2011 Louisiana Laws
Revised Statutes
TITLE 12 — Corporations and associations
RS 12:62 — Surplus

§62. Surplus

A. If there is no earned surplus, the board of directors may apply capital surplus to the reduction or elimination of any deficit resulting from losses.

B. The board of directors may create and abolish reserves out of earned surplus for any proper purposes. Earned surplus so reserved shall not be available for payment of dividends, purchase or redemption of shares, or transfer to capital surplus or stated capital. Earned surplus not otherwise reserved shall be deemed reserved, to the extent of accrued unpaid preferential dividends, for the payment of such dividends pursuant to declaration thereof or as part of the redemption or purchase price of shares of the class or series on which such dividends are payable.

C. Following a merger into, or creation by consolidation of, a corporation, such corporation's earned surplus shall not exceed the sum of the earned surpluses of the merging or consolidating business corporations, nonprofit corporations and foreign corporations, as reduced by any distributions or transfers therefrom in connection with the merger or consolidation.

D. Upon disposition of treasury shares acquired in whole or in part by application of earned surplus, the amount so applied may be restored to earned surplus to the extent of the consideration received upon such disposition.

E. In computing surplus, proper allowance shall (except as provided in subsection F of this section) be made for depreciation and depletion sustained, and ascertained or known losses of every character. Deferred assets and prepaid expenses shall be considered as assets only to the extent of amounts thereof not used or amortized.

F.(1) Unless the articles provide otherwise, a corporation, including a corporation engaged in extractive or oil and gas activities, which owns wasting assets, including oil and gas properties, intended for sale in the ordinary or usual course of business, or which owns property having a limited life, such as a lease for a term of years, or patents, need make no allowance for depletion or amortization of the cost of such assets in computing surplus.

(2) Without limitation of other items which may be properly includable therein in accordance with generally accepted accounting principles or otherwise, corporations engaged in the business of extraction and sale of oil and gas may include in the calculation of depletion for such purposes their aggregate intangible drilling costs of drilling oil and gas wells, including any item of expense or cost not recoverable from a well after it becomes uneconomical other than casing, such as seismic costs, drilling costs, stimulation costs, secondary and tertiary recovery costs, completion costs, workover costs, well site preparation expenses and other similar expenses or costs, aggregate leasehold costs, and any item of expense or cost relating to the acquisition of a lease other than rentals, such as title verification and other title review expenses and lease bonuses.

Acts 1968, No. 105, §1. Acts 1984, No. 841, §1, eff. July 13, 1984.