Corporate Director and Shareholder Liability for Unlawful Distributions in Idaho

At a glance

Requirements one by one

Director conduct and amount

Idaho Code § 30-29-832(a) reaches a director who votes for or assents to a distribution exceeding the amount permitted by § 30-29-640(a) or § 30-29-1409(a). The claimant must show that the director failed the § 30-29-830 standard when taking the action. The director owes the corporation the excess. Section 30-29-830(a)-(b) requires good faith, a reasonable belief in corporate interests, and appropriate care when becoming informed for a decision; subsection (e) addresses qualified reliance on financial information.

Contribution and recoupment

A director held liable can seek contribution from every other director who could also be liable and pro rata recoupment from each shareholder who accepted the unlawful amount knowing of a § 30-29-640(a) or § 30-29-1409(a) violation (§ 30-29-832(b)). These are the liable director’s rights, distinct from the corporation’s claim under subsection (a).

Filing periods

Section 30-29-832(c)(1) gives two years from the relevant § 30-29-640(e) or (g) measurement date, the date an articles restriction caused a § 30-29-640(a) violation, or the date of a § 30-29-1409(a) liquidation payment. Subsection (c)(2) gives one year after final adjudication of the claimant’s liability for contribution or recoupment.

What trips people up

Section 30-29-640(h) excludes liquidation from the ordinary distribution rule. Section 30-29-1409(a) instead requires payment or reasonable provision for claims before shareholder liquidation payments, and § 30-29-832 expressly reaches that duty.

Common questions

Is shareholder knowledge required for a director’s recoupment claim?

Yes. Section 30-29-832(b)(2) requires the shareholder to have accepted the unlawful amount knowing of the cited violation. Receipt alone does not satisfy that clause.

Does every distribution start the same two-year clock?

No. Section 30-29-832(c)(1) lists distinct starts tied to ordinary distribution measurement, disregarded articles restrictions, and liquidation payments. The governing date depends on the transaction.

Statutes and sources

• Idaho Code § 30-29-832, accessed September 27, 2026: governs director liability, contribution, recoupment, and filing periods.
• Idaho Code § 30-29-640, accessed September 27, 2026: states ordinary distribution limits, dates, and liquidation exclusion.
• Idaho Code § 30-29-1409, accessed September 27, 2026: states directors’ payment-of-claims duty after dissolution.
• Idaho Code § 30-29-830, accessed September 27, 2026: states director conduct and reliance standards.