(1) The board of directors may authorize and the corporation may make distributions to its shareholders, subject to sub. (3) and any restriction by the articles of incorporation. (2) The record date for determining shareholders entitled to a distribution, other than a distribution involving a purchase, redemption or other acquisition of the corporation’s shares, is the date on which the board of directors authorizes the distribution, unless the board of directors fixes a different record date. (3) No distribution may be made if, after giving it effect, any of the following would occur: (a) The corporation would not be able to pay its debts as they become due in the usual course of business. (b) The corporation’s total assets would be less than the sum of its total liabilities plus, unless the articles of incorporation permit otherwise, the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution. (4) The board of directors may base a determination that sub. (3) does not prohibit a distribution on financial statements and other financial data prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances. (5) Except as provided in sub. (7), the effect of a distribution for purposes of sub. (3) is measured as of the following dates: (a) In the case of distribution by purchase, redemption or other acquisition of the corporation’s shares, as of the earlier of the following: 1. The date on which money or other property is transferred or debt is incurred by the corporation. 2. The date on which the shareholder ceases to be a shareholder with respect to the acquired shares. (b) In the case of any other distribution of indebtedness, as of the date on which the indebtedness is distributed. (c) In all other cases, as of the following: 1. The date on which the distribution is authorized if the payment occurs within 120 days after the date of authorization. 2. The date on which the payment is made if payment occurs more than 120 days after the date of authorization. (6) A corporation’s indebtedness to a shareholder incurred because of a distribution made in accordance with this section is at parity with the corporation’s indebtedness to its general, unsecured creditors except to the extent subordinated by agreement. This subsection does not affect the validity or priority of a security interest in corporation property created to secure indebtedness incurred because of a distribution. (7) Indebtedness of a corporation, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations under sub. (3) if its terms provide that payment of principal and interest are made only if and to the extent that payment of a distribution to shareholders could then be made under this section. If the indebtedness is issued as a distribution, each payment of principal or interest is treated as a distribution, the effect of which is measured on the date on which the payment is actually made.
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