Alabama Senate Bill SB112 Latest Draft

                            SB112ENROLLED
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SB112
QMC2554-2
By Senators Givhan, Smitherman
RFD: Fiscal Responsibility and Economic Development
First Read: 20-Feb-24
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First Read: 20-Feb-24
Enrolled, An Act,
Relating to the Alabama Business and Nonprofit Entities
Code; to amend Sections 10A-1-1.03, 10A-1-1.08, and
10A-1-3.32, as amended by Act 2023-503; 10A-1-5.31;
10A-2A-1.40, as amended by Act 2023-503; 10A-2A-1.48;
10A-2A-1.51 and 10A-2A-2.02, as amended by Act 2023-503;
10A-2A-6.21, 10A-2A-6.24, and 10A-2A-6.31; 10A-2A-7.04, as
amended by Act 2023-503; 10A-2A-7.05 and 10A-2A-10.05;
10A-2A-10.07 and 10A-2A-10.08, as amended by Act 2023-503;
10A-2A-12.01, 10A-2A-13.02, and 10A-2A-14.05; 10A-3A-1.02,
10A-3A-1.23, 10A-3A-1.26, 10A-3A-2.02, 10A-3A-7.04,
10A-3A-7.05, 10A-3A-9.05, 10A-3A-9.07, 10A-3A-10.01,
10A-3A-10.03, 10A-3A-10.04, and 10A-3A-11.07, as added by Act
2023-503; 10A-4-1.03, 10A-4-2.01, 10A-4-2.02, 10A-4-2.03,
10A-4-2.04, 10A-4-3.01, 10A-4-3.02, 10A-4-3.03, 10A-4-3.05,
10A-4-3.06, 10A-4-4.01, 10A-4-4.02, 10A-4-5.01, 10A-4-5.02,
10A-4-5.03, 10A-4-5.04, 10A-4-5.05, 10A-4-5.06, 10A-4-5.08,
10A-5A-1.08, 10A-5A-2.01, 10A-5A-2.02, 10A-5A-3.02,
10A-5A-8.01, 10A-8A-1.08, 10A-8A-10.02, 10A-9A-1.08, and
10A-9A-2.01; and 10A-9A-2.02, as amended by Act 2023-503, Code
of Alabama 1975; to eliminate references to the old Alabama
Nonprofit Corporation Law; to clarify that the address of
registered agents must be in this state, that the certificate
of formation must set forth the county of the registered agent
in accordance with current practice, and to streamline and
clarify the ratification process of certain actions in
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clarify the ratification process of certain actions in
accordance with Delaware law changes; to provide that business
and nonprofit corporations may provide for exculpation of
certain officers for certain actions in accordance with
changes to Delaware law and the Model Business Corporation
Act; to clarify the amendment and restatement process; to
clarify the provisions regarding the sale of property by
business and nonprofit corporations in accordance with changes
to Delaware law; to conform the professional corporation law
to recent changes in the business and nonprofit corporation
laws; to add Sections 10A-5A-1.11, 10A-8A-1.14, and
10A-9A-1.15 to the Code of Alabama 1975; to provide a process
for ratification of certain actions and transactions for
limited liability companies, limited partnerships, and
partnerships; to add Chapter 18 to Title 10A to the Code of
Alabama 1975, providing for the Alabama Statewide Trade
Association Law; and in connection therewith would have as its
purpose or effect the requirement of a new or increased
expenditure of local funds within the meaning of Section
111.05 of the Constitution of Alabama of 2022.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Sections 10A-1-1.03, 10A-1-1.08, and
10A-1-3.32, as amended by Act 2023-503; 10A-1-5.31;
10A-2A-1.40, as amended by Act 2023-503; 10A-2A-1.48;
10A-2A-1.51 and 10A-2A-2.02, as amended by Act 2023-503;
10A-2A-6.21, 10A-2A-6.24, and 10A-2A-6.31; 10A-2A-7.04, as
amended by Act 2023-503; 10A-2A-7.05 and 10A-2A-10.05;
10A-2A-10.07 and 10A-2A-10.08, as amended by Act 2023-503;
10A-2A-12.01, 10A-2A-13.02, and 10A-2A-14.05; 10A-3A-1.02,
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10A-2A-12.01, 10A-2A-13.02, and 10A-2A-14.05; 10A-3A-1.02,
10A-3A-1.23, 10A-3A-1.26, 10A-3A-2.02, 10A-3A-7.04,
10A-3A-7.05, 10A-3A-9.05, 10A-3A-9.07, 10A-3A-10.01,
10A-3A-10.03, 10A-3A-10.04, and 10A-3A-11.07, as added by Act
2023-503; 10A-4-1.03, 10A-4-2.01, 10A-4-2.02, 10A-4-2.03,
10A-4-2.04, 10A-4-3.01, 10A-4-3.02, 10A-4-3.03, 10A-4-3.05,
10A-4-3.06, 10A-4-4.01, 10A-4-4.02, 10A-4-5.01, 10A-4-5.02,
10A-4-5.03, 10A-4-5.04, 10A-4-5.05, 10A-4-5.06, 10A-4-5.08,
10A-5A-1.08, 10A-5A-2.01, 10A-5A-2.02, 10A-5A-3.02,
10A-5A-8.01, 10A-8A-1.08, 10A-8A-10.02, 10A-9A-1.08,
10A-9A-2.01, and 10A-9A-2.02 of the Code of Alabama 1975, are
amended to read as follows:
"§10A-1-1.03
(a) If a term, including a term that is defined in
subsection (b), is defined in a chapter of this title, then,
when used in that chapter, the term shall have the meaning set
forth in that chapter.
(b) As used in this title, except as provided in
subsection (a) or where the context otherwise requires, the
following terms mean:
(1) AFFILIATE. A person who controls, is controlled by,
or is under common control with another person. An affiliate
of an individual includes the spouse, or a parent or sibling
thereof, of the individual, or a child, grandchild, sibling,
parent, or spouse of any thereof, of the individual, or an
individual having the same home as the individual, or a trust
or estate of which an individual specified in this sentence is
a substantial beneficiary; a trust, estate, incompetent,
conservatee, protected person, or minor of which the
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conservatee, protected person, or minor of which the
individual is a fiduciary; or an entity of which the
individual is director, general partner, agent, employee or
the governing authority or member of the governing authority.
(2) ASSOCIATE. When used to indicate a relationship
with:
(A) a domestic or foreign entity for which the person
is:
(i) an officer or governing person; or
(ii) a beneficial owner of 10 percent or more of a
class of voting ownership interests or similar securities of
the entity;
(B) a trust or estate in which the person has a
substantial beneficial interest or for which the person serves
as trustee or in a similar fiduciary capacity;
(C) the person's spouse or a relative of the person
related by consanguinity or affinity within the fifth degree
who resides with the person; or
(D) a governing person or an affiliate or officer of
the person.
(3) ASSOCIATION. Includes, but is not limited to, an
unincorporated nonprofit association as defined in Chapter 17
and an unincorporated professional association as defined in
Article 1 of Chapter 30.
(4) BENEFIT CORPORATION. A benefit corporation as
defined in Chapter 2A.
(5) BUSINESS CORPORATION. A corporation or foreign
corporation as defined in Chapter 2A. The term includes a
benefit corporation as defined in Chapter 2A.
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benefit corporation as defined in Chapter 2A.
(6) BUSINESS TRUST. A business trust as defined in
Chapter 16.
(7) CERTIFICATE OF DISSOLUTION. Any document such as a
certificate of dissolution, statement of dissolution, or
articles of dissolution, required or permitted to be filed
publicly with respect to an entity's dissolution and winding
up of its business, activity, activities, not for profit
activity, or affairs.
(8) CERTIFICATE OF FORMATION.
(A) The document required to be filed publicly under
this title to form a filing entity; and
(B) if appropriate, a restated certificate of formation
and all amendments of an original or restated certificate of
formation; provided that a restated certificate of formation
and an amendment of an original or restated certificate of
formation shall not be deemed to be a certificate of formation
for purposes of Section 10A-1-4.31.
(9) CERTIFICATE OF OWNERSHIP. An instrument evidencing
an ownership interest or membership interest in an entity.
(10) CERTIFICATED OWNERSHIP INTEREST. An ownership
interest of a domestic entity represented by a certificate.
(11) CERTIFICATION or CERTIFIED. Duly authenticated by
the proper officer or filing officer of the jurisdiction the
laws of which govern the internal affairs of an entity.
(12) CONTRIBUTION. A tangible or intangible benefit
that a person transfers to an entity in consideration for an
ownership interest in the entity or otherwise in the person's
capacity as an owner or a member. A benefit that may
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capacity as an owner or a member. A benefit that may
constitute a contribution transferred in exchange for an
ownership interest or transferred in the transferor's capacity
as an owner or member may include cash, property, services
rendered, a contract for services to be performed, a
promissory note or other obligation of a person to pay cash or
transfer property to the entity, or securities or other
interests in or obligations of an entity. In either case, the
benefit does not include cash or property received by the
entity:
(A) with respect to a promissory note or other
obligation to the extent that the agreed value of the note or
obligation has previously been included as a contribution; or
(B) that the person intends to be a loan to the entity.
(13) CONVERSION. A conversion, whether referred to as a
conversion, domestication, or otherwise, means:
(A) the continuance of a domestic entity as a foreign
entity of any type;
(B) the continuance of a foreign entity as a domestic
entity of any type; or
(C) the continuance of a domestic entity of one type as
a domestic entity of another type.
(14) CONVERTED ENTITY. An entity resulting from a
conversion.
(15) CONVERTING ENTITY. An entity as the entity existed
before the entity's conversion.
(16) COOPERATIVE. Includes an employee cooperative as
defined in Chapter 11.
(17) CORPORATION. Includes a domestic or foreign
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(17) CORPORATION. Includes a domestic or foreign
business corporation, including a benefit corporation, as
defined in Chapter 2A, a domestic or foreign nonprofit
corporation as defined in Chapter 3 or Chapter 3A, a domestic
or foreign professional corporation as defined in Chapter 4,
and those entities specified in Chapter 20 as corporate.
(18) COURT. The designated court, and if none, the
circuit court specifically set forth in this title, and if
none, any other court having jurisdiction in a case.
(19) DAY. When used in the computation of time,
excludes the first day and includes the last day of the period
so computed, unless the last day is a Saturday, Sunday, or
legal holiday, in which event the period runs until the end of
the next day that is not a Saturday, a Sunday, or a legal
holiday. When the period of time to be computed is less than 7
days, intermediate Saturdays, Sundays, and legal holidays
shall be excluded.
(20) DEBTOR IN BANKRUPTCY. A person who is the subject
of:
(A) an order for relief under the United States
bankruptcy laws, Title 11, United States Code, or comparable
order under a successor statute of general application; or
(B) a comparable order under federal, state, or foreign
law governing insolvency.
(21) DESIGNATED COURT. The court or courts that are
designated in the (i) certificate of incorporation or bylaws
of a corporation as authorized by Chapter 2A, (ii) certificate
of incorporation or bylaws of a nonprofit corporation as
authorized by Chapter 3A, (iii) limited liability company
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authorized by Chapter 3A, (iii) limited liability company
agreement of a limited liability company formed pursuant to or
governed by Chapter 5A, (iv) partnership agreement of a
partnership formed pursuant to or governed by Chapter 8A, or
(v) limited partnership agreement of a limited partnership
formed pursuant to or governed by Chapter 9A.
(22) DIRECTOR. An individual who serves on the board of
directors, by whatever name known, of a foreign or domestic
corporation.
(23) DISTRIBUTION. A transfer of property, including
cash, from an entity to an owner or member of the entity in
the owner's or member's capacity as an owner or member. The
term includes a dividend, a redemption or purchase of an
ownership interest, or a liquidating distribution.
(24) DOMESTIC. With respect to an entity, means
governed as to its internal affairs by this title.
(25) DOMESTIC ENTITY. An entity governed as to its
internal affairs by this title.
(26) EFFECTIVE DATE OF THIS TITLE. January 1, 2011.
(27) ELECTRONIC. Relating to technology having
electrical, digital, magnetic, wireless, optical,
electromagnetic, or similar capabilities.
(28) ELECTRONIC SIGNATURE. An electronic signature as
that term is defined in the Uniform Electronic Transactions
Act, Chapter 1A of Title 8, or any successor statute.
(29) ELECTRONIC TRANSMISSION or ELECTRONICALLY
TRANSMITTED. Any form or process of communication not directly
involving the physical transfer of paper or another tangible
medium, which (i) is suitable for the retention, retrieval,
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medium, which (i) is suitable for the retention, retrieval,
and reproduction of information by the recipient, and (ii) is
retrievable in paper form by the recipient through an
automated process used in conventional commercial practice.
(30) ELECTRONIC WRITING. Information that is stored in
an electronic or other nontangible medium and is retrievable
in paper form through an automated process used in
conventional commercial practice.
(31) ENTITY. A domestic or foreign organization.
(32) FILING ENTITY. A domestic entity that is a
corporation, limited partnership, limited liability limited
partnership, limited liability company, professional
association, employee cooperative corporation, or real estate
investment trust.
(33) FILING INSTRUMENT. An instrument, document, or
statement that is required or permitted by this title to be
delivered for filing by or for an entity to a filing officer.
(34) FILING OFFICER. An officer of this state with whom
a filing instrument is required or permitted to be delivered
for filing pursuant to this title.
(35) FOREIGN. With respect to an entity, means governed
as to its internal affairs by the laws of a jurisdiction other
than this state.
(36) FOREIGN ENTITY. An entity governed as to its
internal affairs by the laws of a jurisdiction other than this
state.
(37) FOREIGN FILING ENTITY. A foreign entity that
registers or is required to register as a foreign entity under
Article 7.
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Article 7.
(38) FOREIGN GOVERNMENTAL AUTHORITY. A governmental
official, agency, or instrumentality of a jurisdiction other
than this state.
(39) FOREIGN NONFILING ENTITY. A foreign entity that is
not a foreign filing entity.
(40) GENERAL PARTNER.
(A) Each partner in a general partnership; or
(B) a person who is admitted to a limited partnership
as a general partner in accordance with the governing
documents of the limited partnership.
(41) GENERAL PARTNERSHIP. A partnership as defined in
Chapter 8A. The term includes a limited liability partnership
as defined in Chapter 8A.
(42) GOVERNING AUTHORITY. A person or group of persons
who are entitled to manage and direct the affairs of an entity
pursuant to this title and the governing documents of the
entity, except that if the governing documents of the entity
or this title divide the authority to manage and direct the
affairs of the entity among different persons or groups of
persons according to different matters, governing authority
means the person or group of persons entitled to manage and
direct the affairs of the entity with respect to a matter
under the governing documents of the entity or this title. The
term includes the board of directors of a corporation, by
whatever name known, or other persons authorized to perform
the functions of the board of directors of a corporation, the
general partners of a general partnership or limited
partnership, the persons who have direction and oversight of a
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partnership, the persons who have direction and oversight of a
limited liability company, and the trust managers of a real
estate investment trust. The term does not include an officer
who is acting in the capacity of an officer.
(43) GOVERNING DOCUMENTS.
(A) In the case of a domestic entity:
(i) the certificate of formation for a filing entity or
the document or agreement under which a nonfiling entity is
formed; and
(ii) the other documents or agreements, including
bylaws, partnership agreements of partnerships, limited
liability company agreements of limited liability companies,
or similar documents, adopted by the entity pursuant to this
title to govern the formation or the internal affairs of the
entity; or
(B) in the case of a foreign entity, the instruments,
documents, or agreements adopted under the law of its
jurisdiction of formation to govern the formation or the
internal affairs of the entity.
(44) GOVERNING PERSON. A person serving as part of the
governing authority of an entity.
(45) INDIVIDUAL. A natural person and the estate of an
incompetent or deceased natural person.
(46) INSOLVENCY. The inability of a person to pay the
person's debts as they become due in the usual course of
business or affairs.
(47) INSOLVENT. A person who is unable to pay the
person's debts as they become due in the usual course of
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person's debts as they become due in the usual course of
business or affairs.
(48) JUDGE OF PROBATE. The judge of probate of the
county in which an entity is required or permitted to deliver
a filing instrument for filing pursuant to this title.
(49) JURISDICTION OF FORMATION.
(A) In the case of a filing entity, this state;
(B) in the case of a foreign entity, the jurisdiction
in which the entity's certificate of formation or similar
organizational instrument is filed, or if no certificate of
formation or similar organizational instrument is filed, then
the laws of the jurisdiction which govern the internal affairs
of the foreign entity;
(C) in the case of a general partnership which has
filed a statement of partnership, a statement of not for
profit partnership, or a statement of limited liability
partnership in accordance with Chapter 8A, in this state;
(D) in the case of a foreign limited liability
partnership, the laws of the jurisdiction which govern the
filing of the foreign limited liability partnership's
statement of limited liability partnership or such filing in
that jurisdiction; and
(E) in the case of a foreign or domestic nonfiling
entity other than those entities described in subsection (C)
or (D):
(i) the jurisdiction the laws of which are chosen in
the entity's governing documents to govern its internal
affairs if that jurisdiction bears a reasonable relation to
the owners or members or to the domestic or foreign nonfiling
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the owners or members or to the domestic or foreign nonfiling
entity's business, activities, and affairs under the
principles of this state that otherwise would apply to a
contract among the owners or members; or
(ii) if subparagraph (i) does not apply, the
jurisdiction in which the entity has its principal office.
(50) LAW. Unless the context requires otherwise, both
statutory and common law.
(51) LICENSE. A license, certificate of registration,
or other legal authorization.
(52) LICENSING AUTHORITY. The state court, state
regulatory licensing board, or other like agency which has the
power to issue a license or other legal authorization to
render professional services.
(53) LIMITED LIABILITY COMPANY. A limited liability
company as defined in Chapter 5A.
(54) LIMITED LIABILITY LIMITED PARTNERSHIP. A limited
liability limited partnership as defined in Chapter 9A.
(55) LIMITED LIABILITY PARTNERSHIP. A limited liability
partnership as defined in Chapter 8A.
(56) LIMITED PARTNER. A person who has been admitted to
a limited partnership as a limited partner as provided by:
(A) in the case of a domestic limited partnership,
Chapter 9A; or
(B) in the case of a foreign limited partnership, the
laws of its jurisdiction of formation.
(57) LIMITED PARTNERSHIP. A limited partnership as
defined in Chapter 9A. The term includes a limited liability
limited partnership as defined in Chapter 9A.
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limited partnership as defined in Chapter 9A.
(58) MANAGERIAL OFFICIAL. An officer or a governing
person.
(59) MEMBER.
(A) A person defined as a member under Chapter 5A;
(B) in the case of a nonprofit corporation formed
pursuant to or governed by Chapter 3, a person having
membership rights in the nonprofit corporation in accordance
with its governing documents as provided in Chapter 3, and in
the case of a nonprofit corporation formed pursuant to or
governed by Chapter 3A, a person defined as a member under
Chapter 3A;
(C) in the case of an employee cooperative corporation
formed pursuant to or governed by Chapter 11, a natural person
who, as provided in Chapter 11, has been accepted for
membership in and owns a membership share in an employee
cooperative;
(D) in the case of a nonprofit association, a person
who, as provided in Chapter 17, may participate in the
selection of persons authorized to manage the affairs of the
nonprofit association or in the development of its policy.
(60) MERGER. The combination of one or more domestic
entities with one or more domestic entities or foreign
entities resulting in:
(A) one or more surviving domestic entities or foreign
entities;
(B) the creation of one or more new domestic entities
or foreign entities, or one or more surviving domestic
entities or foreign entities; or
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entities or foreign entities; or
(C) one or more surviving domestic entities or foreign
entities and the creation of one or more new domestic entities
or foreign entities.
(61) NONFILING ENTITY. A domestic entity that is not a
filing entity. The term includes a domestic general
partnership, a limited liability partnership, and a nonprofit
association.
(62) NONPROFIT ASSOCIATION. An unincorporated nonprofit
association as defined in Chapter 17. The term does not
include a general partnership which has filed a statement of
not for profit partnership in accordance with Chapter 8A, a
limited partnership which is carrying on a not for profit
purpose, or a limited liability company which is carrying on a
not for profit purpose.
(63) NONPROFIT CORPORATION. A domestic or foreign
nonprofit corporation as defined in Chapter 3 or Chapter 3A.
(64) NONPROFIT ENTITY. An entity that is a nonprofit
corporation, nonprofit association, or other entity that is
organized solely for one or more nonprofit purposes.
(65) OFFICER. An individual elected, appointed, or
designated as an officer of an entity by the entity's
governing authority or under the entity's governing documents.
(66) ORGANIZATION. A corporation, limited partnership,
general partnership, limited liability company, business
trust, real estate investment trust, joint venture, joint
stock company, cooperative, association, or other
organization, including, regardless of its organizational
form, a bank, insurance company, credit union, and savings and
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form, a bank, insurance company, credit union, and savings and
loan association, whether for profit, not for profit,
nonprofit, domestic, or foreign.
(67) ORGANIZER. A person, who need not be an owner or
member of the entity, who, having the capacity to contract, is
authorized to execute documents in connection with the
formation of the entity. The term includes an incorporator.
(68) OWNER.
(A) With respect to a foreign or domestic business
corporation or real estate investment trust, a stockholder or
a shareholder;
(B) with respect to a foreign or domestic partnership,
a partner;
(C) with respect to a foreign or domestic limited
liability company or association, a member; and
(D) with respect to another foreign or domestic entity,
an owner of an equity interest in that entity.
(69) OWNERSHIP INTEREST. An owner's interest in an
entity. The term includes the owner's share of profits and
losses or similar items and the right to receive
distributions. The term does not include an owner's right to
participate in management or participate in the direction or
oversight of the entity. An ownership interest is personal
property.
(70) PARENT or PARENT ENTITY. An entity that:
(A) owns at least 50 percent of the ownership or
membership interest of a subsidiary; or
(B) possesses at least 50 percent of the voting power
of the owners or members of a subsidiary.
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of the owners or members of a subsidiary.
(71) PARTNER. A limited partner or general partner.
(72) PARTNERSHIP. Includes a general partnership, a
limited liability partnership, a foreign limited liability
partnership, a limited partnership, a foreign limited
partnership, a limited liability limited partnership, and a
foreign limited liability limited partnership.
(73) PARTNERSHIP AGREEMENT. Any agreement (whether
referred to as a partnership agreement or otherwise), written,
oral or implied, of the partners as to the activities and
affairs of a general partnership or a limited partnership. The
partnership agreement includes any amendments to the
partnership agreement. In the case of limited partnerships
formed prior to October 1, 1998, partnership agreement
includes the certificate of partnership.
(74) PARTY TO THE MERGER. A domestic entity or foreign
entity that under a plan of merger is combined by a merger.
The term does not include a domestic entity or foreign entity
that is not to be combined into or with one or more domestic
entities or foreign entities, regardless of whether ownership
interests of the entity are to be issued under the plan of
merger.
(75) PERSON. An individual, including the estate of an
incompetent or deceased individual, or an entity, whether
created by the laws of this state or another state or foreign
country, including, without limitation, a general partnership,
limited liability partnership, limited partnership, limited
liability limited partnership, limited liability company,
corporation, professional corporation, nonprofit corporation,
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corporation, professional corporation, nonprofit corporation,
professional association, trustee, personal representative,
fiduciary, as defined in Section 19-3-150 or person performing
in any similar capacity, business trust, estate, trust,
association, joint venture, government, governmental
subdivision, agency, or instrumentality, or any other legal or
commercial entity.
(76) PRESIDENT.
(A) The individual designated as president of an entity
under the entity's governing documents; or
(B) the officer or committee of persons authorized to
perform the functions of the principal executive officer of an
entity without regard to the designated name of the officer or
committee.
(77) PRINCIPAL OFFICE. The office, in or out of this
state, where the principal executive office, whether referred
to as the principal executive office, chief executive office,
or otherwise, of an entity is located.
(78) PROFESSIONAL ASSOCIATION. A professional
association as defined in Chapter 30.
(79) PROFESSIONAL CORPORATION. A domestic or foreign
professional corporation as defined in Chapter 4.
(80) PROFESSIONAL ENTITY. A professional association
and a professional corporation.
(81) PROFESSIONAL SERVICE. Any type of service that may
lawfully be performed only pursuant to a license issued by a
state court, state regulatory licensing board, or other like
agency pursuant to state laws.
(82) PROPERTY. Includes all property, whether real,
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(82) PROPERTY. Includes all property, whether real,
personal, or mixed, or tangible or intangible, or any right or
interest therein.
(83) REAL ESTATE INVESTMENT TRUST. An unincorporated
trust, association, or other entity as defined in Chapter 10.
(84) SECRETARY.
(A) The individual designated as secretary of an entity
under the entity's governing documents; or
(B) the officer or committee of persons authorized to
perform the functions of secretary of an entity without regard
to the designated name of the officer or committee.
(85) SECRETARY OF STATE. The Secretary of State of the
State of Alabama.
(86) SIGN or SIGNATURE. With the present intent to
authenticate or adopt a writing:
(A) to execute or adopt a tangible symbol to a writing,
and includes any manual, facsimile, or conformed signature; or
(B) to attach to or logically associate with an
electronic transmission an electronic sound, symbol, or
process, and includes an electronic signature in an electronic
transmission.
(87) STATE. Includes, when referring to a part of the
United States, a state or commonwealth, and its agencies and
governmental subdivisions, and a territory or possession, and
its agencies and governmental subdivisions, of the United
States.
(88) SUBSCRIBER. A person who agrees with or makes an
offer to an entity to purchase by subscription an ownership
interest in the entity.
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interest in the entity.
(89) SUBSCRIPTION. An agreement between a subscriber
and an entity, or a written offer made by a subscriber to an
entity before or after the entity's formation, in which the
subscriber agrees or offers to purchase a specified ownership
interest in the entity.
(90) SUBSIDIARY. An entity at least 50 percent of:
(A) the ownership or membership interest of which is
owned by a parent entity; or
(B) the voting power of which is possessed by a parent
entity.
(91) TREASURER.
(A) The individual designated as treasurer of an entity
under the entity's governing documents; or
(B) the officer or committee of persons authorized to
perform the functions of treasurer of an entity without regard
to the designated name of the officer or committee.
(92) TRUSTEE. A person who serves as a trustee of a
trust, including a real estate investment trust.
(93) UNCERTIFICATED OWNERSHIP INTEREST. An ownership
interest in a domestic entity that is not represented by a
certificate.
(94) VICE PRESIDENT.
(A) The individual designated as vice president of an
entity under the governing documents of the entity; or
(B) the officer or committee of persons authorized to
perform the functions of the president of the entity on the
death, absence, or resignation of the president or on the
inability of the president to perform the functions of office
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inability of the president to perform the functions of office
without regard to the designated name of the officer or
committee.
(95) WRITING or WRITTEN. Information that is inscribed
on a tangible medium or that is stored in an electronic or
other medium and is retrievable in perceivable form."
"§10A-1-1.08
(a) The provisions of this title as described by this
section may be cited as provided by this section.
(b) Chapter 2A and the provisions of Chapter 1 to the
extent applicable to business corporations may be cited as the
Alabama Business Corporation Law.
(c) Chapter 3 or Chapter 3A and the provisions of
Chapter 1 to the extent applicable to nonprofit corporations
may be cited as the Alabama Nonprofit Corporation Law.
(d) Chapter 4 and the provisions of Chapter 1 to the
extent applicable to professional corporations may be cited as
the Alabama Professional Corporation Law.
(e) Chapter 5A and the provisions of Chapter 1 to the
extent applicable to limited liability companies may be cited
as the Alabama Limited Liability Company Law.
(f) Chapter 8A and the provisions of Chapter 1 to the
extent applicable to general partnerships may be cited as the
Alabama Partnership Law.
(g) Chapter 9A and the provisions of Chapter 1 to the
extent applicable to limited partnerships may be cited as the
Alabama Limited Partnership Law.
(h) Chapter 10 and the provisions of Chapter 1 to the
extent applicable to real estate investment trusts may be
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extent applicable to real estate investment trusts may be
cited as the Alabama Real Estate Investment Trust Law.
(i) Chapter 11 and the provisions of Chapter 1 and
Chapter 2A to the extent applicable to employee cooperative
corporations may be cited as the Alabama Employee Cooperative
Corporations Law.
(j) Chapter 17 and the provisions of Chapter 1 to the
extent applicable to unincorporated nonprofit associations may
be cited as the Alabama Unincorporated Nonprofit Association
Law."
"§10A-1-3.32
(a) This section applies to domestic entities other
than (i) corporations formed pursuant to or governed by
Chapter 2A or Chapter 4, and real estate investment trusts
formed pursuant to or governed by Chapter 10, each of which is
governed by the separate recordkeeping requirements and record
inspections provisions of Chapter 2A and (ii) nonprofit
corporations formed pursuant to or governed by Chapter 3 or
Chapter 3A, limited liability companies formed pursuant to or
governed by Chapter 5A, general partnerships formed pursuant
to or governed by Chapter 8A, and limited partnerships formed
pursuant to or governed by Chapter 9A, each of which are
governed by the separate recordkeeping requirements and record
inspection provisions set forth in each entity's respective
chapter governing that entity.
(b) With respect to a domestic entity covered by this
section, the books and records maintained under the chapter of
this title applicable to that entity and any other books and
records of that entity, wherever situated, are subject to
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records of that entity, wherever situated, are subject to
inspection and copying at the reasonable request, and at the
expense of, any owner or member or the owner's or member's
agent or attorney during regular business hours. The right of
access extends to the legal representative of a deceased owner
or member or owner or member under legal disability. The
entity shall also provide former owners and members with
access to its books and records pertaining to the period
during which they were owners or members.
(c) The governing documents of a domestic entity may
not unreasonably restrict an owner's or member's right to
information or access to books and records.
(d) Any agent or governing person of a domestic entity
who, without reasonable cause, refuses to allow any owner or
member or the owner's or member's agent or legal counsel to
inspect any books or records of that entity shall be
personally liable to the agent or member for a penalty in an
amount not to exceed 10 percent of the fair market value of
the ownership interest of the owner or member, in addition to
any other damages or remedy."
"§10A-1-5.31
(a) Each filing entity and each foreign filing entity
with a registration under Article 7, and each general
partnership that has an effective statement of partnership,
statement of not for profit partnership, or statement of
limited liability partnership on file with the Secretary of
State in accordance with Chapter 8A, shall designate and
continuously maintain in this state:
(1) a registered agent; and
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(1) a registered agent; and
(2) a registered office.
(b) A registered agent:
(1) is an agent of the entity on which may be served
any process, notice, or demand required or permitted by law to
be served on the entity;
(2) may be:
(A) an individual who is a resident of this state; or
(B) a domestic entity or a foreign entity that is
registered to transact business in this state; and
(3) must maintain a business office at the same address
as the entity's registered office.
(c) The registered office:
(1) must be located at a street address in this state
where process may be personally served on the entity's
registered agent;
(2) is not required to be a place of business of the
filing entity or foreign filing entity; and
(3) may not be solely a mailbox service or a telephone
answering service."
"§10A-2A-1.40
As used in this chapter, unless otherwise specified or
unless the context otherwise requires, the following terms
have the following meanings:
(1) AUTHORIZED STOCK means the stock of all classes and
series a corporation or foreign corporation is authorized to
issue.
(2) BENEFICIAL STOCKHOLDER means a person who owns the
beneficial interest in stock, which is either a record
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beneficial interest in stock, which is either a record
stockholder or a person on whose behalf shares of stock are
registered in the name of an intermediary or nominee.
(3) CERTIFICATE OF INCORPORATION means the certificate
of incorporation described in Section 10A-2A-2.02, all
amendments to the certificate of incorporation, and any other
documents permitted or required to be delivered for filing by
a corporation with the Secretary of State under this chapter
or Chapter 1 that modify, amend, supplement, restate, or
replace the certificate of incorporation. After an amendment
of the certificate of incorporation or any other document
filed the filing of a filing instrument under this chapter or
Chapter 1 that restates or amends and restates the certificate
of incorporation in its entirety, the certificate of
incorporation shall not include any prior documents , but the
original date of incorporation shall remain unchanged . When
used with respect to a corporation incorporated and existing
on December 31, 2019, under a predecessor law of this state,
the term "certificate of incorporation" means articles of
incorporation, charter, or similar incorporating document, and
all amendments and restatements to the certificate of
incorporation, charter, or similar incorporating document.
When used with respect to a foreign corporation, a nonprofit
corporation, or a foreign nonprofit corporation, the
"certificate of incorporation" of such an entity means the
document of such entity that is equivalent to the certificate
of incorporation of a corporation. The term "certificate of
incorporation" as used in this chapter is synonymous to the
term "certificate of formation" used in Chapter 1.
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term "certificate of formation" used in Chapter 1.
(4) CORPORATION, except in the phrase foreign
corporation, means an entity incorporated or existing under
this chapter.
(5) DELIVER or DELIVERY means any method of delivery
used in conventional commercial practice, including delivery
by hand, mail, commercial delivery, and, if authorized in
accordance with Section 10A-2A-1.41, by electronic
transmission.
(6) DISTRIBUTION means a direct or indirect transfer of
cash or other property (except a corporation's own stock) or
incurrence of indebtedness by a corporation to or for the
benefit of its stockholders in respect of any of its stock. A
distribution may be in the form of a payment of a dividend; a
purchase, redemption, or other acquisition of stock; a
distribution of indebtedness; a distribution in liquidation;
or otherwise.
(7) DOCUMENT means a writing as defined in Chapter 1.
(8) EFFECTIVE DATE, when referring to a document
accepted for filing by the Secretary of State, means the time
and date determined in accordance with Article 4 of Chapter 1.
(9) ELECTRONIC MAIL means an electronic transmission
directed to a unique electronic mail address.
(10) ELECTRONIC MAIL ADDRESS means a destination,
commonly expressed as a string of characters, consisting of a
unique user name or mailbox (commonly referred to as the
"local part" of the address) and a reference to an internet
domain (commonly referred to as the "domain part" of the
address), whether or not displayed, to which electronic mail
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address), whether or not displayed, to which electronic mail
can be sent or delivered.
(11) ELIGIBLE ENTITY means an unincorporated entity,
foreign unincorporated entity, nonprofit corporation, or
foreign nonprofit corporation.
(12) ELIGIBLE INTERESTS means interests or memberships.
(13) EMPLOYEE includes an officer, but not a director.
A director may accept duties that make the director also an
employee.
(14) ENTITY includes corporation; foreign corporation;
nonprofit corporation; foreign nonprofit corporation; estate;
trust; unincorporated entity; foreign unincorporated entity;
and state, United States, and foreign government.
(15) EXPENSES means reasonable expenses of any kind
that are incurred in connection with a matter.
(16) FILING ENTITY means an unincorporated entity,
other than a limited liability partnership, that is of a type
that is created by filing a public organic record or is
required to file a public organic record that evidences its
creation.
(17) FOREIGN CORPORATION means a corporation
incorporated under a law other than the law of this state
which would be a corporation if incorporated under the law of
this state.
(18) FOREIGN NONPROFIT CORPORATION means a corporation
incorporated under a law other than the law of this state
which would be a nonprofit corporation if incorporated under
the law of this state.
(19) GOVERNING STATUTE means the statute governing the
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(19) GOVERNING STATUTE means the statute governing the
internal affairs of a corporation, foreign corporation,
nonprofit corporation, foreign nonprofit corporation,
unincorporated entity, or foreign unincorporated entity.
(20) GOVERNMENTAL SUBDIVISION includes authority,
county, district, and municipality.
(21) INCLUDES and INCLUDING denote a partial definition
or a nonexclusive list.
(22) INTEREST means either or both of the following
rights under the governing statute governing an unincorporated
entity:
(i) the right to receive distributions from the entity
either in the ordinary course or upon liquidation; or
(ii) the right to receive notice or vote on issues
involving its internal affairs, other than as an agent,
assignee, proxy, or person responsible for managing its
business and affairs.
(23) INTEREST HOLDER means a person who holds of record
an interest.
(24) KNOWLEDGE is determined as follows:
(a) A person knows a fact when the person:
(1) has actual knowledge of it; or
(2) is deemed to know it under law other than this
chapter.
(b) A person has notice of a fact when the person:
(1) knows of it;
(2) receives notification of it in accordance with
Section 10A-2A-1.41;
(3) has reason to know the fact from all of the facts
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(3) has reason to know the fact from all of the facts
known to the person at the time in question; or
(4) is deemed to have notice of the fact under
subsection (d).
(c) A person notifies another of a fact by taking steps
reasonably required to inform the other person in ordinary
course in accordance with Section 10A-2A-1.41, whether or not
the other person knows the fact.
(d) A person is deemed to have notice of a
corporation's:
(1) matters included in the certificate of
incorporation upon filing;
(2) dissolution, 90 days after a certificate of
dissolution under Section 10A-2A-14.03 becomes effective;
(3) conversion, merger, or interest exchange under
Article 9 or Article 11, 90 days after a statement of
conversion, or statement of merger or interest exchange
becomes effective;
(4) conversion or merger under Article 8 of Chapter 1,
90 days after a statement of conversion or statement of merger
becomes effective; and
(5) revocation of dissolution and reinstatement, 90
days after certificate of revocation of dissolution and
reinstatement under Section 10A-2A-14.04 becomes effective.
(e) A stockholder's knowledge, notice, or receipt of a
notification of a fact relating to the corporation is not
knowledge, notice, or receipt of a notification of a fact by
the corporation solely by reason of the stockholder's capacity
as a stockholder.
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as a stockholder.
(f) The date and time of the effectiveness of a notice
delivered in accordance with Section 10A-2A-1.41, is
determined by Section 10A-2A-1.41.
(25) MEANS denotes an exhaustive definition.
(26) MEMBERSHIP means the rights of a member in a
nonprofit corporation or foreign nonprofit corporation.
(27) ORGANIZATIONAL DOCUMENTS means the public organic
record and private organizational documents of a corporation,
foreign corporation, or eligible entity.
(28) PRINCIPAL OFFICE means the office (in or out of
this state) so designated in the annual report where the
principal executive offices of a corporation or foreign
corporation are located.
(29) PRIVATE ORGANIZATIONAL DOCUMENTS means (i) the
bylaws of a corporation, foreign corporation, nonprofit
corporation, or foreign nonprofit corporation, or (ii) the
rules, regardless of whether in writing, that govern the
internal affairs of an unincorporated entity or foreign
unincorporated entity, are binding on all its interest
holders, and are not part of its public organic record, if
any. Where private organizational documents have been amended
or restated, the term means the private organizational
documents as last amended or restated.
(30) PROCEEDING includes any civil suit and criminal,
administrative, and investigatory action.
(31) PUBLIC ORGANIC RECORD means (i) the certificate of
incorporation of a corporation, foreign corporation, nonprofit
corporation, or foreign nonprofit corporation, or (ii) the
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corporation, or foreign nonprofit corporation, or (ii) the
document, if any, the filing of which is required to create an
unincorporated entity or foreign unincorporated entity, or
which creates the unincorporated entity or foreign
unincorporated entity and is required to be filed. Where a
public organic record has been amended or restated, the term
means the public organic record as last amended or restated.
(32) RECORD DATE means the date fixed for determining
the identity of the corporation's stockholders and their
stockholdings for purposes of this chapter. Unless another
time is specified when the record date is fixed, the
determination shall be made as of the close of business at the
principal office of the corporation on the date so fixed.
(33) RECORD STOCKHOLDER means (i) the person in whose
name shares of stock are registered in the records of the
corporation, or (ii) the person identified as the beneficial
owner of stock in a beneficial ownership certificate pursuant
to Section 10A-2A-7.23 on file with the corporation to the
extent of the rights granted by such certificate.
(34) SECRETARY means the corporate officer to whom the
board of directors has delegated responsibility under Section
10A-2A-8.40(c) to maintain the minutes of the meetings of the
board of directors and of the stockholders and for
authenticating records of the corporation.
(35) STOCK EXCHANGE means a transaction pursuant to
Section 10A-2A-11.03.
(36) STOCKHOLDER means a record stockholder.
(37) STOCK means the units into which the proprietary
interests in a corporation or foreign corporation are divided.
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interests in a corporation or foreign corporation are divided.
(38) TYPE OF ENTITY means a generic form of entity: (i)
recognized at common law; or (ii) formed under a governing
statute, regardless of whether some entities formed under that
law are subject to provisions of that law that create
different categories of the form of entity.
(39) UNINCORPORATED ENTITY means an organization or
artificial legal person that either has a separate legal
existence or has the power to acquire an estate in real
property in its own name and that is not any of the following:
a corporation, foreign corporation, nonprofit corporation,
foreign nonprofit corporation, a series of a limited liability
company or of another type of entity, an estate, a trust, a
state, United States, or foreign government. The term includes
a general partnership, limited liability company, limited
partnership, business trust, joint stock association, and
unincorporated nonprofit association.
(40) UNITED STATES includes any district, authority,
bureau, commission, department, and any other agency of the
United States.
(41) UNRESTRICTED VOTING TRUST BENEFICIAL OWNER means,
with respect to any stockholder rights, a voting trust
beneficial owner whose entitlement to exercise the stockholder
right in question is not inconsistent with the voting trust
agreement.
(42) VOTING GROUP means all stock of one or more
classes or series that under the certificate of incorporation
or this chapter are entitled to vote and be counted together
collectively on a matter at a meeting of stockholders. All
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collectively on a matter at a meeting of stockholders. All
stock entitled by the certificate of incorporation or this
chapter to vote generally on the matter is for that purpose a
single voting group.
(43) VOTING POWER means the current power to vote in
the election of directors.
(44) VOTING TRUST BENEFICIAL OWNER means an owner of a
beneficial interest in stock of the corporation held in a
voting trust established pursuant to Section 10A-2A-7.30(a)."
"§10A-2A-1.48
(a) The quorum and voting requirements applicable to a
ratifying action by the board of directors under Section
10A-2A-1.47(a) shall be the quorum and voting requirements
applicable to the corporate action proposed to be ratified at
the time such the ratifying action is taken.
(b) If the ratification of the defective corporate
action requires approval by the stockholders under Section
10A-2A-1.47(c), and if the approval is to be given at a
meeting, the corporation shall notify each holder of valid and
putative stock, regardless of whether entitled to vote , as of
(i) the record date for notice of the meeting and as of (i)
the date of the action by the board of directors under Section
10A-2A-1.47(a), which shall be the record date, and (ii) the
date of the occurrence of the defective corporate action,
provided that notice shall not be required to be given to
holders of valid or putative stock whose identities or
addresses for notice cannot be determined from the records of
the corporation. The notice must state that the purpose, or
one of the purposes, of the meeting, is to consider
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one of the purposes, of the meeting, is to consider
ratification of a defective corporate action and must be
accompanied by (i) either a copy of the action taken by the
board of directors in accordance with Section 10A-2A-1.47(a)
or the information required by Section 10A-2A-1.47(a)(1)
through (a)(4), and (ii) a statement that any claim that the
ratification of such the defective corporate action and any
putative stock issued as a result of such the defective
corporate action should not be effective, or should be
effective only on certain conditions, shall be brought within
120 days from the applicable validation effective time.
(c) Except as provided in subsection (d) with respect
to the voting requirements to ratify the election of a
director, the quorum and voting requirements applicable to the
approval by the stockholders required by Section
10A-2A-1.47(c) shall be the quorum and voting requirements
applicable to the corporate action proposed to be ratified at
the time of such the stockholder approval.
(d) The approval by stockholders to ratify the election
of a director requires that the votes cast within the voting
group favoring such the ratification exceed the votes cast
opposing the ratification of the election at a meeting at
which a quorum is present.
(e) Putative stock on the record date for determining
the stockholders entitled to vote on any matter submitted to
stockholders under Section 10A-2A-1.47(c) of the action by the
board of directors under Section 10A-2A-1.47(a) (and without
giving effect to any ratification of putative stock that
becomes effective as a result of such the vote) shall neither
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becomes effective as a result of such the vote) shall neither
be entitled to vote nor counted for quorum purposes in any
vote to approve the ratification of any defective corporate
action.
(f) If the approval under this section of putative
stock would result in an overissue, in addition to the
approval required by Section 10A-2A-1.47, approval of an
amendment to the certificate of incorporation under Article 10
to increase the number of shares of stock of an authorized
class or series or to authorize the creation of a class or
series of stock so there would be no overissue shall also be
required."
"§10A-2A-1.51
(a) If the defective corporate action ratified under
this Division D of Article 1 would have required under any
other section of this chapter a filing in accordance with this
chapter, then, regardless of whether a filing was previously
made in respect of such defective corporate action and
instrument to be delivered to a filing officer for filing and
either (i) the filing instrument requires any change to give
effect to the defective corporate action in accordance with
this Division D of Article 1 (including any change to the date
and time of the effectiveness of the filing instrument) or
(ii) a filing instrument under any other section of this
chapter was not previously delivered to a filing officer for
filing in respect of the defective corporate action, then, in
lieu of a filing instrument otherwise required by this
chapter, the corporation shall file deliver a certificate of
validation to the appropriate filing officer for filing in
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validation to the appropriate filing officer for filing in
accordance with this section, and that certificate of
validation shall serve to amend or substitute for any other
filing instrument with respect to such the defective corporate
action required by this chapter.
(b) The certificate of validation must set forth:
(1) the name of the corporation;
(2) the unique identifying number or other designation
as assigned by the Secretary of State;
(3) the defective corporate action that is the subject
of the certificate of validation (including, in the case of
any defective corporate action involving the issuance of
putative stock, the number and type of shares of putative
stock issued and the date or dates upon which that putative
stock was purported to have been issued);
(4) the date of the defective corporate action;
(5) the nature of the failure of authorization in
respect of the defective corporate action;
(6)(3) a statement that the defective corporate action
was ratified in accordance with Section 10A-2A-1.47, including
the date on which the board of directors ratified that
defective corporate action and the date, if any, on which the
stockholders approved the ratification of that defective
corporate action; and
(7)(4) the information required by subsection (c).
(c) The certificate of validation must also contain the
following information:
(1) if a filing was previously made in respect of the
defective corporate action and no changes to that filing are
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defective corporate action and no changes to that filing are
required to give effect to the ratification of that defective
corporate action in accordance with Section 10A-2A-1.47, the
certificate of validation must set forth (i) the name, title,
and filing date of the filing previously made and any
certificate of correction to that filing, and (ii) a statement
that a copy of the filing previously made, together with any
certificate of correction to that filing, is attached as an
exhibit to the certificate of validation;
(2)(1) if a filing instrument was previously made
delivered to a filing officer for filing in respect of the
defective corporate action and that filing instrument requires
any change to give effect to the ratification of that
defective corporate action in accordance with Section
10A-2A-1.47, the certificate of validation must set forth (i)
the name, title, and filing date of the filing instrument
previously made delivered to a filing officer for filing and
any certificate of correction to that filing instrument, and
(ii) a statement that a filing instrument containing all of
the information required to be included under the applicable
section or sections of this chapter to give effect to that
defective corporate action is attached as an exhibit to the
certificate of validation, and (iii) the date and time that
filing instrument is deemed to have become effective; or
(3)(2) if a filing instrument was not previously made
delivered to a filing officer for filing in respect of the
defective corporate action and the defective corporate action
ratified under Section 10A-2A-1.47 would have required a
filing instrument under any other section of this chapter, the
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filing instrument under any other section of this chapter, the
certificate of validation must set forth (i) a statement that
a filing instrument containing all of the information required
to be included under the applicable section or sections of
this chapter to give effect to that defective corporate action
is attached as an exhibit to the certificate of validation,
and (ii) the date and time that filing instrument is deemed to
have become effective."
"§10A-2A-2.02
Section 10A-1-3.05 shall not apply to this chapter.
Instead:
(a) The certificate of incorporation must set forth:
(1) a corporate name for the corporation that satisfies
the requirements of Article 5 of Chapter 1;
(2) the number of shares of stock the corporation is
authorized to issue;
(3) the street and mailing addresses of the
corporation's initial registered office, the county within
this state in which the street and mailing address is located,
and the name of the corporation's initial registered agent at
that office as required by Article 5 of Chapter 1; and
(4) the name and address of each incorporator.
(b) The certificate of incorporation may set forth:
(1) the names and addresses of the individuals who are
to serve as the initial directors;
(2) provisions not inconsistent with law regarding:
(i) the purpose or purposes for which the corporation
is organized;
(ii) managing the business and regulating the affairs
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(ii) managing the business and regulating the affairs
of the corporation;
(iii) defining, limiting, and regulating the powers of
the corporation, its board of directors, and stockholders;
(iv) a par value for authorized stock or classes of
stock; or
(v) subject to subsection (f), a provision imposing
personal liability for the debts of the corporation on its
stockholders to a specified extent and upon specified
conditions; otherwise, the stockholders of a corporation shall
not be personally liable for the payment of the corporation's
debts, except as they may be liable by reason of their own
conduct or acts;
(3) any provision that under this chapter is permitted
to be set forth in the certificate of incorporation or
required or permitted to be set forth in the bylaws;
(4) a provision eliminating or limiting the liability
of a director or officer to the corporation or its
shareholders stockholders for money damages for any action
taken, or any failure to take any action, as a director or
officer, except liability for (i) the amount of a financial
benefit received by a director or officer to which the
director or officer is not entitled; (ii) an intentional
infliction of harm on the corporation or the stockholders;
(iii) in the case of a director, a violation of Section
10A-2A-8.32; or (iv) an intentional violation of criminal law;
or (v) in the case of an officer, any claim by or in the right
of the corporation;
(5) a provision permitting or making obligatory
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(5) a provision permitting or making obligatory
indemnification of a director for liability as defined in
Section 10A-2A-8.50 to any person for any action taken, or any
failure to take any action, as a director, except liability
for (i) receipt of a financial benefit to which the director
is not entitled, (ii) an intentional infliction of harm on the
corporation or its stockholders, (iii) a violation of Section
10A-2A-8.32, or (iv) an intentional violation of criminal law;
and
(6) a provision limiting or eliminating any duty of a
director or any other person to offer the corporation the
right to have or participate in any, or one or more classes or
categories of, business opportunities, before the pursuit or
taking of the opportunity by the director or other person;
provided that any application of that provision to an officer
or a related person of that officer (i) also requires approval
of that application by the board of directors, subsequent to
the effective date of the provision, by action of qualified
directors taken in compliance with the same procedures as are
set forth in Section 10A-2A-8.60 ,; and (ii) may be limited by
the authorizing action of the board of directors.
(c) The certificate of incorporation need not set forth
any of the corporate powers enumerated in Sections 10A-1-2.11,
10A-1-2.12, and 10A-1-2.13.
(d) Provisions of the certificate of incorporation may
be made dependent upon facts objectively ascertainable outside
the certificate of incorporation in accordance with Section
10A-2A-1.20(c).
(e) As used in this section, "related person" means:
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(e) As used in this section, "related person" means:
(i) the individual's spouse;
(ii) a child, stepchild, grandchild, parent,
stepparent, grandparent, sibling, stepsibling, half sibling,
aunt, uncle, niece, or nephew (or spouse of any such person)
of the individual or of the individual's spouse;
(iii) a natural person living in the same home as the
individual;
(iv) an entity (other than the corporation or an entity
controlled by the corporation) controlled by the individual or
any person specified above in this definition;
(v) a domestic or foreign:
(A) business or nonprofit corporation (other than the
corporation or an entity controlled by the corporation) of
which the individual is a director ;,
(B) unincorporated entity of which the individual is a
general partner or a member of the governing authority ;, or
(C) individual, trust or estate for whom or of which
the individual is a trustee, guardian, personal
representative, or like fiduciary ;, or
(vi) a person that is, or an entity that is, controlled
by an employer of the individual.
(f) The certificate of incorporation may not contain
any provision that would impose liability on a stockholder for
the attorney's fees or expenses of the corporation or any
other party in connection with an internal corporate claim, as
defined in Section 10A-2A-2.07(d).
(g) The certificate of incorporation is part of a
binding contract between the corporation and the stockholders,
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binding contract between the corporation and the stockholders,
subject to the provisions of this chapter.
(h) For purposes of subsection (b)(4) only, unless the
certificate of incorporation otherwise provides, "officer"
means an individual appointed or elected in accordance with
Section 10A-2A-8.40 as (i) president, chief executive officer,
chief operating officer, chief financial officer, chief legal
officer, secretary, controller, treasurer, or chief accounting
officer of the corporation; and (ii) any officer of the
corporation designated by resolution of the board of directors
as an "officer" for purposes of subsection (b)(4). The board
of directors may, from time to time, by resolution determine
that one or more of the officers designated in accordance with
subsection (h)(ii) shall no longer be an officer for purposes
of subsection (b)(4), but no such resolution shall be
effective as to any such officer, or any act or omission of
any such officer, prior to the adoption of the resolution.
(i) No provision in the certificate of incorporation
pursuant to subsection (b)(4) shall eliminate or limit the
liability of a director or officer for any act or omission
occurring prior to the date when the provision in the
certificate of incorporation becomes effective. Any amendment,
repeal, or elimination of a provision in the certificate of
incorporation pursuant to subsection (b)(4) shall not affect
its application with respect to an act or omission by a
director or officer occurring before the amendment, repeal, or
elimination unless the provision in the certificate of
incorporation provides otherwise at the time of the act or
omission."
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omission."
"§10A-2A-6.21
(a) The powers granted in this section to the board of
directors may be reserved to the stockholders by the
certificate of incorporation.
(b) The board of directors may authorize stock to be
issued for consideration consisting of a contribution. Stock
may be issued in one or more transactions, in the numbers, at
the time and for the consideration as set forth in a
resolution of the board of directors.
(c) A resolution of the board of directors may delegate
to a person or body, in addition to the board of directors,
the authority to enter into one or more transactions to issue
stock, and with respect to that transaction, shares of stock
may be issued in the numbers, at the time and for the
consideration as the person or body may determine; provided
the resolution fixes (i) a maximum number of shares of stock
that may be issued pursuant to the resolution, (ii) a time
period during which the stock may be issued, and (iii) a
minimum amount of consideration for which the stock may be
issued. No resolution shall permit a person or body to issue
stock to that person or body.
(c)(d) Before the corporation issues stock pursuant to
subsection (b) or subsection (c) , the board of directors or
the person or body authorized pursuant to subsection (c) shall
determine that the consideration received or to be received
for stock to be issued is adequate. That determination by the
board of directors or the person or body authorized pursuant
to subsection (c) is conclusive insofar as the adequacy of
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to subsection (c) is conclusive insofar as the adequacy of
consideration for the issuance of stock relates to whether the
stock is validly issued, fully paid, and nonassessable.
(e) Any provision of a resolution contemplated by
subsection (b) or subsection (c) may be made dependent on
facts ascertainable outside the resolution, which facts shall
be determined in accordance with Section 10A-2A-1.20(c).
(d)(f) When the corporation receives the consideration
for which the board of directors authorized the issuance of
stock, the stock issued therefor is fully paid and
nonassessable.
(e)(g) The corporation may place in escrow stock issued
for a contract for future services or benefits or a promissory
note, or make other arrangements to restrict the transfer of
the stock, and may credit distributions in respect of the
stock against its purchase price, until the services are
performed, the benefits are received, or the note is paid. If
the services are not performed, the benefits are not received,
or the note is not paid, the stock escrowed or restricted and
the distributions credited may be cancelled in whole or part."
"§10A-2A-6.24
(a) A corporation may issue rights, options, or
warrants for the purchase of stock or other securities of the
corporation. The board of directors shall determine (i) the
terms and conditions upon which the rights, options, or
warrants are issued ; and (ii) the terms, including the
consideration for which the stock or other securities acquired
from the corporation upon the exercise of any rights, options,
or warrants are to be issued. The authorization by the board
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or warrants are to be issued. The authorization by the board
of directors for the corporation to issue rights, options, or
warrants constitutes authorization of the issuance of the
stock or other securities for which the rights, options, or
warrants are exercisable.
(b) The board of directors may adopt a resolution to
delegate to a person or body, in addition to the board of
directors, the authority to enter into one or more
transactions to issue rights, options, or warrants, and with
respect to those transactions, the rights, options, or
warrants may be issued in the numbers, at the time and for the
consideration as the person or body may determine; provided
that the resolution fixes (i) the maximum number of rights,
options, or warrants, and the maximum number of shares of
stock issuable upon exercise thereof, that may be issued
pursuant to the resolution, (ii) a time period during which
the rights, options, or warrants, and during which the stock
issuable upon exercise thereof, may be issued, and (iii) a
minimum amount of consideration (if any) for which the rights,
options, or warrants may be issued and a minimum amount of
consideration for the stock issuable upon exercise thereof. No
resolution shall permit a person or body to issue rights,
options, or warrants to that person or body.
(c) Any provision in a resolution contemplated by
subsection (a) or subsection (b) may be made dependent on
facts ascertainable outside the resolution, which facts shall
be determined in accordance with Section 10A-2A-1.20(c).
(b)(d) The terms and conditions of rights, options, or
warrants may include restrictions or conditions that:
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warrants may include restrictions or conditions that:
(1) preclude or limit the exercise, transfer, or
receipt of rights, options, or warrants by any person or
persons owning or offering to acquire a specified number or
percentage of the outstanding stock or other securities of the
corporation or by any transferee or transferees of that person
or persons, or
(2) invalidate or void rights, options, or warrants
held by that person or persons or any of that person's
transferee or transferees.
(c)(e) The board of directors or the person or body
authorized pursuant to subsection (b) may authorize one or
more officers to (i) designate the recipients of rights,
options, warrants, or other equity compensation awards that
involve the issuance of stock and (ii) determine, within an
amount and subject to any other limitations established by the
board of directors , the person or body authorized pursuant to
subsection (b) and, if applicable, the stockholders, the
number of the rights, options, warrants, or other equity
compensation awards and the terms of the rights, options,
warrants, or awards to be received by the recipients, provided
that an officer may not use that authority to designate
himself or herself or any other persons as the board of
directors may specify as a recipient of rights, options,
warrants, or other equity compensation awards."
"§10A-2A-6.31
(a) A corporation may acquire its own stock, and,
unless otherwise provided in the certificate of incorporation,
the stock so acquired constitutes shall constitute authorized
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the stock so acquired constitutes shall constitute authorized
but unissued stock ., provided, however, that:
(1) the certificate of incorporation may provide that
the acquired stock shall constitute authorized, issued, but
not outstanding stock;
(b) If the(2) the certificate of incorporation
prohibits may prohibit the reissue of the acquired stock, in
which case, the number of authorized shares of stock is
reduced by the number of shares of stock acquired .; or
(3) if the certificate of incorporation does not (i)
provide that the acquired stock shall constitute authorized
but unissued stock, (ii) prohibit the reissuance of the
acquired stock, or (iii) provide that the acquired stock shall
constitute authorized, issued, but not outstanding stock, then
the board of directors may determine, at or prior to the time
of the acquisition, that the acquired stock will constitute
authorized, issued, but not outstanding stock.
(b) If the board of directors has determined that any
acquired stock was to be authorized, issued, but not
outstanding in accordance with subsection (a)(3), then the
board of directors may thereafter determine that the acquired
stock shall be converted to stock that is authorized but not
issued."
"§10A-2A-7.04
(a) Unless otherwise provided in the certificate of
incorporation, any action required or permitted by this
chapter to be taken at any meeting of the stockholders may be
taken without a meeting, and without prior notice, if one or
more consents in writing setting forth the action so taken are
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more consents in writing setting forth the action so taken are
signed by the holders of outstanding stock having not less
than the minimum number of votes that would be required to
authorize or take the action at a meeting at which all shares
of stock entitled to vote on the action were present and
voted; provided, however, that if a corporation's certificate
of incorporation authorizes stockholders to cumulate their
votes when electing directors pursuant to Section 10A-2A-7.28,
directors may not be elected by less than unanimous written
consent. The action must be evidenced by one or more written
consents describing the action taken, signed by the
stockholders approving the action and delivered to the
corporation for filing by the corporation with the minutes or
corporate records.
(b) If not otherwise fixed under Section 10A-2A-7.07
and if prior action by the board of directors is not required
respecting the action to be taken without a meeting, the
record date for determining the stockholders entitled to take
action without a meeting shall be the first date on which a
signed written consent signed by a stockholder is delivered to
the corporation. If not otherwise fixed under Section
10A-2A-7.07 and if prior action by the board of directors is
required respecting the action to be taken without a meeting,
the record date shall be the close of business on the day the
resolution of the board of directors taking the prior action
is adopted. No written consent of the stockholders shall be
effective to take the corporate action referred to therein
unless, within 60 days of the earliest date on which a consent
is delivered to the corporation as required by this section,
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is delivered to the corporation as required by this section,
written consents signed by sufficient stockholders to take the
action have been delivered to the corporation. Any person
executing signing a consent may provide, whether through
instruction to an agent or otherwise, that such the consent
will be effective at a future time, including a time
determined upon the happening of an event, occurring not later
than 60 days after such the instruction is given or such
provision is made, if evidence of the instruction or provision
is provided to the corporation. A If a person signs a consent
when that person is not a stockholder, then that person's
consent shall not be valid unless that person is a stockholder
as of the record date for determining stockholders entitled to
consent to the action. Unless a person's written consent
states that it is irrevocable, that written consent may be
revoked by that person by a writing to that effect delivered
to the corporation before unrevoked written consents
sufficient in number to take the corporate action have been
delivered to the corporation.
(c) A consent signed pursuant to this section has the
effect of a vote taken at a meeting and may be described as
such in any document. Unless the certificate of incorporation,
bylaws or a resolution of the board of directors provides for
a reasonable delay to permit tabulation of written consents,
the action taken by written consent shall be effective when
written consents signed by sufficient stockholders to take the
action have been delivered to the corporation.
(d) If this chapter requires that notice of a proposed
action be given to nonvoting stockholders and the action is to
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action be given to nonvoting stockholders and the action is to
be taken by written consent of the voting stockholders, the
corporation shall give its nonvoting stockholders written
notice of the action not more than 10 days after (i) written
consents sufficient to take the action have been delivered to
the corporation, or (ii) any later date that tabulation of
consents is completed pursuant to an authorization under
subsection (c). The notice must reasonably describe the action
taken and contain or be accompanied by the same material that,
under any provision of this chapter, would have been required
to be sent to nonvoting stockholders in a notice of a meeting
at which the proposed action would have been submitted to the
stockholders for action.
(e) If action is taken by less than unanimous written
consent of the voting stockholders, the corporation shall give
its nonconsenting voting stockholders written notice of the
action not more than 10 days after (i) written consents
sufficient to take the action have been delivered to the
corporation, or (ii) any later date that tabulation of
consents is completed pursuant to an authorization under
subsection (c). The notice must reasonably describe the action
taken and contain or be accompanied by the same material that,
under any provision of this chapter, would have been required
to be sent to voting stockholders in a notice of a meeting at
which the action would have been submitted to the stockholders
for action.
(f) The notice requirements in subsections (d) and (e)
shall not delay the effectiveness of actions taken by written
consent, and a failure to comply with those notice
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consent, and a failure to comply with those notice
requirements shall not invalidate actions taken by written
consent, provided that this subsection shall not be deemed to
limit judicial power to fashion any appropriate remedy in
favor of a stockholder adversely affected by a failure to give
the notice within the required time period."
"§10A-2A-7.05
(a) A corporation shall notify stockholders of the
place, if any, date, and time of each annual and special
stockholders' meeting no fewer than 10 nor more than 60 days
before the meeting date. If the board of directors has
authorized participation by means of remote communication
pursuant to Section 10A-2A-7.09 for holders of any class or
series of stock, the notice to the holders of that class or
series of stock must describe the means of remote
communication to be used. The notice must include the record
date for determining the stockholders entitled to vote at the
meeting, if that date is different from the record date for
determining stockholders entitled to notice of the meeting.
Unless this chapter or the certificate of incorporation
requires otherwise, the corporation is required to give notice
only to stockholders entitled to vote at the meeting as of the
record date for determining the stockholders entitled to
notice of the meeting.
(b) Unless this chapter or the certificate of
incorporation requires otherwise, the notice of an annual
meeting of stockholders need not include a description of the
purpose or purposes for which the meeting is called.
(c) Notice of a special meeting of stockholders must
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(c) Notice of a special meeting of stockholders must
include a description of the purpose or purposes for which the
meeting is called.
(d) If not otherwise fixed under Section 10A-2A-7.03 or
Section 10A-2A-7.07, the record date for determining
stockholders entitled to notice of and to vote at an annual or
special stockholders' meeting is the earlier of (i) the date
of the action by the board of directors calling the meeting of
the stockholders or (ii) the day before the first notice is
delivered to stockholders.
(e) Unless the certificate of incorporation or bylaws
require otherwise, if an annual or special stockholders'
meeting is adjourned to a different place, if any, date, or
time (including an adjournment taken to address a technical
failure to convene or continue a meeting using remote
communication pursuant to Section 10A-2A-7.09) , notice need
not be given of the new place, if any, date, or time if the
new place, if any, date, or time is (i) announced at the
meeting before adjournment or (ii) displayed, during the time
scheduled for the meeting, on the same electronic network used
to enable stockholders and proxy holders to participate in the
meeting by means of remote communication . If a new record date
for the adjourned meeting is or must be fixed under Section
10A-2A-7.07, however, notice of the adjourned meeting shall be
given under this section to stockholders entitled to vote at
the adjourned meeting as of the record date fixed for notice
of the adjourned meeting."
"§10A-2A-10.05
Unless the certificate of incorporation provides
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Unless the certificate of incorporation provides
otherwise, a corporation's board of directors may adopt
amendments to the corporation's certificate of incorporation
without stockholder approval:
(a) to extend the duration of the corporation if it was
incorporated at a time when limited duration was required by
law;
(b) to delete the names and addresses of the
incorporators or initial directors;
(c) to delete the name and address of the initial
registered agent or registered office, if a statement of
change is on file with the Secretary of State;
(d) if the corporation has only one class of stock
outstanding:
(1) to change each issued and unissued authorized share
of stock of the class into a greater number of whole shares of
stock of that class; or
(2) to increase the number of authorized shares of
stock of the class to the extent necessary to permit the
issuance of stock as a stock dividend;
(e) to change the corporate name, provided that the
name complies with Article 5 of Chapter 1;
(f) to reflect a reduction in authorized stock, as a
result of the operation of Section 10A-2A-6.31(b)
10A-2A-6.31(a)(2) , when the corporation has acquired its own
stock and the certificate of incorporation prohibits the
reissue of the acquired stock;
(g) to delete a class of stock from the certificate of
incorporation, as a result of the operation of Section
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incorporation, as a result of the operation of Section
10A-2A-6.31(b) 10A-2A-6.31(a)(2) , when there is no remaining
stock of the class because the corporation has acquired all
stock of the class and the certificate of incorporation
prohibits the reissue of the acquired stock; or
(h) to take actions expressly permitted by Section
10A-2A-6.02 to be made without stockholder approval."
"§10A-2A-10.07
(a) A corporation's board of directors may restate its
certificate of incorporation at any time, without stockholder
approval, to consolidate all amendments into a single
document. The restated certificate of incorporation may amend
the certificate of incorporation with those amendments that
the board of directors is permitted to adopt without
stockholder approval in accordance with Sections 10A-2A-10.02
and 10A-2A-10.05. The restated certificate of incorporation
may also amend the certificate of incorporation with those
amendments that the stockholders must approve in accordance
with Section 10A-2A-10.03.
(b) If the restated certificate of incorporation
includes one or more new amendments that require stockholder
approval, the amendments shall be adopted and approved as
provided in Section 10A-2A-10.03.
(c) A corporation that restates its certificate of
incorporation shall deliver to the Secretary of State for
filing a certificate of restatement setting forth:
(1) the name of the corporation;
(2) the text of the restated certificate of
incorporation;
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incorporation;
(3) a statement that the restated certificate of
incorporation consolidates all amendments into a single
document;
(4) if a new amendment is included in the restated
certificate of incorporation, the statements required under
Section 10A-2A-10.06 with respect to the new amendment; and
(5) the unique identifying number or other designation
as assigned by the Secretary of State.
(d) The duly adopted restated certificate of
incorporation supersedes the original certificate of
incorporation and all amendments to the certificate of
incorporation.
(e) A restated certificate of incorporation may omit
the information that may be deleted pursuant to Section
10A-2A-10.05."
"§10A-2A-10.08
(a) A corporation's certificate of incorporation may be
amended without action by the board of directors or
stockholders to carry out a plan of reorganization ordered or
decreed by a court of competent jurisdiction under the
authority of a law of the United States if the certificate of
incorporation after the amendment only contains provisions
required or permitted by Section 10A-2A-2.02.
(b) The individual or individuals designated by the
court shall deliver to the Secretary of State for filing a
certificate of amendment setting forth:
(1) the name of the corporation;
(2) the text of each amendment approved by the court;
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(2) the text of each amendment approved by the court;
(3) the date of the court's order or decree approving
the certificate of amendment;
(4) the title of the reorganization proceeding in which
the order or decree was entered;
(5) a statement that the court had jurisdiction of the
proceeding under federal statute; and
(6) the unique identifying number or other designation
as assigned by the Secretary of State.
(c) Stockholders of a corporation undergoing
reorganization do not have dissenters' appraisal rights except
as and to the extent provided in the reorganization plan.
(d) This section does not apply after entry of a final
decree in the reorganization proceeding even though the court
retains jurisdiction of the proceeding for limited purposes
unrelated to consummation of the reorganization plan."
"§10A-2A-12.01
(a) No approval of the stockholders is required, unless
the certificate of incorporation otherwise provides:
(a)(1) to sell, lease, exchange, or otherwise dispose
of any or all of the corporation's assets in the usual and
regular course of business;
(b)(2) to mortgage, pledge, dedicate to the repayment
of indebtedness (whether with or without recourse), or
otherwise encumber any or all of the corporation's assets,
regardless of whether in the usual and regular course of
business;
(c)(3) to transfer any or all of the corporation's
assets to one or more corporations, foreign corporations, or
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assets to one or more corporations, foreign corporations, or
other entities all of the stock or interests of which are
owned by the corporation; or
(d)(4) to distribute assets pro rata to the holders of
one or more classes or series of the corporation's stock.
(b) Without limiting the rights of a secured party
under applicable law, no approval by stockholders shall be
required by Section 10A-2A-12.02 for a sale, lease, exchange,
or other disposition of any of the corporation's assets if
those assets are mortgaged, pledged, dedicated to the
repayment of indebtedness, or otherwise encumbered for the
benefit of a secured party or other creditor and either:
(1) The secured party or other creditor exercises its
rights under the law governing the mortgage, pledge,
dedication, or encumbrance, or other applicable law, whether
under the Uniform Commercial Code, a real property law, or
other law, to effect the sale, lease, exchange, or other
disposition of those assets without the consent of the
corporation; or
(2) In lieu of the secured party or other creditor
exercising such rights, the board of directors of the
corporation authorizes an alternative sale, lease, exchange,
or other disposition of those assets, whether with the secured
party or other creditor, that results in the reduction or
elimination of the total liabilities or obligations secured by
those assets, provided that (i) the value of those assets is
less than or equal to the total amount of the liabilities or
obligations being eliminated or reduced and (ii) the sale,
lease, exchange, or other disposition of those assets is not
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lease, exchange, or other disposition of those assets is not
prohibited by the law governing the mortgage, pledge,
dedication, or encumbrance. The provision of consideration to
the corporation or to its stockholders shall not create a
presumption that the value of the assets is greater than the
total amount of the liabilities or obligations being
eliminated or reduced.
(c) A failure to satisfy the condition in subsection
(b)(2)(i) shall not result in the invalidation of a sale,
lease, exchange, or other disposition of the corporation's
assets if the transferee of those assets (i) provided value
therefor (which may include the reduction or elimination of
the total liabilities or obligations secured by those assets)
and (ii) acted in good faith (as defined in Section
7-1-201(b)). The preceding sentence shall not apply to a
proceeding against the corporation and any other necessary
parties to enjoin the sale, lease, exchange, or other
disposition of the corporation's assets before the
consummation thereof and shall not eliminate any liability for
monetary damages for any claim, including a claim in the right
of the corporation, based upon a violation of a duty by a
current or former director or officer, or other person.
(d) A provision of the certificate of incorporation
that requires the authorization or consent of stockholders for
a sale, lease, exchange, or other disposition of the
corporation's assets shall not apply to a transaction
permitted by subsection (b) unless that provision expressly so
requires."
"§10A-2A-13.02
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"§10A-2A-13.02
(a) A stockholder is entitled to appraisal rights, and
to obtain payment of the fair value of that stockholder's
stock, in the event of any of the following corporate actions:
(1) consummation of a merger to which the corporation
is a party (i) if the corporation is a subsidiary and the
merger is governed by Section 10A-2A-11.05 or (ii) if
stockholder approval is required for the merger by Section
10A-2A-11.04, or would be required but for the provisions of
Section 10A-2A-11.04(j), except that appraisal rights shall
not be available to any stockholder of the corporation with
respect to stock of any class or series that remain
outstanding after consummation of the merger;
(2) consummation of a stock exchange to which the
corporation is a party the stock of which will be acquired,
except that appraisal rights shall not be available to any
stockholder of the corporation with respect to any class or
series of stock of the corporation that is not acquired in the
stock exchange;
(3) consummation of a disposition of assets pursuant to
Section 10A-2A-12.02 if the stockholder is entitled to vote on
the disposition, except that appraisal rights shall not be
available to any stockholder of the corporation with respect
to stock of any class or series if (i) (A) under the terms of
the corporate action approved by the stockholders there is to
be distributed to stockholders in cash the corporation's net
assets, in excess of a reasonable amount reserved to meet
claims of the type described in Section 10A-2A-14.06 and
Section 10A-2A-14.07, (A)(I) within one year after the
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Section 10A-2A-14.07, (A)(I) within one year after the
stockholders' approval of the action and (B)(II) in accordance
with their respective interests determined at the time of
distribution, and (ii)(B) the disposition of assets is not an
interested transaction , or (ii) the certificate of
incorporation states that no stockholder shall be entitled to
appraisal rights with respect to the consummation of a
disposition of assets pursuant to Section 10A-2A-12.02 ;
(4) an amendment of the certificate of incorporation
with respect to a class or series of stock that reduces the
number of stock of a class or series owned by the stockholder
to a fraction of a stock if the corporation has the obligation
or right to repurchase the fractional stock so created;
(5) any other merger, stock exchange, disposition of
assets or amendment to the certificate of incorporation, in
each case to the extent provided by the certificate of
incorporation, bylaws or a resolution of the board of
directors;
(6) consummation of a conversion of a corporation to a
foreign corporation pursuant to Article 9 of this chapter or
Article 8 of Chapter 1 if the stockholder does not receive
stock in the foreign corporation resulting from the conversion
that has terms as favorable to the stockholder in all material
respects, and represents at least the same percentage interest
of the total voting rights of the outstanding stock of the
foreign corporation, as the stock held by the stockholder
before the conversion;
(7) consummation of a conversion of a corporation to a
nonprofit corporation pursuant to Article 9 of this chapter of
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nonprofit corporation pursuant to Article 9 of this chapter of
or Article 8 of Chapter 1; or
(8) consummation of a conversion of the corporation to
an unincorporated entity pursuant to Article 9 of this chapter
or Article 8 of Chapter 1.
(b) Notwithstanding subsection (a), the availability of
appraisal rights under subsections (a)(1), (2), (3), (4), (6),
and (8) shall be limited in accordance with the following
provisions:
(1) Appraisal rights shall not be available for the
holders of stock of any class or series of stock which is:
(i) a covered security under Section 18(b)(1)(A) or (B)
of the Securities Act of 1933;
(ii) has at least 2,000 record stockholders; or
(iii) issued by an open end management investment
company registered with the Securities and Exchange Commission
under the Investment Company Act of 1940 and which may be
redeemed at the option of the holder at net asset value.
(2) The applicability of subsection (b)(1) shall be
determined as of:
(i) the record date fixed to determine the stockholders
entitled to receive notice of the meeting of stockholders to
act upon the corporate action requiring appraisal rights or,
in the case of an offer made pursuant to Section
10A-2A-11.04(j), the date of the offer; or
(ii) if there is no meeting of stockholders and no
offer made pursuant to Section 10A-2A-11.04(j), the day before
the consummation of the corporate action or effective date of
the amendment of the certificate of incorporation, as
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the amendment of the certificate of incorporation, as
applicable.
(3) Subsection (b)(1) shall not be applicable and
appraisal rights shall be available pursuant to subsection (a)
for the holders of any class or series of stock (i) who are
required by the terms of the corporate action requiring
appraisal rights to accept for their stock anything other than
cash or stock of any class or any series of stock of any
corporation, or any other proprietary interest of any other
entity, that satisfies the standards set forth in subsection
(b)(1) at the time the corporate action becomes effective, or
(ii) in the case of the consummation of a disposition of
assets pursuant to Section 10A-2A-12.02, unless the cash,
stock, or proprietary interests received in the disposition
are, under the terms of the corporate action approved by the
stockholders, to be distributed to the stockholders, as part
of a distribution to stockholders of the net assets of the
corporation in excess of a reasonable amount to meet claims of
the type described in Sections 10A-2A-14.06 and 10A-2A-14.07,
(A) within one year after the stockholders' approval of the
action, and (B) in accordance with their respective interests
determined at the time of the distribution , or (iii) in the
case of the consummation of a disposition of assets pursuant
to Section 10A-2A-12.02, unless the certificate of
incorporation states that no stockholder shall be entitled to
appraisal rights with respect to the consummation of a
disposition of assets pursuant to Section 10A-2A-12.02 .
(4) Subsection (b)(1) shall not be applicable and
appraisal rights shall be available pursuant to subsection (a)
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appraisal rights shall be available pursuant to subsection (a)
for the holders of any class or series of stock where the
corporate action is an interested transaction.
(c) Notwithstanding any other provision of this Section
10A-2A-13.02, the certificate of incorporation as originally
filed or any amendment to the certificate of incorporation may
limit or eliminate appraisal rights for any class or series of
preferred stock, except that (i) no limitation or elimination
shall be effective if the class or series does not have the
right to vote separately as a voting group (alone or as part
of a group) on the action or if the action is a conversion or
merger in which the converted organization or the surviving
organization is not a corporation or foreign corporation, and
(ii) any limitation or elimination contained in an amendment
to the certificate of incorporation that limits or eliminates
appraisal rights for any stock that is outstanding immediately
before the effective date of the amendment or that the
corporation is or may be required to issue or sell thereafter
pursuant to any conversion, exchange, or other right existing
immediately before the effective date of the amendment shall
not apply to any corporate action that becomes effective
within one year after the effective date of the amendment if
that action would otherwise afford appraisal rights."
"§10A-2A-14.05
(a) A dissolved corporation continues its existence as
a corporation but may not carry on any business except as is
appropriate to wind up and liquidate its business and affairs,
including:
(1) collecting its assets;
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(1) collecting its assets;
(2) disposing of its properties that will not be
distributed in kind to stockholders;
(3) discharging or making provisions for discharging
its liabilities;
(4) distributing its remaining property among its
stockholders according to their interests; and
(5) doing every other act necessary to wind up and
liquidate its business and affairs.
(b) In winding up its business and affairs, a
corporation may:
(1) preserve the corporation's business and affairs and
property as a going concern for a reasonable time;
(2) prosecute, defend, or settle actions or proceedings
whether civil, criminal, or administrative;
(3) transfer the corporation's assets;
(4) resolve disputes by mediation or arbitration;
(5) merge or convert in accordance with Article 9 or 11
of this chapter or Article 8 of Chapter 1; and
(6) enter into a stock exchange in accordance with
Article 11 of this chapter.
(c) Dissolution of a corporation does not:
(1) transfer title to the corporation's property;
(2) prevent transfer of its stock or securities;
(3) subject its directors or officers to standards of
conduct different from those prescribed in Article 8 of this
chapter;
(4) change (i) quorum or voting requirements for its
board of directors or stockholders;
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board of directors or stockholders;
(ii) provisions for selection, resignation, or removal
of its directors or officers or both; or
(iii) provisions for amending its bylaws;
(5) prevent commencement of a proceeding by or against
the corporation in its corporate name;
(6) abate or suspend a proceeding pending by or against
the corporation on the effective date of dissolution; or
(7) terminate the authority of the registered agent of
the corporation.
(d) A distribution in liquidation under this section
may only be made by a dissolved corporation. For purposes of
determining the stockholders entitled to receive a
distribution in liquidation, the board of directors may fix a
record date for determining stockholders entitled to a
distribution in liquidation, which date may not be
retroactive. If the board of directors does not fix a record
date for determining stockholders entitled to a distribution
in liquidation, the record date is the date the board of
directors authorizes the distribution in liquidation."
"§10A-3A-1.02
As used in this chapter, unless otherwise specified or
unless the context otherwise requires, the following terms
have the following meanings:
(1) CERTIFICATE OF INCORPORATION means the certificate
of incorporation described in Section 10A-3A-2.02, all
amendments to the certificate of incorporation, and any other
documents permitted or required to be delivered for filing by
a nonprofit corporation with the Secretary of State under this
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a nonprofit corporation with the Secretary of State under this
chapter or Chapter 1 that modify, amend, supplement, restate,
or replace the certificate of incorporation. After an
amendment of the certificate of incorporation or any other
document filed the filing of a filing instrument under this
chapter or Chapter 1 that restates or amends and restates the
certificate of incorporation in its entirety, the certificate
of incorporation shall not include any prior documents , but
the original date of incorporation shall remain unchanged	.
When used with respect to a nonprofit corporation incorporated
and existing on December 31, 2023, under a predecessor law of
this state, the term "certificate of incorporation" means
articles of incorporation, charter, or similar incorporating
document, and all amendments and restatements to the articles
of incorporation, charter, or similar incorporating document.
When used with respect to a foreign nonprofit corporation, a
business corporation, or a foreign business corporation, the
"certificate of incorporation" of that entity means the
document of that entity that is equivalent to the certificate
of incorporation of a corporation. The term "certificate of
incorporation" as used in this chapter is synonymous to the
term certificate of formation used in Chapter 1.
(2) BOARD or BOARD OF DIRECTORS means the group of
individuals responsible for the management or direction, and
oversight, of the activities and affairs of the nonprofit
corporation, regardless of the name used to refer to the group
or other persons authorized to perform the functions of the
board of directors.
(3) BUSINESS CORPORATION, except in the phrase foreign
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(3) BUSINESS CORPORATION, except in the phrase foreign
business corporation, means an entity incorporated or existing
under the Alabama Business Corporation Law.
(4) BYLAWS means the code or codes of rules (other than
the certificate of incorporation) adopted for the regulation
or management of the affairs of the nonprofit corporation,
regardless of the name or names by which the rules are
designated.
(5) DELIVER or DELIVERY means any method of delivery
used in conventional commercial practice, including delivery
by hand, mail, commercial delivery, and, if authorized in
accordance with Section 10A-3A-1.03, by electronic
transmission.
(6) DIRECTOR means an individual designated, elected,
or appointed, by that or any other name or title, to act as a
member of the board of directors, while the individual is
holding that position.
(7) DISTRIBUTION means a direct or indirect transfer of
cash or other property from a nonprofit corporation to a
member, director, or officer of that nonprofit corporation in
that person's capacity as a member, director, or officer, but
does not mean payments or benefits made in accordance with
Section 10A-3A-6.41.
(8) DOCUMENT means a writing as defined in Chapter 1.
(9) EFFECTIVE DATE when referring to a document
accepted for filing by the Secretary of State, means the time
and date determined in accordance with Article 4 of Chapter 1.
(10) ELECTRONIC MAIL means an electronic transmission
directed to a unique electronic mail address.
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directed to a unique electronic mail address.
(11) ELECTRONIC MAIL ADDRESS means a destination,
commonly expressed as a string of characters, consisting of a
unique user name or mailbox (commonly referred to as the
"local part" of the address) and a reference to an internet
domain (commonly referred to as the "domain part" of the
address), whether or not displayed, to which electronic mail
can be sent or delivered.
(12) EMPLOYEE does not include an individual serving as
an officer or director who is not otherwise employed by the
nonprofit corporation.
(13) ENTITLED TO VOTE means entitled to vote on the
matter under consideration pursuant to the certificate of
incorporation or bylaws of the nonprofit corporation, or
applicable provisions of this chapter or Chapter 1.
(14) ENTITY includes nonprofit corporation; foreign
nonprofit corporation; business corporation; foreign business
corporation; estate; trust; unincorporated entity; foreign
unincorporated entity; and state, United States, and foreign
government.
(15) EXPENSES means reasonable expenses of any kind
that are incurred in connection with a matter.
(16) FOREIGN BUSINESS CORPORATION means a business
corporation incorporated under a law other than the law of
this state which would be a business corporation if
incorporated under the law of this state.
(17) FOREIGN NONPROFIT CORPORATION means a nonprofit
corporation incorporated under a law other than the law of
this state which would be a nonprofit corporation if
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this state which would be a nonprofit corporation if
incorporated under the law of this state.
(18) FOREIGN UNINCORPORATED ENTITY means an
unincorporated entity whose internal affairs are governed by
the law of a jurisdiction other than this state.
(19) FUNDAMENTAL TRANSACTION means an amendment of the
certificate of incorporation, an amendment to the bylaws, a
merger, a conversion, a sale of all or substantially all of
the assets, or the dissolution of a nonprofit corporation.
(20) GOVERNING STATUTE means the statute governing the
internal affairs of a nonprofit corporation, foreign nonprofit
corporation, business corporation, foreign business
corporation, unincorporated entity, or foreign unincorporated
entity.
(21) INCLUDES and INCLUDING denote a partial definition
or a nonexclusive list.
(22) INTEREST means:
(a) a share;
(b) a membership or membership interests; or
(c) either or both of the following rights under the
governing statute governing an organization other than a
nonprofit corporation, foreign nonprofit corporation, business
corporation, or foreign business corporation:
(i) the right to receive distributions from that
organization either in the ordinary course or upon
liquidation; or
(ii) the right to receive notice or vote on issues
involving that organization's internal affairs, other than as
an agent, assignee, proxy, or person responsible for managing
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an agent, assignee, proxy, or person responsible for managing
that organization's business and affairs.
(23) INTEREST HOLDER means a person who holds of record
an interest.
(24) KNOWLEDGE is determined as follows:
(a) A person knows a fact when the person:
(1) has actual knowledge of it; or
(2) is deemed to know it under law other than this
chapter.
(b) A person has notice of a fact when the person:
(1) knows of it;
(2) receives notification of it in accordance with
Section 10A-3A-1.03;
(3) has reason to know the fact from all of the facts
known to the person at the time in question; or
(4) is deemed to have notice of the fact under
subsection (d).
(c) A person notifies another of a fact by taking steps
reasonably required to inform the other person in ordinary
course in accordance with Section 10A-3A-1.03, whether or not
the other person knows the fact.
(d) A person is deemed to have notice of a nonprofit
corporation's:
(1) matters included in the certificate of
incorporation upon filing;
(2) dissolution, 90 days after a certificate of
dissolution under Section 10A-3A-11.05 becomes effective;
(3) conversion or merger under Article 13 or Article
12, 90 days after a statement of conversion or statement of
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12, 90 days after a statement of conversion or statement of
merger becomes effective;
(4) conversion or merger under Article 8 of Chapter 1,
90 days after a statement of conversion or statement of merger
becomes effective; and
(5) revocation of dissolution and reinstatement, 90
days after certificate of revocation of dissolution and
reinstatement under Section 10A-3A-11.06 becomes effective.
(e) A member's knowledge, notice, or receipt of a
notification of a fact relating to the nonprofit corporation
is not knowledge, notice, or receipt of a notification of a
fact by that nonprofit corporation solely by reason of the
member's capacity as a member.
(f) The date and time of the effectiveness of a notice
delivered in accordance with Section 10A-3A-1.03, is
determined by Section 10A-3A-1.03.
(25) MEANS denotes an exhaustive definition.
(26) MEMBER means a person in whose name a membership
is registered on the records of the membership nonprofit
corporation and who has the right to (i) select or vote for
the election of directors or (ii) vote on any type of
fundamental transaction.
(27) MEMBERSHIP or MEMBERSHIP INTERESTS means the
rights and any obligations of a member in a membership
nonprofit corporation or a foreign membership nonprofit
corporation.
(28) MEMBERSHIP NONPROFIT CORPORATION means, except as
provided in Section 10A-3A-14.01(c)(1), a nonprofit
corporation whose certificate of incorporation provides that
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corporation whose certificate of incorporation provides that
it will have members.
(29) NONMEMBERSHIP NONPROFIT CORPORATION means a
nonprofit corporation whose certificate of incorporation
provides that it will not have members.
(30) NONPROFIT CORPORATION, except in the phrase
foreign nonprofit corporation, means a nonprofit corporation
incorporated under or existing under this chapter.
(31) ORGANIZATIONAL DOCUMENTS means the public organic
record and private organizational documents of a nonprofit
corporation, foreign nonprofit corporation, business
corporation, foreign business corporation, or other
organization.
(32) PRINCIPAL OFFICE means the office (in or out of
this state) where the principal executive offices of a
nonprofit corporation or foreign nonprofit corporation are
located.
(33) PRIVATE ORGANIZATIONAL DOCUMENTS means (i) the
bylaws of a nonprofit corporation, foreign nonprofit
corporation, business corporation, or foreign business
corporation or (ii) the rules, regardless of whether in
writing, that govern the internal affairs of an unincorporated
entity or foreign unincorporated entity, are binding on all
its interest holders, and are not part of its public organic
record, if any. Where private organizational documents have
been amended or restated, the term means the private
organizational documents as last amended or restated.
(34) PROCEEDING includes any civil suit and criminal,
administrative, and investigatory action.
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administrative, and investigatory action.
(35) PUBLIC ORGANIC RECORD means (i) the certificate of
incorporation of a nonprofit corporation, foreign nonprofit
corporation, business corporation, or foreign business
corporation, or (ii) the document, if any, the filing of which
is required to create an unincorporated entity or foreign
unincorporated entity, or which creates the unincorporated
entity or foreign unincorporated entity and is required to be
filed. Where a public organic record has been amended or
restated, the term means the public organic record as last
amended or restated.
(36) RECORD DATE means the date fixed for determining
the identity of the nonprofit corporation's members and their
interests for purposes of this chapter. Unless another time is
specified when the record date is fixed, the determination
shall be made as of the close of business at the principal
office of the nonprofit corporation on the date so fixed.
(37) SECRETARY means the corporate officer to whom the
certificate of incorporation, bylaws, or board of directors
has delegated responsibility under Section 10A-3A-8.40(c) to
maintain the minutes of the meetings of the board of
directors, committees, and the members, and for authenticating
records of the nonprofit corporation.
(38) SHARES means the units into which the proprietary
interests in a domestic or foreign business corporation are
divided.
(39) TYPE OF ENTITY means a generic form of entity: (i)
recognized at common law; or (ii) formed under a governing
statute, regardless of whether some entities formed under that
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statute, regardless of whether some entities formed under that
law are subject to provisions of that law that create
different categories of the form of entity.
(40) UNINCORPORATED ENTITY means an organization or
artificial legal person that either has a separate legal
existence or has the power to acquire an estate in real
property in its own name and that is not any of the following:
a corporation, foreign corporation, nonprofit corporation,
foreign nonprofit corporation, a series of a limited liability
company or of another type of entity, an estate, a trust, a
state, United States, or foreign government. The term includes
a general partnership, limited liability company, limited
partnership, business trust, joint stock association, and
unincorporated nonprofit association.
(41) UNITED STATES includes a district, authority,
bureau, commission, department, and any other agency of the
United States.
(42) VOTE, VOTING, or CASTING A VOTE includes the
giving of consent in writing without a meeting. The term does
not include either recording the fact of abstention or failing
to vote for a candidate or for approval or disapproval of a
matter, whether or not the person entitled to vote
characterizes that conduct as voting or casting a vote.
(43) VOTING GROUP means one or more classes of members
that under the certificate of incorporation, bylaws, or this
chapter are entitled to vote and be counted together
collectively on a matter at a meeting of members. All members
entitled by the certificate of incorporation, bylaws, or this
chapter to vote generally on the matter are for that purpose a
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chapter to vote generally on the matter are for that purpose a
single voting group.
(44) VOTING POWER means the current power to vote in
the election of directors, or to vote on approval of any type
of fundamental transaction.
"§10A-3A-1.23
(a) The quorum and voting requirements applicable to a
ratifying action by the board of directors under Section
10A-3A-1.22(a) shall be the quorum and voting requirements
applicable to the corporate action proposed to be ratified at
the time the ratifying action is taken.
(b) If the ratification of the defective corporate
action requires approval by the members under Section
10A-3A-1.22(c), and if the approval is to be given at a
meeting, the membership nonprofit corporation shall notify
each holder of valid and putative membership interests,
regardless of whether entitled to vote , as of the record date
for notice of the meeting and as of (i) the date of the action
by the board of directors under Section 10A-3A-1.22(a) which
shall be the record date and (ii) the date of the occurrence
of the defective corporate action, provided that notice shall
not be required to be given to holders of valid or putative
membership interests whose identities or addresses for notice
cannot be determined from the records of the membership
nonprofit corporation. The notice must state that the purpose,
or one of the purposes, of the meeting, is to consider
ratification of a defective corporate action and must be
accompanied by (i) either a copy of the action taken by the
board of directors in accordance with Section 10A-3A-1.22(a)
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board of directors in accordance with Section 10A-3A-1.22(a)
or the information required by Section 10A-3A-1.22(a)(1)
through (a)(4), and (ii) a statement that any claim that the
ratification of the defective corporate action and any
putative membership interest issued as a result of the
defective corporate action should not be effective, or should
be effective only on certain conditions, shall be brought
within 120 days from the applicable validation effective time.
(c) Except as provided in subsection (d) with respect
to the voting requirements to ratify the election of a
director, the quorum and voting requirements applicable to the
approval by the members, if any, and if none, by the directors
shall be the quorum and voting requirements applicable to the
corporate action proposed to be ratified at the time of the
member or director approval.
(d) The approval by members to ratify the election of a
director requires that the votes cast within the voting group
favoring the ratification exceed the votes cast opposing the
ratification of the election at a meeting at which a quorum is
present.
(e) Putative membership interest interests on the
record date for determining the members entitled to vote on
any matter submitted to members under Section 10A-3A-1.22(c)
of the action by the board of directors under Section
10A-3A-1.22(a) (and without giving effect to any ratification
of putative membership interests that becomes effective as a
result of the vote) shall neither be entitled to vote nor
counted for quorum purposes in any vote to approve the
ratification of any defective corporate action.
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ratification of any defective corporate action.
(f) If the approval under this section of putative
membership interests would result in an overissue, in addition
to the approval required by Section 10A-3A-1.22, approval of
an amendment to the certificate of incorporation under Article
9 to increase the number of membership interests of an
authorized class or to authorize the creation of a class of
membership interests so there would be no overissue shall also
be required.
(g) If the ratification of the defective corporate
action requires approval by a person or group of persons
specified in the certificate of incorporation, the directors
shall provide that person or group of persons with (i) either
a copy of the action taken by the board of directors in
accordance with Section 10A-3A-1.22(a) or the information
required by Section 10A-3A-1.22(a)(1) through (a)(4), and (ii)
a statement that any claim that the ratification of the
defective corporate action and any putative membership
interest issued as a result of the defective corporate action
should not be effective, or should be effective only on
certain conditions, shall be brought within 120 days from the
applicable validation effective time.
"§10A-3A-1.26
(a) If the defective corporate action ratified under
this Division B of Article 1 would have required under any
other section of this chapter a filing in accordance with this
chapter, then, regardless of whether a filing was previously
made in respect of the defective corporate action and
instrument to be delivered to a filing officer for filing and
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instrument to be delivered to a filing officer for filing and
either (i) the filing instrument requires any change to give
effect to the defective corporate action in accordance with
Division B of Article 1 (including any change to the date and
time of the effectiveness of the filing instrument) or (ii) a
filing instrument under any other section of this chapter was
not previously delivered to a filing officer for filing in
respect of the defective corporate action, then, in lieu of a
filing instrument otherwise required by this chapter, the
nonprofit corporation shall file deliver a certificate of
validation to the appropriate filing officer for filing in
accordance with this section, and that certificate of
validation shall serve to amend or substitute for any other
filing instrument with respect to the defective corporate
action required by this chapter.
(b) The certificate of validation must set forth:
(1) the name of the nonprofit corporation;
(2) the unique identifying number or other designation
as assigned by the Secretary of State;
(3) the defective corporate action that is the subject
of the certificate of validation (including, in the case of
any defective corporate action involving the issuance of
putative membership interests, the number and type of shares
of putative membership interests issued and the date or dates
upon which that putative membership interest was purported to
have been issued);
(4) the date of the defective corporate action;
(5) the nature of the failure of authorization in
respect of the defective corporate action;
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respect of the defective corporate action;
(6)(3) a statement that the defective corporate action
was ratified in accordance with Section 10A-3A-1.22, including
the date on which the board of directors ratified that
defective corporate action, and if applicable, the date on
which the members approved the ratification of that defective
corporate action, and the date on which the person or group of
persons specified in the certificate of incorporation approved
the ratification of that defective corporate action; and
(7)(4) the information required by subsection (c).
(c) The certificate of validation must also contain the
following information:
(1) if a filing was previously made in respect of the
defective corporate action and no changes to that filing are
required to give effect to the ratification of that defective
corporate action in accordance with Section 10A-3A-1.22, the
certificate of validation must set forth (i) the name, title,
and filing date of the filing previously made and any
certificate of correction to that filing, and (ii) a statement
that a copy of the filing previously made, together with any
certificate of correction to that filing, is attached as an
exhibit to the certificate of validation;
(2)(1) if a filing instrument was previously made
delivered to a filing officer for filing in respect of the
defective corporate action and that filing instrument requires
any change to give effect to the ratification of that
defective corporate action in accordance with Section
10A-3A-1.22, the certificate of validation must set forth (i)
the name, title, and filing date of the filing instrument
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the name, title, and filing date of the filing instrument
previously made delivered to a filing officer for filing and
any certificate of correction to that filing instrument, and
(ii) a statement that a filing instrument containing all of
the information required to be included under the applicable
section or sections of this chapter to give effect to that
defective corporate action is attached as an exhibit to the
certificate of validation, and (iii) the date and time that
filing instrument is deemed to have become effective; or
(3)(2) if a filing instrument was not previously made
delivered to a filing officer for filing in respect of the
defective corporate action and the defective corporate action
ratified under Section 10A-3A-1.22 would have required a
filing instrument under any other section of this chapter, the
certificate of validation must set forth (i) a statement that
a filing instrument containing all of the information required
to be included under the applicable section or sections of
this chapter to give effect to that defective corporate action
is attached as an exhibit to the certificate of validation,
and (ii) the date and time that filing instrument is deemed to
have become effective."
"§10A-3A-2.02
Section 10A-1-3.05 shall not apply to this chapter.
Instead:
(a) The certificate of incorporation must set forth:
(1) a name for the nonprofit corporation that satisfies
the requirements of Article 5 of Chapter 1;
(2) the street and mailing address of the nonprofit
corporation's initial registered office, the county within
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corporation's initial registered office, the county within
this state in which the street and mailing address is located,
and the name of the nonprofit corporation's initial registered
agent at that office as required by Article 5 of Chapter 1;
(3) that the nonprofit corporation is incorporated
under this chapter;
(4) the name and address of each incorporator; and
(5)(i) if the nonprofit corporation will have members,
a statement to that effect; or
(ii) if the nonprofit corporation will not have
members, a statement to that effect.
(b) The certificate of incorporation may set forth:
(1) the names and addresses of the individuals who are
to serve as the initial directors;
(2) provisions not inconsistent with law regarding:
(i) the purpose or purposes for which the nonprofit
corporation is organized;
(ii) managing the activities and regulating the affairs
of the nonprofit corporation;
(iii) defining, limiting, and regulating the powers of
the nonprofit corporation, its board of directors, and the
members;
(iv) the characteristics, qualifications, rights,
limitations, and obligations attaching to each or any class of
members;
(v) subject to Section 10A-3A-4.20, limiting a member's
right to inspect and copy the records of the nonprofit
corporation under Section 10A-3A-4.02(b);
(vi) the distribution of assets on dissolution;
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(vi) the distribution of assets on dissolution;
(vii) provisions for the election, appointment, or
designation of directors;
(viii) provisions granting inspection rights to a
person or group of persons under Section 10A-3A-4.07; and
(ix) provisions specifying a person or group of persons
whose approval is required under Sections 10A-3A-9.30,
10A-3A-10.04, 10A-3A-11.04, 10A-3A-12.08, or 10A-3A-13.08;
(3) any provision that under this chapter is permitted
to be set forth in the certificate of incorporation or
required or permitted to be set forth in the bylaws;
(4) a provision eliminating or limiting the liability
of a director or officer to a nonprofit corporation or its
members for money damages for any action taken, or any failure
to take any action, as a director or officer, except liability
for (i) the amount of a financial benefit received by a
director or officer to which the director or officer is not
entitled, (ii) an intentional infliction of harm on the
nonprofit corporation or its members, (iii) in the case of a
director, a violation of Section 10A-3A-8.32, or (iv) an
intentional violation of criminal law ;, or (v) in the case of
an officer, any claim by or in the right of the nonprofit
corporation;
(5) a provision permitting or making obligatory
indemnification of a director for liability as defined in
Section 10A-3A-8.50 to any person for any action taken, or any
failure to take any action, as a director, except liability
for (i) receipt of a financial benefit to which the director
is not entitled, (ii) an intentional infliction of harm on the
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is not entitled, (ii) an intentional infliction of harm on the
nonprofit corporation or its members, (iii) a violation of
Section 10A-3A-8.32, or (iv) an intentional violation of
criminal law;
(6) a provision limiting or eliminating any duty of a
director or any other person to offer the nonprofit
corporation the right to have or participate in any, or one or
more classes or categories of, corporate opportunities, before
the pursuit or taking of the opportunity by the director or
other person; provided that the application of that provision
to an officer or a related person of that officer (i) also
requires approval of that application by the board of
directors, subsequent to the effective date of the provision,
by action of the disinterested or qualified directors taken in
compliance with the same procedures as are set forth in
Section 10A-3A-8.60, and (ii) may be limited by the
authorizing action of the board of directors; and
(7) provisions required if the nonprofit corporation is
to be exempt from taxation under federal, state, or local law.
(c) The certificate of incorporation need not set forth
any of the corporate powers enumerated in Sections 10A-1-2.11,
10A-1-2.12, and 10A-1-2.13.
(d) Provisions of the certificate of incorporation may
be made dependent upon facts objectively ascertainable outside
the certificate of incorporation in accordance with Section
10A-3A-1.04.
(e) As used in this section, "related person" means:
(i) the individual's spouse; (ii) a child, stepchild,
grandchild, parent, stepparent, grandparent, sibling,
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grandchild, parent, stepparent, grandparent, sibling,
stepsibling, half sibling, aunt, uncle, niece, or nephew (or
spouse of any such person) of the individual or of the
individual's spouse; (iii) a natural person living in the same
home as the individual; (iv) an entity (other than the
nonprofit corporation or an entity controlled by the nonprofit
corporation) controlled by the individual or any person
specified above in this definition; (v) a domestic or foreign
(A) business or nonprofit corporation (other than the
nonprofit corporation or an entity controlled by the nonprofit
corporation) of which the individual is a director, (B)
unincorporated entity of which the individual is a general
partner or a member of the governing authority, or (C)
individual, trust or estate for whom or of which the
individual is a trustee, guardian, personal representative, or
like fiduciary; or (vi) a person that is, or an entity that
is, controlled by, an employer of the individual.
(f) The certificate of incorporation may not contain
any provision that would impose liability on a member or a
director for the attorney's fees or expenses of the nonprofit
corporation or any other party in connection with an internal
corporate claim, as defined in Section 10A-3A-2.07(d).
(g) The certificate of incorporation is a part of a
binding contract between the nonprofit corporation and (i) the
members in a membership nonprofit corporation and (ii) the
directors in a nonmembership nonprofit corporation, subject to
the provisions of this chapter.
(h) For purposes of subsection (b)(4) only, unless the
certificate of incorporation otherwise provides, "officer"
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certificate of incorporation otherwise provides, "officer"
means an individual appointed or elected in accordance with
Section 10A-3A-8.40 as (i) president, chief executive officer,
chief operating officer, chief financial officer, chief legal
officer, secretary, controller, treasurer, or chief accounting
officer of the nonprofit corporation and (ii) any officer of
the nonprofit corporation designated by resolution of the
board of directors as an "officer" for purposes of subsection
(b)(4). The board of directors may from time to time by
resolution determine that one or more of the officers
designated in accordance with subsection (h)(ii) shall no
longer be an "officer" for purposes of subsection (b)(4), but
no such resolution shall be effective as to any such officer,
or any act or omission of any such officer, prior to the
adoption of such resolution.
(i) No provision in the certificate of incorporation
pursuant to subsection (b)(4) shall eliminate or limit the
liability of a director or officer for any act or omission
occurring prior to the date when the provision in the
certificate of incorporation becomes effective. Any amendment,
repeal, or elimination of a provision in the certificate of
incorporation pursuant to subsection (b)(4) shall not affect
its application with respect to an act or omission by a
director or officer occurring before the amendment, repeal, or
elimination unless the provision in the certificate of
incorporation provides otherwise at the time of the act or
omission."
"§10A-3A-7.04
(a) Unless otherwise provided in the certificate of
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(a) Unless otherwise provided in the certificate of
incorporation;, any action required or permitted by this
chapter to be taken at any meeting of the members may be taken
without a meeting, and without prior notice, if one or more
consents in writing setting forth the action so taken are
signed by the members having not less than the minimum number
of votes that would be required to authorize or take the
action at a meeting at which all members entitled to vote on
the action were present and voted. The action must be
evidenced by one or more written consents describing the
action taken, signed by the members approving the action and
delivered to the membership nonprofit corporation for filing
by the membership nonprofit corporation with the minutes or
corporate records.
(b) If not otherwise fixed under Section 10A-3A-7.07
and if prior action by the board of directors is not required
respecting the action to be taken without a meeting, the
record date for determining the members entitled to take
action without a meeting shall be the first date on which a
signed written consent signed by a member is delivered to the
membership nonprofit corporation. If not otherwise fixed under
Section 10A-3A-7.07 and if prior action by the board of
directors is required respecting the action to be taken
without a meeting, the record date shall be the close of
business on the day the resolution of the board of directors
taking the prior action is adopted. No written consent of a
member shall be effective to take the corporate action
referred to therein unless, within 60 days of the earliest
date on which a consent is delivered to the membership
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date on which a consent is delivered to the membership
nonprofit corporation as required by this section, written
consents signed by sufficient members to take the action have
been delivered to the membership nonprofit corporation. Any
person executing signing a consent may provide, whether
through instruction to an agent or otherwise, that the consent
will be effective at a future time, including a time
determined upon the happening of an event, occurring not later
than 60 days after the instruction is given or the provision
is made, if evidence of the instruction or provision is
provided to the membership nonprofit corporation. A If a
person signs a consent when that person is not a member, then
that person's consent shall not be valid unless that person is
a member as of the record date for determining members
entitled to consent to the action. Unless a person's written
consent states that it is irrevocable, that written consent
may be revoked by that person by a writing to that effect
delivered to the membership nonprofit corporation before
unrevoked written consents sufficient in number to take the
corporate action have been delivered to the membership
nonprofit corporation.
(c) A consent signed pursuant to the provisions of this
section has the effect of a vote taken at a meeting and may be
described as such in any document. Unless the certificate of
incorporation, bylaws, or a resolution of the board of
directors provides for a reasonable delay to permit tabulation
of written consents, the action taken by written consent shall
be effective when written consents signed by sufficient
members to take the action have been delivered to the
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members to take the action have been delivered to the
membership nonprofit corporation.
(d) If action is taken by less than unanimous written
consent of the voting members, the membership nonprofit
corporation shall give its nonconsenting voting members
written notice of the action not more than 10 days after (i)
written consents sufficient to take the action have been
delivered to the membership nonprofit corporation or (ii) any
later date that tabulation of consents is completed pursuant
to an authorization under subsection (c). The notice must
reasonably describe the action taken.
(e) The notice requirements in subsection (d) shall not
delay the effectiveness of actions taken by written consent,
and a failure to comply with those notice requirements shall
not invalidate actions taken by written consent, provided that
this subsection shall not be deemed to limit judicial power to
fashion any appropriate remedy in favor of a member adversely
affected by a failure to give the notice within the required
time period.
"§10A-3A-7.05
(a) A membership nonprofit corporation shall notify
members of the place, if any, date, and time of each annual,
regular, or special meeting of the members no fewer than 10
nor more than 60 days before the meeting date. If the board of
directors has authorized participation by means of remote
communication pursuant to Section 10A-3A-7.09 for any class of
members or voting group, the notice to that class of members
or voting group must describe the means of remote
communication to be used. The notice must include the record
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communication to be used. The notice must include the record
date for determining the members entitled to vote at the
meeting, if that date is different from the record date for
determining members entitled to notice of the meeting. Unless
the certificate of incorporation requires otherwise, the
membership nonprofit corporation is required to give notice
only to members entitled to vote at the meeting as of the
record date for determining the members entitled to notice of
the meeting.
(b) Unless this chapter, the certificate of
incorporation, or the bylaws require otherwise, notice of an
annual or regular meeting of the members need not include a
description of the purpose or purposes for which the meeting
is called.
(c) Notice of a special meeting of members must include
a description of the purpose or purposes for which the meeting
is called.
(d) If not otherwise fixed under Section 10A-3A-7.03 or
Section 10A-3A-7.07, the record date for determining members
entitled to notice of and to vote at an annual, regular, or
special meeting of the members is the earlier of (i) the date
of the action by the board of directors calling the meeting of
the members or (ii) the day before the first notice is
delivered to members.
(e) Unless the certificate of incorporation or bylaws
require otherwise, if an annual, regular, or special meeting
of the members is adjourned to a different place, if any,
date, or time (including an adjournment taken to address a
technical failure to convene or continue a meeting using
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technical failure to convene or continue a meeting using
remote communication pursuant to Section 10A-3A-7.09) , notice
need not be given of the new place, if any, date, or time if
the new place, if any, date, or time is (i) announced at the
meeting before adjournment or (ii) displayed, during the time
scheduled for the meeting, on the same electronic network used
to enable members and proxy holders to participate in the
meeting by means of remote communication . If a new record date
for the adjourned meeting is or must be fixed under Section
10A-3A-7.07, however, notice of the adjourned meeting shall be
given under this section to members entitled to vote at the
adjourned meeting as of the record date fixed for notice of
the adjourned meeting.
"§10A-3A-9.05
Except as otherwise provided in the certificate of
incorporation:
(1) the board of directors of a nonmembership nonprofit
corporation, or if the initial board of directors of a
nonmembership nonprofit corporation is not named in the
certificate of incorporation and has not yet been elected,
appointed, or designated, its incorporators, may adopt
amendments to the nonmembership nonprofit corporation's
certificate of incorporation; and
(2) an amendment adopted by the board of directors
under this section must also be approved by that person or
group of persons, if any, whose approval is required by the
certificate of incorporation in accordance with Section
10A-3A-9.30.
"§10A-3A-9.07
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"§10A-3A-9.07
(a)(1) A membership nonprofit corporation's board of
directors may restate its certificate of incorporation at any
time, without member the approval of the members or any person
or group of persons specified in the certificate of
incorporation, to consolidate all amendments into a single
document. Unless the certificate of incorporation of a
membership nonprofit corporation provides otherwise, the
restated certificate of incorporation may amend the
certificate of incorporation with those amendments that the
board of directors is permitted to adopt in accordance with
Sections 10A-3A-9.02 and 10A-3A-9.03(g) without the approval
of the members or any person or group of persons specified in
the certificate of incorporation. Unless the certificate of
incorporation of a membership nonprofit corporation provides
otherwise, the restated certificate of incorporation of a
membership nonprofit corporation may also amend the
certificate of incorporation with those amendments that the
member or any person or group of persons specified in the
certificate of incorporation must approve in accordance with
Sections 10A-3A-9.02, 10A-3A-9.03, 10A-3A-9.04, and
10A-3A-9.30.
(2) A nonmembership nonprofit corporation's board of
directors may restate its certificate of incorporation at any
time without the approval of any person or group of persons
specified in the certificate of incorporation to consolidate
all amendments into a single document. Unless the certificate
of incorporation of a nonmembership nonprofit corporation
provides otherwise, the restated certificate of incorporation
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provides otherwise, the restated certificate of incorporation
may amend the certificate of incorporation with those
amendments that the board of directors is permitted to adopt
in accordance with Section 10A-3A-9.05 without the approval of
any person or group of persons specified in the certificate of
incorporation. Unless the certificate of incorporation of a
nonmembership nonprofit corporation provides otherwise, the
restated certificate of incorporation of a nonmembership
nonprofit corporation may also amend the certificate of
incorporation with those amendments that any person or group
of persons specified in the certificate of incorporation must
approve in accordance with Sections 10A-3A-9.02, 10A-3A-9.05,
and 10A-3A-9.30.
(b) If the restated certificate of incorporation
includes one or more new amendments, the amendments must be
adopted and approved as provided in (i) Section 10A-3A-9.02,
(ii) Sections 10A-3A-9.03 and 10A-3A-9.04 , or (ii)(iii)
Section 10A-3A-9.05.
(c) A nonprofit corporation that restates its
certificate of incorporation shall deliver to the Secretary of
State for filing a certificate of restatement setting forth:
(1) the name of the nonprofit corporation;
(2) the text of the restated certificate of
incorporation;
(3) a statement that the restated certificate of
incorporation consolidates all amendments into a single
document;
(4) if a new amendment is included in the restated
certificate of incorporation, the statements required under
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certificate of incorporation, the statements required under
Section 10A-3A-9.06 with respect to the new amendment; and
(5) the unique identifying number or other designation
as assigned by the Secretary of State.
(d) The duly adopted restated certificate of
incorporation supersedes the original certificate of
incorporation and all amendments to the certificate of
incorporation.
(e) Unless the certificate of incorporation provides
otherwise, a restated certificate of incorporation may omit
the information that may be deleted pursuant to Section
10A-3A-9.03(g)."
"§10A-3A-10.01
In a membership nonprofit corporation , no:
(a) No approval of the members or any person or group
of persons specified in the certificate of incorporation is
required, unless the certificate of incorporation otherwise
provides:
(a)(1) to sell, lease, exchange, or otherwise dispose
of any or all of the membership nonprofit corporation's assets
in the usual and regular course of the membership nonprofit
corporation's activities;
(b)(2) to mortgage, pledge, dedicate to the repayment
of indebtedness (whether with or without recourse), or
otherwise encumber any or all of the membership nonprofit
corporation's assets, regardless of whether in the usual and
regular course of its activities; or
(c)(3) to transfer any or all of the membership
nonprofit corporation's assets to one or more corporations or
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nonprofit corporation's assets to one or more corporations or
other entities all of the memberships or interests of which
are owned by the membership nonprofit corporation.
(b) Unless the certificate of incorporation otherwise
provides, without limiting the rights of a secured party under
applicable law, no approval by members or any person or group
of persons specified in the certificate of incorporation shall
be required by Section 10A-3A-10.02 for a sale, lease,
exchange, or other disposition of any of the membership
nonprofit corporation's assets if those assets are mortgaged,
pledged, dedicated to the repayment of indebtedness, or
otherwise encumbered for the benefit of a secured party or
other creditor and either:
(1) The secured party or other creditor exercises its
rights under the law governing the mortgage, pledge,
dedication, or encumbrance, or other applicable law, whether
under the Uniform Commercial Code, a real property law, or
other law, to effect the sale, lease, exchange, or other
disposition of those assets without the consent of the
corporation; or
(2) In lieu of the secured party or other creditor
exercising such rights, the board of directors of the
membership nonprofit corporation authorizes an alternative
sale, lease, exchange, or other disposition of those assets,
whether with the secured party or other creditor, that results
in the reduction or elimination of the total liabilities or
obligations secured by those assets, provided that (i) the
value of those assets is less than or equal to the total
amount of the liabilities or obligations being eliminated or
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amount of the liabilities or obligations being eliminated or
reduced and (ii) the sale, lease, exchange, or other
disposition of those assets is not prohibited by the law
governing the mortgage, pledge, dedication, or encumbrance.
The provision of consideration to the membership nonprofit
corporation shall not create a presumption that the value of
the assets is greater than the total amount of the liabilities
or obligations being eliminated or reduced.
(c) A failure to satisfy the condition in subsection
(b)(2)(i) shall not result in the invalidation of a sale,
lease, exchange, or other disposition of the membership
nonprofit corporation's assets if the transferee of those
assets (i) provided value therefor (which may include the
reduction or elimination of the total liabilities or
obligations secured by those assets) and (ii) acted in good
faith (as defined in Section 7-1-201(b)). The preceding
sentence shall not apply to a proceeding against the
membership nonprofit corporation and any other necessary
parties to enjoin the sale, lease, exchange, or other
disposition of the membership nonprofit corporation's assets
before the consummation thereof and shall not eliminate any
liability for monetary damages for any claim, including a
claim in the right of the membership nonprofit corporation,
based upon a violation of a duty by a current or former
director or officer, or other person.
(d) A provision of the certificate of incorporation
that requires the authorization or consent of members or any
person or group of persons specified in the certificate of
incorporation for a sale, lease, exchange, or other
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incorporation for a sale, lease, exchange, or other
disposition of the membership nonprofit corporation's assets
shall not apply to a transaction permitted by subsection (b)
unless that provision expressly so requires.
"§10A-3A-10.03
Except as otherwise provided in In a nonmembership
nonprofit corporation:
(a) Unless the certificate of incorporation otherwise
provides:
(1) a sale, lease, exchange, mortgage, pledge, or other
disposition of all, or substantially all, the property and
assets of the nonmembership nonprofit corporation may be
approved by the board of directors; and
(2) a sale, lease, exchange, mortgage, pledge, or other
disposition of all, or substantially all, of the property and
assets of the nonmembership nonprofit corporation approved by
the board of directors under this section must also be
approved by that person or group of persons whose approval is
required by the certificate of incorporation in accordance
with Section 10A-3A-10.04.
(b) Unless the certificate of incorporation otherwise
provides, without limiting the rights of a secured party under
applicable law, no approval by any person or group of persons
specified in the certificate of incorporation shall be
required by this section for a sale, lease, exchange, or other
disposition of any of the nonmembership nonprofit
corporation's assets if those assets are mortgaged, pledged,
dedicated to the repayment of indebtedness, or otherwise
encumbered for the benefit of a secured party or other
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encumbered for the benefit of a secured party or other
creditor and either:
(1) The secured party or other creditor exercises its
rights under the law governing the mortgage, pledge,
dedication, or encumbrance, or other applicable law, whether
under the Uniform Commercial Code, a real property law, or
other law, to effect the sale, lease, exchange, or other
disposition of those assets without the consent of the
nonmembership nonprofit corporation; or
(2) In lieu of the secured party or other creditor
exercising such rights, the board of directors of the
nonmembership nonprofit corporation authorizes an alternative
sale, lease, exchange, or other disposition of those assets,
whether with the secured party or other creditor, that results
in the reduction or elimination of the total liabilities or
obligations secured by those assets, provided that (i) the
value of those assets is less than or equal to the total
amount of the liabilities or obligations being eliminated or
reduced and (ii) the sale, lease, exchange, or other
disposition of those assets is not prohibited by the law
governing the mortgage, pledge, dedication, or encumbrance.
The provision of consideration to the nonmembership nonprofit
corporation shall not create a presumption that the value of
the assets is greater than the total amount of the liabilities
or obligations being eliminated or reduced.
(c) A failure to satisfy the condition in subsection
(b)(2)(i) shall not result in the invalidation of a sale,
lease, exchange, or other disposition of the nonmembership
nonprofit corporation's assets if the transferee of those
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nonprofit corporation's assets if the transferee of those
assets (i) provided value therefor (which may include the
reduction or elimination of the total liabilities or
obligations secured by those assets) and (ii) acted in good
faith (as defined in Section 7-1-201(b)). The preceding
sentence shall not apply to a proceeding against the
nonmembership nonprofit corporation and any other necessary
parties to enjoin the sale, lease, exchange, or other
disposition of the nonmembership nonprofit corporation's
assets before the consummation thereof and shall not eliminate
any liability for monetary damages for any claim, including a
claim in the right of the nonmembership nonprofit corporation,
based upon a violation of a duty by a current or former
director or officer, or other person.
(d) A provision of the certificate of incorporation
that requires the authorization or consent of any person or
group of persons specified in the certificate of incorporation
for a sale, lease, exchange, or other disposition of the
nonmembership nonprofit corporation's assets shall not apply
to a transaction permitted by subsection (b) unless that
provision expressly so requires.
"§10A-3A-10.04
(a) The certificate of incorporation of a membership
nonprofit corporation may require that a disposition of assets
under either or both Section 10A-3A-10.01 and Section
10A-3A-10.02 be approved in writing by a specified person or
group of persons in addition to the board of directors and
members.
(b) The certificate of incorporation of a nonmembership
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(b) The certificate of incorporation of a nonmembership
nonprofit corporation may require that a disposition of assets
under Section 10A-3A-10.03 be approved in writing by a
specified person or group of persons in addition to the board
of directors.
(c) A requirement in the certificate of incorporation
described in subsection (a) or (b) may only be approved by the
written approval of the specified person or group of persons."
"§10A-3A-11.07
(a) A dissolved nonprofit corporation continues its
existence as a nonprofit corporation but may not carry on any
activity except as is appropriate to wind up and liquidate its
activities and affairs, including:
(1) collecting its assets;
(2) disposing of its properties that will not be
distributed in kind;
(3) discharging or making provisions for discharging
its liabilities;
(4) distributing its remaining property as required by
law, its certificate of incorporation, bylaws, and as approved
when the dissolution was authorized; and
(5) doing every other act necessary to wind up and
liquidate its activities and affairs.
(b) In winding up its activities and affairs, a
dissolved nonprofit corporation may:
(1) preserve the nonprofit corporation's activities and
affairs and property as a going concern for a reasonable time;
(2) prosecute, defend, or settle actions or proceedings
whether civil, criminal, or administrative;
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whether civil, criminal, or administrative;
(3) transfer the nonprofit corporation's assets;
(4) resolve disputes by mediation or arbitration; and
(5) merge or convert in accordance with Article 12 or
13 of this chapter or Article 8 of Chapter 1.
(c) Dissolution of a nonprofit corporation does not:
(1) transfer title to the nonprofit corporation's
property;
(2) subject its directors or officers to standards of
conduct different from those prescribed in Article 8 of this
chapter;
(3) change:
(i) quorum or voting requirements for its board of
directors or members;
(ii) provisions for selection, resignation, or removal
of its directors or officers or both; or
(iii) provisions for amending its bylaws;
(4) prevent commencement of a proceeding by or against
the nonprofit corporation in its corporate name;
(5) abate or suspend a proceeding pending by or against
the nonprofit corporation on the effective date of
dissolution; or
(6) terminate the authority of the registered agent of
the nonprofit corporation.
(d) A distribution in liquidation under this section
may only be made by a dissolved nonprofit corporation.
"§10A-4-1.03
As used in this chapter, unless the context otherwise
requires, the term:
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requires, the term:
(1) DISQUALIFIED PERSON. Any person who is not a
qualified person.
(2) DOMESTIC PROFESSIONAL CORPORATION. A business
professional corporation for profit or nonprofit professional
corporation organized pursuant to the provisions of this
chapter.
(3) FOREIGN PROFESSIONAL CORPORATION. A corporation or
unincorporated association, for profit or nonprofit, organized
for the purpose of rendering professional services under a law
other than the law of Alabama this state.
(4) LICENSING AUTHORITY. As defined in Section
10A-1-1.03(49) 10A-1-1.03.
(5) PROFESSIONAL SERVICE. As defined in Section
10A-1-1.03(80) 10A-1-1.03.
(6) QUALIFIED PERSON. With respect to any domestic
professional corporation:
a. An individual who is authorized by law of Alabama
this state or of any qualified state to render a professional
service permitted by the certificate of formation
incorporation of the professional corporation;
b. A general partnership in which all the partners are
qualified persons with respect to the professional
corporation; and
c. A professional corporation, domestic or foreign, in
which all the shareholders stockholders are qualified persons
with respect to the professional corporation.
d. A limited liability company in which all the members
are qualified persons with respect to the professional
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are qualified persons with respect to the professional
corporation.
"Qualified person" does not include any person during
any period in which the person's authorization to render
professional services has been completely terminated or
suspended.
(7) QUALIFIED STATE. Any state, other than Alabama this
state, or territory of the United States or the District of
Columbia which allows individuals authorized to render
professional services in Alabama this state and not in the
other state, or partnerships of the individuals, or domestic
professional corporations or professional associations owned
by the individuals to own shares of stock in professional
corporations or to be members of professional associations
organized under its laws."
"§10A-4-2.01
DomesticA domestic professional corporations
corporation may be organized under this chapter only for the
purpose of rendering professional services and services
ancillary thereto within a single profession, except that the
same professional corporation or nonprofit professional
corporation may render medical, dental, and other health
related services for the purpose of, and shall have the power
to render, professional services if the domestic professional
corporation complies with the rules of the licensing authority
for such profession ; provided that in the case of a
professional corporation, at least one shareholder stockholder
of the professional corporation is duly licensed to provide
each professional service for which the professional
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each professional service for which the professional
corporation is organized, or, in the case of a nonprofit
professional corporation, all of the professional services
rendered by the professional corporation are rendered by
persons duly licensed to render the professional service."
"§10A-4-2.02
(a) Any corporation whose certificate of formation
incorporation includes as a stated purpose the performance of
professional services may be incorporated under this chapter
by stating in its certificate of formation incorporation that
it is incorporated under this chapter.
(b) A domestic professional business corporation, other
than that is not a nonprofit professional corporation , which
is subject to this chapter shall cease being governed by this
chapter and shall be governed by the Alabama Business
Corporation Law, if it is a domestic corporation, if it amends
its certificate of formation incorporation to delete the
statement that it is organized under this chapter, and
conforms its articles certificate of incorporation to the
Alabama Business Corporation Law and, if it is a foreign
corporation, complies with the provisions of this title
applicable to foreign entities . A domestic nonprofit
professional corporation which is subject to this chapter
shall cease being governed by this chapter and shall be
governed by the Alabama Nonprofit Corporation Law , if it is a
domestic corporation, if it amends its certificate of
formation incorporation to delete the statement that it is
organized under this chapter, and conforms its certificate of
incorporation to the Alabama Nonprofit Corporation Law and, if
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incorporation to the Alabama Nonprofit Corporation Law and, if
it is a foreign corporation, complies with the provisions of
this title applicable to foreign entities .
(c) Any corporation which is not subject to this
chapter may become subject to this chapter, if it is a
domestic corporation, by conforming its articles certificate
of incorporation to this chapter.
(d) Any foreign professional corporation which renders
professional services in Alabama this state shall be subject
to this chapter."
"§10A-4-2.03
(a) Subject to Section 10A-4-5.07, a domestic
professional corporation, including a professional corporation
that is a nonprofit corporation, shall have all the powers
necessary or convenient to effectuate its purposes, including
those enumerated in Sections 10A-1-2.11, 10A-1-2.12, and
10A-1-2.13.
(b) A domestic professional corporation shall not
engage in any profession other than the profession or
professions permitted by its certificate of formation
incorporation, except that a domestic professional corporation
may invest its funds in real estate, mortgages, stocks, bonds,
or any other type investment."
"§10A-4-2.04
A professional corporation, domestic or foreign, may
render professional services in Alabama this state only
through individuals permitted to render the services in
Alabama this state; but nothing in this chapter shall be
construed to require that any individual who is employed by a
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construed to require that any individual who is employed by a
professional corporation be licensed to perform services for
which no license is otherwise required or to prohibit the
rendering of professional services by a licensed individual
acting in his or her that person's individual capacity,
notwithstanding the individual may be a shareholder
stockholder, member, director, officer, employee, or agent of
a professional corporation, domestic or foreign."
"§10A-4-3.01
(a) A domestic professional corporation may issue
shares, fractional shares stock, fractions of a share of
stock, and rights or options to purchase shares stock only to
qualified persons.
(b) Where deemed necessary by the licensing authority
for any profession in order to prevent violations of the
ethical standards of the profession, the licensing authority
may, within its rule-making power, by rule further restrict,
condition, or abridge the authority of domestic professional
corporations to issue shares stock, but no rule shall, of
itself, have the effect of causing a shareholder stockholder
of a professional corporation at the time the rule becomes
effective to become a disqualified person unless and to the
extent specified by the licensing authority.
(c) A shareholder stockholder of a domestic
professional corporation may transfer or pledge shares,
fractional shares stock, fractions of a share of stock , and
rights or options to purchase shares stock of the professional
corporation only to qualified persons.
(d) Any issuance or transfer of shares stock in
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(d) Any issuance or transfer of shares stock in
violation of this section shall be void, however, nothing
contained herein shall prohibit the transfer of shares stock
of a domestic professional corporation by operation of law or
court decree.
(e) Nothing in this section shall require domestic
nonprofit professional corporations to issue shares stock. The
Domestic nonprofit professional corporations may have members
and all members must be qualified persons. A licensing
authority may, within its rule-making power, by rule further
restrict, condition, or abridge membership in domestic
nonprofit corporations, but no rule shall, of itself, have the
effect of causing a member of a domestic nonprofit
professional corporation at the time the rule becomes
effective to become a disqualified person unless and to the
extent specified by the licensing authority."
"§10A-4-3.02
(a) Upon the death of a shareholder stockholder of a
domestic professional corporation, or if a shareholder
stockholder of a domestic professional corporation becomes a
disqualified person, or if shares stock of a domestic
professional corporation are is transferred by operation of
law or court decree to a disqualified person, the shares of
stock owned by the deceased shareholder stockholder or of the
disqualified person may be transferred to a qualified person
and, if not so transferred, shall be purchased or redeemed by
the domestic professional corporation to the extent of funds
which may be legally made available for the purchase.
(b) If the price for the shares stock is not fixed by
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(b) If the price for the shares stock is not fixed by
the governing documents of the domestic professional
corporation or by private agreement, the domestic professional
corporation, within six months after the death or 30 days
after the disqualification or transfer, as the case may be,
shall make a written offer to pay for the shares stock at a
specified price deemed by the domestic professional
corporation to be the fair value thereof as of the date of the
death, disqualification, or transfer. The offer shall be given
to the executor or administrator of the estate of a deceased
shareholder stockholder or to the disqualified shareholder
person or transferee and shall be accompanied by a balance
sheet of the domestic professional corporation, as of the
latest available date and not more than 12 months prior to the
making of the offer, and a profit and loss statement of the
domestic professional corporation for the 12 months' period
ended on the date of the balance sheet.
(c) If within 30 days after the date of the written
offer from the domestic professional corporation the fair
value of the shares stock is agreed upon between the
disqualified person and the domestic professional corporation,
payment therefor shall be made within 90 days, or other period
as the parties may fix by agreement, after the date of the
offer, upon surrender of the certificate or certificates
representing the shares stock. Upon payment of the agreed
value the disqualified persons shall cease to have any
interest in the shares stock.
(d) If within 30 days from the date of the written
offer from the domestic professional corporation, the
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offer from the domestic professional corporation, the
disqualified person and the domestic professional corporation
do not so agree, then either party may commence a civil action
in the designated court, and if none, in the circuit court for
the county in which the domestic professional corporation's
principal office is located in this state, and if none in this
state, in the circuit court for the county in which the
domestic professional corporation's most recent registered
office is located requesting that the fair value of the shares
stock be found and determined. The disqualified person,
wherever residing, shall be made a party to the proceeding as
an action against his or her shares the disqualified person's
stock quasi in rem. Service shall be made in accordance with
the rules of civil procedure. The disqualified person shall be
entitled to judgment against the domestic professional
corporation for the amount of the fair value of his or her
shares the disqualified person's stock as of the date of
death, disqualification, or transfer upon surrender to the
domestic professional corporation of the certificate or
certificates representing the shares stock. The court may, in
its discretion, order that the judgment be paid in
installments and with interest and on terms as the court may
determine. The court may, if it so elects, appoint one or more
persons as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers shall
have the power and authority as shall be specified in the
order of their appointment or an amendment thereof.
(e) The judgment shall include an allowance for
interest at the rate the court finds to be fair and equitable
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interest at the rate the court finds to be fair and equitable
in all the circumstances, from the date of death,
disqualification, or transfer.
(f) The costs and expenses of any proceeding shall be
determined by the court and shall be assessed against the
domestic professional corporation, but all or any part of the
costs and expenses may be apportioned and assessed as the
court may deem equitable against the disqualified person if
the court shall find that the action of the disqualified
person in failing to accept the offer was arbitrary or
vexatious or not in good faith. The expenses shall include
reasonable compensation for and reasonable expenses of the
appraisers and a reasonable attorney's fee but shall exclude
the fees and expenses of counsel for and of experts employed
by any party; but if the fair value of the shares stock as
determined materially exceeds the amount which the domestic
professional corporation offered to pay therefor, or if no
offer was made, the court in its discretion may award to the
disqualified person the sum the court determines to be
reasonable compensation to any expert or experts employed by
the disqualified person in the proceeding.
(g) If a purchase, redemption, or transfer of the
shares stock of a deceased stockholder or disqualified
shareholder person or of a transferee who is a disqualified
person is not completed within 12 months after the death of
the deceased shareholder stockholder or 12 months after the
disqualification or transfer, as the case may be, the domestic
professional corporation shall forthwith cancel the shares
stock on its books and the disqualified person shall have no
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stock on its books and the disqualified person shall have no
further interest as a shareholder stockholder in the domestic
professional corporation other than his or her the
disqualified person's right to payment for the shares stock
under this section.
(h) Shares acquired by a domestic professional
corporation pursuant to payment of the agreed value therefor
or to payment of the judgment entered therefor, as in this
section provided, may be held, cancelled, or disposed of by
the domestic professional corporation as in the case of other
treasury shares. (1) A professional corporation may acquire its
own stock, and, the stock so acquired shall constitute
authorized but unissued stock, provided however:
(A) the certificate of incorporation may provide that
the acquired stock shall constitute authorized, issued, but
not outstanding stock;
(B) the certificate of incorporation may prohibit the
reissue of the acquired stock, in which case, the number of
authorized shares of stock is reduced by the number of shares
of stock acquired; or
(C) if the certificate incorporation does not (i)
provide that the acquired stock shall constitute authorized
but unissued stock, (ii) prohibit the reissuance of the
acquired stock, or (iii) provide that the acquired stock shall
constitute authorized, issued, but not outstanding stock, then
the board of directors may determine, at or prior to the time
of the acquisition, that the acquired stock will constitute
authorized, issued, but not outstanding stock.
(2) If the board of directors determines that any
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(2) If the board of directors determines that any
acquired stock was to be authorized, issued, but not
outstanding in accordance with subsection (h)(1)(C), then the
board of directors may thereafter determine that the acquired
stock shall be converted to stock that is authorized but not
issued.
(i) This section shall not be deemed to require the
purchase of shares stock of a disqualified person where the
period of the disqualification is for less than 12 months from
the date of disqualification or transfer.
(j) Any provision regarding purchase, redemption, or
transfer of shares stock of a domestic professional
corporation contained in the certificate of formation
incorporation, bylaws, or any private agreement shall be
specifically enforceable in the courts of Alabama this state.
(k) Nothing herein contained shall prevent or relieve a
domestic professional corporation from paying pension benefits
or other deferred compensation for services rendered to or on
behalf of a former shareholder stockholder as otherwise
permitted by law.
(l) A domestic professional corporation may purchase
its own shares stock from a disqualified person without regard
to the availability of capital or surplus for the purchase;
however, no purchase of or payment for the shares stock shall
be made at a time when the domestic professional corporation
is insolvent or when the purchase or payment would make it
insolvent.
(m) The foregoing provisions of this section shall not
apply to a domestic nonprofit professional corporation. Any
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apply to a domestic nonprofit professional corporation. Any
member of a corporation who becomes a disqualified person must
cease being a member not more than 12 months after the date of
disqualification if he or she is then a disqualified person."
"§10A-4-3.03
(a) Every individual who renders professional services
as an employee of a domestic or professional corporation shall
be liable for any negligent or wrongful act or omission in
which he or she that individual personally participates to the
same extent as if he or she that individual rendered the
services as a sole practitioner.
(b) The Except as otherwise provided in subsection (a),
the personal liability of a shareholder stockholder, employee,
director, or officer of a domestic professional corporation,
other than a domestic nonprofit professional corporation,
shall be no greater in any respect than that of a shareholder
stockholder, employee, director, or officer of a corporation
organized under governed by the Alabama Business Corporation
Law.
(c) The Except as otherwise provided in subsection (a),
the personal liability of a member, employee, director, or
officer of a domestic nonprofit professional corporation shall
be no greater in any respect than that of a member, employee,
director, or officer of a corporation organized under governed
by the Alabama Nonprofit Corporation Law.
(d) The Except as otherwise provided in subsection (a),
the personal liability of a shareholder stockholder, member,
employee, director, or officer of a foreign professional
corporation shall be determined under the law of the
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corporation shall be determined under the law of the
jurisdiction in which it is organized."
"§10A-4-3.05
A voting trust with respect to shares stock of a
domestic professional corporation shall not be valid unless
all the trustees and beneficiaries thereof are qualified
persons, except that a voting trust may be validly continued
for a period of 12 months after the death of a deceased
beneficiary or after a beneficiary has become a disqualified
person."
"§10A-4-3.06
At least one director of a domestic professional
corporation and the president of a domestic professional
corporation shall be qualified persons with respect to the
domestic professional corporation; provided, however, that the
foregoing restriction shall not apply for a period of 12
months after the death of the sole shareholder stockholder of
a domestic professional corporation."
"§10A-4-4.01
Administrators, executors, guardians, conservators, or
receivers of the estates of shareholders stockholders of a
domestic professional corporation who hold all of the
outstanding shares stock of the domestic professional
corporation may amend the certificate of formation
incorporation by signing a written consent to the certificate
of amendment and delivering the certificate of amendment for
filing to the Secretary of State. The certificate of amendment
shall set forth, in addition to the information required to be
included in the certificate of amendment by the Alabama
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included in the certificate of amendment by the Alabama
Business Corporation Law, a statement that the administrators,
executors, guardians, conservators, or receivers own all the
outstanding shares stock."
"§10A-4-4.02
(a) A domestic professional corporation may convert to
or merge with another corporation, professional corporation,
or another type of entity, domestic or foreign, if permitted
under the Alabama Business Corporation Law, the Alabama
Nonprofit Corporation Law, or may merge with or convert to
another type of entity as permitted by Article 8 of Chapter 1.
Upon the merger, consolidation, or conversion, if the
surviving or new corporation or converted entity, as the case
may be, is to render professional services in Alabama this
state, it shall comply with the provisions of this chapter.
(b) An unincorporated professional association
organized under Article 1 of Chapter 30 may merge or
consolidate with a domestic professional corporation organized
under this chapter . In the merger, the unincorporated
professional association shall follow the procedure specified
in the Alabama Business Corporation Law shall apply, provided
that:
(1) The surviving corporation shall be a domestic
professional corporation,
(2) The following terms, when used in the Alabama
Business Corporation Law to refer to an unincorporated
professional association, shall have the following meanings:
a. "Board of directors" shall mean BOARD OF DIRECTORS
means"board of governors ,".
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means"board of governors ,".
b. "Corporation" shall mean CORPORATION means
"unincorporated association ,".
c. "Shares or securities" STOCK or SECURITIES in the
case of an unincorporated professional association which is a
nonstock organization, shall mean means the undivided
interests of the members in the assets of the association	,.
d. "Shareholder" STOCKHOLDER in the case of an
unincorporated association which is a nonstock organization,
shall mean means"member."
(3) The plan of merger or plan of conversion shall be
approved by a vote of two thirds two-thirds of the members of
the professional association."
"§10A-4-5.01
The Attorney General may institute proceedings to
involuntarily dissolve a domestic professional corporation or
a domestic nonprofit professional corporation . A licensing
authority may request that the Attorney General institute such
the proceedings."
"§10A-4-5.02
(a) A foreign professional corporation shall be
entitled to register under Article 7 of Chapter 1 for
authority to render professional services in Alabama this
state only if:
(1) A domestic professional corporation incorporated
under this chapter would be allowed to register or procure a
certificate of authority or equivalent authorization to render
professional services in the state under whose laws the
foreign professional corporation is organized;
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foreign professional corporation is organized;
(2) The foreign professional corporation meets the
requirements of Section 10A-4-2.01;
(3) The foreign professional corporation designates the
Alabama licensed individual or individuals through whom it
will render professional services in Alabama this state and
the individual or individuals are not, at the time of the
designation, so designated by any other foreign professional
corporation;
(4) The name of the foreign professional corporation
meets the requirements of Section 10A-1-5.08, provided that
the foreign professional corporation can meet the requirements
of Section 10A-1-5.08 by adding at the end of its name, for
use in Alabama this state, the words "professional
corporation" or the abbreviation "P.C."; and
(5) All the shareholders stockholders, or all the
members, in the case of a nonprofit professional corporation
which has members, at least one director , and the president of
the foreign professional corporation are licensed in at least
one state or territory of the United States or the District of
Columbia to render the professional services which the foreign
professional corporation would render in Alabama this state.
(6) The foreign professional corporation includes in
its application a statement acknowledging that it will be
subject to the jurisdiction of the Alabama regulatory and
licensing authorities with respect to any professional
services rendered to clients or patients in Alabama this
state.
(b) No foreign professional corporation shall maintain
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(b) No foreign professional corporation shall maintain
an office in Alabama this state for the conduct of business or
professional practice until it has obtained a certificate of
authority to render professional services in Alabama this
state."
"§10A-4-5.03
The certificate of authority of a foreign professional
corporation may be revoked by the Secretary of State if the
foreign professional corporation fails to comply with any
provision of this chapter applicable to it the foreign
professional corporation . Each licensing authority in Alabama
this state shall certify to the Secretary of State, from time
to time, the names of all foreign professional corporations
which have given cause for revocation as provided in this
chapter, together with the facts pertinent thereto. Whenever a
licensing authority shall certify the name of a foreign
professional corporation to the Secretary of State as having
given cause for revocation, the licensing authority shall
concurrently mail to the foreign professional corporation at
its registered office in Alabama this state notice that the
certification has been made. No certificate of authority of a
foreign professional corporation shall be revoked by the
Secretary of State unless he or she the Secretary of State
shall have given the foreign professional corporation not less
than 60 days' notice thereof and the foreign professional
corporation shall fail prior to revocation to correct the
noncompliance."
"§10A-4-5.04
(a) Every business professional corporation, domestic
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(a) Every business professional corporation, domestic
or foreign, is required to file an annual report under the
Alabama Business Corporation Law, and shall include in the
annual report, in addition to the items required by the
Alabama Business Corporation Law:
(1) A statement that all the shareholders stockholders,
at least one director, and the president of the corporation
are qualified persons with respect to the corporation, and
(2) In the case of a foreign professional corporation,
the name or names of the Alabama licensed professional or
professionals through whom the foreign professional
corporation will render professional services in Alabama this
state.
(b) Financial information contained in the annual
report of a professional corporation, other than the amount of
stated capital of the corporation, shall not be open to public
inspection nor shall the licensing authority disclose any
facts or information obtained therefrom except insofar as its
official duty may require the same to be made public or in the
event the information is required for evidence in any criminal
proceedings or in any other action by the State of Alabama."
"§10A-4-5.05
(a) Each licensing authority of Alabama this state may
propound to any professional corporation, domestic or foreign,
organized to practice a profession within the jurisdiction of
the licensing authority, and to any officer or director
thereof, the interrogatories as may be reasonably necessary
and proper to enable the licensing authority to ascertain
whether the professional corporation has complied with all the
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whether the professional corporation has complied with all the
provisions of this chapter applicable to the professional
corporation. The interrogatories shall be answered within 30
days after the mailing thereof, or within the additional time
as shall be fixed by the licensing authority, and the answers
thereto shall be full and complete and shall be made in
writing and under oath. If the interrogatories be directed to
an individual they shall be answered by him or her, and if
directed to a professional corporation they shall be answered
by the president, vice president, secretary, or assistant
secretary thereof. The licensing authority shall certify to
the Attorney General, for such action as the Attorney General
may deem appropriate, all interrogatories and answers thereto
which disclosed a violation of any of the provisions of this
chapter.
(b) Interrogatories propounded by a licensing authority
and the answers thereto shall not be open to public inspection
nor shall the licensing authority disclose any facts or
information obtained therefrom except insofar as its official
duty may require the same to be made public or in the event
the interrogatories or the answers thereto are required for
evidence in any criminal proceedings or in any other action by
the State of Alabama this state."
"§10A-4-5.06
(a) Each officer and director of a professional
corporation, domestic or foreign, who signs any articles
certificate, statement, report, application, answer to an
interrogatory, or other document filed pursuant to this
article with the licensing authority having jurisdiction which
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article with the licensing authority having jurisdiction which
is known to the officer or director to be false in any
material respect, shall be deemed to be guilty of a Class C
misdemeanor.
(b) If any professional corporation, domestic or
foreign, or individual shall fail to answer interrogatories
directed to the professional corporation or to the individual
under Section 10A-4-5.05, the licensing authority which
propounded the interrogatories may seek an order from the a
circuit court compelling with competent jurisdiction to compel
an answer."
"§10A-4-5.08
(a) The provisions of this chapter shall apply to all
existing corporations organized under the statute formerly
codified as Article 11 of Chapter 4, Title 10 and repealed by
Acts 1983, No. 83-514, effective January 1, 1984; provided,
that any professional corporation, or nonprofit corporation,
in existence on December 31, 1983, in which duly licensed
medical and dental professionals are shareholders
stockholders, or in the case of a nonprofit professional
corporation, render medical and dental services, shall be
deemed to be in compliance with Sections 10A-4-2.01 and
10A-4-2.03, as amended, and other applicable provisions of
this chapter. The repeal of a prior act by this chapter shall
not impair, or otherwise affect, the organization or continued
existence of an existing domestic professional corporation nor
the right of any foreign professional corporation presently
qualified to render professional services in Alabama this
state to continue to do so without again qualifying to render
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state to continue to do so without again qualifying to render
professional services in Alabama this state.
(b) Any unincorporated professional association
organized under Section 10A-30-1.01 Article 1 of Chapter 30
may become subject to the provisions of this chapter by
amending its certificate of association as a certificate of
formation incorporation in compliance with this chapter, and
delivering its certificate of formation incorporation to the
Secretary of State for filing.
(c) Any domestic nonprofit corporation rendering
professional services may become subject to the provisions of
this chapter by amending its certificate of formation
incorporation in compliance with this chapter and delivering
the amendment to its certificate of formation incorporation to
the Secretary of State for filing.
(d) The provisions of this chapter shall not apply to
any unincorporated professional association now in existence
under Section 10A-30-1.01, or to any domestic nonprofit
corporation rendering professional services unless the
association or nonprofit corporation voluntarily becomes
subject to this chapter as herein provided, and nothing
contained in this chapter shall alter or affect any existing
or future right or privilege permitting or not prohibiting
performance of professional services through the use of any
other form of business organization."
"§10A-5A-1.08
(a) Except as otherwise provided in subsections (b) and
(c):
(1) the limited liability company agreement governs
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(1) the limited liability company agreement governs
relations among the members as members and between the members
and the limited liability company; and
(2) to the extent the limited liability company
agreement does not otherwise provide for a matter described in
subsection (a)(1), this chapter governs the matter.
(b)(1) To the extent that, at law or in equity, a
member or other person has duties, including fiduciary duties,
to the limited liability company, or to another member or to
another person that is a party to or is otherwise bound by a
limited liability company agreement, the member's or other
person's duties may be expanded or restricted or eliminated by
a written limited liability company agreement, but the implied
contractual covenant of good faith and fair dealing may not be
eliminated.
(2) A written limited liability company agreement may
provide for the limitation or elimination of any and all
liabilities for breach of contract and breach of duties,
including fiduciary duties, of a member or other person to a
limited liability company or to another member or to another
person that is a party to or is otherwise bound by a limited
liability company agreement, but a limited liability company
agreement may not limit or eliminate liability for any act or
omission that constitutes a bad faith violation of the implied
contractual covenant of good faith and fair dealing.
(3) A member or other person shall not be liable to a
limited liability company or to another member or to another
person that is a party to or is otherwise bound by a limited
liability company agreement for breach of fiduciary duty for
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liability company agreement for breach of fiduciary duty for
the member's or other person's good faith reliance on the
limited liability company agreement.
(4) A limited liability company agreement may provide
that any or all of the following :
(A) a member, dissociated member, or transferee who
fails to perform in accordance with, or to comply with the
terms and conditions of, the limited liability company
agreement shall be subject to specified penalties or specified
consequences; and
(B) at the time or upon the happening of events
specified in the limited liability company agreement, a
member, dissociated member, or transferee may be subject to
specified penalties or specified consequences .; and
(C) subject to Section 10A-5A-1.08(c), an act or
transaction under the limited liability company agreement by
the limited liability company, a member, dissociated member,
or transferee is void or voidable.
(5) A penalty or consequence that may be specified
under paragraph (4) of this subsection may include and take
the form of reducing or eliminating the defaulting member's or
transferee's proportionate interest in a limited liability
company, subordinating the member's or transferee's
transferable interest to that of non-defaulting members or
transferees, forcing a sale of that transferable interest,
forfeiting the defaulting member's or transferee's
transferable interest, the lending by other members or
transferees of the amount necessary to meet the defaulting
member's or transferee's commitment, a fixing of the value of
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member's or transferee's commitment, a fixing of the value of
the defaulting member's or transferee's transferable interest
by appraisal or by formula and redemption or sale of the
transferable interest at that value, or other penalty or
consequence.
(6) A written limited liability company agreement may
supersede, in whole or in part, the provisions of Division C
of Article 3 of Chapter 1.
(c) A limited liability company agreement may not:
(1) vary the nature of the limited liability company as
a separate legal entity under Section 10A-5A-1.04(a);
(2) vary the law applicable under Section 10A-5A-1.05;
(3) restrict the rights under this chapter of a person
other than a member, dissociated member, or transferee;
(4) vary the power of the court under Section
10A-5A-2.05;
(5) eliminate the implied contractual covenant of good
faith and fair dealing as provided under Section
10A-5A-1.08(b)(1);
(6) eliminate or limit the liability of a member or
other person for any act or omission that constitutes a bad
faith violation of the implied contractual covenant of good
faith and fair dealing as provided under Section
10A-5A-1.08(b)(2);
(7) waive the requirements of Section 10A-5A-4.04(c);
(8) vary the law applicable under Section
10A-5A-4.06(c);
(9) reduce the limitations period specified under
Section 10A-5A-4.06(d) for an action commenced under other
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Section 10A-5A-4.06(d) for an action commenced under other
applicable law;
(10) waive the prohibition on issuance of a certificate
of a transferable interest in bearer form under Section
10A-5A-5.02(c);
(11) vary the power of a court to decree dissolution in
the circumstances specified in Section 10A-5A-7.01(d) or in
Section 10A-5A-11.09(e);
(12) vary the requirement to wind up a limited
liability company's activities and affairs as specified in
Section 10A-5A-7.02(a);
(13) vary the provisions of Section 10A-5A-8.01;
(14) vary the right of a member under Section
10A-5A-10.09; or
(15) waive the requirements of Section
10A-5A-11.02(b).; or
(16) vary the provisions of Section 10A-5A-1.11(c),
(d), or (e)."
"§10A-5A-2.01
(a) In order to form a limited liability company, one
or more organizers must execute a certificate of formation and
deliver it for filing to the filing officer provided for in
subsection (e). Section 10A-1-3.05 shall not apply to this
chapter. Instead, the certificate of formation shall set
forth:
(1) the name of the limited liability company, which
must comply with Article 5 of Chapter 1;
(2) the street address in this state, including the
county, of the registered office required by Article 5 of
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county, of the registered office required by Article 5 of
Chapter 1;
(3) the name of the registered agent at the registered
office required by Article 5 of Chapter 1;
(4) a statement that there is at least one member of
the limited liability company;
(5) if applicable, a statement as provided in Section
10A-5A-11.02(b)(3); and
(6) any other matters the members determine to include
therein.
(b) A limited liability company is formed when its
certificate of formation becomes effective in accordance with
Article 4 of Chapter 1.
(c) The fact that a certificate of formation has been
filed and is effective in accordance with Article 4 of Chapter
1 is notice of the matters required to be included by
subsections (a)(1), (a)(2), (a)(3), and (a)(4) and if
applicable, (a)(5), but is not notice of any other fact.
(d) A limited liability company agreement shall be
entered into either before, after, or at the time of the
filing of the certificate of formation and, whether entered
into before, after, or at the time of the filing, may be made
effective as of the filing of the certificate of formation or
at any other time or date provided in the limited liability
company agreement.
(e) A certificate of formation shall be delivered for
filing to the Secretary of State."
"§10A-5A-2.02
Division B of Article 3 of Chapter 1 shall not apply to
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Division B of Article 3 of Chapter 1 shall not apply to
this chapter. Instead:
(a) A certificate of formation may be amended at any
time.
(b) A certificate of formation may be restated with or
without amendment at any time.
(c) To amend its certificate of formation, a limited
liability company must deliver a certificate of amendment for
filing to the Secretary of State which certificate of
amendment shall state:
(1) the name of the limited liability company;
(2) the unique identifying number or other designation
as assigned by the Secretary of State; and
(3) the changes the amendment makes to the certificate
of formation as most recently amended or restated.
(d) To restate its certificate of formation, a limited
liability company must deliver a restated certificate of
formation for filing to the Secretary of State. A restated
certificate of formation must:
(1) be designated as such in the heading;
(2) state the limited liability company's name;
(3) state the unique identifying number or other
designation as assigned by the Secretary of State; and
(4) set forth any amendment or change effected in
connection with the restatement of the certificate of
formation.
Any such restatement that effects an amendment shall be
subject to any other provision of this chapter, not
inconsistent with this section, which would apply if a
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inconsistent with this section, which would apply if a
separate certificate of amendment were filed to effect the
amendment or change.
(e) The original certificate of formation, as
theretofore amended, shall be superseded by the restated
certificate of formation and thenceforth, the restated
certificate of formation, including any further amendment or
changes made thereby, shall be the certificate of formation of
the limited liability company, but the original effective date
of formation shall remain unchanged.
(f) An amended or restated certificate of formation may
contain only provisions that would be permitted at the time of
the amendment if the amended or restated certificate of
formation were a newly filed original certificate of
formation.
(g) A restated certificate of formation may omit any
information that is not required to be in the certificate of
formation under this chapter, including the name and address
of the initial registered agent or registered office, if  a
statement of change is on file with the Secretary of State.
Any omission other than the initial registered agent, shall be
an amendment to the certificate of formation, which amendment
must be approved in accordance with the limited liability
company agreement, and if the limited liability company
agreement does not state the approval required for an
amendment of the certificate of formation, then the amendment
must be approved by all of the members. "
"§10A-5A-3.02
No person shall have the power to bind the limited
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No person shall have the power to bind the limited
liability company, or a series thereof, except:
(a) to the extent the person is authorized to act as
the agent of the limited liability company or a series thereof
under or pursuant to the limited liability company agreement;
(b) to the extent the person is authorized to act as
the agent of the limited liability company or a series thereof
pursuant to in accordance with Sections 10A-5A-4.07,
10A-5A-7.03, or 10A-5A-11.11; or
(c) to the extent provided by law other than this
chapter."
"§10A-5A-8.01
(a) A limited liability company shall have the power to
render professional services if it complies with the rules of
the licensing authority for such profession.
(b) Every individual who renders professional services
as a member or as an employee of a limited liability company
shall be liable for any negligent or wrongful act or omission
in which the individual personally participates to the same
extent the individual would be liable if the individual
rendered the services as a sole practitioner.
(c) Except as otherwise provided in subsection (b), the
personal liability of a member of any limited liability
company engaged in providing professional services shall be
governed by Section 10A-5A-3.01.
(d) The Except as otherwise provided in subsection (b),
the personal liability of a member, manager, or employee of a
foreign limited liability company engaged in providing
professional services shall be determined under the law of the
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professional services shall be determined under the law of the
jurisdiction in which the foreign limited liability company is
organized.
(e) Nothing in this article shall restrict or limit in
any manner the authority or duty of a licensing authority with
respect to individuals rendering a professional service within
the jurisdiction of the licensing authority. Nothing in this
article shall restrict or limit any law, rule, or regulation
pertaining to standards of professional conduct.
(f) Nothing in this article shall limit the authority
of a licensing authority to impose requirements in addition to
those stated in this chapter on any limited liability company
or foreign limited liability company rendering professional
services within the jurisdiction of the licensing authority.
(g) A member's transferrable interest in a limited
liability company organized to render professional services
may be voluntarily transferred only to a qualified person."
"§10A-8A-1.08
(a) Except as otherwise provided in subsections (b) and
(c):
(1) the partnership agreement governs relations among
the partners as partners and between the partners and the
partnership; and
(2) to the extent the partnership agreement does not
otherwise provide for a matter described in subsection (a)(1),
this chapter governs the matter.
(b)(1) To the extent that, at law or in equity, a
partner or other person has duties, including fiduciary
duties, to a partnership or to another partner or to another
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duties, to a partnership or to another partner or to another
person that is a party to or is otherwise bound by a
partnership agreement, the partner's or other person's duties
may be expanded or restricted or eliminated by provisions in a
written partnership agreement, but the implied contractual
covenant of good faith and fair dealing may not be eliminated.
(2) A written partnership agreement may provide for the
limitation or elimination of any and all liabilities for
breach of contract and breach of duties, including fiduciary
duties, of a partner or other person to a partnership or to
another partner or to another person that is a party to or is
otherwise bound by a partnership agreement, but a partnership
agreement may not limit or eliminate liability for any act or
omission that constitutes a bad faith violation of the implied
contractual covenant of good faith and fair dealing.
(3) A partner or other person shall not be liable to a
partnership or to another partner or to another person that is
a party to or is otherwise bound by a partnership agreement
for breach of fiduciary duty for the partner's or other
person's good faith reliance on the partnership agreement.
(4) A partnership agreement may provide that:
(A) a partner, dissociated partner, or transferee who
fails to perform in accordance with, or to comply with the
terms and conditions of, the partnership agreement shall be
subject to specified penalties or specified consequences; and
(B) at the time or upon the happening of events
specified in the partnership agreement, a partner , dissociated
partner, or transferee may be subject to specified penalties
or specified consequences .; and
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or specified consequences .; and
(C) subject to Section 10A-8A-1.08(c), an act or
transaction under the partnership agreement by the
partnership, a partner, a dissociated partner, or a transferee
is void or voidable.
(5) A penalty or consequence that may be specified
under paragraph (4) of this subsection may include and take
the form of reducing or eliminating the defaulting partner's
or transferee's proportionate transferable interest in a
partnership, subordinating the partner's or transferee's
transferable interest to that of non-defaulting partners or
transferees, forcing a sale of that transferable interest,
forfeiting the defaulting partner's or transferee's
transferable interest, the lending by other partners or
transferees of the amount necessary to meet the defaulting
partner's or transferee's commitment, a fixing of the value of
the defaulting partner's or transferee's transferable interest
by appraisal or by formula and redemption or sale of the
transferable interest at that value, or other penalty or
consequence.
(6) A written partnership agreement may supersede, in
whole or in part, the provisions of Division C and Division D
of Article 3 of Chapter 1.
(c) A partnership agreement may not:
(1) vary the nature of the partnership as a separate
legal entity under Section 10A-8A-1.04(a);
(2) vary a partnership's power under Section
10A-8A-1.05 to sue, be sued, and defend in its own name;
(3) vary the law applicable to a limited liability
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(3) vary the law applicable to a limited liability
partnership under Section 10A-8A-1.06;
(4) restrict rights under this chapter of a person
other than a partner, a dissociated partner, or a transferee;
(5) vary the requirements of Section 10A-8A-2.03;
(6) unreasonably restrict the right of access to books
and records under Section 10A-8A-4.10, but the partnership
agreement may impose reasonable restrictions on the
availability and use of information obtained under those
sections and may define appropriate remedies, including
liquidated damages, for a breach of any reasonable restriction
on use;
(7) eliminate the implied contractual covenant of good
faith and fair dealing as provided under Section
10A-8A-1.08(b)(1);
(8) eliminate or limit the liability of a partner or
other person for any act or omission that constitutes a bad
faith violation of the implied contractual covenant of good
faith and fair dealing as provided under Section
10A-8A-1.08(b)(2);
(9) waive the requirements of Section 10A-8A-4.04(e);
(10) reduce the limitations period specified under
Section 10A-8A-4.09(e) for an action commenced under other
applicable law;
(11) waive the prohibition on issuance of a certificate
of a transferable interest in bearer form under Section
10A-8A-5.02(c);
(12) vary the power of a person to dissociate as a
partner under Section 10A-8A-6.02(a) except that the
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partner under Section 10A-8A-6.02(a) except that the
partnership agreement may require that the notice under
Section 10A-8A-6.01(1) be in a writing or in a specific form
thereof;
(13) vary the right of a court to expel a partner in
the events specified in Section 10A-8A-6.01(5);
(14) vary the power of a court to decree dissolution in
the circumstances specified in Section 10A-8A-8.01(4) or (5);
(15) vary the requirement to wind up the partnership's
business or not for profit activity as specified in Section
10A-8A-8.01(4), (5), (6), or (7);
(16) vary the right of a partner to approve or consent
to the cancellation of a statement of limited liability
partnership as specified in Section 10A-8A-10.01(m); or
(17) vary the rights of a partner under Section
10A-8A-9.10.; or
(18) vary the provisions of Section 10A-8A-1.14(c),
(d), or (e)."
"§10A-8A-10.02
(a) A limited liability partnership shall have the
power to render professional services if it complies with the
rules of the licensing authority for such profession.
(b) Every individual who renders professional services
as a partner or as an employee of a limited liability
partnership shall be liable for any negligent or wrongful act
or omission in which the individual personally participates to
the same extent the individual would be liable if the
individual rendered the services as a sole practitioner.
(c) Except as otherwise provided in subsection (b), the
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(c) Except as otherwise provided in subsection (b), the
personal liability of a partner of any limited liability
partnership engaged in providing professional services shall
be governed by Section 10A-8A-3.06.
(d) The Except as otherwise provided in subsection (b),
the personal liability of a partner or employee of a foreign
limited liability partnership engaged in providing
professional services shall be determined under the law of the
jurisdiction which governs the foreign limited liability
partnership.
(e) Nothing in this article shall restrict or limit in
any manner the authority or duty of a licensing authority with
respect to individuals rendering a professional service within
the jurisdiction of the licensing authority. Nothing in this
article shall restrict or limit any law, rule, or regulation
pertaining to standards of professional conduct.
(f) Nothing in this article shall limit the authority
of a licensing authority to impose requirements in addition to
those stated in this chapter on any limited liability
partnership or foreign limited liability partnership rendering
professional services within the jurisdiction of the licensing
authority.
(g) A partner's transferable interest in a limited
liability partnership organized to render professional
services may be voluntarily transferred only to a qualified
person."
"§10A-9A-1.08
(a) Except as otherwise provided in subsections (b) and
(c):
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(c):
(1) the partnership agreement governs relations among
the partners as partners and between the partners and the
partnership; and
(2) to the extent the partnership agreement does not
otherwise provide for a matter described in subsection (a)(1),
this chapter governs the matter.
(b)(1) To the extent that, at law or in equity, a
partner or other person has duties, including fiduciary
duties, to a limited partnership or to another partner or to
another person that is a party to or is otherwise bound by a
partnership agreement, the partner's or other person's duties
may be expanded or restricted or eliminated by provisions in a
written partnership agreement, but the implied contractual
covenant of good faith and fair dealing may not be eliminated.
(2) A written partnership agreement may provide for the
limitation or elimination of any and all liabilities for
breach of contract and breach of duties, including fiduciary
duties, of a partner or other person to a limited partnership
or to another partner or to another person that is a party to
or is otherwise bound by a partnership agreement, but a
partnership agreement may not limit or eliminate liability for
any act or omission that constitutes a bad faith violation of
the implied contractual covenant of good faith and fair
dealing.
(3) A partner or other person shall not be liable to a
limited partnership or to another partner or to another person
that is a party to or is otherwise bound by a partnership
agreement for breach of fiduciary duty for the partner's or
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agreement for breach of fiduciary duty for the partner's or
other person's good faith reliance on the partnership
agreement.
(4) A partnership agreement may provide that any of the
following:
(A) a partner, dissociated partner, or transferee who
fails to perform in accordance with, or to comply with the
terms and conditions of, the partnership agreement shall be
subject to specified penalties or specified consequences; and
(B) at the time or upon the happening of events
specified in the partnership agreement, a partner , dissociated
partner, or transferee may be subject to specified penalties
or specified consequences .; and
(C) subject to Section 10A-9A-1.08(c), an act or
transaction under the partnership agreement by the
partnership, a partner, a dissociated partner, or a transferee
is void or voidable.
(5) A penalty or consequence that may be specified
under paragraph (4) of this subsection may include and take
the form of reducing or eliminating the defaulting partner's
or transferee's proportionate interest in a limited
partnership, subordinating the partner's or transferee's
transferable interest to that of non-defaulting partners or
transferees, forcing a sale of that transferable interest,
forfeiting the defaulting partner's or transferee's
transferable interest, the lending by other partners or
transferees of the amount necessary to meet the defaulting
partner's or transferee's commitment, a fixing of the value of
the defaulting partner's or transferee's transferable interest
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the defaulting partner's or transferee's transferable interest
by appraisal or by formula and redemption or sale of the
transferable interest at that value, or other penalty or
consequence.
(6) A written partnership agreement may supersede, in
whole or in part, the provisions of Division C and Division D
of Article 3 of Chapter 1.
(c) A partnership agreement may not:
(1) vary the nature of the limited partnership as a
separate legal entity under Section 10A-9A-1.04(a);
(2) vary a limited partnership's power under Section
10A-9A-1.05 to sue, be sued, and defend in its own name;
(3) vary the law applicable to a limited partnership
under Section 10A-9A-1.06;
(4) restrict rights under this chapter of a person
other than a partner, a dissociated partner, or a transferee;
(5) vary the requirements of Section 10A-9A-2.03;
(6) vary the information required under Section
10A-9A-1.11 or unreasonably restrict the right to information
under Sections 10A-9A-3.04 or 10A-9A-4.07, but the partnership
agreement may impose reasonable restrictions on the
availability and use of information obtained under those
sections and may define appropriate remedies, including
liquidated damages, for a breach of any reasonable restriction
on use;
(7) vary the power of the court under Section
10A-9A-2.04;
(8) eliminate the implied contractual covenant of good
faith and fair dealing as provided under Section
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faith and fair dealing as provided under Section
10A-9A-1.08(b)(1);
(9) eliminate or limit the liability of a partner or
other person for any act or omission that constitutes a bad
faith violation of the implied contractual covenant of good
faith and fair dealing as provided under Section
10A-9A-1.08(b)(2);
(10) waive the requirements of Section 10A-9A-5.02(e);
(11) reduce the limitations period specified under
Section 10A-9A-5.08(d) for an action commenced under other
applicable law;
(12) waive the prohibition on issuance of a certificate
of a transferable interest in bearer form under Section
10A-9A-7.02(c);
(13) vary the power of a person to dissociate as a
general partner under Section 10A-9A-6.04(a) except that the
partnership agreement may require that the notice under
Section 10A-9A-6.03(1) be in a writing or in a specific form
thereof;
(14) vary the power of a court to decree dissolution in
the circumstances specified in Section 10A-9A-8.01(f);
(15) vary the requirement to wind up the partnership's
activities and affairs as specified in Section 10A-9A-8.02; or
(16) vary the rights of a partner under Section
10A-9A-10.10.; or
(17) vary the provisions of Section 10A-9A-1.15(c),
(d), or (e)"
"§10A-9A-2.01
(a) In order to form a limited partnership, a person
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(a) In order to form a limited partnership, a person
must deliver a certificate of formation for filing to the
Secretary of State. Section 10A-1-3.05 shall not apply to this
chapter. Instead, the certificate of formation shall set
forth:
(1) the name of the limited partnership, which must
comply with Article 5 of Chapter 1;
(2) the street address in this state, including the
county, of the registered office required by Article 5 of
Chapter 1;
(3) the name of the registered agent at the registered
office as required by Article 5 of Chapter 1;
(4) the name and the street and mailing address of each
general partner;
(5) whether the limited partnership is a limited
liability limited partnership;
(6) any additional information required by Article 8 of
Chapter 1 or by Article 10 of this chapter; and
(7) any other matters the partners determine to include
therein which comply with Section 10A-9A-1.08.
(b) A limited partnership is formed when the
certificate of formation becomes effective in accordance with
Article 4 of Chapter 1.
(c) The fact that a certificate of formation has been
filed and is effective in accordance with Article 4 of Chapter
1 is notice of the matters required to be included by
subsections (a)(1), (a)(2), (a)(3), (a)(4), if applicable,
(a)(5), and (a)(6), but is not notice of any other fact.
(d) A partnership agreement shall be entered into
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(d) A partnership agreement shall be entered into
either before, after, or at the time of filing the certificate
of formation and, whether entered into before, after, or at
the time of filing, may be made effective as of the filing of
the certificate of formation or at any other time or date
provided in the partnership agreement."
"§10A-9A-2.02
Division B of Article 3 of Chapter 1 shall not apply to
this chapter. Instead:
(a) A certificate of formation may be amended at any
time.
(b) A certificate of formation may be restated with or
without amendment at any time.
(c) To amend its certificate of formation, a limited
partnership must deliver a certificate of amendment for filing
to the Secretary of State which certificate of amendment shall
state:
(1) the name of the limited partnership;
(2) the unique identifying number or other designation
as assigned by the Secretary of State; and
(3) the changes the amendment makes to the certificate
of formation as most recently amended or restated.
(d) Prior to a statement of dissolution being delivered
to the Secretary of State for filing, a limited partnership
shall promptly deliver a certificate of amendment for filing
with the Secretary of State to reflect:
(1) the admission of a new general partner; or
(2) the dissociation of a person as a general partner.
(e) Prior to a statement of dissolution being delivered
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(e) Prior to a statement of dissolution being delivered
to the Secretary of State for filing, if a general partner
knows that any information in a filed certificate of formation
was inaccurate when the certificate of formation was filed or
has become inaccurate due to changed circumstances and if such
the information is required to be set forth in a newly filed
certificate of formation under this chapter, the general
partner shall promptly:
(1) cause the certificate of formation to be amended;
or
(2) if appropriate, deliver for filing with the
Secretary of State a certificate of correction in accordance
with Chapter 1.
(f) A certificate of formation may be amended at any
time pursuant to this section for any other proper purpose as
determined by the limited partnership. A certificate of
formation may also be amended in a statement of merger
pursuant to Article 8 of Chapter 1 or Article 10 of this
chapter.
(g) In order to restate its certificate of formation, a
limited partnership must deliver a restated certificate of
formation for filing with the Secretary of State. A restated
certificate of formation must:
(1) be designated as such in the heading;
(2) state the name of the limited partnership;
(3) state the unique identifying number or other
designation as assigned by the Secretary of State;
(4) set forth any amendment or change effected in
connection with the restatement of the certificate of
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connection with the restatement of the certificate of
formation. Any such restatement that effects an amendment
shall be subject to any other provision of this chapter not
inconsistent with this section, which would apply if a
separate certificate of amendment were filed to effect the
amendment or change;
(5) set forth the text of the restated certificate of
formation; and
(6) state that the restated certificate of formation
consolidates all amendments into a single document.
(h) The original certificate of formation, as
theretofore amended, shall be superseded by the restated
certificate of formation and thenceforth, the restated
certificate of formation, including any further amendment or
changes made thereby, shall be the certificate of formation of
the limited partnership, but the original effective date of
formation shall remain unchanged.
(i) An amended or restated certificate of formation may
contain only the provisions that would be permitted at the
time of the amendment if the amended or restated certificate
of formation were a newly filed original certificate of
formation.
(j)(1) An amendment to a certificate of formation takes
effect when the filing of the certificate of amendment takes
effect as provided by Article 4 of Chapter 1.
(2) An amendment to a certificate of formation does not
affect:
(i) an existing cause of action in favor of or against
the limited partnership for which the certificate of amendment
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the limited partnership for which the certificate of amendment
is sought;
(ii) a pending suit to which the limited partnership is
a party; or
(iii) an existing right of a person other than an
existing partner.
(3) If the name of a limited partnership is changed by
amendment, an action brought by or against the limited
partnership in the former name of that limited partnership
does not abate because of the name change.
(k)(1) A restated certificate of formation takes effect
when the filing of the restated certificate of formation takes
effect as provided by Article 4 of Chapter 1.
(2) On the date and time the restated certificate of
formation takes effect, the original certificate of formation
and each prior amendment or restatement of the certificate of
formation is superseded and the restated certificate of
formation is the effective certificate of formation.
(3) Subsections (j)(2) and (3) (j)(3) apply to an
amendment effected by a restated certificate of formation.
(l) A restated certificate of formation may omit any
information that is not required to be in the certificate of
formation under this chapter, including the name and address
of the initial registered agent or registered office, if a
statement of change is on file with the Secretary of State.
Any omission other than the initial registered agent, shall be
an amendment to the certificate of formation, which amendment
must be approved in accordance with the partnership agreement,
and if the partnership agreement does not state the approval
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and if the partnership agreement does not state the approval
required for an amendment of the certificate of formation,
then the amendment must be approved by all of the partners.	"
Section 2. Sections 10A-5A-1.11, 10A-8A-1.14, and
10A-9A-1.15, are added to the Code of Alabama 1975 to read as
follows:
§10A-5A-1.11
(a) If a limited liability company agreement provides
that an act or transaction is void or voidable when taken,
then that act or transaction may be ratified or waived by: 
(1) the members or other persons entitled to ratify or
waive that act or transaction under the limited liability
company agreement;
(2) if the limited liability company agreement does not
specify the approval required for the ratification or waiver,
then those members or other persons entitled to approve the
amendment of the limited liability company agreement; or 
(3) if the limited liability company agreement does not
specify the approval required for the amendment of the limited
liability company agreement, then all of the members.
(b) If the void or voidable act or transaction was the
issuance or transfer of any transferable interest, then for
purposes of determining who may ratify or waive any act or
transaction, the transferable interest purportedly issued or
transferred shall be deemed not to have been issued or
transferred.
(c) Any act or transaction ratified, or with respect to
which the failure to comply with any requirements of the
limited liability company agreement is waived, pursuant to
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limited liability company agreement is waived, pursuant to
this section shall be deemed validly taken at the time of the
act or transaction.
(d) Upon application of the limited liability company,
any member, or any person claiming to be substantially and
adversely affected by a ratification or waiver pursuant to
this section, the designated court, and if none, the circuit
court for the county in which the limited liability company's
principal office is located in this state, and if none in this
state, in the circuit court for the county in which the
limited liability company's most recent registered office is
located, may hear and determine the validity and effectiveness
of the ratification of, or waiver with respect to, any void or
voidable act or transaction effectuated pursuant to this
section, and in any such application, the limited liability
company shall be named as a party and service of the
application upon the registered agent of the limited liability
company shall be deemed to be service upon the limited
liability company, and no other party need be joined in order
for the court to adjudicate the validity and effectiveness of
the ratification or waiver, and the court may make such order
respecting further or other notice of the application as the
court deems proper under the circumstances; provided, that
nothing herein limits or affects the right to serve process in
any other manner now or hereafter provided by law, and this
sentence is an extension of and not a limitation upon the
right otherwise existing of service of legal process upon
nonresidents.
(e) The provisions of this section shall not be
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(e) The provisions of this section shall not be
construed to limit the accomplishment of a ratification or
waiver of a void or voidable act or transaction by other means
permitted by law.
§10A-8A-1.14
(a) If a partnership agreement provides that an act or
transaction is void or voidable when taken, then that act or
transaction may be ratified or waived by:
(1) the partners or other persons entitled to ratify or
waive that act or transaction under the partnership agreement;
(2) if the partnership agreement does not specify the
approval required for the ratification or waiver, then those
partners or other persons entitled to approve the amendment of
the partnership agreement; or
(3) if the partnership agreement does not specify the
approval required for the amendment of the partnership
agreement, then all of the partners.
(b) If the void or voidable act or transaction was the
issuance or transfer of any transferable interest, then for
purposes of determining who may ratify or waive any act or
transaction, the transferable interest purportedly issued or
transferred shall be deemed not to have been issued or
transferred.
(c) Any act or transaction ratified, or with respect to
which the failure to comply with any requirements of the
partnership agreement is waived, pursuant to this section
shall be deemed validly taken at the time of the act or
transaction. 
(d) Upon application of the partnership, any partner,
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(d) Upon application of the partnership, any partner,
or any person claiming to be substantially and adversely
affected by a ratification or waiver pursuant to this section,
the designated court, and if none, the circuit court for the
county in which the partnership's principal office is located
in this state, and if none in this state, in the circuit court
for the county in which the partnership's most recent
registered office is located, may hear and determine the
validity and effectiveness of the ratification of, or waiver
with respect to, any void or voidable act or transaction
effectuated pursuant to this section, and in any such
application, the partnership shall be named as a party and
service of the application upon the registered agent of the
partnership shall be deemed to be service upon the
partnership, and no other party need be joined in order for
the court to adjudicate the validity and effectiveness of the
ratification or waiver, and the court may make such order
respecting further or other notice of the application as the
court deems proper under the circumstances; provided, that
nothing herein limits or affects the right to serve process in
any other manner now or hereafter provided by law, and this
sentence is an extension of and not a limitation upon the
right otherwise existing of service of legal process upon
nonresidents.
(e) The provisions of this section shall not be
construed to limit the accomplishment of a ratification or
waiver of a void or voidable act or transaction by other means
permitted by law.
§10A-9A-1.15
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§10A-9A-1.15
(a) If a partnership agreement provides that an act or
transaction is void or voidable when taken, then that act or
transaction may be ratified or waived by: 
(1) the partners or other persons entitled to ratify or
waive that act or transaction under the partnership agreement;
(2) if the partnership agreement does not specify the
approval required for the ratification or waiver, then those
partners or other persons entitled to approve the amendment of
the partnership agreement; or
(3) if the partnership agreement does not specify the
approval required for the amendment of the partnership
agreement, then all of the partners.
(b) If the void or voidable act or transaction was the
issuance or transfer of any transferable interest, then for
purposes of determining who may ratify or waive any act or
transaction, the transferable interest purportedly issued or
transferred shall be deemed not to have been issued or
transferred.
(c) Any act or transaction ratified, or with respect to
which the failure to comply with any requirements of the
partnership agreement is waived, pursuant to this section
shall be deemed validly taken at the time of the act or
transaction. 
(d) Upon application of the partnership, any partner,
or any person claiming to be substantially and adversely
affected by a ratification or waiver pursuant to this section,
the designated court, and if none, the circuit court for the
county in which the partnership's principal office is located
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county in which the partnership's principal office is located
in this state, and if none in this state, in the circuit court
for the county in which the partnership's most recent
registered office is located, may hear and determine the
validity and effectiveness of the ratification of, or waiver
with respect to, any void or voidable act or transaction
effectuated pursuant to this section, and in any such
application, the partnership shall be named as a party and
service of the application upon the registered agent of the
partnership shall be deemed to be service upon the
partnership, and no other party need be joined in order for
the court to adjudicate the validity and effectiveness of the
ratification or waiver, and the court may make such order
respecting further or other notice of the application as the
court deems proper under the circumstances; provided, that
nothing herein limits or affects the right to serve process in
any other manner now or hereafter provided by law, and this
sentence is an extension of and not a limitation upon the
right otherwise existing of service of legal process upon
nonresidents.
(e) The provisions of this section shall not be
construed to limit the accomplishment of a ratification or
waiver of a void or voidable act or transaction by other means
permitted by law.
Section 3. Chapter 18 is added to Title 10A of the Code
of Alabama 1975, to read as follows:
CHAPTER 18. Alabama Statewide Trade Associations.
§10A-18-1.01. Short title.
This chapter and the provisions of Chapter 1, to the
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This chapter and the provisions of Chapter 1, to the
extent applicable to Alabama statewide trade associations, may
be cited as the Alabama Statewide Trade Association Law.
§10A-18-1.02. Applicability of Alabama Nonprofit
Corporation Law.
The provisions of the Alabama Nonprofit Corporation Law
shall apply to Alabama statewide trade associations, except to
the extent they are inconsistent with the provisions of this
chapter.
§10A-18-1.03. Definitions.
As used in this chapter, unless the context otherwise
requires, the term:
(a) Alabama statewide trade association means a
domestic entity that is formed under or is governed by the
Alabama Nonprofit Corporation Law and that: 
(1) is a membership nonprofit corporation as defined in
the Alabama Nonprofit Corporation Law;
(2) was formed on or before January 1, 2024, and is in
existence as of January 1, 2024;
(3) has its principal office or other headquarters in
this state;
(4) represents or promotes the common business,
professional, or industry interests of its members on a
statewide basis; 
(5) has elected to be governed by this chapter on or
before December 31, 2024, by amending its certificate of
incorporation in accordance with Section 10A-18-1.09(a); and
(6) has not ceased to be governed by this chapter in
accordance with Section 10A-18-1.09(b) or Section
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accordance with Section 10A-18-1.09(b) or Section
10A-18-1.09(c).
(b) Policies and procedures means guidelines that
provide detailed instructions on how specific tasks,
activities, or situations should be handled within an Alabama
statewide trade association, including areas such as
membership application and renewal processes, event planning
and execution, code of conduct and ethics, financial
management and reporting, dispute resolution, communication
protocols, and operational aspects relevant to the Alabama
statewide trade association's functioning. 
§10A-18-1.04. Alabama statewide trade association
records.
(a) In lieu of any records required to be maintained by
a membership nonprofit corporation under the Alabama Nonprofit
Corporation Law, a statewide trade association must maintain
the following records:
(1) its certificate of incorporation as currently in
effect;
(2) its bylaws as currently in effect;
(3) its policies and procedures as currently in effect;
(4) minutes of all meetings of its board of directors
and its members;
(5) a list of the names and business addresses of its
current directors and officers;
(6) its annual financial statements, annual audits, and
annual federal and state income tax returns for its last three
fiscal years (or such shorter period of existence); and
(7) a list of its current members in alphabetical order
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(7) a list of its current members in alphabetical order
by class of membership showing the address for each member to
which notices and other communications from the Alabama
statewide trade association are to be sent.
(b) An Alabama statewide trade association shall
maintain its books and records for its last three fiscal years
(or such shorter period of existence) in a form that permits
preparation of the financial statements in accordance with
generally accepted accounting principles as applied to
nonprofit corporations. Financial statements shall mean
balance sheets, income statements, statements of activities,
notes to financial statements, statements of financial
position, and any investment summaries.
(c) An Alabama statewide trade association shall have
an annual audit of its financial statements. The audit shall
be conducted by an independent certified public accounting
firm that regularly audits nonprofit entities. The independent
certified public accounting firm shall be appointed annually
by the board of directors.
§10A-18-1.05. Inspection rights of members. 
In lieu of any inspection rights of the members of a
membership nonprofit corporation under the Alabama Nonprofit
Corporation Law:
(a) A member of an Alabama statewide trade association
is entitled to inspect the records required to be maintained
by the Alabama statewide trade association under Sections
10A-18-1.04(a)(1)through (6) during regular business hours at
the principal office of the Alabama statewide trade
association provided that the member gives the Alabama
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association provided that the member gives the Alabama
statewide trade association written notice of the member's
demand at least five business days before the date on which
the member wishes to inspect.
(b) A member may inspect the records Sections
10A-18-1.04(a)(1) through (6) only if:
(1) the member's request is made in good faith and for
a proper purpose;
(2) the member's request describes with reasonable
particularity the member's purpose and the records the member
desires to inspect; and
(3) the records are directly connected with the
member's purpose.
(c) An Alabama statewide trade association may impose
reasonable restrictions and conditions on access to and use of
the records to be inspected under subsection (a), including
designating information confidential and imposing
nondisclosure and safeguarding, and may further keep
confidential from its members and other persons, for a period
of time as the Alabama statewide trade association deems
reasonable, any information that the Alabama statewide trade
association reasonably believes to be in the nature of a trade
secret or other information the disclosure of which the
Alabama statewide trade association in good faith believes is
not in the best interest of the Alabama statewide trade
association or could damage the Alabama statewide trade
association or its activities or affairs or that the Alabama
statewide trade association is required by law or by agreement
with a third party to keep confidential. In any dispute
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with a third party to keep confidential. In any dispute
concerning the reasonableness of a restriction under this
subsection, the Alabama statewide trade association has the
burden of proving reasonableness.
(d) This section does not limit the power of a court,
upon showing of good cause, to compel the production of the
books and records of an Alabama statewide trade association,
including records not set forth in Section 10A-18-1.04, to the
court for examination by a court appointed professional and to
impose reasonable restrictions on the use of those books and
records by that court appointed professional.
§10A-18-1.06. Court ordered action.
(a) If an Alabama statewide trade association does not,
within the time period set forth in Section 10A-18-1.05, allow
a member who complies with Section 10A-18-1.05 to inspect the
records required to be maintained by Sections
10A-18-1.04(a)(1) through (6), a member may petition the
Montgomery County Circuit Court, and the court may summarily
order inspection of the records demanded at the Alabama
statewide trade association's expense upon application of the
member.
(b) If the court orders inspection of the records
demanded under Section 10A-18-1.05, it shall impose reasonable
restrictions on the confidentiality, use, or distribution of
the records by the demanding member and the court shall also
order the Alabama statewide trade association to pay the
member's expenses incurred to obtain the order, unless the
Alabama statewide trade association establishes that it
refused inspection in good faith because the Alabama statewide
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refused inspection in good faith because the Alabama statewide
trade association had:
(1) a reasonable basis for doubt about the right of the
member to inspect the records demanded; or
(2) required reasonable restrictions on the
confidentiality, use, or distribution of the records demanded
to which the demanding member had been unwilling to agree.
§10A-18-1.07. Financial review.
(a) If a member of an Alabama statewide trade
association has a reasonable belief that financial fraud or
malfeasance has occurred or is occurring at the Alabama
statewide trade association, that member may petition the
Montgomery County Circuit Court for an independent audit of
the financial statements of the Alabama statewide trade
association. For good cause shown, the court may order an
independent audit of the financial statements of the Alabama
statewide trade association with that independent audit report
to be made to the court. If the court does not find good
cause, the court costs shall be assessed to the petitioning
member. If the court does find good cause, the court costs and
the cost of the audit shall be assessed to the Alabama
statewide trade association.
(b) In making its determination, the court may review
among other matters, whether the Alabama statewide trade
association (i) prepared its annual financial statements for
its last three fiscal years (or such shorter period of
existence), (ii) had an independent audit of its financial
statements for its last three fiscal years (or such shorter
period of existence), (iii) timely filed its federal or state
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period of existence), (iii) timely filed its federal or state
income tax returns for its last three fiscal years (or such
shorter period of existence), or (iv) incurred negative
financial performance without a reasonable basis and/or board
approval.
§10A-18-1.08. Limitations on use of membership list.
In addition to the restrictions on the use of
membership lists under the Alabama Nonprofit Corporation Law:
(a) In an effort to prevent cybercrime, identity fraud,
and financial crimes, an Alabama statewide trade association
shall take reasonable precautions to safeguard member data,
information, and contact information, including membership
lists.
(b) An Alabama statewide trade association's
certificate of incorporation may provide that the Alabama
statewide trade association may not disclose member lists and
member data.
(c) The membership list of an Alabama statewide trade
association is the property of the Alabama statewide trade
association and shall be used solely for official use of the
Alabama statewide trade association. The Alabama statewide
trade association may provide member mailing lists for
official business purposes consistent with its purpose and its
certificate of incorporation.
(d) Electronic mail addresses and other electronic
transmission information for members may be used in the
historical and routine business of an Alabama statewide trade
association and shall not be rented, sold, or otherwise
provided to any other individual or organization for any other
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provided to any other individual or organization for any other
purpose unless authorized by the board of directors.
(e) Unless otherwise permitted by the certificate of
incorporation or bylaws of an Alabama statewide trade
association, a membership list or any part thereof may not be
obtained or used by a member or members of the Alabama
statewide trade association for any purpose unrelated to the
interest of that member or members with respect to the
member's capacity as a member of the Alabama statewide trade
association without the consent of the board of directors,
including without limitation:
(1) to solicit money or property unless the money or
property will be used solely to solicit the votes of the
members in an election to be held by the Alabama statewide
trade association;
(2) for any commercial purpose; or
(3) to be sold to, or purchased by, any person.
§10A-18-1.09. Required statement in certificate of formation.
(a) A membership nonprofit corporation formed under or
governed by the Alabama Nonprofit Corporation Law that elects
to be governed by this chapter shall amend its certificate of
incorporation by setting forth in its certificate of
incorporation a statement that it is an Alabama statewide
trade association as defined in Sections 10A-18-1.03(a)(1)
through (6) and that it elects to be governed by this chapter.
(b) An Alabama statewide trade association shall cease
to be governed by this chapter if it amends its certificate of
incorporation by removing the statement required in Section
10A-18-1.09(a) and shall thereafter be governed solely by the
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10A-18-1.09(a) and shall thereafter be governed solely by the
Alabama Nonprofit Corporation Law, with no right to elect to
be governed by this chapter thereafter.
(c) An Alabama statewide trade association shall cease
to be governed by this chapter if it no longer meets the
definition of an Alabama statewide trade association as set
forth in Section 10A-18-1.03. If an Alabama statewide trade
association ceases to be governed by this chapter in
accordance with this section, then that Alabama statewide
trade association shall thereafter be governed solely by the
Alabama Nonprofit Corporation Law, with no right to elect to
be governed by this chapter thereafter.
Section 4. Although this bill would have as its purpose
or effect the requirement of a new or increased expenditure of
local funds, the bill is excluded from further requirements
and application under Section 111.05 of the Constitution of
Alabama of 2022, because the bill defines a new crime or
amends the definition of an existing crime.
Section 5.Section 3 and Section 4 shall become
effective on June 1, 2024; Section 1 and Section 2, with the
exception of Sections 10A-1-1.03, 10A-1-1.08, and 10A-1-3.32,
Code of Alabama 1975, as amended by Section 1 of this act,
shall become effective on August 1, 2024; and Sections
10A-1-1.03, 10A-1-1.08, and 10A-1-3.32, Code of Alabama 1975,
as amended by Section 1 of this act, shall become effective
January 1, 2025.
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January 1, 2025.
________________________________________________
President and Presiding Officer of the Senate
________________________________________________
Speaker of the House of Representatives
SB112
Senate 04-Apr-24
I hereby certify that the within Act originated in and passed
the Senate, as amended.
Patrick Harris,
Secretary.
House of Representatives
Amended and passed: 02-May-24
Senate concurred in House amendment 07-May-24
By: Senator Givhan
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