Corporate Director and Shareholder Liability for Unlawful Distributions in Montana

At a glance

Requirements one by one

Director conduct and excess recovery

Mont. Code Ann. § 35-14-832(1) reaches a director who votes for or assents to a payment exceeding § 35-14-640(1) or the dissolved-corporation duty in § 35-14-1409(1). The claimant must prove the director failed § 35-14-830 when acting. The director owes the corporation the excess above a permitted payment. Section 35-14-830(1)-(2), (5) sets good-faith, corporate-interest, care, and qualified-reliance rules.

Contribution, knowing-recipient recoupment, and assent

Under § 35-14-832(2), a liable director may seek contribution from every other director who could be liable and pro rata recoupment from each shareholder who knowingly accepted the unlawful amount. Section 35-14-824(4) presumes assent by a present director unless the director timely objects, records dissent or abstention, or delivers written notice before or immediately after adjournment. A director voting in favor cannot use that dissent route.

Two filing periods with different starting events

Section 35-14-832(3) gives two years for the director claim after the § 35-14-640(5) or (7) measurement date, an articles-violation date, or the date of a liquidation payment under § 35-14-1409(1). Section 35-14-640(5) measures share acquisitions, distribution debt, and other payments differently; in the last category, authorization controls if payment occurs within 120 days, otherwise payment controls. Contribution and recoupment have one year after final adjudication of the claimant director's liability.

What trips people up

Section 35-14-640(8) excludes liquidation distributions from its ordinary financial-test rule. Section 35-14-1409(1) instead requires directors to pay or reasonably provide for claims before paying shareholders in liquidation. Subsection (2) limits breach liability for claims barred or satisfied through the specified dissolved-corporation claim routes.

Common questions

Does a shareholder's receipt alone trigger recoupment?

No. Section 35-14-832(2)(b) requires knowledge that the amount violated § 35-14-640(1) or § 35-14-1409(1).

Is the director-claim clock also the contribution clock?

No. Section 35-14-832(3)(b) starts the one-year contribution and recoupment period after final adjudication of the claimant director's liability.

Statutes and sources

• Mont. Code Ann. § 35-14-140, accessed September 27, 2026: corporation and distribution definitions.
• Mont. Code Ann. § 35-14-640, accessed September 27, 2026: ordinary limits, dates, and liquidation exclusion.
• Mont. Code Ann. § 35-14-824, accessed September 27, 2026: presumed assent and dissent.
• Mont. Code Ann. § 35-14-830, accessed September 27, 2026: director conduct and reliance.
• Mont. Code Ann. § 35-14-832, accessed September 27, 2026: liability, contribution, recoupment, and periods.
• Mont. Code Ann. § 35-14-1409, accessed September 27, 2026: liquidation claims duty.