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HomeCorporations CodeCh. 21§ 2116 Foreign Director Liability Rules

§ 2116 Foreign Director Liability Rules

Corporations Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 2116 Foreign Director Liability Rules

This law says that directors of a foreign company that does business inside the state can be sued for giving out illegal dividends, buying shares, handing out company assets, or making false paperwork, and the lawsuit can happen in this state.

Key Takeaways

  • •Directors can be personally liable for illegal financial actions like unauthorized dividends or false reports.
  • •The rule applies to foreign companies that do business inside the state.
  • •Anyone harmed (shareholders, creditors, etc.) can sue the director in this state's courts.

Example

A foreign company sells its products in the state. One of its directors decides to give shareholders a dividend that the company's own rules say is not allowed.

Because the dividend was not authorized, the shareholders can take the director to court in this state and hold them personally responsible for the mistake.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 2116 Foreign Director Liability Rules

The directors of a foreign corporation transacting intrastate business are liable to the corporation, its shareholders, creditors, receiver, liquidator or trustee in bankruptcy for the making of unauthorized dividends, purchase of shares or distribution of assets or false certificates, reports or public notices or other violation of official duty according to any applicable laws of the state or place of incorporation or organization, whether committed or done in this state or elsewhere. Such liability may be enforced in the courts of this state. (Added by Stats. 1975, Ch. 682.)

Last verified: January 10, 2026

Key Terms

foreign corporationintrastate businessunauthorized dividendsviolation of official dutyliability

Related Statutes

  • § 2113 Foreign Corporation Merger Surrender
  • § 2100 Foreign Corporation Intrastate Rules
  • § 2101 Foreign Corporation Name Registration
  • § 2102 Foreign Corporation Agent Designation
  • § 2103 Foreign Insurance Contracts Preserved

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Corporations Code. Section 2116.
View Official Source