Usa Alabama

USA Statutes : alabama
Title : Title 10 CORPORATIONS, PARTNERSHIPS AND ASSOCIATIONS.
Chapter : Chapter 12 LIMITED LIABILITY COMPANY ACT.
Section 10-12-1

Section 10-12-1
Short title.

This chapter shall be known and may be cited as the "Alabama Limited Liability Company Act."



(Acts 1993, No. 93-724, p. 1425, §1.)Section 10-12-10

Section 10-12-10
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Articles of organization.

(a) The articles of organization shall set forth:

(1) The name of the limited liability company.

(2) The period of its duration, if not perpetual.

(3) The purpose or purposes for which the limited liability company is organized.

(4) The location and mailing address of its initial registered office, and the name of its initial registered agent at that address.

(5) The names and mailing addresses of the initial member or members, and, if any, organizer of the limited liability company.

(6) The right, if given, of the member or members to admit additional members, and the terms and conditions of the admission.

(7) The circumstances, if any, under which the cessation of membership of one or more members will result in dissolution of the limited liability company.

(8) If the limited liability company is to be managed by one or more managers, the articles of organization shall so state and shall set out the names and the mailing addresses of the manager or managers who are to serve as managers until their successors are elected and begin serving.

(9) Any other provision, not inconsistent with law, for the regulation of the internal affairs of the limited liability company, including any provisions which under this chapter are required or permitted to be set out in the operating agreement of the limited liability company.

(b) It is not necessary to set out in the articles of organization any of the powers enumerated in this chapter.



(Acts 1993, No. 93-724, p. 1425, §10; Act 97-920, 1st Ex. Sess., p. 312, § 1.)Section 10-12-11

Section 10-12-11
Amendment of articles of organization.

(a) The articles of organization may be amended by delivering the amendment to the probate judge in whose office the articles of organization are filed. The amendment shall set forth:

(1) The name of the limited liability company.

(2) The date of filing of the articles of organization.

(3) The amendment(s).

(b) Within 30 days after the happening of any of the following events, an amendment to the articles of organization shall be filed to reflect the occurrence of such event or events:

(1) There is a change in the name of the limited liability company.

(2) There is a false or erroneous statement in the articles of organization.

(3) There is a change in the period of duration of the limited liability company stated in the articles of organization.

(4) The members desire to make a change in any other statement in the articles of organization to accurately represent the agreement between them.

(c) The form for evidencing an amendment to the articles of organization of a limited liability company shall contain terms and provisions consistent with this chapter. The amendment shall be approved, unless the articles of organization require a greater vote, by a majority vote of the members entitled to vote.



(Acts 1993, No. 93-724, p. 1425, §11.)Section 10-12-12

Section 10-12-12
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Filing.

(a) The articles of organization and two copies shall be delivered to the probate judge. If the probate judge finds that the articles of organization conform to law, the probate judge shall, upon receipt of all fees required by this chapter:

(1) Endorse on the articles of organization and on each of the copies the word "Filed," and the hour, day, month, and year of the filing.

(2) File the articles of organization in the office of the probate judge and certify the two copies.

(3) Issue one certified copy of the articles of organization, and return the certified copy to the organizer or members.

(4) Within 10 days after the issuance of the certified copy of the articles of organization, transmit to the Secretary of State a certified copy of the articles of organization, indicating thereon the place, date, and time of filing of the articles of organization.

(b) For failure of the probate judge to comply with the requirement in subdivision (4) of subsection (a) of this section, the probate judge shall forfeit $50 to the state, to be recovered in an action by the state.

(c) An amendment and two copies shall be delivered to the office of the probate judge in which the articles of organization are filed. A person who executes an amendment as an agent or fiduciary need not exhibit evidence of authority as a prerequisite to filing. If the probate judge finds that the amendment substantially conforms to law, the probate judge shall, upon receipt of all filing fees required by this chapter:

(1) Endorse on the amendment the word "Filed" and the day, month, and year of the filing thereof.

(2) File the endorsed amendment in the office of the probate judge.

(d) Upon the filing of the amendment in the office of the probate judge, the articles of organization shall be amended as set forth therein.



(Acts 1993, No. 93-724, p. 1425, §12; Act 97-920, 1st Ex. Sess., p. 312, §1.)Section 10-12-13

Section 10-12-13
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Execution.

(a) Unless otherwise specified in this chapter, each document required by this chapter to be filed in the office of the probate judge shall be executed in the following manner:

(1) The articles of organization shall be signed by one or more members named therein or an organizer.

(2) An amendment shall be signed by at least one member.

(3) If an amendment requires the adding of a new member, the amendment shall be signed by a person who was a member before the amendment was filed and by the new member.

(4) Articles of dissolution shall be signed by at least one member, as authorized pursuant to the operating agreement.

(b) Any person may sign a document required by this chapter by an attorney-in-fact, but a power of attorney relating to the admission of a member shall specify that admission of a new member is an authorized act of the attorney-in-fact.

(c) The execution of articles of organization by a member or an organizer, or the execution of articles, of dissolution, or of an amendment by a member constitutes an affirmation that the facts therein are true under penalties for perjury prescribed by Section 13A-10-103 or its successor.



(Acts 1993, No. 93-724, p. 1425, §13; Act 97-920, 1st Ex. Sess., p. 312, § 1.)Section 10-12-14

Section 10-12-14
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Existence of limited liability company.

(a) Upon the filing of the articles of organization with the probate judge, the limited liability company's existence shall begin. A copy of the articles of organization that is stamped "filed" and marked with the filing date and issued by the probate judge shall be conclusive evidence that all conditions precedent required to be performed by the members have been complied with and that the limited liability company has been legally organized under this chapter, except in a proceeding brought by the State of Alabama either to cancel or revoke the articles of organization or to involuntarily dissolve the limited liability company.

(b) A limited liability company may not transact business or incur indebtedness, except that which is incidental to its organization or to obtaining subscriptions for or payment of contributions, until the articles of organization have been filed as described in subsection (a) above. Persons engaged in prefiling activities other than those authorized by this subsection shall be jointly and severally liable for any debts or liabilities incurred in the course of those activities as provided in Section 10-12-7. In no event shall the activities of an organizer authorized under this chapter result in liability for such person under this section. This section shall not be interpreted to invalidate any debts, contracts, or liabilities of the limited liability company incurred on behalf of the limited liability company prior to the filing of its articles of organization.



(Acts 1993, No. 93-724, p. 1425, §14; Act 97-920, 1st Ex. Sess., p. 312, § 1.)Section 10-12-15

Section 10-12-15
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Registered office and registered agent to be maintained.

(a) Each limited liability company shall have and continuously maintain in this state:

(1) An office, which may be a place of its business in this state.

(2) An agent for service of process on the limited liability company. The agent shall be an individual resident of this state, a domestic business entity, or a foreign business entity with an office in this state.

(3) No change in the designation of the agent for service of process required to be maintained under subdivision (2) shall be deemed effective until a statement of that change has been filed with the office of the Secretary of State, designating a new agent for service of process together with the new agent's street address. Until the statement of change is filed, service of process upon the previously designated agent for service of process shall continue to be effective.

(4) No change in the address of the agent for service of process required to be maintained under subdivision (2) shall be deemed effective until a statement of that change has been filed with the office of the Secretary of State, designating a new address for service of process. Until the statement of change of address is filed, service of process at the previously designated address of the agent for service of process shall continue to be effective.

(b) The sole duty of the registered agent is to forward to the foreign or domestic limited liability company at its last known address any process or notice that is served on the registered agent.



(Acts 1993, No. 93-724, p. 1425, §15; Act 97-920, 1st Ex. Sess., p. 312, §1.)Section 10-12-16

Section 10-12-16
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Records to be kept; right of inspection.

(a) Each limited liability company shall keep at the office referred to in subdivision (1) of subsection (a) of Section 10-12-15 the following records:

(1) A current list of the full name and last known business or residence street address of each member, and each manager, if any.

(2) A copy of the filed articles of organization and all amendments thereto, together with executed copies of any powers of attorney pursuant to which any documents have been executed.

(3) Copies of the limited liability company's federal, state, and local income tax returns and reports, if any, for the three most recent years.

(4) Copies of any then effective operating agreements including any amendments thereto.

(5) Copies of any financial statements of the limited liability company for the three most recent years.

(b) Those records, and any other books and records of the limited liability company, wherever situated, are subject to inspection and copying for any proper purpose at the reasonable request, and at the expense of, any member or the member's agent or attorney during regular business hours. Any agent, member, or manager of a limited liability company who, without reasonable cause, refuses to allow any member or the member's agent or attorney to inspect or copy any books or records of the limited liability company for any proper purpose shall be personally liable to the member for a penalty in an amount not to exceed 10 percent of the fair market value of the membership interest of the member, in addition to any other damages or remedy.



(Acts 1993, No. 93-724, p. 1425, §16; Act 97-920, 1st Ex. Sess., p. 312, §1.)Section 10-12-17

Section 10-12-17
Service of process.

(a) The registered agent appointed by a limited liability company shall be an agent of the limited liability company upon whom any process, notice, or demand required or permitted by law to be served upon the limited liability company may be served.

(b) Whenever a limited liability company fails to appoint or maintain a registered agent in this state, or whenever its registered agent cannot with reasonable diligence be found at the registered office, then process, notice, or demand may be served as provided by the Alabama Rules of Civil Procedure, as amended from time to time.

(c) Nothing contained in this section shall limit or affect the right to serve any process, notice, or demand required or permitted by law to be served upon a limited liability company in any other manner now or hereafter permitted by law.



(Acts 1993, No. 93-724, p. 1425, §17.)Section 10-12-18

Section 10-12-18
Parties to actions.

Neither a member nor a manager of a limited liability company is a proper party to proceedings by or against a limited liability company, except where the object is to enforce a member's or manager's rights against or liability to the limited liability company.



(Acts 1993, No. 93-724, p. 1425, §18.)Section 10-12-19

Section 10-12-19
Business transactions of a member with the limited liability company.

Except as otherwise provided in the operating agreement, a member may lend money to and transact any lawful business with the limited liability company and, subject to other applicable law, have the same rights and obligations with respect thereto as a person who is not a member.



(Acts 1993, No. 93-724, p. 1425, §19.)Section 10-12-2

Section 10-12-2
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Definitions.

As used in this chapter, unless the context otherwise requires, the following terms mean:

(a) ARTICLES OF ORGANIZATION. The articles provided for by Section 10-12-10, or, if they have been amended or restated, the articles as most recently amended or restated. In the case of a foreign limited liability company, the term includes all documents serving a similar function that are required to be filed to form the limited liability company in the state or other jurisdiction where it is organized.

(b) BANKRUPT. A bankrupt or a debtor under the federal bankruptcy law, as amended from time to time, or an insolvent under any state insolvency act.

(c) BUSINESS ENTITY. A corporation, limited liability company, partnership, limited partnership, registered limited liability partnership, or other entity organized to engage in business, whether for profit or not, created under the laws of the State of Alabama, predecessor law, or law of another jurisdiction.

(d) COURT. Every court and judge having jurisdiction in a case.

(e) FINANCIAL RIGHTS. Rights to (1) share in profits and losses as provided in Section 10-12-28, (2) receive interim distributions as provided in Section 10-12-29, and (3) receive termination distributions as provided in Section 10-12-41.

(f) FOREIGN LIMITED LIABILITY COMPANY. An organization formed under the laws of any jurisdiction other than Alabama that is substantially similar to a limited liability company.

(g) GOVERNANCE RIGHTS. All a member's rights as a member of a limited liability company except financial rights, including without limitation, the rights to participate in the management of the limited liability company and to bind the limited liability company as provided in Section 10-12-21.

(h) LIMITED LIABILITY COMPANY or DOMESTIC LIMITED LIABILITY COMPANY. An organization that is formed and existing under this chapter.

(i) MANAGER or MANAGERS. A person or persons designated by the members of a limited liability company to manage the limited liability company as provided in the articles of organization.

(j) MEMBER. A person reflected in the required records of a limited liability company as the owner of some governance rights of a membership interest in the limited liability company.

(k) OPERATING AGREEMENT. A written agreement of the member or members governing the affairs of a limited liability company and the conduct of its business.

(l) ORGANIZER. A person, who need not be a member of the limited liability company, who is authorized to execute documents in connection with the formation of a limited liability company.

(m) PERSON. Natural persons and organizations (whether created by the laws of Alabama or another state or foreign country), including, without limitation, general partnerships, registered limited liability partnerships, limited partnerships, limited liability companies, corporations, professional corporations, professional associations, trustees, personal representatives, fiduciaries (as defined in Section 19-3-150) or persons performing in any similar capacity, trusts, business trusts, estates, custodianships, and other associations.



(Acts 1993, No. 93-724, p. 1425, §2; Act 97-920, 1st Ex. Sess., p. 312, § 1.)Section 10-12-20

Section 10-12-20
Liability of members to third parties.

(a) Except as otherwise provided in this chapter, a member of a limited liability company is not liable under a judgment, decree, or order of a court, or in any other manner, for a debt, obligation, or liability of the limited liability company, whether arising in contract, tort, or otherwise, or for the acts or omissions of any other member, manager, agent, or employee of the limited liability company.

(b) A member may be liable to creditors of the limited liability company for a written agreement to make a contribution to the limited liability company.

(c) A member of a limited liability company may become liable by reason of the member's own acts or conduct.



(Acts 1993, No. 93-724, p. 1425, §20.)Section 10-12-21

Section 10-12-21
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Agency power of members and managers; duties.

(a) Except as provided in subsection (b), every member is an agent of the limited liability company for the purpose of its business or affairs, and the act of any member, including, but not limited to, the execution in the name of the limited liability company of any instrument, for apparently carrying on in the usual way the business or affairs of the limited liability company binds the limited liability company, unless the member so acting has, in fact, no authority to act for the limited liability company in the particular matter and the person with whom the member is dealing has knowledge of the fact that the member has no such authority.

(b) If the articles of organization provide that management of the limited liability company is vested in a manager or managers, both of the following conditions apply:

(1) No member, acting solely in the capacity as member, is an agent for the limited liability company.

(2) Every manager is an agent of the limited liability company for the purpose of its business or affairs, and the act of any manager, including, but not limited to, the execution in the name of the limited liability company of any instrument, for apparently carrying on in the usual way the business or affairs of the limited liability company binds the limited liability company, unless the manager so acting has, in fact, no authority to act for the limited liability company in the particular matter and the person with whom the manager is dealing has knowledge of the fact that the manager has no such authority.

(c) An act of a manager or a member which is not apparently for the carrying on in the usual way the business of the limited liability company does not bind the limited liability company unless authorized in accordance with the operating agreement at the time of the transaction or at any other time.

(d) No act of a manager or member in contravention of a restriction on authority shall bind the limited liability company to persons having knowledge of the restriction.

(e) In a limited liability company managed by its members under subsection (a) of Section 10-12-22, the only fiduciary duties a member owes to the company or to its other members are the duty of loyalty and the duty of care imposed by subsections (f) through (g).

(f) A member's duty of loyalty to a member-managed limited liability company and its members is limited to each of the following:

(1) To account to the limited liability company and to hold as trustee for it any property, profit, or benefit derived by the member in the conduct or winding up of the limited liability company's business or derived from a use by the member of the limited liability company's property, including the appropriation of the limited liability company's opportunity.

(2) To refrain from dealing with the limited liability company in the conduct or winding up of the limited liability company's business as or on behalf of a party having an interest adverse to the limited liability company.

(3) To refrain from competing with the limited liability company in the conduct of the limited liability company's business before the dissolution of the limited liability company.

(g) A member's duty of care to a member-managed limited liability company and its other members in the conduct or winding up of the limited liability company's business is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.

(h) A member shall discharge the duties to a member-managed company and its other members under this chapter or under the operating agreement and exercise any rights consistently with the obligation of good faith and fair dealing.

(i) A member of a member-managed company does not violate a duty or obligation under this chapter or under the operating agreement merely because the member's conduct furthers the member's own interest.

(j) This section applies to a person winding up the limited liability company's business as the personal or legal representative of the last surviving member as if the person were a member.

(k) If the management of a limited liability company is vested in a manager or managers pursuant to subsection (b) of Section 10-12-22, each of the following applies:

(1) The only duty a member who is not also a manager owes to the company or to the other members solely by reason of being a member is to not disclose or otherwise use information described in subsection (b) of Section 10-12-16, whether or not obtained under the authority of subsection (b) of Section 10-12-16, to the detriment of the company or the other members.

(2) A manager is held to the same standards of conduct prescribed for members in subsections (f) through (i).

(3) A member who pursuant to the operating agreement exercises some or all of the rights of a manager in the management and conduct of the company's business is held to the standards of conduct in subsections (f) through (i) to the extent that the member exercises the managerial authority vested in a manager by this chapter.

(4) A manager is relieved of liability imposed by law for violation of the standards prescribed by subsections (f) through (i) to the extent of the managerial authority delegated to the members by the operating agreement.

(l) The articles of organization or operating agreement may modify the duties contained in subsections (e) through (k), but may not provide for any of the following:

(1) Unreasonably restrict a right to information or access to records under Section 10-12-16.

(2) Eliminate the duty of loyalty under subsection (f) or subsection (e) of Section 10-12-36, but the articles of organization or operating agreement may provide for any of the following:

a. Identify types or categories of activities that do not violate the duty of loyalty.

b. Specify the number or percentage of members or percentage of membership interests or number or percentage of disinterested managers that may authorize or ratify, after full disclosure of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty.

(3) Unreasonably reduce the duty of care under subsection (g) or subsection (e) of Section 10-12-36.

(4) Eliminate the obligation of good faith and fair dealing under subsection (h), but the operating agreement may determine the standards by which the performance of the obligation is to be measured, if the standards are not manifestly unreasonable.



(Acts 1993, No. 93-724, p. 1425, §21; Act 97-920, 1st Ex. Sess., p. 312, §1.)Section 10-12-22

Section 10-12-22
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Management of the limited liability company; creation of classes; voting; rights; meetings.

(a) Unless otherwise stated in the articles of organization, the management of the limited liability company is vested in its members. Subject to any provisions in the operating agreement or this chapter restricting or enlarging the management rights and duties of any person or group or class of persons, the members shall have the right and authority to manage the business or affairs of the limited liability company and to make all decisions with respect thereto.

(b) If the articles of organization vests management of the limited liability company in one or more managers, then the managers shall have the power to manage the business or affairs of the limited liability company as provided in the operating agreement. Except as otherwise provided in the operating agreement, the managers:

(1) Shall be designated, appointed, elected, removed, or replaced by a vote, approval, or consent of more than one-half the number of members.

(2) Need not be members of the limited liability company or natural persons.

(3) Unless they have been earlier removed or have earlier resigned, shall hold office until their successors have been elected and qualified.

(c) The articles of organization of a limited liability company may provide for classes or groups of members or managers having such relative rights, powers, and duties as so provided, and may make provision for the future creation of additional classes or groups of members or managers having such relative rights, powers, and duties as may be created in the manner provided in the articles of organization, including rights, duties, and powers senior to existing classes and groups of members or managers. The articles of organization may provide for taking action, including the amendment of the articles of organization or operating agreement, without the vote or approval of one or more members or classes or groups of members or managers, including an action to create one or more classes of interests in the company that were not previously outstanding, but are authorized under the articles of organization.

(d) The articles of organization may grant to all or certain identified members or managers or a specified class or group of members or managers the right to vote separately or with all or any class or group of members or managers on any matter. Voting by members or managers may be on a per capita, number, financial interest, class, group, or any other basis.

(e) The articles of organization or operating agreement may, with respect to any rights to vote, set forth provisions relating to notice of the time, place, or purpose of any meeting at which any matter is to be voted on by any members or managers or class or group of members or managers, waiver of such notice, action by consent without a meeting, establishment of a record date, quorum requirements, voting in person or by proxy, or any other matter with respect to the exercise of any such right to vote.



(Acts 1993, No. 93-724, p. 1425, §22; Act 97-920, 1st Ex. Sess., p. 312, §1.)Section 10-12-23

Section 10-12-23
Limited liability company property.

(a) Property may be acquired, held, and conveyed in the name of the limited liability company. Any estate in real property may be acquired in the name of the limited liability company and title to any estate so acquired shall vest in the limited liability company itself rather than in the members individually.

(b) All property originally contributed to the limited liability company or subsequently acquired by a limited liability company by purchase or otherwise is limited liability company property. A member has no interest in specific limited liability company property.

(c) Except as provided in subsection (d), title to property of the limited liability company that is held in the name of the limited liability company may be transferred by an instrument of transfer executed by any member in the name of the limited liability company.

(d) If the articles of organization provide that management of the limited liability company is vested in a manager or managers, title to property of the limited liability company that is held in the name of the limited liability company may be transferred by an instrument of transfer executed by any manager in the name of the limited liability company; but a member, acting solely as a member, shall not have that authority.

(e) Title to property of the limited liability company that is held in the name of one or more members or managers with an indication in the instrument transferring title to the property to them of their capacity as members or managers of a limited liability company or of the existence of a limited liability company, even if the name of the limited liability company is not indicated, may be transferred by an instrument of transfer executed by the persons in whose name title is held.

(f) Property transferred under subsections (c), (d), and (e) may be recovered by the limited liability company if it proves that the act of the person executing the instrument of transfer did not bind the limited liability company under Section 10-12-21, unless the property has been transferred by the initial transferee or a person claiming through the initial transferee to a subsequent transferee who gives value without having notice that the person who executed the instrument of initial transfer lacked authority to bind the limited liability company.

(g) Title to property of the limited liability company that is held in the name of one or more persons other than the limited liability company, without an indication in the instrument transferring title to the property to them of their capacity as members or managers of a limited liability company or of the existence of a limited liability company, may be transferred free of any claims of the limited liability company or the members by the persons in whose name title is held to a transferee who gives value without having notice that it is property of a limited liability company.



(Acts 1993, No. 93-724, p. 1425, §23.)Section 10-12-24

Section 10-12-24
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Operating agreements.

(a) The member or members of a limited liability company may enter into an operating agreement to regulate or establish the affairs of the limited liability company, the conduct of its business, and the relations of its members. An operating agreement may contain any provisions regarding the affairs of a limited liability company and the conduct of its business that are not inconsistent with the laws of this state or the articles of organization.

(b) In the event there is more than one member, any operating agreement shall initially be agreed to, in writing, by all of the members. If an operating agreement does not provide for the method by which an operating agreement may be amended, then all of the members shall agree in writing to any amendment.

(c) A court of equity may enforce an operating agreement by injunction or by other relief that the court in its discretion determines to be fair and appropriate in the circumstances. As an alternative to injunctive or other equitable relief, when the provisions of Section 10-12-38 are applicable, the court may order dissolution of the limited liability company.



(Acts 1993, No. 93-724, p. 1425, §24; Act 97-920, 1st Ex. Sess., p. 312, §1.)Section 10-12-25

Section 10-12-25
Derivative actions.

(a) A member may bring an action in the right of a limited liability company to recover a judgment in its favor if the members or managers with authority to do so have refused to bring the action or if an effort to cause those members or managers to bring the action is not likely to succeed.

(b) In a derivative action, the plaintiff shall be a member at the time of bringing the action or have succeeded to the right of a member.

(c) If a derivative action is successful, in whole or in part, or if anything is received by the plaintiff as a result of a judgment, compromise, or settlement of an action or claim, the court may award the plaintiff reasonable expenses, including reasonable attorney's fees, and shall direct the plaintiff to remit to the limited liability company the remainder of those proceeds.



(Acts 1993, No. 93-724, p. 1425, §25.)Section 10-12-26

Section 10-12-26
Contributions.

The contributions of a member to the limited liability company may be in cash, property, services previously rendered, or a promissory note or other binding obligation to pay cash, convey property, or to render services.



(Acts 1993, No. 93-724, p. 1425, §26.)Section 10-12-27

Section 10-12-27
Liability for contributions.

(a) Except as provided in the articles of organization, a member is obligated to the limited liability company to perform any promise to pay cash or convey property or to render services, even if the member is unable to perform because of death, disability, or any other reason. A member who does not perform such a promise is obligated at the option of the limited liability company to pay cash equal to the amount or value of the portion of the contribution that has not been paid, conveyed, or rendered.

(b) The operating agreement may provide that the interest of any member who fails to make any contribution that the member is obligated to make, or who fails to pay any agreed assessment that the member is obligated to make, shall be subject to a reasonable penalty for such failure. The penalty may take the form of reducing the defaulting member's proportionate interest in the limited liability company, subordinating the member's interest to that of nondefaulting members, a forced sale of the member's interest in compliance with reasonable procedures for notice and disposition, forfeiture of the member's interest on compliance with reasonable procedures for notice, the lending of the amount necessary to meet the member's commitment by other members, affixing of the value of the member's interest by appraisal or by suitable formula and redemption or sale of the member's interest at that value, or other reasonable penalty.

(c) Unless otherwise provided in the operating agreement, the obligation of a member to perform any promise with respect to a contribution to the capital of the limited liability company, or to return money or other property paid or distributed in violation of this chapter, may be compromised only by consent of all the members. Notwithstanding the compromise, a creditor of a limited liability company who extends credit, or whose claim arises, after filing of the articles of organization or an amendment thereto which, in either case, reflects the obligation, and before the amendment thereof to reflect the compromise, may enforce the original obligation.



(Acts 1993, No. 93-724, p. 1425, §27.)Section 10-12-28

Section 10-12-28
Sharing of profits and losses.

The profits and losses, income, deductions, and credits, and items of income, deduction, and credits of the limited liability company shall be allocated among the members in the manner provided in the operating agreement. If the operating agreement does not so provide, profits and losses, income, deductions, and credits, and items of income, deductions, and credits shall be allocated on the basis of the pro rata value of the contributions made by each member to the extent they have been made and not returned.



(Acts 1993, No. 93-724, p. 1425, §28.)Section 10-12-29

Section 10-12-29
(Applicable to limited liability companies organized after January 1, 1998, Limited Liability Companies Not Electing To Come Under the Pre-1997 Changes, and to all limited liability companies after December 31, 2000.) Interim distributions of property; impairment of capital.

(a) Except as provided in this section or in the operating agreement, members are entitled to receive distributions from the limited liability company in proportion to their respective rights to share in profits under Section 10-12-28.

(b) Subsection (a) shall not apply to any of the following:

(1) Distributions on dissolution.

(2) Distributions governed by a contrary provision in the operating agreement.

(c) No distribution may be made unless, after the distribution is made, the assets of the limited liability company are sufficient to pay all liabilities of the limited liability company except liabilities to members on account of their contributions.

(d) Unless otherwise provided in the operating agreement, a member has no right to receive and may not be required to accept a distribution in kind.



(Acts 1993, No. 93-724, p. 1425, §29; Act 97-920, 1st Ex. Sess., p. 312, §1.)Section 10-12-3

Section 10-12-3
Purpose.

Limited liability companies may be organized under this chapter for any lawful purpose or purposes. If the purpose for which it is organized or its form makes it subject to a special provision of law, the limited liability company shall also comply with that provision.



(Acts 1993, No. 93-724, p. 1425, §3.)Section 10-12-30

Section 10-12-30
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Purchase of dissociated member's interest.

Unless the articles of organization or the operating agreement of a limited liability company or a private agreement provide for the purchase of the interest of a former member whose membership has ceased, neither the limited liability company nor its members shall be obligated to purchase the interest of a former member whose membership has ceased.



(Acts 1993, No. 93-724, p. 1425, §30; Act 97-920, 1st Ex. Sess., p. 312, §1.)Section 10-12-31

Section 10-12-31
Admission of additional members.

(a) After the filing of a limited liability company's original articles of organization, additional members may be admitted as follows:

(1) In the case of a member acquiring an interest directly from the limited liability company, upon compliance with the operating agreement or, if the operating agreement does not provide for the admission of additional members, with the written consent of all members.

(2) In the case of an assignee of an interest of a member, by complying with Section 10-12-33.

(b) The effective time of admission of a member to a limited liability company shall be the later of:

(1) The date the limited liability company is formed.

(2) The time provided in the operating agreement, or if no time is provided, then when the person's admission is reflected in the records of the limited liability company.



(Acts 1993, No. 93-724, p. 1425, §31.)Section 10-12-32

Section 10-12-32
Transferability of member's interest.

(a) Except as otherwise provided in the operating agreement:

(1) A membership interest in a limited liability company is assignable in whole or in part.

(2) An assignment of a member's interest in a limited liability company does not of itself dissolve the limited liability company or entitle the assignee to exercise any management rights.

(3) An assignment only entitles the assignee to the financial rights of the assignor to the extent assigned.

(4) A member who assigns the member's interest in a limited liability company does not cease to be a member until the assignee is substituted as provided in Section 10-12-33.

(b) A limited liability company, in the articles of organization or in the operating agreement, may provide that a member's interest in the limited liability company may be evidenced by a certificate of limited liability company interest issued by the limited liability company. Any provision for the assignment or transfer of a limited liability company interest represented by such a certificate shall be consistent with this chapter.

(c) Any purported transfer of a member's interest in violation of this section is void.



(Acts 1993, No. 93-724, p. 1425, §32.)Section 10-12-33

Section 10-12-33
Right of assignee to become member.

(a) Except as otherwise provided in the operating agreement:

(1) An assignee of an interest in a limited liability company may become a member only if the other members unanimously consent. The consent of a member may be evidenced in any manner specified in the operating agreement, but in the absence of such a specification, consent shall be evidenced by a written instrument, dated and signed by the member.

(2) The assignor of a membership interest is not released from liability to the limited liability company under Section 10-12-27, whether or not the assignee becomes a member.

(3) A member who assigns the member's entire interest in the limited liability company ceases to be a member or to have the power to exercise any rights of a member when any assignee of the interest becomes a member with respect to the assigned interest.

(b) An assignee who has become a member has, to the extent assigned, the rights and powers, and is subject to the restrictions and liabilities, of a member under the articles of organization, any operating agreement, and this chapter. An assignee who becomes a member also is liable for the obligations of the assignor to make contributions as provided in Section 10-12-27. The assignee is not obligated for liabilities that are unknown to the assignee at the time of becoming a member.



(Acts 1993, No. 93-724, p. 1425, §33.)Section 10-12-34

Section 10-12-34
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Power of estate of deceased or incompetent member.

(a) Except as otherwise provided in the operating agreement or articles of organization:

(1) If a member who is an individual dies or if a court of competent jurisdiction adjudges a member to be incompetent to manage the member's person or property, the member's personal representative, conservator, legal representative, heirs, or legatees may exercise all the member's financial rights for the purpose of settling the member's estate or administering the member's property, including any power the member had to transfer the membership interest.

(2) If a member is a corporation, limited liability company, trust, general partnership, limited partnership, registered limited liability partnership, custodianship, or other entity and is dissolved or terminated, the financial rights of that member may be exercised by the legal representative or successor of that member.

(b) The personal representative, conservator, legal representative, heirs, or legatees of a deceased or incompetent member shall have the same rights and duties with respect to the inspection and copying of the books and records of the limited liability company that a member would have under Section 10-12-16 and subdivision (1) of subsection (k) of Section 12-10-21. The duties of care and loyalty specified in Section 10-12-21, including any modifications specified therein, shall inure to the benefit of the personal representative, conservator, legal representative, heirs, or legatees of a deceased or incompetent member.



(Acts 1993, No. 93-724, p. 1425, §34; Act 97-920, 1st Ex. Sess., p. 312, §1.)Section 10-12-35

Section 10-12-35
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Member's financial rights subject to charging order.

(a) On application to a court of competent jurisdiction by any judgment creditor of a member or assignee, the court may charge the interest of the member or assignee with payment of the unsatisfied amount of the judgment with interest. To the extent so charged, the judgment creditor has only the rights of an assignee of financial rights. This section shall be the sole and exclusive remedy of a judgment creditor with respect to the judgment debtor's membership interest.

(b) This chapter does not deprive any member of the benefit of any exemption laws applicable to the member's limited liability company interest.



(Acts 1993, No. 93-724, p. 1425, §35; Act 97-920, 1st Ex. Sess., p. 312, §1.)Section 10-12-36

Section 10-12-36
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Cessation of membership.

(a) A person ceases to be a member of a limited liability company upon the occurrence of one or more of the following events:

(1) The member ceases to be a member by voluntary act as provided in subsection (d).

(2) The member ceases to be a member of the limited liability company as provided in Section 10-12-33.

(3) The member is removed as a member in either of the following manners:

a. In accordance with the operating agreement.

b. Subject to contrary provisions in the operating agreement, when the member assigns all of the member's interest in the limited liability company, by an affirmative vote of a majority in number of the members who have not assigned their interests.

(b) Subject to contrary provisions in the operating agreement, or written consent of all members at the time, a person ceases to be a member upon the occurrence of one or more of the following events listed in the following subdivision or paragraphs:

(1) The member:

a. Makes an assignment for the benefit of creditors.

b. Files a voluntary petition in bankruptcy.

c. Is adjudicated bankrupt or insolvent.

d. Files a petition or answer seeking for the member any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any statute, law, or regulation.

e. Files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the member in any proceeding in the nature of the proceedings listed in paragraph d.

f. Seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the member or of all or any substantial part of the member's properties.

(2) Any of the following time periods have elapsed:

a. 120 days have elapsed after the commencement of any proceeding against the member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any statute, law, or regulation, unless the proceeding has been dismissed.

b. 90 days have elapsed after the appointment, without the consent of the member, of a trustee, receiver, or liquidator of the member or of all or any substantial part of the member's properties, unless the appointment is vacated or stayed.

c. 90 days have elapsed after the expiration of any stay, unless the appointment is vacated.

(3) In the case of a member who is an individual:

a. The member dies.

b. A court of competent jurisdiction adjudicates the member incompetent to manage the member's person or property.

(4) In the case of a member who is a trustee or is acting as a member by virtue of being a trustee of a trust, the termination of the trust, but not merely the substitution of a new trustee.

(5) In the case of a member that is a separate limited liability company, the dissolution and commencement of winding up of the separate limited liability company.

(6) In the case of a member that is a corporation:

a. The filing of articles of dissolution or the equivalent for the corporation.

b. The revocation of its charter and the lapse of 90 days after notice to the corporation of revocation without a reinstatement of its charter.

(7) In the case of an estate, the distribution by the fiduciary of the estate's entire interest in the limited liability company.

(8) In the case of a limited liability company performing professional services, at the time a member's license or registration to perform the professional services is terminated or suspended for a period of more than 12 months.

(9) In the case of a general partnership, a limited partnership, or a registered limited liability partnership, the dissolution and commencement of winding up of the partnership.

(c) The members may provide in the operating agreement for other events the occurrence of which result in a person ceasing to be a member of the limited liability company.

(d) Unless the operating agreement provides that a member has no power to cease being a member of a limited liability company by voluntary act, the member may do so at any time by giving notice as provided in the operating agreement, or, if there is no such provision, 30 days written notice to the other members. If the member has the power to cease being a member by a voluntary act but the cessation is a breach of the operating agreement, or the cessation occurs as a result of otherwise wrongful conduct of the member, the limited liability company may recover damages from the member whose membership has ceased for breach of the operating agreement, including the reasonable cost of obtaining replacement for the services such member was obligated to perform. Unless otherwise provided in the operating agreement, in the case of a limited liability company for a definite term or particular undertaking, cessation of membership by voluntary act of a member before the expiration of that term is a breach of the operating agreement.

(e) Upon a member's cessation of membership each of the following applies:

(1) The member's governance rights terminate.

(2) The member's duty of loyalty under subsection (f) of Section 10-12-21 terminates.

(3) The member's duty of loyalty under subsection (f) of Section 10-12-21 and duty of care under subsection (g) of Section 10-12-21 continue only with regard to matters arising and events occurring before the member's cessation of membership, unless the member participates in the winding up of the limited liability company's business pursuant to Section 10-12-39.

(4) The member's duty of loyalty with respect to information shall be the same as that of a member who is not a manager under subdivision (1) of subsection (k) of Section 10-12-21, unless the member participates in the winding up of the limited liability company's business pursuant to Section 10-12-39, in which event subdivision (3) of this subsection applies.



(Acts 1993, No. 93-724, p. 1425, §36; Act 97-920, 1st Ex. Sess., p. 312, §1.)Section 10-12-37

Section 10-12-37
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Dissolution.

A limited liability company is dissolved and its affairs shall be wound up upon occurrence of the first of the following events:

(1) Events specified in the articles of organization or the operating agreement.

(2) Written consent of all members to dissolve.

(3) When there is no remaining member, unless either of the following applies:

a. The holders of all the financial rights in the limited liability company agree in writing, within 90 days after the cessation of membership of the last member, to continue the legal existence and business of the limited liability company and to appoint one or more new members.

b. The legal existence and business of the limited liability company is continued and one or more new members are appointed in the manner stated in the operating agreement or articles of organization.

(4) When the limited liability company is not the successor limited liability company in the merger or consolidation with one or more limited liability companies or other entities.

(5) Entry of a decree of judicial dissolution under Section 10-12-38.



(Acts 1993, No. 93-724, p. 1425, §37; Act 97-920, 1st Ex. Sess., p. 312, §1.)Section 10-12-38

Section 10-12-38
Judicial dissolution.

On application by or for a member, the circuit court for the county in which the articles of organization are filed may decree dissolution of a limited liability company whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement.



(Acts 1993, No. 93-724, p. 1425, §38.)Section 10-12-39

Section 10-12-39
Winding up.

(a) Except as otherwise provided in the articles of organization or the operating agreement, the members who have not wrongfully dissolved a limited liability company may wind up the limited liability company's business and affairs.

(b) A person winding up a limited liability company's business may: Preserve the company business or property as a going concern for a reasonable time; prosecute and defend actions and proceedings, whether civil, criminal, or administrative; settle and close the limited liability company's business; dispose of and transfer property; discharge the limited liability company's liabilities; distribute the assets of the limited liability company pursuant to Section 10-12-41; and perform other necessary and appropriate acts.



(Acts 1993, No. 93-724, p. 1425, §39.)Section 10-12-4

Section 10-12-4
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Powers.

Unless its articles of organization provide otherwise, every limited liability company has perpetual duration and succession in its name and has the same powers as a natural person to do all things necessary or convenient to carry out its business and affairs, including, without limitation, the following powers:

(a) To sue and be sued, complain and defend, in its name.

(b) To purchase, take, receive, lease, or otherwise acquire, own, hold, improve, use, and otherwise deal in and with real or personal property, or an interest in it, wherever situated.

(c) To sell, convey, mortgage, encumber, pledge, lease, exchange, transfer, and otherwise dispose of all or any part of its property and assets.

(d) To lend money to and otherwise assist its members.

(e) To purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise dispose of, and otherwise use and deal in and with shares or other interests in or obligations of domestic or foreign limited liability companies, domestic or foreign corporations, associations, general or limited partnerships, or direct or indirect obligations of the United States or of any government, state, territory, governmental district, or municipality, or of any instrumentality thereof.

(f) To make contracts, guarantees, and indemnity agreements and incur liabilities; borrow money at those rates of interest as the limited liability company may determine; issue its notes, bonds, and other obligations; and secure any of its obligations by mortgage, pledge of, or creation of security interest in, all or any of its property, franchises, or income; make contracts of guaranty and suretyship which are necessary or convenient to the conduct, promotion, or attainment of the business of the contracting company and of a corporation of which the majority of the outstanding stock is owned, directly or indirectly, by the contracting company; or make other contracts of guaranty and suretyship which are necessary or convenient to the conduct, promotion, or attainment of the business of the contracting company, or any interest therein, not inconsistent with the provisions of the Constitution of Alabama as it may be amended from time to time.

(g) To lend money for any lawful purpose, invest and reinvest its funds, and take and hold real and personal property as security for the payment of funds so loaned or invested.

(h) To conduct its business, carry on its operations, and have and exercise the powers granted by this chapter in any state, territory, district, or possession of the United States, or in any foreign country.

(i) To elect or appoint managers and agents of the limited liability company, and define their duties and fix their compensation.

(j) To make and alter the operating agreement, not inconsistent with its articles of organization or with the laws of this state, for the administration and regulation of the affairs of the limited liability company.

(k) To make donations for the public welfare or for charitable, scientific, or educational purposes.

(l) To transact any lawful business which the managers or members find will be in aid of governmental policy.

(m) To pay pensions and establish pension plans, pension trusts, profit-sharing plans, and other incentive plans for any or all of its managers, employees, former managers, or former employees.

(n) To indemnify a member, manager, or employee, or former member, manager, or employee of the limited liability company against expenses actually and reasonably incurred in connection with the defense of an action, suit, or proceeding, civil or criminal, in which the member, manager, or employee is made a party by reason of being or having been a member, manager, or employee of the limited liability company, except in relation to matters as to which the member, manager, or employee is determined in the action, suit, or proceeding to be liable for negligence or misconduct in the performance of duty; to make any other indemnification that is authorized by the articles of organization, the operating agreement, or by a resolution adopted by the members after notice (unless notice is waived); to purchase and maintain insurance on behalf of any person who is or was a member, manager, or employee of the limited liability company against any liability asserted against and incurred by the member, manager, or employee in any capacity or arising out of the member's, manager's, or employee's status as such, whether or not the limited liability company would have the power to indemnify the member, manager, or employee against that liability under the provisions of this subsection.

(o) To cease its activities.

(p) To have and exercise all powers necessary or convenient to effect any or all of the purposes for which the limited liability company is organized.

(q) To become a partner, limited partner, shareholder, member, or associate of a general partnership, limited partnership, registered limited liability partnership, corporation, joint venture or similar association, or another limited liability company.

(r) To be a promoter, incorporator, organizer, or manager of any corporation, general partnership, limited partnership, registered limited liability partnership, limited liability company, joint venture, trust, or other enterprise.

(s) To render professional services, if each member or employee who renders professional services in Alabama is licensed or registered to render those professional services pursuant to applicable Alabama law and if the limited liability company complies with the limitations of Section 10-12-45.



(Acts 1993, No. 93-724, p. 1425, §4; Act 97-920, 1st Ex. Sess., p. 312, § 1.)Section 10-12-40

Section 10-12-40
Survival of remedy after dissolution.

(a) A dissolved limited liability company continues its existence but may not carry on any business except that necessary or appropriate to wind up and liquidate its business and affairs.

(b) Dissolution of a limited liability company does not:

(1) Transfer title to the limited liability company assets.

(2) Terminate or suspend a proceeding pending by or against the limited liability company on the effective date of dissolution.

(3) Terminate the authority of the registered agent of the limited liability company.



(Acts 1993, No. 93-724, p. 1425, §40.)Section 10-12-41

Section 10-12-41
Distribution of assets upon dissolution.

Upon the winding up of a limited liability company, the assets of the limited liability company shall be distributed in the following order of priority:

(1) To creditors (including members who are creditors to the extent allowed by Section 10-12-19 or otherwise permitted by law), in order of priority as provided by law, except those liabilities to members of the limited liability company for interim distributions or on account of their contributions.

(2) Except as otherwise provided in the articles of organization or the operating agreement, to members of the limited liability company and former members for interim distributions and in respect of their contributions.

(3) Except as otherwise provided in the articles of organization or the operating agreement, to members first for the return of their contributions and second with respect to their interests in the limited liability company, in the proportions in which the members share in distributions.



(Acts 1993, No. 93-724, p. 1425, §41.)Section 10-12-42

Section 10-12-42
Articles of dissolution.

(a) After the dissolution of the limited liability company pursuant to Section 10-12-37, the limited liability company shall file articles of dissolution in the office of the probate judge of the county in which the articles of organization were filed. The articles of dissolution shall set forth:

(1) The name of the limited liability company.

(2) The date of filing its articles of organization.

(3) The reason for filing the articles of dissolution.

(4) The effective date of the articles of dissolution, which shall be a date certain, if they are not to be effective immediately.

(5) Any other information the members or managers filing the articles deem appropriate.

(b) The articles of dissolution and two copies shall be delivered to the judge of probate. If the judge of probate finds that the articles of dissolution conform to law and that all fees prescribed in this chapter have been paid, the judge of probate shall:

(1) Endorse on the articles of dissolution and on each copy the word "Filed" and the hour, day, month, and year of the filing.

(2) File the articles of dissolution in the office of the judge of probate and certify two copies.

(3) Issue a certificate of dissolution to which a certified copy of the articles of dissolution shall be affixed, and return the certificate of dissolution with the certified copy of the articles of dissolution affixed to the representative of the dissolved limited liability company.

(4) Within 10 days after the issuance of a certificate of dissolution, transmit to the Secretary of State a certified copy of the articles of dissolution, indicating the place, date, and time of filing of the certificate.



(Acts 1993, No. 93-724, p. 1425, §42.)Section 10-12-43

Section 10-12-43
Known claims against dissolved limited liability company.

(a) A dissolved limited liability company may dispose of the known claims against it by filing articles of dissolution pursuant to Section 10-12-42 and following the procedure described in this section.

(b) The dissolved limited liability company shall notify its known claimants in writing of the dissolution at any time after the filing of its articles of dissolution. The written notice shall:

(1) Describe information that must be included in a claim.

(2) Provide a mailing address where a claim may be sent.

(3) State the deadline, which may not be less than 120 days from the date of mailing of the written notice, by which the dissolved limited liability company shall receive the claim.

(4) State that the claim shall be barred if not received by the deadline.

(c) A claim against the dissolved limited liability company is barred in either of the following circumstances:

(1) If a claimant who was given written notice under subsection (b) does not deliver the claim to the dissolved limited liability company by the deadline.

(2) If a claimant whose claim was rejected in writing by the dissolved limited liability company does not commence a proceeding to enforce the claim within 180 days from the date of the rejection notice.

(d) For purposes of this section, "claim" does not include a contingent liability or a claim based on an event occurring after the effective date of dissolution.



(Acts 1993, No. 93-724, p. 1425, §43.)Section 10-12-44

Section 10-12-44
Unknown claims against dissolved limited liability company.

(a) A dissolved limited liability company may publish notice of its dissolution which requests that persons with claims against the limited liability company present them in accordance with the notice.

(b) The notice shall:

(1) Be published one time in a newspaper of general circulation in the county where the dissolved limited liability company's principal office (or, if none in this state, its registered office) is or was last located.

(2) Describe the information that shall be included in a claim and provide a mailing address where the claim may be sent.

(3) State that articles of dissolution have been filed for the limited liability company.

(4) State that a claim against the limited liability company shall be barred unless a proceeding to enforce the claim is commenced within two years after the publication of the notice.

(c) If the dissolved limited liability company publishes a newspaper notice in accordance with subsection (b) and files articles of dissolution pursuant to Section 10-12-42, the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the claim against the dissolved limited liability company within two years after the publication date of the newspaper notice:

(1) A claimant who did not receive written notice under Section 10-12-43.

(2) A claimant whose claim was timely sent to the dissolved limited liability company but not acted on.

(3) A claimant whose claim is contingent or based on an event occurring after the effective date of dissolution.

(d) A claim may be enforced under this section:

(1) Against the dissolved limited liability company, to the extent of its undistributed assets.

(2) If part or all the limited liability company assets have been distributed in liquidation, against a member of the dissolved limited liability company to the extent of the member's pro rata share of the claim or the assets of the limited liability company distributed to the member in liquidation, whichever is less. If a member's total liability for all claims determined under the preceding sentence exceeds the total amount of assets distributed to the member in liquidation, then the member's liability on each claim shall be limited to an amount determined by multiplying the assets distributed in liquidation by a fraction, the numerator of which is the claim and the denominator of which is the total of all the claims.



(Acts 1993, No. 93-724, p. 1425, §44.)Section 10-12-45

Section 10-12-45
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Special rules for limited liability companies performing professional services.

(a) 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.

(b) The personal liability of a member, manager, or other employee of any limited liability company engaged in providing professional services shall be no greater than that of a shareholder, employee, director, or officer of a corporation organized under the Alabama Business Corporation Act or any successor act.

(c) The personal liability of a member, manager, or employee of a foreign limited liability company shall be determined under the law of the jurisdiction in which it is organized.

(d) Nothing in this chapter 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 chapter shall restrict or limit any law, rule, or regulation pertaining to standards of professional conduct.

(e) Nothing in this chapter 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.

(f) A limited liability company organized to render professional services under this chapter may render only one specific type of professional services, and services ancillary to them, and may not engage in any business other than rendering the professional services which it was organized to render, and services ancillary to them. In addition, a limited liability company organized to render professional services shall be subject to the restrictions imposed on professional corporations by the Revised Alabama Professional Corporation Act, Sections 10-4-380 through 10-4-404 inclusive, as amended from time to time.

(g) A limited liability company organized to render professional services, domestic or foreign, may render professional services in Alabama only through individuals permitted to render those services in Alabama; but nothing in this chapter shall be construed to require that any individual who is employed by a limited liability company rendering professional services 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 an individual capacity, notwithstanding that the individual may be a member, manager, employee or agent of a domestic or foreign limited liability company rendering professional services.

(h) A member's interest in a limited liability company organized to render professional services may be voluntarily transferred only to a person who is licensed or registered to render the professional services for which the company was organized.

(i) If a membership interest is transferred by gift or inheritance to a person who is not licensed or registered to render the professional services for which the limited liability company was organized or if a member's license or registration to perform the professional services for which the limited liability company was organized is terminated or suspended for a period of more than 12 months, the person or member shall not be treated as owning financial rights or an ownership interest in the limited liability company and shall be entitled only to receive the fair value of the membership interest determined in the same manner as the fair value of interests in professional corporations is determined under Section 10-4-389.



(Acts 1993, No. 93-724, p. 1425, §45; Act 97-920, 1st Ex. Sess., p. 312, §1.)Section 10-12-46

Section 10-12-46
Foreign limited liability companies.

(a) Subject to the Constitution of Alabama, the laws of the state or other jurisdictions under which a foreign limited liability company is organized govern its organization, its internal affairs, and the liability of its members.

(b) Subject to the Constitution of Alabama, a foreign limited liability company may not be denied registration by reason of any difference between those laws and the laws of this state; provided, however, that no foreign limited liability company shall be allowed to carry on in this state any business of a character that may not lawfully be carried on by a domestic limited liability company.



(Acts 1993, No. 93-724, p. 1425, §46.)Section 10-12-47

Section 10-12-47
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Registration.

(a) Before transacting business in this state, a foreign limited liability company shall register with the Secretary of State. To register, a foreign limited liability company shall submit to the Secretary of State, in duplicate, on forms furnished by the Secretary of State, an application for registration as a foreign limited liability company, signed by an authorized member or manager or other representative setting forth the following:

(1) The name of the foreign limited liability company, and if different, the name under which it proposes to register and transact business in this state.

(2) The state or other jurisdiction where it was formed, the name and address in that state or other jurisdiction where its articles of organization (or equivalent document) and all amendments thereto are on file, and the date of its formation.

(3) The general character of the business it proposes to transact in this state.

(4) The name and address of an agent for service of process on the foreign limited liability company. The agent shall satisfy and continue to satisfy the requirements applicable to registered agents of domestic limited liability companies under Section 10-12-15.

(5) The street address of the office required to be maintained in the state or other jurisdiction of its organization by the laws of that state or other jurisdiction, or, if not so required, of the principal office of the foreign limited liability company.

(6) A statement that the foreign limited liability company consents to service of process on it by registered mail addressed to it at the address specified in subdivision (5), if the agent appointed under subdivision (4) cannot be found or served with the exercise of reasonable diligence.

(b) The execution by a member or manager of an application for registration as a foreign limited liability company, or the execution of any certificate of amendment to such an application under Section 10-12-50, constitutes an affirmation that the facts therein are true under penalties of perjury prescribed by Section 13A-10-103 or its successor.

(c) A foreign limited liability company shall not be deemed to be transacting business in this state for the purposes of this section solely by reason of offers or sales of interests in the limited liability company in this state.



(Acts 1993, No. 93-724, p. 1425, §47; Act 97-920, 1st Ex. Sess., p. 312, §1.)Section 10-12-48

Section 10-12-48
Issuance of registration.

(a) If the Secretary of State finds that an application for registration conforms to law and all requisite fees have been paid, the Secretary of State shall:

(1) Endorse on the application the word "Filed" and the month, day, and year of the filing.

(2) File in the Office of the Secretary of State a duplicate original of the application.

(3) Issue a certificate of registration to transact business in this state, effective as of the date the application was filed with the Office of the Secretary of State.

(b) The certificate of registration, together with a duplicate original of the application, shall be returned to the person, or a representative of the person, who filed the application.

(c) Upon the issuance of a certificate of registration by the Secretary of State, the foreign limited liability company shall be authorized to transact any business in this state:

(1) That is consistent with the general character of business set forth in its application;

(2) That may be done lawfully in this state by a limited liability company organized under the laws of this state; and

(3) That the foreign limited liability company is authorized to do in the state or other jurisdiction where it was organized.

The authorization shall relate back to and be deemed effective as of the date the application was filed with the Office of the Secretary of State.



(Acts 1993, No. 93-724, p. 1425, §48.)Section 10-12-49

Section 10-12-49
Name.

A foreign limited liability company may register with the Secretary of State under any name (whether or not it is the name under which it is registered in the jurisdiction where it is organized) provided that the name satisfies the requirements of Section 10-12-5 and is a name that could be adopted by a domestic limited liability company.



(Acts 1993, No. 93-724, p. 1425, §49.)Section 10-12-5

Section 10-12-5
(applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Limited liability company name.

The name of each limited liability company as set forth in its articles of organization shall contain the words "Limited Liability Company" or the abbreviation "L.L.C." or "LLC". These words or their abbreviation shall be the last words of the name of every limited liability company formed under the provisions of this chapter. The limited liability company name may not contain a word or phrase which indicates or implies that it is organized for a purpose other than one or more of the purposes contained in its articles of organization.



(Acts 1993, No. 93-724, p. 1425, §5; Act 97-920, 1st Ex. Sess., p. 312, § 1.)Section 10-12-50

Section 10-12-50
Changes and amendments.

If any statement in the application for registration of a foreign limited liability company was false when made or any arrangements or other facts described have changed, making the application inaccurate in any respect, the foreign limited liability company shall promptly file in the Office of the Secretary of State a certificate correcting the statement.



(Acts 1993, No. 93-724, p. 1425, §50.)Section 10-12-51

Section 10-12-51
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Cancellation of registration.

A foreign limited liability company may cancel its registration by filing with the Secretary of State a certificate of cancellation signed by a duly authorized member or manager or other representative. A cancellation does not terminate the consent to service of process on the foreign limited liability company as provided in Section 10-12-47 with respect to causes of action arising out of business transacted within this state.



(Acts 1993, No. 93-724, p. 1425, §51; Act 97-920, 1st Ex. Sess., p. 312, §1.)Section 10-12-52

Section 10-12-52
Transacting business without registration.

(a) A foreign limited liability company transacting business in this state may not maintain any action, suit, or proceeding in any court of this state until it has registered in this state.

(b) The failure of a foreign limited liability company to register in this state does not impair the validity of any contract or act of the foreign limited liability company or prevent: the foreign limited liability company from defending any action, suit, or proceeding in any court of this state.

(c) A foreign limited liability company, by transacting business in this state without registration, shall be deemed to consent to service of process with respect to causes of action arising out of business transacted in this state by registered mail addressed to the foreign limited liability company at the office required to be maintained in the state or other jurisdiction where it is organized, or, if not so required, at the principal office of the limited liability company.

(d) The liability of a member or members of a foreign limited liability company is governed by the laws of the state or other jurisdictions where it is organized, and any limitations on that liability are not waived solely by reason of having transacted business in Alabama without registration.



(Acts 1993, No. 93-724, p. 1425, §52.)Section 10-12-53

Section 10-12-53
Action by Attorney General.

The Attorney General may bring an action to restrain a foreign limited liability company from transacting business in this state in violation of this chapter.



(Acts 1993, No. 93-724, p. 1425, §53.)Section 10-12-54

Section 10-12-54
Merger and consolidation.

(a) Pursuant to any agreement, a domestic limited liability company may merge or consolidate with or into one or more limited liability companies or other business entities formed or organized under the laws of this state, any other state, the United States, or any foreign jurisdiction, with the domestic limited liability company or the other business entity being the surviving or resulting domestic limited liability company or other business entity. Except as otherwise specifically provided for in the operating agreement, a merger shall be approved by each domestic limited liability company which is to merge by all the members at the time approval of the merger is voted on.

(b) Notwithstanding prior approval, an agreement of merger may be terminated prior to filing articles of merger with the Secretary of State or amended pursuant to a provision for the termination or amendment contained in the agreement of merger.



(Acts 1993, No. 93-724, p. 1425, §54.)Section 10-12-55

Section 10-12-55
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Requirements for articles of merger; effective date.

(a) If a domestic limited liability company is merging under this chapter, the domestic limited liability company or other business entity surviving or resulting from the merger shall file articles of merger in the Office of the Secretary of State. If a domestic limited liability company is filing the articles of merger, the articles of merger shall be signed by at least one member of the domestic limited liability company, and if another business entity is filing the articles of merger, the articles of merger shall be signed by a person authorized by the other business entity. The articles of merger shall state all of the following:

(1) The name, jurisdiction, and date of formation or organization of each of the domestic limited liability companies or other business entities that are to merge.

(2) That an agreement of merger has been approved and executed by each of the domestic limited liability companies or other business entities that are to merge.

(3) The name of the surviving or resulting domestic limited liability company or other business entity.

(4) The future effective date or time (which shall be a date or time certain) of the merger if it is not to be effective upon the filing of the articles of merger.

(5) That the agreement of merger is on file at a place of business of the surviving or resulting domestic limited liability company or other business entity, and shall state the street address of that place of business.

(6) That a copy of the agreement of merger will be furnished by the surviving or resulting domestic limited liability company or other business entity, on request and without cost, to any member of any domestic limited liability company or any person holding an interest in any other business entity which is a party to the merger.

(7) If the surviving or resulting entity is not a domestic limited liability company or other business entity organized under the laws of this state, a statement that the foreign business entity consents to service of process on it by registered mail addressed to the foreign business entity at the office required to be maintained in the state or other jurisdiction where it is organized by the laws of that state or, other jurisdiction, or, if not so required, at its principal office, if it has not appointed an agent under Section 10-12-47 or if that agent cannot be found or served with the exercise of reasonable diligence.

(b) A merger shall be effective upon the filing in the Office of the Secretary of State of the articles of merger unless a future effective date or time is provided in the articles of merger, in which event the merger shall be effective at the future date or time specified.



(Acts 1993, No. 93-724, p. 1425, §55; Act 97-920, 1st Ex. Sess., p. 312, §1.)Section 10-12-56

Section 10-12-56
Vesting of certain rights, privileges, powers, property, liabilities and duties.

(a) When any merger has become effective under this chapter, for all purposes of the laws of the state, all the rights, privileges, and powers of each of the domestic limited liability companies and other business entities that have merged, and all property, real, personal, and mixed, and all debts due to any of the domestic limited liability companies and other business entities, as well as all other things and causes of action belonging to each of the domestic limited liability companies and other business entities, shall be vested in the surviving or resulting domestic limited liability company or other business entity, and shall thereafter be the property of the surviving or resulting domestic limited liability company or other business entity as they were of each of the domestic limited liability companies and other business entities that have merged. The title to any real property vested by deed or otherwise in any of the domestic limited liability companies and other business entities shall not revert or be in any way impaired by reason of this chapter.

(b) All rights of creditors and all liens upon any property of any of the domestic limited liability companies and other business entities shall be preserved unimpaired, and all debts, liabilities and duties of each of the domestic limited liability companies and other business entities that have merged shall attach to the surviving or resulting domestic limited liability company or other business entity, and may be enforced against it to the same extent as if the debts, liabilities, and duties had been incurred or contracted by it.

(c) Unless otherwise provided in the articles of merger, a merger, of a domestic limited liability company, including a domestic limited liability company which is not the surviving or resulting entity in the merger, shall not require the domestic limited liability company to wind up its business and affairs, or pay its liabilities and distribute its assets.



(Acts 1993, No. 93-724, p. 1425, §56.)Section 10-12-57

Section 10-12-57
Recording of articles of merger; effect when Secretary of State files articles; copy of certified articles conclusive evidence of matters.

The articles of merger required by this chapter to be filed with the Secretary of State shall also be recorded in the office of the judge of probate in the county in which the limited liability company is required to file articles of organization and in each county in which a limited liability company which is a party to the merger is required to file articles of organization; provided, however, that when the articles are filed by the Secretary of State, the matters covered by the articles shall be effective as stated therein, and a copy of the articles certified by the Secretary of State shall be conclusive evidence of the matters covered therein.



(Acts 1993, No. 93-724, p. 1425, §57.)Section 10-12-58

Section 10-12-58
Applicability of Article 5 of Chapter 2A of Title 10.

To the extent applicable, the provisions and requirements of Article 5 (commencing with Section 10-2A-140) of Chapter 2A of this title, relating to mergers of corporations, shall apply to mergers between corporations, domestic limited liability companies, and other business entities as defined by this chapter. Domestic limited liability companies and other business entities shall be treated as corporations for the purposes of applying the procedures, requirements, and effects prescribed in that Article 5.



(Acts 1993, No. 93-724, p. 1425, §58.)Section 10-12-59

Section 10-12-59
Fees, charges, and penalties to be collected by judge of probate and Secretary of State.

The judge of probate or the Secretary of State, as the case may be, shall charge and collect in accordance with the provisions of this chapter:

(a) Fees for filing documents and issuing certificates.

(b) Miscellaneous charges and penalties imposed by this chapter.



(Acts 1993, No. 93-724, p. 1425, §59.)Section 10-12-6

Section 10-12-6
Nature of interest of member in limited liability company.

An interest in a limited liability company is personal property.



(Acts 1993, No. 93-724, p. 1425, §6.)Section 10-12-60

Section 10-12-60
Fees for filing documents and issuing certificates; Secretary of State Limited Liability Companies Fund created; deposits and expenditures; deposits to State General Fund.

(a) In lieu of all other charges and fees, the following fees shall be collected in accordance with the provisions of this chapter:

(1) Filing articles of organization, $40 for the State of Alabama and $35 for the judge of probate.

(2) Filing articles of amendment and issuing a certificate of amendment, $10 for the judge of probate.

(3) Filing restated articles of organization, $25 for the judge of probate and $10 for the State of Alabama.

(4) Filing a report of the name and address of registered agent or a statement of change of address of registered office or change of registered agent, or both, $5 for the State of Alabama.

(5) Filing articles of dissolution, $5 for the judge of probate and $10 for the State of Alabama.

(6) Filing an application of a foreign limited liability company for an amended certificate of authority to transact business in this state and issuing an amended certificate of authority, $25 for the State of Alabama.

(7) Filing a certificate of cancellation of a foreign limited liability company and issuing a certificate, $20 for the State of Alabama.

(8) Filing a copy of the articles of merger as required by Section 10-12-57, $5 plus $.50 per page in excess of five pages to the judge of probate.

(9) Filing the application for registration as a foreign limited liability company and issuing the certificate of registration to transact business in this state, $75 for the State of Alabama.

(10) Filing any other statement or report of a domestic or foreign limited liability company, $10 for the State of Alabama.

(b) When appropriate two checks shall accompany the document, one payable to the judge of probate for all charges of the judge of probate, and one payable to the State of Alabama covering all charges for the Secretary of State. The check for the Secretary of State will be forwarded by the judge of probate to the Secretary of State.

(c) There is created in the State Treasury a fund to be known and designated as the Secretary of State Limited Liability Companies Fund. All funds, fees, charges, costs, and collections accruing to or collected by the office of the Secretary of State under the provisions of this chapter, and any other fees collected by the Secretary of State relating to limited liability companies shall be deposited into the State Treasury to the credit of the fund except as provided in subsection (e) below.

(d) All funds now or hereafter deposited in the State Treasury to the credit of the Secretary of State Limited Liability Companies Fund shall not be expended for any purpose whatsoever unless the funds have been allotted and budgeted in accordance with the provisions of Article 4 (commencing with Section 41-4-80) of Chapter 4 of Title 41, and only in the amounts and for the purposes provided by the Legislature in the general appropriation bill or this section.

(e) An amount equal to 80 percent of total collections by the Secretary of State for each fiscal year in relation to limited liability companies during the fiscal year shall be deposited to the credit of the State General Fund.

(f) The fees herein imposed for the office of the judge of probate shall be charged and paid into the appropriate county treasury or to the judge of probate as may be authorized or required by law.



(Acts 1993, No. 93-724, p. 1425, §60.)Section 10-12-61

Section 10-12-61
Miscellaneous charges.

(a) The judge of probate shall charge and collect for furnishing a certified copy of any document, instrument, or paper relating to a limited liability company, $1.50 per page and $1.50 for the certificate and affixing the seal.

(b) The Secretary of State shall charge and collect:

(1) For furnishing a certified copy of any document, instrument, or paper relating to a limited liability company, $1 per page and $5 for the certificate and affixing the seal.

(2) At the time of any service of process on the Secretary of State as resident agent of a limited liability company, the amount prescribed by law or rule of court.

(3) For requests of immediate expedition by the Secretary of State regarding document filings, certifications, and certificates in addition to required fees, a $10 surcharge shall be imposed.



(Acts 1993, No. 93-724, p. 1425, §61.)Section 10-12-7

Section 10-12-7
Unauthorized assumption of powers.

All persons who assume to act as a limited liability company without authority to do so shall be jointly and severally liable for all debts and liabilities created by their so acting.



(Acts 1993, No. 93-724, p. 1425, §7.)Section 10-12-8

Section 10-12-8
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Application of partnership provisions to limited liability companies; classification for federal income tax purposes.

(a) The terms "partnership" and "limited partnership," when used in any chapter or title other than this chapter, the Alabama Uniform Partnership Act (Chapter 8A, Title 10), and the Alabama Limited Partnership Act of 1983 (Chapter 9A, Title 10), and any successors of those acts, include a limited liability company organized under this chapter, unless the context requires otherwise.

(b) Notwithstanding subsection (a), for purposes of taxation, other than Chapter 14A of Title 40, a domestic or foreign limited liability company shall be treated as a partnership unless it is classified otherwise for federal income tax purposes, in which case it shall be classified in the same manner as it is for federal income tax purposes.

(c) A foreign or domestic limited liability company governed by this chapter is subject to any amendment to or repeal of this chapter.



(Acts 1993, No. 93-724, p. 1425, §8; Act 97-920, 1st Ex. Sess., p. 312, §1; Act 2000-705, p. 1442, §4.)Section 10-12-9

Section 10-12-9
(Applicable to limited liability companies organized after January 1, 1998, limited liability companies not electing to come under the pre-1997 changes, and to all limited liability companies after December 31, 2000.) Formation.

One or more persons may form a limited liability company by filing the articles of organization for the limited liability company with the probate judge of the county in which the initial registered office of the limited liability company is located.



(Acts 1993, No. 93-724, p. 1425, §9; Act 97-920, 1st Ex. Sess., p. 312, §1.)

USA Statutes : alabama