{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/13.1-1035.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/13.1-1035.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/13.1-1035.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/13.1-1035.html"}],"law_id":72538,"edition_id":1,"section_id":72538,"structure_id":14004,"section_number":"13.1-1035","catch_line":"Restrictions on making distribution","history":"1991, c. 168; 1992, c. 574; 2001, c. 548; 2009, c. 763.","full_text":"A\n\nNo distribution may be made by a limited liability company if, after giving effect to the distribution:1\n\nThe limited liability company would not be able to pay its debts as they became due in the usual course of business; or2\n\nThe 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\n\nThe limited liability company may base a determination that a distribution is not prohibited under subsection A of this section either on:1\n\nFinancial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances; or2\n\nA fair valuation or other method that is reasonable in the circumstances.C\n\nThe 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or (ii) the date the payment is made if it occurs more than 120 days after the date of authorization.D\n\n[Repealed.]E\n\nFor the purposes of this section, the term “distribution” shall not include amounts constituting reasonable compensation for present or past services or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\n\nThis section shall not apply to distributions in liquidation under Article 9 (§ 13.1-1046 et seq.) of this chapter.","order_by":null,"text":{"0":{"id":261176,"text":"No distribution may be made by a limited liability company if, after giving effect to the distribution:","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"A1"},"1":{"id":261177,"text":"The limited liability company would not be able to pay its debts as they became due in the usual course of business; or","type":"section","prefixes":["A","1"],"prefix":"1","entire_prefix":"A1","prefix_anchor":"A1","level":2,"prior_prefix":"A","next_prefix":"A2"},"2":{"id":261178,"text":"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.","type":"section","prefixes":["A","2"],"prefix":"2","entire_prefix":"A2","prefix_anchor":"A2","level":2,"prior_prefix":"A1","next_prefix":"B"},"3":{"id":261179,"text":"The limited liability company may base a determination that a distribution is not prohibited under subsection A of this section either on:","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A2","next_prefix":"B1"},"4":{"id":261180,"text":"Financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances; or","type":"section","prefixes":["B","1"],"prefix":"1","entire_prefix":"B1","prefix_anchor":"B1","level":2,"prior_prefix":"B","next_prefix":"B2"},"5":{"id":261181,"text":"A fair valuation or other method that is reasonable in the circumstances.","type":"section","prefixes":["B","2"],"prefix":"2","entire_prefix":"B2","prefix_anchor":"B2","level":2,"prior_prefix":"B1","next_prefix":"C"},"6":{"id":261182,"text":"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.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B2","next_prefix":"D"},"7":{"id":261183,"text":"[Repealed.]","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C","next_prefix":"E"},"8":{"id":261184,"text":"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.","type":"section","prefixes":["E"],"prefix":"E","entire_prefix":"E","prefix_anchor":"E","level":1,"prior_prefix":"D","next_prefix":"F"},"9":{"id":261185,"text":"This section shall not apply to distributions in liquidation under Article 9 (§ 13.1-1046 et seq.) of this chapter.","type":"section","prefixes":["F"],"prefix":"F","entire_prefix":"F","prefix_anchor":"F","level":1,"prior_prefix":"E"}},"ancestry":[{"id":14004,"edition_id":1,"name":"Finance","identifier":"6","label":"article","depth":3,"order_by":1,"parent_id":12817,"metadata":{},"date_created":"2026-06-26 03:46:34","date_modified":"2026-06-26 03:46:34","permalink":{"id":148861,"object_type":"structure","relational_id":14004,"identifier":"6","token":"13.1\/12\/6","url":"\/13.1\/12\/6\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12817,"edition_id":1,"name":"Virginia Limited Liability Company Act","identifier":"12","label":"chapter","depth":2,"order_by":1,"parent_id":12744,"metadata":{},"date_created":"2026-06-26 03:43:54","date_modified":"2026-06-26 03:43:54","permalink":{"id":148351,"object_type":"structure","relational_id":12817,"identifier":"12","token":"13.1\/12","url":"\/13.1\/12\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12744,"edition_id":1,"name":"Corporations","identifier":"13.1","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:51","date_modified":"2026-06-26 03:43:51","permalink":{"id":147493,"object_type":"structure","relational_id":12744,"identifier":"13.1","token":"13.1","url":"\/13.1\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":56042,"structure_id":14004,"section_number":"13.1-1029","catch_line":"Sharing of profits and losses","url":"\/13.1-1029\/","token":"13.1\/12\/6\/13.1-1029","metadata":false},{"id":73279,"structure_id":14004,"section_number":"13.1-1030","catch_line":"Sharing of distributions","url":"\/13.1-1030\/","token":"13.1\/12\/6\/13.1-1030","metadata":false},{"id":77425,"structure_id":14004,"section_number":"13.1-1031","catch_line":"Interim distributions","url":"\/13.1-1031\/","token":"13.1\/12\/6\/13.1-1031","metadata":false},{"id":55088,"structure_id":14004,"section_number":"13.1-1032","catch_line":"Resignation of member","url":"\/13.1-1032\/","token":"13.1\/12\/6\/13.1-1032","metadata":false},{"id":61693,"structure_id":14004,"section_number":"13.1-1033","catch_line":"Repealed","url":"\/13.1-1033\/","token":"13.1\/12\/6\/13.1-1033","metadata":false},{"id":73763,"structure_id":14004,"section_number":"13.1-1034","catch_line":"Distribution in kind","url":"\/13.1-1034\/","token":"13.1\/12\/6\/13.1-1034","metadata":false},{"id":72538,"structure_id":14004,"section_number":"13.1-1035","catch_line":"Restrictions on making distribution","url":"\/13.1-1035\/","token":"13.1\/12\/6\/13.1-1035","metadata":false},{"id":60226,"structure_id":14004,"section_number":"13.1-1036","catch_line":"Liability upon wrongful distribution","url":"\/13.1-1036\/","token":"13.1\/12\/6\/13.1-1036","metadata":false},{"id":71027,"structure_id":14004,"section_number":"13.1-1037","catch_line":"Right to distribution","url":"\/13.1-1037\/","token":"13.1\/12\/6\/13.1-1037","metadata":false}],"previous_section":{"id":73763,"structure_id":14004,"section_number":"13.1-1034","catch_line":"Distribution in kind","url":"\/13.1-1034\/","token":"13.1\/12\/6\/13.1-1034","metadata":false},"next_section":{"id":60226,"structure_id":14004,"section_number":"13.1-1036","catch_line":"Liability upon wrongful distribution","url":"\/13.1-1036\/","token":"13.1\/12\/6\/13.1-1036","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/13.1-1035\/","history_text":"

This law was first created in 1991. The record of its establishment is cataloged in chapter 168 of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year. Unfortunately, the 1991 \u201cActs\u201d aren\u2019t available online. It has been modified 3 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 1992, chapter 574; in 2001, chapter 548<\/a>; in 2009, chapter 763<\/a>.<\/p>","references":[{"id":60226,"section_number":"13.1-1036","catch_line":"Liability upon wrongful distribution","order_by":null,"url":"\/13.1-1036\/"}],"refers_to":[{"id":78398,"section_number":"13.1-1046","catch_line":"Dissolution; generally","order_by":null,"url":"\/13.1-1046\/"}],"permalink":{"id":148887,"object_type":"law","relational_id":72538,"identifier":"13.1-1035","token":"13.1\/12\/6\/13.1-1035","url":"\/13.1-1035\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/13.1-1035\/","token":"13.1\/12\/6\/13.1-1035","dublin_core":{"Title":"Restrictions on making distribution","Type":"Text","Format":"text\/html","Identifier":"\u00a7 13.1-1035","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> No distribution<\/span> may be made by a limited liability company<\/span> if, after giving effect to the distribution<\/span>: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> The limited liability company<\/span> would not be able to pay its debts as they became due in the usual course of business; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> The limited liability company<\/span>’s total assets<\/span> would be less than the sum of its total liabilities plus, unless the articles of organization<\/span> or an operating agreement<\/span> permits otherwise, the amount that would be needed, if the limited liability company<\/span> were to be dissolved at the time of the distribution<\/span>, to satisfy the preferential rights upon dissolution of members<\/span> whose preferential rights are superior to the rights of members<\/span> receiving the distribution<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> The limited liability company<\/span> may base a determination that a distribution<\/span> is not prohibited under subsection A of this section either on: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> Financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> A fair valuation or other method that is reasonable in the circumstances. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> The effect of a distribution<\/span> under subsection A of this section is measured as of (i) the date the distribution<\/span> 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. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> [Repealed.] <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

E.<\/span> For the purposes of this section, the term “distribution<\/span>” 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. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

F.<\/span> This section shall not apply to distributions<\/span> in liquidation<\/span> under Article 9 (§ 13.1-1046<\/a> et seq.) of this chapter. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nRESTRICTIONS ON MAKING DISTRIBUTION (\u00a7 13.1-1035)\n\nA. No distribution may be made by a limited liability company if, after giving\neffect to the distribution:\n\n 1. The limited liability company would not be able to pay its debts as they\n became due in the usual course of business; or\n\n 2. The limited liability company’s total assets would be less than the\n sum of its total liabilities plus, unless the articles of organization or an\n operating agreement permits otherwise, the amount that would be needed, if the\n limited liability company were to be dissolved at the time of the\n distribution, to satisfy the preferential rights upon dissolution of members\n whose preferential rights are superior to the rights of members receiving the\n distribution.\n\nB. The limited liability company may base a determination that a distribution is\nnot prohibited under subsection A of this section either on:\n\n 1. Financial statements prepared on the basis of accounting practices and\n principles that are reasonable in the circumstances; or\n\n 2. A fair valuation or other method that is reasonable in the circumstances.\n\nC. The effect of a distribution under subsection A of this section is measured\nas of (i) the date the distribution is authorized if the payment occurs within\n120 days after the date of authorization or (ii) the date the payment is made if\nit occurs more than 120 days after the date of authorization.\n\nD. [Repealed.]\n\nE. For the purposes of this section, the term “distribution” shall\nnot include amounts constituting reasonable compensation for present or past\nservices or reasonable payments made in the ordinary course of business pursuant\nto a bona fide retirement plan or other benefits program.\n\nF. This section shall not apply to distributions in liquidation under Article 9\n(§ 13.1-1046 et seq.) of this chapter.\n\nHISTORY: 1991, c. 168; 1992, c. 574; 2001, c. 548; 2009, c. 763.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}