distribution made in violation of s. 607.06401, s. 607.1410(1), or the articles of incorporation is personally liable to the corporation” if the director did not meet the § 607.0830 standard; “A proceeding under this section is barred unless it is commenced” within the specified periods.
• Fla. Stat. § 607.06401, accessed September 27, 2026: “No distribution may be made if, after giving it effect” the specified debt-payment or asset test fails; “This section does not apply to distributions in liquidation under ss. 607.1401-607.14401.”
• Fla. Stat. § 607.0830, accessed September 27, 2026: a director must act “In good faith” and “In a manner he or she reasonably believes to be in the best interests of the corporation.”
• Fla. Stat. § 607.1410, accessed September 27, 2026: “Directors shall cause the dissolved corporation to discharge or make reasonable provision for the payment of claims and make distributions in liquidation of assets to shareholders after payment or provision for claims.”