UCLA Law School Professor
In 2011,
The most important change the 2011 amendments made to Section 500 of the 1977 Law was abandoning the determination of retained earnings under generally accepted accounting principles. New Section 500(c) provides that the board of directors of a corporation may make a determination that a distribution is not prohibited under subdivisions (a) of Section 500 based on"[f]inancial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances", a"fair valuation"or"[a]ny other method that is reasonable under the circumstances". This new standard is also applicable to the insolvency restriction upon dividends contained in Section 501 of the 1977 Law which was not otherwise affected.
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Mr
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