Usa Alabama

USA Statutes : alabama
Title : Title 10 CORPORATIONS, PARTNERSHIPS AND ASSOCIATIONS.
Chapter : Chapter 2A BUSINESS CORPORATIONS.
Section 10-2A-300

Section 10-2A-300
Law applicable to close corporations.

(a) This article applies to all close corporations, as defined in Section 10-2A-301. Unless a corporation elects to become a close corporation in the manner prescribed, it shall be subject in all respects to the provisions of this chapter, except this article dealing with close corporations.

(b) All provisions of this chapter shall be applicable to all close corporations as defined in Section 10-2A-301 except insofar as this article otherwise provides.

(c) Neither election to become, nor operation as, a close corporation shall deprive any shareholder of such corporation of the limitation of liability provided under Section 10-2A-43.

(d) This chapter shall apply only to close corporations formed in accordance with Section 10-2A-302 or electing to become a close corporation pursuant to Section 10-2A-303 before January 1, 1995, and which has not voluntarily terminated its status as a close corporation or otherwise ceased to be a close corporation to which the provisions of this article apply before January 1, 1995.



(Acts 1980, No. 80-633, p. 1094, §161; Acts 1994, No. 94-245, p. 457, §4.)Section 10-2A-301

Section 10-2A-301
"Close corporation" defined; contents of articles of incorporation; number of shareholders.

(a) A close corporation is a corporation organized under this chapter whose articles of incorporation contain the provisions required by Section 10-2A-91 and, in addition, provide that:

(1) The corporation is a close corporation authorized by this article;

(2) All of the issued shares of all classes shall be subject to one or more of the restrictions on transfer permitted by Section 10-2A-41; and

(3) For purposes of determining the number of holders of record of the stock of a close corporation, stock which is held in joint or common tenancy or by the entireties shall be treated as held by one shareholder.

(b) The articles of incorporation of a close corporation may set forth the qualifications of shareholders, either by specifying classes of persons who shall be entitled to be holders of record of shares of any class, or by specifying classes of persons who shall not be entitled to be holders of shares of any class or both.

(c) All of the corporation's issued shares of all classes, exclusive of treasury shares, shall be held of record by not more than a specified number of persons, not exceeding 30.



(Acts 1980, No. 80-633, p. 1094, §162.)Section 10-2A-302

Section 10-2A-302
Formation of a close corporation.

A close corporation shall be formed in accordance with Sections 10-2A-90 through 10-2A-96, except that such formation must be authorized by the affirmative vote of all holders of and subscribers to shares of the corporation, and:

(1) The articles of incorporation shall contain a heading stating the name of the corporation and that it is a close corporation; and

(2) The articles of incorporation shall contain the provisions required by Section 10-2A-301; and

(3) Each certificate for shares shall conspicuously note the fact that the corporation is a close corporation and make reference to the restriction on transfer of shares set forth in the articles of incorporation.



(Acts 1980, No. 80-633, p. 1094, §163.)Section 10-2A-303

Section 10-2A-303
Election of existing corporation to become a close corporation.

Any corporation subject to this chapter may become a close corporation by amending its articles of incorporation to contain a statement that it elects to become a close corporation, to contain the provisions required by Section 10-2A-301 to appear in the articles of incorporation of a close corporation, and to contain a heading stating the name of the corporation and that it is a close corporation. Such amendment shall be adopted in accordance with the requirements of this chapter, except that it must be approved by the unanimous affirmative vote of the holders of record of all the shares of each class of stock of the corporation which are outstanding.



(Acts 1980, No. 80-633, p. 1094, §164.)Section 10-2A-304

Section 10-2A-304
Voluntary termination of close corporation status by amendment of articles of incorporation; vote required.

(a) A corporation may voluntarily terminate its status as a close corporation and cease to be subject to this article by amending its articles of incorporation to delete therefrom the additional provisions required or permitted by Section 10-2A-301 to be stated in the articles of incorporation of close corporations except such provisions as are permitted by this chapter which the corporation chooses to retain. Any such amendment shall be adopted and shall become effective in accordance with Section 10-2A-115, except that it must be approved by a vote of the holders of record of at least one-third of the shares of each class of stock of the corporation which are outstanding.

(b) The articles of incorporation of a close corporation may provide that on any amendment to terminate its status as a close corporation, a vote greater than one-third or a vote of all shares of any class shall be required; and if the certificate of incorporation contains such a provision, that provision shall not be amended, repealed or modified by any vote less than that required to terminate the corporation's status as a close corporation.



(Acts 1980, No. 80-633, p. 1094, §165.)Section 10-2A-305

Section 10-2A-305
Issuance or transfer of shares of a close corporation in breach of qualifying conditions.

(a) If shares of a close corporation are issued or transferred to any person who is not entitled under any provision of the articles of incorporation permitted by Section 10-2A-301 to be a holder of record of shares of such corporation, and if the certificate for shares conspicuously notes the qualifications of the persons entitled to be holders of record thereof, such person is conclusively presumed to have notice of the fact of his ineligibility to be a shareholder.

(b) If a certificate for shares of any close corporation conspicuously notes the fact of a restriction on transfer of shares of the corporation and the restriction is one which is permitted by Section 10-2A-41, the transferee of the shares is conclusively presumed to have notice of the fact that he has acquired shares in violation of the restriction, if such acquisition violates the restriction.

(c) Whenever any person to whom shares of a close corporation have been issued or transferred has, or is conclusively presumed under this section to have notice either that he is a person not eligible to be a holder of shares of the corporation, or that the transfer of shares is in violation of a restriction on transfer of shares, the corporation may, at its option, refuse to register transfer of the shares into the name of the transferee in addition to any remedies which may be available under Section 10-2A-41 or otherwise.

(d) The provisions of subsection (c) of this section shall not be applicable if the transfer of shares even though otherwise contrary to subsections (a) or (b) of this section, has been consented to by all the shareholders of the close corporation, or if the close corporation has amended its articles of incorporation in accordance with Section 10-2A-304.

(e) The term "transfer," as used in this section, is not limited to a transfer for value.

(f) The provisions of this section do not in any way impair any rights of a transferee regarding any right to rescind the transaction or to recover under any applicable warranty express or implied.



(Acts 1980, No. 80-633, p. 1094, §166.)Section 10-2A-306

Section 10-2A-306
Corporate option where a restriction on transfer of shares is held invalid.

If a restriction on transfer of shares of a close corporation is held not to be authorized by Section 10-2A-41, the corporation shall nevertheless have an option for a period of 30 days after the judgment setting aside the restriction becomes final, to acquire the restricted shares at a price which is agreed upon by the parties or if no agreement is reached as to price, then at the fair value as determined by the circuit court of the county in which the corporation has its registered office or any court in such place having jurisdiction. In order to determine fair value, the court may appoint an appraiser to receive evidence and report to the court his findings and recommendation as to fair value. The appraiser shall have such powers and shall proceed, so far as applicable, in the same manner as appraisers appointed under Section 10-2A-163.



(Acts 1980, No. 80-633, p. 1094, §167.)Section 10-2A-307

Section 10-2A-307
Agreements restricting discretion of directors.

A written agreement among the shareholders of a close corporation holding a majority of the outstanding shares entitled to vote, whether solely among themselves or with a party not a shareholder, is not invalid, as between the parties to the agreement, on the ground that it so relates to the conduct of the business and affairs of the corporation as to restrict or interfere with the discretion or powers of the board of directors. The effect of any such agreement shall be to relieve the directors and impose upon the shareholders who are parties to the agreement the liability for managerial acts or omissions which is imposed on directors to the extent and so long as the discretion or powers of the board in its management of corporate affairs is controlled by such agreement.



(Acts 1980, No. 80-633, p. 1094, §168.)Section 10-2A-308

Section 10-2A-308
Management by shareholders.

The articles of incorporation of a close corporation may provide that the business of the corporation shall be managed by the shareholders of the corporation rather than by a board of directors. So long as this provision continues in effect:

(1) No meeting of shareholders need be called to elect directors;

(2) Unless the context clearly requires otherwise, the shareholders of the corporation shall be deemed to be directors for purposes of applying provisions of this article; and

(3) The shareholders of the corporation shall be subject to all liabilities of directors.

Such a provision may be inserted in the articles of incorporation by amendment if all incorporators and subscribers or all holders of record of all of the outstanding shares, whether or not having voting power, authorize such a provision. An amendment to the articles of incorporation to delete such a provision shall be adopted by a vote of the holders of record of not less than one-third of all outstanding shares of the corporation, whether or not otherwise entitled to vote. If the articles of incorporation contain a provision authorized by this section, the existence of such provision shall be noted conspicuously on the face or back of every certificate for shares issued by such corporation.



(Acts 1980, No. 80-633, p. 1094, §169.)Section 10-2A-309

Section 10-2A-309
Appointment of custodian for close corporation.

(a) The circuit court of the county in which the corporation has its registered office or any court in such place having jurisdiction, upon application of any shareholder, may appoint one or more persons to be custodians, and, if the corporation is insolvent, to be receivers, of any close corporation when:

(1) Pursuant to Section 10-2A-308 the business and affairs of the corporation are managed by the shareholders and they are so divided that the business of the corporation is suffering or is threatened with irreparable injury and any remedy with respect to such deadlock provided in the articles of incorporation or bylaws or in any written agreement of the shareholders has failed; or

(2) The petitioning shareholder has the right to the dissolution of the corporation under a provision of the articles of incorporation permitted by Section 10-2A-312.

(b) In lieu of appointing a custodian for a close corporation under this section the court may appoint a provisional director, whose powers and status shall be as provided in Section 10-2A-310 if the court determines that it would be in the best interest of the corporation. Such appointment shall not preclude any subsequent order of the court appointing a custodian for such corporation.

(c) A custodian appointed under this section shall have all the powers of a receiver appointed under Section 10-2A-196, but the authority of the custodian is to continue the business of the corporation and not to liquidate its affairs and distribute its assets, except when the court shall otherwise order.



(Acts 1980, No. 80-633, p. 1094, §170.)Section 10-2A-310

Section 10-2A-310
Appointment of a provisional director in certain cases.

(a) Notwithstanding any contrary provision of the articles of incorporation or the bylaws or agreement of the shareholders, the circuit court of the county in which the registered office of the corporation is located may appoint a provisional director for a close corporation if the directors are so divided respecting the management of the corporation's business and affairs that the votes required for action by the board of directors cannot be obtained with the consequence that the business and affairs of the corporation can no longer be conducted to the advantage of the shareholders generally.

(b) An application for relief under this section must be filed (1) by at least one-half of the number of directors then in office, or (2) by the holders of at least one-third of all shares then entitled to elect directors, or, (3) if there be more than one class of shares then entitled to elect one or more directors, by the holders of two-thirds of the shares of any such class; but the articles of incorporation of a close corporation may provide that a lesser proportion of the directors or of the shareholders or of a class of shareholders may apply for relief under this section.

(c) A provisional director shall be an impartial person who is neither a shareholder nor a creditor of the corporation or of any subsidiary or affiliate of the corporation, and whose further qualifications, if any, may be determined by the circuit court of the county. A provisional director is not a receiver of the corporation and does not have the title and powers of a custodian or receiver. A provisional director shall have all the rights and powers of a duly elected director of the corporation, including the right to notice of and to vote at meetings of directors until such time as he shall be removed by order of the circuit court of the county or by the holders of a majority of all shares then entitled to vote to elect directors or by the holders of two-thirds of the shares of that class of voting shares which filed the application for appointment of a provisional director. His compensation shall be determined by agreement between him and the corporation subject to approval of the circuit court of the county, which may fix his compensation in the absence of agreement or in the event of disagreement between the provisional director and the corporation.

(d) Even though the requirements of subsection (b) of this section relating to the number of directors or shareholders who may petition for appointment of a provisional director are not satisfied, the circuit court of the county may nevertheless appoint a provisional director if permitted by subsection (b) of Section 10-2A-309.



(Acts 1980, No. 80-633, p. 1094, §171.)Section 10-2A-311

Section 10-2A-311
Shareholders' agreements.

No written agreement among shareholders of a close corporation, nor any provision of the articles of incorporation or of the bylaws of the corporation, which agreement or provision relates to any phase of the affairs of such corporation, including but not limited to the management of its business or declaration and payment of dividends or other division of profits or the election of directors or officers or the employment of shareholders by the corporation or the arbitration of disputes, shall be invalid on the ground that it is an attempt by the parties to the agreement or by the shareholders of the corporation to treat the corporation as if it were a partnership or to arrange relations among the shareholders or between the shareholders and the corporation in a manner that would be appropriate only among partners.



(Acts 1980, No. 80-633, p. 1094, §172.)Section 10-2A-312

Section 10-2A-312
Shareholders' option to dissolve corporation.

(a) The articles of incorporation of any close corporation may include a provision granting to any shareholder, or to the holders of any specified number or percentage of shares of any class of shares, an option to have the corporation dissolved at will or upon the occurrence of any specified event or contingency. Whenever any such option to dissolve is exercised, the shareholders exercising such option shall give written notice thereof to all other shareholders. After the expiration of 30 days following the sending of such notice, the dissolution of the corporation shall proceed as if the required number of shareholders having voting power had consented in writing to dissolution of the corporation as provided by Section 10-2A-181.

(b) If the articles of incorporation as originally filed do not contain a provision authorized by subsection (a) of this section, the articles may be amended to include such provision if adopted by the affirmative vote of the holders of all the outstanding shares, whether or not entitled to vote, unless the articles of incorporation specifically authorize such an amendment by a vote which shall be not less than two-thirds of all the outstanding shares whether or not entitled to vote.

(c) Each certificate for shares in any corporation whose articles of incorporation authorize dissolution as permitted by this section shall conspicuously note on the face thereof the existence of the provision. Unless noted conspicuously on the face of the certificate for shares the provision is ineffective.



(Acts 1980, No. 80-633, p. 1094, §173.)Section 10-2A-313

Section 10-2A-313
Effect of the close corporation provisions on other laws.

This article shall not be deemed to repeal any statute or rule of law which is or would be applicable to any corporation which is organized under the provisions of this chapter but is not a close corporation.



(Acts 1980, No. 80-633, p. 1094, §174.)Section 10-2A-70.1

Section 10-2A-70.1
Limitation on amount of political contribution; provisions supplemental.

(a) It shall be legal and permissible for any corporation, other than a public utility that is regulated by the Public Service Commission, whether for profit or nonprofit, incorporated under the laws of or doing business in this state, to directly give, pay, expend, or contribute, any money or other valuable thing in any amount not to exceed $500.00 to any one candidate or political party, or to aid or defeat any question or proposition in any one election in order to aid, promote or prevent the nomination or election of any person, or defeat any question or proposition submitted to the vote of the people, or in order to aid, promote or antagonize the interest of any political party. In the case of a group of parent-subsidiary corporations, the $500.00 limitation described above shall apply to the entire group.

A corporation which is a public utility because it owns, controls or operates a railroad shall not make a contribution to any candidate for the Public Service Commission, but shall otherwise be entitled to take any action permitted nonpublic utilities under this section.

(b) The provisions of this section are supplemental. It shall be construed in pari materia with other laws regulating political contributions; however, those laws or parts of laws which are in direct conflict or inconsistent with the provisions of this section are hereby repealed.



(Acts 1981, No. 81-543, p. 911, §§1, 3; Acts 1988, No. 88-107, p. 137, §1.)Section 10-2A-70.2

Section 10-2A-70.2
Corporation contributions to candidates, parties, etc.

It is the intent of the Legislature that the provisions hereof shall not repeal nor be construed to repeal any provision of Section 10-2A-70.1. Provided further, however, notwithstanding any provision hereof or any other law to the contrary, it shall be legal and permissible for any corporation, other than a public utility that is regulated by the Public Service Commission, whether for profit or nonprofit, incorporated under the laws of or doing business in this state, to directly give, pay, expend, or contribute, any money or other valuable thing in any amount not to exceed $500.00 to any one candidate or political party or political committee. It shall also be legal and permissible for nonprofit corporations to directly give, pay, extend, or contribute, any money or other valuable thing in any amount in order to aid, promote or defeat any question or proposition submitted to the vote of the people.

A corporation which is a public utility because it owns, controls or operates a railroad shall not make a contribution to any candidate for the Public Service Commission, but shall otherwise be entitled to take any action permitted nonpublic utilities under this section.



(Acts 1981, No. 81-860, p. 1631, §3; Acts 1988, No. 88-107, p. 137, §2.)Section 10-2A-70

Section 10-2A-70
Giving aid or contribution to political party or candidate, etc.; penalty; exception for voluntary separate political fund.

Any corporation, incorporated company or incorporated association, by whatever name it may be known, incorporated or organized under the laws of this state or doing business in this state, or any servant, agent, employee or officer thereof, who shall give, donate, appropriate or furnish, directly or indirectly, any money, securities, funds or property of said corporation, incorporated company or incorporated association for the purpose of aiding any political party or any candidate for any public office or any candidate for any nomination for any public office by any political party or who shall give, donate, appropriate or furnish, directly or indirectly, any money, security, funds or property of said corporation, incorporated company or association to any committee or person as a contribution to the expenses of any political party or any candidate, representative or committee of any political party or candidate for nomination by any political party or any committee or other person acting in behalf of such candidate shall be guilty of a misdemeanor and, on conviction, shall be fined not less than $100.00, nor more than $2,000.00, at the discretion of the jury trying the case. Notwithstanding the provisions of this section, it shall not be unlawful for any business or nonprofit corporation, incorporated under the laws of or doing business in this state, or any officer or agent acting in behalf of such corporation to give, pay, expend or contribute money, services or anything of value for the purposes of establishing, administering or soliciting voluntary contributions to a separate, segregated fund to be utilized for political purposes as permitted by Section 10-1-2. Provided, that no corporate funds will be a part of such separate, segregated fund.



(Acts 1959, No. 414, p. 1055, §64; Acts 1979, No. 79-705, p. 1253, §3; Code 1975, §10-2-168; Acts 1981, No. 81-868, p. 1661, §1.)

USA Statutes : alabama