Alabama House Bill HB209

Alabama 2022 Regular Session

• Introduced: 2/2/22
• Refer: 2/2/22

Caption

Corporations, stock, issuance in fractional shores reg., issuance of scrip in bearer form prohibited, Sec. 10A-2A-6.04 am'd.

Impact

By mandating that all scrip must be registered instead of allowing bearer forms, HB 209 impacts the operational practices of corporations in Alabama. This means that shareholders must have their fractional shares logged in the corporation's records, thus enabling the corporation to better manage shareholder rights, dividends, and distributions upon dissolution. The bill could lead to greater accountability within corporations regarding their fractional share transactions, which may ultimately benefit investors and promote a more secure investment environment.

Summary

House Bill 209 addresses the issuance of fractional shares by corporations in Alabama. The bill specifically prohibits corporations from issuing scrip in bearer form, which are certificates that represent fractions of shares of stock but are not registered in the corporate books. This legislative change aims to ensure that all issued scrip for fractional stock must be registered and compliant with existing notice requirements. The intent behind this bill is to enhance the clarity and traceability of stock ownership, particularly concerning fractional shares which can often lead to complications in corporate governance and clarity of ownership rights.

Contention

While specific discussions of contention on this bill were not detailed in the available texts, it can be inferred that the prohibition of bearer scrip may raise concerns among certain stakeholders who favor the flexibility and privacy that bearer instruments traditionally offer. Opponents might argue that such changes introduce unnecessary bureaucracy and limit options for investors. However, supporters would likely counter that the benefits of regulation and increased transparency outweigh these concerns, positioning it as a necessary step towards modernizing corporate law in Alabama.