Corporate Director and Shareholder Liability for Unlawful Distributions in Nevada

At a glance

Requirements one by one

Directors, claimants, and the recoverable amount

NRS § 78.300(1) prohibits directors from making distributions outside Chapter 78. Under subsection (2), directors under whose administration a violation occurred are jointly and severally liable to the corporation. If the corporation dissolves or becomes insolvent, creditors existing when the violation occurred may also claim. Recovery is capped at the lesser of the full distribution or the corporation’s resulting loss. The subsection expressly subjects this liability to NRS § 78.138.

Director protection and dissent

NRS § 78.138(3) presumes business decisions were made in good faith, on an informed basis, and with a view to corporate interests. Subsection (7) addresses the showing needed for individual damages, including rebuttal of the presumption and proof of a breach involving intentional misconduct, fraud, or a knowing violation of law. NRS § 78.300(3) separately removes liability for a director whose dissent is entered in the meeting minutes when action is taken, or for an absent director who enters dissent after learning of the action.

Filing period

NRS § 78.300(2) permits liability within three years after each violation. Its clock is keyed to each violation, and the section gives no separate contribution or recipient-recovery filing period.

What trips people up

NRS § 78.288(8) excludes liquidation distributions under § 78.590 from the ordinary distribution rule. Separately, § 78.597(3) caps aggregate claims against a stockholder of a dissolved or expired corporation at the amount distributed to that stockholder. That is a different route from § 78.300’s director liability.

Common questions

Must the corporation prove the whole payment was lost?

Section 78.300(2) limits recovery to the lesser of the payment or the corporation’s loss. That requires a loss inquiry; it does not automatically award the whole payment.

Does the ordinary distribution rule address fraudulent transfers?

Section 78.288(9) says Chapter 112 does not apply to a corporate distribution made in accordance with Chapter 78. Whether another remedy applies to a particular transaction needs separate analysis.

Statutes and sources

• NRS § 78.288, accessed September 27, 2026: authorizes and limits ordinary distributions and addresses liquidation and Chapter 112.
• NRS § 78.300, accessed September 27, 2026: makes administering directors jointly and severally liable to named claimants for the lesser amount, subject to dissent and § 78.138.
• NRS § 78.138, accessed September 27, 2026: supplies director-duty presumptions and the individual-damages threshold.
• NRS § 78.590, accessed September 27, 2026: gives dissolved-corporation directors the power to distribute assets after paying or providing for liabilities.
• NRS § 78.597, accessed September 27, 2026: caps aggregate post-dissolution stockholder liability at the distribution received.