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HomeCorporations CodeCh. 23§ 2308 Shareholder Distribution Rules

§ 2308 Shareholder Distribution Rules

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

§ 2308 Shareholder Distribution Rules

This law says that any money or stock a company gives to its owners after the law starts must follow the new Chapter 5 rules, but a buy‑back deal made before the law can still happen if the new rules or the old rules at the time allow it.

Key Takeaways

  • •Only companies that existed before the law’s start are covered.
  • •Any payout to shareholders after the law starts must follow Chapter 5.
  • •Buy‑back contracts signed before the law can still be used if they’re allowed by the new rules or the old rules that were in place when the contract was signed.

Example

A company that was already in business before the law began decides to pay a dividend to its shareholders in March 2026.

Because the dividend is given after the law starts, the company must follow Chapter 5. If the same company had signed a share‑buy‑back contract in 2024, it can still carry out that buy‑back after the law starts as long as Chapter 5 or the 2024 law says it’s okay.

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

Official Source
View on CA.gov

§ 2308 Shareholder Distribution Rules

Chapter 5 of the new law applies to any distribution to its shareholders made after the effective date by a corporation existing on the effective date, except that any such distribution effected pursuant to a contract for the purchase or redemption of shares entered into by the corporation prior to the effective date may be made if permissible under Chapter 5 or under the prior law in effect at the time the contract was entered into. (Added by Stats. 1975, Ch. 682.)

Last verified: January 10, 2026

Key Terms

distributionshareholderseffective dateChapter 5contract for the purchase or redemption of shares

Related Statutes

  • § 2300 Corporations Code Effective Dates
  • § 2301 Corporate Law Effective Date
  • § 2302.1 Bylaws Amendment Exemption
  • § 2306 Corporate Indemnification Rules
  • § 2307 Share Certificate Statement Rules

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Corporations Code. Section 2308.
View Official Source