With respect to liability for improper dividends,a non-breaching director and an innocent shareholder are both protected from liability due to their good faith.

Question

Quizplus · Accepted Answer

Both non-breaching directors and innocent shareholders are protected from liability for improper dividends if they acted in good faith. This means they had no knowledge of facts that would make the dividend illegal or knew that the board did not have the authority to declare the dividend. However, breaching directors could face personal liability for losses resulting from the improper dividend.

With Respect to Liability for Improper Dividends,a Non-Breaching Director and an Innocent