Code of Virginia

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Code of Virginia
Title 13.1. Corporations
Chapter 12. Virginia Limited Liability Company Act
5/8/2021

Article 6. Finance.

§ 13.1-1029. Sharing of profits and losses.

The profits and losses of a limited liability company shall be allocated among the members, and among classes of members, on the basis provided in writing in the articles of organization or an operating agreement. If the articles of organization or an operating agreement does not so provide in writing, profits and losses shall be allocated on the basis of the value, as stated in the limited liability company records required to be kept pursuant to § 13.1-1028, of the contributions made by each member to the extent they have been received by the limited liability company.

1991, c. 168; 1995, c. 168; 1997, c. 190.

§ 13.1-1030. Sharing of distributions.

Distributions of cash or other assets of a limited liability company shall be allocated among the members, and among classes of members, on the basis provided in writing in the articles of organization or an operating agreement. If the articles of organization or an operating agreement do not so provide in writing, distributions shall be made on the basis of the value, as stated in the limited liability company records required to be kept pursuant to § 13.1-1028, of the contributions made by each member to the extent they have been received by the limited liability company.

1991, c. 168; 1995, c. 168; 1997, c. 190.

§ 13.1-1031. Interim distributions.

Except as provided in this article, a member is entitled to receive distributions from a limited liability company before the dissolution and winding up thereof to the extent and at the times or upon the happening of the events specified in the articles of organization or an operating agreement.

1991, c. 168; 1996, c. 265.

§ 13.1-1032. Resignation of member.

A member may resign from a limited liability company only to the extent provided for in writing in the articles of organization or an operating agreement.

1991, c. 168; 1995, c. 168.

§ 13.1-1033. Repealed.

Repealed by Acts 1995, c. 168.

§ 13.1-1034. Distribution in kind.

Except as provided in writing in the articles of organization or an operating agreement, a member, regardless of the nature of his or its contribution, has no right to demand and receive any distribution from a limited liability company in any form other than cash. Except as provided in writing in the articles of organization or an operating agreement, a member may not be compelled to accept a distribution of any asset in kind from a limited liability company to the extent that the percentage of the asset distributed to him or it exceeds a percentage of that asset which his or its membership interest constitutes of all membership interests in the limited liability company.

1991, c. 168.

§ 13.1-1035. Restrictions on making distribution.

A. No distribution may be made by a limited liability company if, after giving effect to the distribution:

1. The limited liability company would not be able to pay its debts as they became due in the usual course of business; or

2. The limited liability company's total assets would be less than the sum of its total liabilities plus, unless the articles of organization or an operating agreement permits otherwise, the amount that would be needed, if the limited liability company were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of members whose preferential rights are superior to the rights of members receiving the distribution.

B. The limited liability company may base a determination that a distribution is not prohibited under subsection A of this section either on:

1. Financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances; or

2. A fair valuation or other method that is reasonable in the circumstances.

C. The effect of a distribution under subsection A of this section is measured as of (i) the date the distribution is authorized if the payment occurs within 120 days after the date of authorization or (ii) the date the payment is made if it occurs more than 120 days after the date of authorization.

D. [Repealed.]

E. For the purposes of this section, the term "distribution" shall not include amounts constituting reasonable compensation for present or past services or reasonable payments made in the ordinary course of business pursuant to a bona fide retirement plan or other benefits program.

F. This section shall not apply to distributions in liquidation under Article 9 (§ 13.1-1046 et seq.) of this chapter.

1991, c. 168; 1992, c. 574; 2001, c. 548; 2009, c. 763.

§ 13.1-1036. Liability upon wrongful distribution.

If a member has received a distribution in violation of the articles of organization or an operating agreement or in violation of § 13.1-1035 of this chapter, then the member is liable to the limited liability company for a period of two years thereafter for the amount of the distribution wrongfully made.

1991, c. 168; 2009, c. 763.

§ 13.1-1037. Right to distribution.

At the time a member becomes entitled to receive a distribution, he or it has the status of, and is entitled to all remedies available to, a creditor of the limited liability company with respect to the distribution.

1991, c. 168.