Final answer:
The untrue statement regarding the legality of dividend distributions is that dividends do not require formal approval by the Board of Directors. Dividends must be formally sanctioned, and they can only be paid if certain financial conditions are met, including the availability of retained earnings and the ability to pay existing liabilities.
Step-by-step explanation:
The statement about the legality of dividend distributions that is NOT generally true is that dividends do not need to be formally approved by the Board of Directors. In fact, distributing dividends is a major corporate decision that must be formally approved by the Board of Directors. The other statements are generally true: the corporation must still be able to pay its liabilities when they become due, a corporation may not pay dividends that are higher than their legally available retained earnings, and no amounts may be distributed unless the corporate capital is left intact. These directives ensure that the company's financial health is not compromised by the payment of dividends.