Corporate Director and Shareholder Liability for Unlawful Distributions in New Mexico
At a glance
| Law, transactions, and persons | NMSA 1978 § 53-11-46; voting or assenting directors; distributions under Business Corporation Act or articles. |
|---|---|
| Underlying prohibited distribution | Distribution contrary to Act or articles (§ 53-11-46(A)); § 53-11-44(A) sets ordinary post-payment debt and asset limits. |
| Director conduct and defenses | Vote or assent plus failure of § 53-11-35(B) duty standard; qualified reliance may protect; § 53-11-35(C) gives dissent routes. |
| Amount, interest, and shared liability | Joint and several; excess dividend amount or other-distribution value over lawful amount (§ 53-11-46(A)); no special interest formula. |
| Who may enforce | Director liable to corporation (§ 53-11-46(A)); no direct creditor claimant named in this section. |
| Recipient shareholder recovery | Liable director may seek proportional contribution from recipients who knew distribution violated Act (§ 53-11-46(B)). |
| Contribution and dissent | Contribution from other assenting directors who failed duty standard; present director may dissent in minutes, file before adjournment, or mail immediately after (§§ 53-11-46(C), 53-11-35(C)). |
| Filing periods | § 53-11-46 states no section-specific filing or contribution period; general limitations need separate review. |
| Related remedies and limits of this comparison | § 53-11-44(E) addresses relation to other state distribution-legality statutes; no case-specific legality or liability outcome is decided. |
Requirements one by one
Directors, claimant, and the recoverable amount
NMSA 1978 § 53-11-46(A) reaches a director who votes for or assents to a distribution that violates the Business Corporation Act or the articles, unless the director complied with the Act’s director-duty standard. The director owes the corporation the excess dividend amount or other-distribution value, jointly and severally with the other voting or assenting directors. Section 53-11-35(B) requires good faith, a belief that the action serves or does not oppose corporate interests, and ordinarily prudent care in a like position. It also describes qualified reliance on corporate personnel, professionals, and a committee.
Recipient and director contribution
A director held liable may seek contribution from shareholders who accepted the distribution knowing it violated the Act, in proportion to the amounts received (§ 53-11-46(B)). Under subsection (C), the director may also seek contribution from another voting or assenting director who failed the conduct standard. These are contribution rights, distinct from the corporation’s claim against the director.
What trips people up
Section 53-11-35(C) presumes a director present when the board acts to have assented. The director can enter dissent in the minutes, file it with the meeting secretary before adjournment, or send it by registered mail to the corporate secretary immediately after adjournment. A director who voted for the action cannot use that dissent right.
Common questions
Does an unlawful distribution create a claim for the whole payment?
Section 53-11-46(A) measures recovery by the amount or value above what could have been distributed without violating the Act or articles. Section 53-11-44(A) states debt-payment and asset limits for ordinary distributions; applying them needs the transaction’s figures.
Does this section give creditors a direct claim or a fixed deadline?
Section 53-11-46(A) names the corporation as claimant and gives no filing period. Other law may matter, so this page states no general limitations or creditor-rights outcome.
Statutes and sources
- NMSA 1978 § 53-11-46, accessed September 27, 2026: states director liability, amount, shared liability, and contribution.
- NMSA 1978 § 53-11-44, accessed September 27, 2026: states ordinary distribution authorization, debt and asset limits, and interaction with other state statutes.
- NMSA 1978 § 53-11-35, accessed September 27, 2026: states director duties, reliance, and dissent procedure.
Source links
Every statute quoted above, linked, with the date we checked it.
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