Section 2-304 - Application of capital surplus(a) By resolution of its board of directors, a corporation may apply any part of its capital surplus for: (1) The reduction or elimination of a corporate deficit arising from a loss, however incurred, or from diminution in the value of its assets, but only after earned surplus is exhausted; or(2) Any other proper corporate purpose.(b) An application of capital surplus under subsection (a) of this section shall be disclosed to the stockholders of the corporation in its next annual report.