§ 7412 Corporate Distribution Solvency Limits

• •A company can't give out money or stuff if it can't pay its bills after doing so.
• •This includes the main company and any smaller companies it owns.
• •If giving out money would make it hard to pay bills later, it's not allowed.

A toy company wants to give its shareholders extra money as a bonus.

If giving this bonus means the company won't have enough money to pay its workers or suppliers later, it can't do it. The law says the company must make sure it can still pay all its bills first.