2005 North Carolina Code - General Statutes Article 4 - Finance.

Article 4.

Finance.

§ 57C‑4‑01.  Contributions to capital.

The contribution of a member may be in the form of any tangible or intangible property or benefit to the limited liability company that a person contributes in cash, property, services rendered, promissory notes, or other binding obligation to contribute cash or property or to render services.  Except as provided in an operating agreement, in the case of noncash contributions, the value of the contribution to the limited liability company shall be the fair market value of the contribution on the date it is made, as agreed to by the limited liability company and the contributor. (1993, c. 354, s. 1.)

 

§ 57C‑4‑02.  Liability for contribution.

(a)       A promise by a member to contribute to the limited liability company is not enforceable unless set out in a writing signed by the member.

(b)       Except as provided in an operating agreement, a member is obligated to the limited liability company to perform any enforceable promises to contribute cash or property or to render services, even if the member is unable to perform because of death, disability, or any other reason.  If a member does not make the required contribution of property or services, the member (or the member's estate or personal representative) is obligated, at the option of the limited liability company, to contribute cash equal to that portion of the value of the stated contribution that has not been made.

(c)       Unless otherwise provided in the operating agreement, the obligation of a member to make a contribution or to return money or other property paid or distributed in violation of this Chapter may be compromised only with the unanimous consent of the members.  Any such compromise, however, shall not affect the rights of a creditor of a limited liability company to enforce a claim that arose prior to the date of the compromise. (1993, c. 354, s. 1.)

 

§ 57C‑4‑03.  Allocation of income, gain, loss, deduction, or credit.

Income, gain, loss, deduction, or credit of a limited liability company shall be allocated among the members, and among classes of members, in the manner agreed to in an operating agreement.  To the extent an operating agreement does not so provide for the allocation of such items, income, gain, loss, deduction, or credit shall be allocated among the members in proportion to the agreed value, as stated in the limited liability company records required to be kept pursuant to G.S. 57C‑3‑04(a)(5), of the contributions made by each member, taking into account variations in the capital contributions of each member during the period for which the allocations are made using any reasonable method selected by the managers. (1993, c. 354, s. 1.)

 

§ 57C‑4‑04.  Interim distributions.

Except as provided in this Chapter, a member is entitled to receive distributions from a limited liability company before the withdrawal of the member from the limited liability company and before the dissolution and winding up of the limited liability company as provided in an operating agreement.  In the absence of any provision for interim distributions in an operating agreement, such distributions may be made at such times and in such amounts as determined by the managers, in proportion to the agreed value, as stated in the limited liability company records required to be kept pursuant to G.S. 57C‑3‑04(a)(5), of the contributions made by each member as of the date of such distribution, or as of such date within 90 days prior to the distribution that may be determined by the managers. (1993, c. 354, s. 1.)

 

§ 57C‑4‑05.  Distribution in kind.

Except as provided in an operating agreement:

(1)       A member, regardless of the nature of the member's contribution, has no right to demand or receive any distribution from a limited liability company in any form other than cash; and

(2)       No member may be compelled to accept from a limited liability company a distribution of any asset in kind unless all persons with interests in the limited liability company receive at the same time as a distribution an interest in the property distributed that is proportionate to their interests in the limited liability company. (1993, c. 354, s. 1.)

 

§ 57C‑4‑06.  Restrictions on making distributions.

(a)       No distribution may be made if, after giving effect to the distribution:

(1)       The limited liability company would not be able to pay its debts as they become 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 operating agreement provides 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 the member receiving the distribution.

(b)       The limited liability company may base a determination that a distribution is not prohibited under subsection (a) of this section on financial statements prepared on the basis of accounting practices and principles that are reasonable under the circumstances; and for this purpose may determine asset values based on book values or on a fair market valuation or other method that is reasonable under the circumstances.

(c)       Except as provided in subsection (e) of this section, 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 payment is made if it occurs more than 120 days after the date of authorization.

(d)       A limited liability company's indebtedness issued as a distribution made in accordance with this section is at parity with the limited liability company's indebtedness to its general, unsecured creditors except to the extent otherwise provided by agreement.

(e)       Indebtedness of a limited liability company, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations under subsection (a) of this section if its terms provide that payment of principal and interest are made only if, and to the extent that, payment of a distribution to members could then be made under this section.  If indebtedness with such terms is issued as a distribution, each payment of principal or interest, and not the issuance of the indebtedness, is treated as a distribution, the effect of which is measured on the date the payment is actually made. (1993, c. 354, s. 1.)

 

§ 57C‑4‑07.  Liability upon wrongful distribution.

(a)       A manager or director who votes for or assents to a distribution in violation of G.S. 57C‑4‑06 or a written operating agreement is personally liable to the limited liability company for the amount of the distribution that exceeds what could have been distributed without violating G.S. 57C‑4‑06 or the operating agreement if it is established that the manager or director did not act in compliance with G.S. 57C‑3‑22.

(b)       Each manager or director held liable under subsection (a) of this section for a wrongful distribution is entitled to:

(1)       Contribution from each other manager or director who could be held liable under subsection (a) of this section for the wrongful distribution; and

(2)       Reimbursement from each member for the amount the member received knowing that the distribution was made in violation of G.S. 57C‑4‑06 or the operating agreement.

(c)       A proceeding under this section is barred unless it is commenced within three years after the date on which the effect of the distribution is measured under G.S. 57C‑4‑06(c). (1993, c. 354, s. 1; 2001‑387, s. 72.)

 

§ 57C‑4‑08.  Right to distribution.

Subject to the provisions of this Article, at the time a member becomes entitled to receive a distribution, the member has the status of, and is entitled to all remedies available to, a creditor of the limited liability company with respect to the distribution.  (1993, c. 354, s. 1.)