Usa Alabama

USA Statutes : alabama
Title : Title 10 CORPORATIONS, PARTNERSHIPS AND ASSOCIATIONS.
Chapter : Chapter 2B BUSINESS CORPORATIONS.
Section 10-2B-1.01

Section 10-2B-1.01
Short title and applicability.

(a) This chapter shall be known and may be cited as the "Alabama Business Corporation Act."

(b) Without in any way limiting the generality of any provision of this chapter, all of the provisions of this chapter shall apply to banks, trust companies, savings and loan associations, insurance companies, public utilities, and railroad companies, except to the extent, if any, that any provision of this chapter is inconsistent with other statutes of this state specifically applicable to such corporations.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-1.02

Section 10-2B-1.02
Reservation of power to amend or repeal.

The Alabama Legislature has power to amend or repeal all or part of this chapter at any time, and all domestic and foreign corporations subject to this chapter are governed by the amendment or repeal.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-1.20

Section 10-2B-1.20
Filing requirements.

(a) A document must satisfy the requirements of this section and of any other section that adds to or varies these requirements, to be entitled under this chapter to filing by the probate judge or by the Secretary of State, as the case may be.

(b) This chapter must require or permit filing the document in the office of the probate judge or the Office of the Secretary of State, as the case may be.

(c) The document must contain the information required by this chapter. It may contain other information as well.

(d) The document must be typewritten or printed.

(e) The document must be in the English language. A corporate name need not be in English if written in English letters or Arabic or Roman numerals, and the copy of its articles of incorporation and all amendments thereto required of foreign corporations need not be in English if accompanied by a reasonably authenticated English translation.

(f) The document must be executed:

(1) By the chair of the board of directors of the domestic or foreign corporation, by its president, or by another of its officers;

(2) If directors have not been selected or the corporation has not been formed, by an incorporator; or

(3) If the corporation is in the hands of a receiver, trustee, or other court-appointed fiduciary, by that fiduciary.

(g) The person executing the document shall sign it and state beneath or opposite his or her signature in English letters, his or her name, and the capacity in which he or she signs. The document may but need not contain: (1) the corporate seal, (2) an attestation by the secretary or an assistant secretary, or (3) an acknowledgement, verification, or proof.

(h) If the Secretary of State has prescribed a mandatory form for the document under Section 10-2B-1.21, the document must be in or on the prescribed form.

(i) The document must be delivered to the office of the probate judge or the Office of the Secretary of State, as the case may be, for filing and must be accompanied by one exact or conformed copy (except as provided in Sections 10-2B-5.03 and 10-2B-15.09) and such additional exact or conformed copies as may be required by any of the provisions of Section 10-2B-1.25, together with all fees required by this chapter or other law.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-1.21

Section 10-2B-1.21
Forms.

The Secretary of State shall prescribe and furnish on request forms for: (1) an application for a certificate of existence, (2) a foreign corporation's application for a certificate of authority to transact business in this state, (3) a foreign corporation's application for a certificate of withdrawal, and (4) the annual report. If the Secretary of State so requires, use of these forms is mandatory.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-1.22

Section 10-2B-1.22
Filing, service, and copying fees.

(a) The probate judge or the Secretary of State, as the case may be, shall collect the following fees when the documents described in this subsection are delivered to him or her for filing:

DOCUMENTFEE FOR STATE OF ALABAMAFEE FOR PROBATE JUDGE
(1) Articles of incorporation$40.00$35.00
(2) Application for reserved name$10.00No fee
(3) Notice of transfer of reserved name$5.00No fee
(4) Application for registered name$1.00 for each month or fraction thereof remaining in calendar year in which application is filed; $5.00 minimumNo fee
(5) Application for renewal of registered name$12.00No fee
(6) Corporation's statement of change of registered agent or registered office or both$5.00No fee
(7) Agent's statement of change of registered office for each affected corporation$5.00No fee
(8) Agent's statement of resignationNo feeNo fee
(9) Amendment of articles of incorporation that alter the name of a corporation$10.00$10.00
(10) Amendment of articles of incorporation other than one altering the name of a corporationNo fee$10.00
(11) Restatement of articles of incorporation with or without amendment of articles$10.00$25.00
(12) Articles of merger or share exchange$50.00$25.00
(13) Articles of dissolution$20.00$10.00
(14) Articles of revocation of dissolution$10.00$5.00
(15) Certificate of administrative dissolutionNo feeNo fee
(16) Application for reinstatement following administrative dissolution$40.00$35.00
(17) Certificate of reinstatementNo feeNo fee
(18) Certificate of judicial dissolutionNo feeNo fee
(19) Application for certificate of authority$175.00No fee
(20) Application for amended certificate of authority$25.00No fee
(21) Application for certificate of withdrawal$20.00No fee
(22) Certificate of revocation of authority to transact businessNo feeNo fee
(23) Annual report$10.00No fee
(24) Articles of correction of document filed with the probate judgeNo fee$10.00
(25) Articles of correction of document filed with the Secretary of State$10.00No fee
(26) Application for certificate of existence or authorization$5.00No fee
(27) Any other document required or permitted to be filed by this chapter$5.00$5.00

(b) When appropriate, two checks shall accompany a document delivered to the probate judge or the Secretary of State for filing, one payable to the probate judge for all charges for the probate judge, and one payable to the State of Alabama covering all charges for the Secretary of State. In the case of any document delivered for filing to the probate judge accompanied by a check for the charges for the Secretary of State, the check for the Secretary of State shall be forwarded by the probate judge to the Secretary of State. In the case of any document delivered for filing to the Secretary of State accompanied by a check for the probate judge, the check for the probate judge shall be forwarded by the Secretary of State to the probate judge.

(c) There is hereby established in the State Treasury a fund to be known and designated as the Secretary of State Corporations Fund. All funds, fees, charges, costs, and collections accruing to or collected by the Office of the Secretary of State under the foregoing provisions of this section or any other fees collected by the Secretary of State relating to corporations shall be deposited into the State Treasury to the credit of the Secretary of State Corporations Fund except as so provided in subsection (e).

(d) All funds now or hereafter deposited in the State Treasury to the credit of the Secretary of State Corporations Fund shall not be expended for any purpose whatsoever unless the same shall have been allotted and budgeted in accordance with the provisions of Article 4 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) Seventy percent of funds collected by the Secretary of State in relation to corporations 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 probate judge shall be charged and paid into the appropriate county treasury or to the probate judge as may be authorized or required by law.

(g) The Secretary of State shall collect a fee each time process is served on him or her under this chapter in an amount prescribed by law or rule of court. The party to a proceeding causing service of process is entitled to recover this fee as costs if he or she prevails in the proceeding.

(h) The Secretary of State shall collect the following fees for copying and certifying the copy of any filed document relating to a domestic or foreign corporation:

(1) One dollar ($1) a page for copying; and

(2) Five dollars ($5) for the certificate.

(i) The probate judge shall collect the following fees for copying and certifying the copy of any filed document relating to a corporation:

(1) One dollar and fifty cents ($1.50) a page for copying; and

(2) One dollar and fifty cents ($1.50) for the certificate.

(j) For corporations created by an act of the Legislature prior to the adoption of the Constitution of Alabama of 1901, or which resulted from a merger or consolidation, all documents required by this chapter to be delivered to the probate judge for filing shall be delivered to the Secretary of State for filing, all certificates required to be issued by the probate judge shall be issued by the Secretary of State, and all fees with respect to such filings and issuance of certificates shall be paid to the Secretary of State for the State of Alabama.

(k) For requests of immediate expedition by the Secretary of State regarding document filings, certifications, and certificates in addition to required fees, a one hundred dollar ($100) surcharge shall be imposed.



(Acts 1994, No. 94-245, p. 343, §1; Act 2000-724, p. 1550, §1.)Section 10-2B-1.23

Section 10-2B-1.23
Effective time and date of document.

(a) Except as provided in subsection (b) and Section 10-2B-1.24(c), a document accepted for filing is effective:

(1) At the time of filing on the date it is filed, as evidenced by the probate judge's or the Secretary of State's date and time endorsement on the original document; or

(2) At the time specified in the document as its effective time on the date it is filed.

(b) A document may specify a delayed effective time and date, and if it does so the document becomes effective at the time and date specified. If a delayed effective date but no time is specified, the document is effective at the close of business on that date. A delayed effective date for a document must not be later than the 90th day after the date it is filed.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-1.24

Section 10-2B-1.24
Correcting filed document.

(a) A domestic or foreign corporation may correct a document filed by the probate judge or the Secretary of State if the document (1) contains, through accident or inadvertence, clerical or otherwise, an incorrect statement or (2) was defectively executed, attested, sealed, verified, or acknowledged, without refiling the entire document or submitting formal articles of amendment.

(b) A document is corrected:

(1) By preparing articles of correction that (i) describe the document (including its filing date) or attach a copy of it to the articles, (ii) specify the incorrect statement and the reason it is incorrect or the manner in which the execution was defective, and (iii) correct the incorrect statement or defective execution; and

(2) By delivering the articles to the probate judge or the Secretary of State, as the case may be, for filing.

(c) Articles of correction are effective on the effective date of the document they correct except as to persons relying on the uncorrected document and adversely affected by the correction. As to those persons, articles of correction are effective when filed.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-1.25

Section 10-2B-1.25
Place of filing and filing duties of probate judge and Secretary of State.

(a) The following documents shall be delivered to the office of the probate judge for filing:

(1) Articles of incorporation,

(2) Articles of amendment of articles of incorporation,

(3) Restated articles of incorporation,

(4) Articles of dissolution,

(5) Articles of revocation of dissolution,

(6) Any other document required or permitted to be filed under this chapter and not expressly required to be delivered to the Office of the Secretary of State or probate judge for filing, and

(7) Articles of correction of any document required or permitted to be delivered to the office of the probate judge for filing.

(b) Any of the following documents delivered to the office of the probate judge for filing shall be accompanied by an additional exact or conformed copy to permit the probate judge to transmit to the Secretary of State a certified copy thereof as required by subsection (g) of this section:

(1) Articles of incorporation,

(2) Articles of amendment that alter the name of any corporation,

(3) Restated articles of incorporation,

(4) Articles of dissolution,

(5) Articles of revocation of dissolution, and

(6) Articles of correction correcting any of the foregoing documents.

(c) The following documents shall be delivered to the Office of the Secretary of State for filing:

(1) Articles of merger or share exchange,

(2) Application of a foreign corporation for certificate of authority to transact business in this state,

(3) The annual report (which may be made as provided in Section 10-2B-16.22 by filing with the Department of Revenue the public record information together with the prescribed fee for the annual report),

(4) For corporations created by an act of the Legislature prior to the adoption of the Constitution of Alabama of 1901, or which have resulted from a merger or consolidation, all documents required by this chapter to be delivered to the probate judge for filing shall be delivered to the Secretary of State for filing,

(5) Any other document required or permitted under this chapter to be delivered to the Secretary of State for filing,

(6) Articles of correction of any document required or permitted to be delivered to the Office of the Secretary of State for filing.

(d) Articles of merger or share exchange delivered to the Office of the Secretary of State for filing shall be accompanied by such additional number of exact or conformed copies of such articles as may be required for purposes of subsection (g) hereof.

(e) If a document delivered for filing to the office of the probate judge or the Office of the Secretary of State, as the case may be, satisfies the requirements of Section 10-2B-1.20 and of this section, and if, in the case of the filing with the probate judge of articles of incorporation or articles of amendment that change the name of the corporation, the probate judge finds that the name of the proposed corporation or proposed changed name has been reserved under Section 10-2B-4.02, the probate judge or Secretary of State, as the case may be, shall file it immediately upon delivery.

(f) The probate judge or Secretary of State, as the case may be, files a document by stamping or otherwise endorsing "Filed," together with his or her name and official title and the date and time of receipt, on both the original and the document copy and on the receipt for the filing fee. Immediately after filing a document, except as provided in Sections 10-2B-5.03 and 10-2B-15.10, the probate judge or Secretary of State shall deliver the document copy, with the filing fee receipt (or acknowledgment of receipt if no fee is required) attached, to the domestic or foreign corporation or its representative.

(g) In the case of any of the documents described in subsection (b) above, the probate judge shall within 10 days transmit a certified copy of such document to the Office of the Secretary of State. In the case of articles of merger or share exchange, the Secretary of State shall promptly transmit a certified copy of the articles of merger or share exchange to the office of the probate judge of the county in which each of the corporations' articles of incorporation are filed or, in the case of corporations existing on January 1, 1981, the corporation's certificate of incorporation was filed, there to be recorded in a book to be kept for that purpose.

(h) If the probate judge or Secretary of State, as the case may be, refuses to file a document, he or she shall return it to the domestic or foreign corporation or its representative within seven days after the document was delivered, together with a brief, written explanation of the reason for his or her refusal.

(i) The probate judge's or Secretary of State's duty to file documents under this section is ministerial. His or her filing or refusing to file a document does not:

(1) Affect the validity or invalidity of the document in whole or part;

(2) Relate to the correctness or incorrectness of information contained in the document;

(3) Create a presumption that the document is valid or invalid or that information contained in the document is correct or incorrect.

(j) The Secretary of State shall keep an alphabetical list of domestic and foreign corporations, whose statements of incorporation, certificates or articles of incorporation, or applications for certificate of authority are filed in his or her office, together with the data contained in said documents.



(Acts 1994, No. 94-245, p. 343, §1; Act 2000-705, p. 1442, §3.)Section 10-2B-1.26

Section 10-2B-1.26
Appeal from probate judge's or Secretary of State's refusal to file document.

(a) If the probate judge or the Secretary of State refuses to file a document delivered to his or her office for filing, the domestic or foreign corporation may within 120 days of the return of the document to it appeal the refusal to the circuit court of the county in which the officer refusing to file the document has his or her office. The appeal is commenced by petitioning the court to compel filing the document and by attaching to the petition the document and the probate judge's or Secretary of State's explanation of his or her refusal to file.

(b) The court may summarily order the probate judge or Secretary of State to file the document, may order a trial de novo, or take other action the court considers appropriate.

(c) The court's final decision may be appealed as in other civil proceedings.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-1.27

Section 10-2B-1.27
Evidentiary effect of copy of filed document.

A certificate attached to a copy of a document filed by the probate judge or Secretary of State, bearing his or her signature (which may be in facsimile) and, in the case of the Secretary of State, the Seal of this State, certifying that the original is on file with his or her office, is conclusive evidence that the original document is on file with the probate judge or the Secretary of State, as the case may be.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-1.28

Section 10-2B-1.28
Certificate of existence.

(a) Anyone may apply to the Secretary of State to furnish a certificate of existence for a domestic corporation or a certificate of authorization for a foreign corporation.

(b) A certificate of existence or authorization sets forth:

(1) The domestic corporation's corporate name or the foreign corporation's corporate name used in this state;

(2) That (i) the domestic corporation is duly incorporated under the law of this state, the county in which the articles of incorporation are filed in the office of probate judge, the date of its incorporation, and the period of its duration if less than perpetual; or (ii) that the foreign corporation is authorized to transact business in this state;

(3) That its most recent annual report required by Section 10-2B-16.22 has been delivered to the Secretary of State;

(4) That the records of the Secretary of State do not disclose that articles of dissolution have been filed; and

(5) Other facts of record in the Office of the Secretary of State that may be requested by the applicant.

(c) Subject to any qualification stated in the certificate, a certificate of existence or authorization issued by the Secretary of State may be relied upon as conclusive evidence that the domestic or foreign corporation is in existence or is authorized to transact business in this state.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-1.29

Section 10-2B-1.29
Penalty for signing false document.

(a) A person commits an offense if he or she signs a document he or she knows is false in any material respect with the intent that the document be delivered to the Secretary of State or probate judge for filing.

(b) An offense under this section is a Class C misdemeanor under the Alabama Criminal Code.



(Acts 1994, No. 94-245, p, 343, §1.)Section 10-2B-1.30

Section 10-2B-1.30
Powers of probate judge and Secretary of State.

Each probate judge and the Secretary of State shall have the powers reasonably necessary to perform the duties required of him or her by this chapter.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-1.40

Section 10-2B-1.40
Definitions.

In this Act:

(1) "Articles of incorporation" include amended and restated articles of incorporation and, in the case of a corporation existing on January 1, 1981, its certificate of incorporation, including any amended certificate, and also include, except where the context otherwise requires, articles of merger.

(2) "Authorized shares" means the shares of all classes a domestic or foreign corporation is authorized to issue.

(3) "Conspicuous" means so written that a reasonable person against whom the writing is to operate should have noticed it. For example, printing in italics or boldface or contrasting color, or typing in capitals or underlined, is conspicuous.

(4) "Corporation" or "domestic corporation" means a corporation for profit, which is not a foreign corporation, incorporated under or subject to the provisions of this chapter.

(5) "Day" when used in the computation of time under this chapter excludes the first day and includes the last day of the period so computed, unless the last day is a Saturday, Sunday, or legal holiday, in which event the period runs until the end of the next day that is not a Saturday, a Sunday, or a legal holiday. When the period of time to be computed is less than 7 days, intermediate Saturdays, Sundays and legal holidays shall be excluded.

(6) "Deliver" includes mail.

(7) "Distribution" means a direct or indirect transfer of money or other property (except its own shares) or incurrence of indebtedness by a corporation to or for the benefit of any one or more of its shareholders in respect of any of its shares. A distribution may be in the form of a declaration or payment of a dividend; a purchase, redemption, or other acquisition of shares; a distribution of indebtedness; or otherwise.

(8) "Effective date of notice" is defined in Section 10-2B-1.41.

(9) "Employee" includes an officer but not a director. A director may accept duties that make him or her also an employee.

(10) "Entity" includes corporation and foreign corporation; not-for-profit corporation; profit and not-for-profit unincorporated association; business trust, estate, partnership, trust, and two or more persons having a joint or common economic interest; and state, United States, and foreign government.

(11) "Foreign corporation" means a corporation for profit incorporated under a law other than the law of this state.

(12) "Governmental subdivision" includes authority, county, district, and municipality.

(13) "Includes" denotes a partial definition.

(14) "Individual" includes the estate of an incompetent or deceased individual.

(15) "Means" denotes an exhaustive definition.

(16) "Notice" is defined in Section 10-2B-1.41.

(17) "Person" includes individual and entity.

(18) "Principal office" means the office (in or out of this state) so designated in the annual report where the principal executive offices of a domestic or foreign corporation are located.

(19) "Probate Judge" means the probate judge of the county in which the corporation's articles of incorporation are filed or, in the case of a corporation existing on January 1, 1981, the corporation's certificate of incorporation, was filed, unless otherwise provided in this chapter.

(20) "Proceeding" includes civil suit and criminal, administrative, and investigatory action.

(21) "Record date" means the date established under Article 6 or 7 on which a corporation determines the identity of its shareholders and their shareholdings for purposes of this chapter. The determination shall be made as of the close of business on the record date unless another time for doing so is specified when the record date is fixed.

(22) "Secretary" means the corporate officer to whom the board of directors has delegated responsibility under Section 10-2B-8.40(c) for custody of the minutes of the meetings of the board of directors and of the shareholders and for authenticating records of the corporation.

(23) "Shares" means the units into which the proprietary interests in a corporation are divided.

(24) "Shareholder" means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation.

(25) "State," when referring to a part of the United States, includes a state and commonwealth (and their agencies and governmental subdivisions) and a territory and insular possession (and their agencies and governmental subdivisions) of the United States.

(26) "Subscriber" means a person who subscribes for shares in a corporation, whether before or after incorporation.

(27) "Treasury shares" means shares of a corporation that have been issued, have been subsequently acquired by and belong to the corporation, and have not been canceled or restored to the status of authorized but unissued shares. Treasury shares shall be deemed to be "issued" shares, but not "outstanding" shares.

(28) "United States" includes district, authority, bureau, commission, department, and any other agency of the United States.

(29) "Voting group" means all shares of one or more classes or series that under the articles of incorporation or this chapter are entitled to vote and be counted together collectively on a matter at a meeting of shareholders. All shares entitled by the articles of incorporation or this chapter to vote generally on the matter are for that purpose a single voting group.



(Acts 1994, No. 94-245, p. 343, §1; Acts 1995, No. 95-255, p. 427, §1.)Section 10-2B-1.41

Section 10-2B-1.41
Notice.

(a) Notice under this chapter must be in writing when written notice is required under this chapter or by the corporation's articles of incorporation or bylaws, and in other cases unless oral notice is reasonable under the circumstances.

(b) Except to the extent limited in the articles of incorporation or bylaws, notice may be communicated in person; by telephone, telegraph, teletype, telecopier, facsimile transmission, or other form of wire or wireless communication; or by mail or private carrier. If these forms of personal notice are impracticable, notice may be communicated by a newspaper of general circulation in the area where published; or by radio, television, or other form of public broadcast communication.

(c) Written notice by a domestic or foreign corporation to its shareholder, if in a comprehensible form, is effective when mailed, if mailed postpaid and correctly addressed to the shareholder's address shown in the corporation's current record of shareholders.

(d) Written notice to a domestic or foreign corporation (authorized to transact business in this state) may be addressed to its registered agent at its registered office or to the corporation or its secretary at its principal office shown in its most recent annual report or, in the case of a foreign corporation that has not yet delivered an annual report, in its application for a certificate of authority.

(e) Except as provided in subsection (c), written notice, if in a comprehensible form, is effective at the earliest of the following:

(1) When received;

(2) Five days after its deposit in the United States mail, as evidenced by the postmark, if mailed postpaid and correctly addressed; or

(3) On the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee.

(f) Oral notice is effective when communicated if communicated in a comprehensible manner.

(g) If this chapter prescribes notice requirements for particular circumstances, those requirements govern. If articles of incorporation or bylaws prescribe notice requirements, not inconsistent with this section or other provisions of this chapter, those requirements govern.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-10.01

Section 10-2B-10.01
Authority to amend articles of incorporation.

(a) A corporation may amend its articles of incorporation at any time to add or change a provision that is required or permitted in the articles of incorporation or to delete a provision not required in the articles of incorporation. Whether a provision is required or permitted in the articles of incorporation is determined as of the effective date of the amendment.

(b) A shareholder of the corporation does not have a vested property right resulting from any provision in the articles of incorporation, including provisions relating to management, control, capital structure, dividend entitlement, or purpose or duration of the corporation.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-10.02

Section 10-2B-10.02
Amendment by board of directors.

Unless the articles of incorporation provide otherwise, a corporation's board of directors may adopt one or more amendments to the corporation's articles of incorporation without shareholder action:

(1) To extend the duration of the corporation if it was incorporated at a time when limited duration was required by law;

(2) To delete the names and addresses of the initial directors;

(3) To delete the name and address of the initial registered agent or registered office, if a statement of change is on file with the Secretary of State;

(4) To change each issued and unissued authorized share of an outstanding class into a greater number of whole shares if the corporation has only shares of that class outstanding;

(5) To change the corporate name by substituting the word "corporation," or "incorporated," or an abbreviation of one of such words for a similar word or abbreviation in the name, or by adding, deleting, or changing a geographical attribution for the name; or

(6) To make any other change expressly permitted by this chapter to be made without shareholder action.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-10.03

Section 10-2B-10.03
Amendment by board of directors and shareholders.

(a) A corporation's board of directors may propose one or more amendments to the articles of incorporation for submission to the shareholders.

(b) For the amendments to be adopted:

(1) The board of directors must recommend the amendment to the shareholders unless the board of directors determines that because of conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the shareholders with the amendment; and

(2) The shareholders entitled to vote on the amendment must approve the amendment as provided in subsection (e).

(c) Subject to the corporation's articles of incorporation, the board of directors may condition its submission of the proposed amendment on any basis, except that the board of directors may not decrease the vote required for approval under subsection (e).

(d) The corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders' meeting in accordance with Section 10-2B-7.05. The notice of meeting must also state that the purpose, or one of the purposes, of the meeting is to consider the proposed amendment and contain or be accompanied by a copy or summary of the amendment.

(e) Unless this chapter, the articles of incorporation, or the board of directors (acting pursuant to subsection (c)) require a greater vote or a vote by voting groups, the amendment to be adopted must be approved by:

(1) A majority of the votes entitled to be cast on the amendment by any voting group with respect to which the amendment would create dissenters' rights; and

(2) The votes required by Sections 10-2B-7.25 and 10-2B-7.26 by every other voting group entitled to vote on the amendment.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-10.04

Section 10-2B-10.04
Voting on amendments by voting groups.

(a) The holders of the outstanding shares of a class are entitled to vote as a separate voting group (if shareholder voting is otherwise required by this chapter) on a proposed amendment if the amendment would:

(1) Increase or decrease the aggregate number of authorized shares of the class;

(2) Effect an exchange or reclassification of all or part of the shares of the class into shares of another class;

(3) Effect an exchange or reclassification, or create the right of exchange, of all or part of the shares of another class into shares of the class;

(4) Change the designation, rights, preferences, or limitations of all or part of the shares of the class;

(5) Change the shares of all or part of the class into a different number of shares of the same class;

(6) Create a new class of shares having rights or preferences with respect to distributions or to dissolutions that are prior, superior, or substantially equal to the shares of the class;

(7) Increase the rights, preferences, or number of authorized shares of any class that, after giving effect to the amendment, have rights or preferences with respect to distributions or to dissolutions that are prior, superior, or substantially equal to the shares of the class;

(8) Limit or deny an existing preemptive right of all or part of the shares of the class; or

(9) Cancel or otherwise affect rights to distributions of dividends that have accumulated but not yet been declared on all or part of the shares of the class.

(b) If a proposed amendment would affect a series of a class of shares in one or more ways described in subsection (a), the shares of that series are entitled to vote as a separate voting group on the proposed amendment.

(c) If a proposed amendment that entitles two or more series of shares to vote as separate voting groups under this section would affect those two or more series in the same or substantially similar way, the shares of all the series so affected must vote together as a single voting group on the proposed amendment.

(d) A class or series of shares is entitled to the voting rights granted by this section although the articles of incorporation provide that the shares are nonvoting shares.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-10.05

Section 10-2B-10.05
Amendment before issuance of shares.

If a corporation has not yet issued shares, its board of directors may adopt one or more amendments to the corporation's articles of incorporation.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-10.06

Section 10-2B-10.06
Articles of amendment.

A corporation amending its articles of incorporation shall deliver to the probate judge for filing articles of amendment setting forth:

(1) The name of the corporation;

(2) The text of each amendment adopted;

(3) If an amendment provides for an exchange, reclassification, or cancellation of issued shares, provisions for implementing the amendment if not contained in the amendment itself;

(4) The date of each amendment's adoption;

(5) If an amendment was adopted by the board of directors without shareholder action, a statement to that effect and that shareholder action was not required;

(6) If an amendment was approved by the shareholders:

(i) The designation, number of outstanding shares, number of votes entitled to be cast by each voting group entitled to vote separately on the amendment, and the number of votes of each voting group indisputably represented at the meeting; and

(ii) Either the total number of votes cast for and against the amendment by each voting group entitled to vote separately on the amendment or the total number of undisputed votes cast for the amendment by each voting group and a statement that the number cast for the amendment by each voting group was sufficient for approval by that voting group.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-10.07

Section 10-2B-10.07
Restated articles of incorporation.

(a) A corporation's board of directors may restate its articles of incorporation at any time with or without shareholder action.

(b) The restatement may include one or more amendments to the articles. If the restatement includes an amendment requiring shareholder approval, it must be adopted as provided in Section 10-2B-10.03.

(c) If the board of directors submits a restatement for shareholder action, the corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders' meeting in accordance with Section 10-2B-7.05. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider the proposed restatement that identifies any amendment or other change it would make in the articles.

(d) A corporation restating its articles of incorporation shall deliver to the probate judge for filing articles of restatement setting forth the name of the corporation and the text of the restated articles of incorporation together with a certificate setting forth:

(1) Whether the restatement contains an amendment to the articles requiring shareholder approval and, if it does not, that the board of directors adopted the restatement;

(2) If the restatement contains an amendment to the articles requiring shareholder approval, the information required by Section 10-2B-10.06.

(e) Duly adopted restated articles of incorporation supersede the original articles of incorporation and all amendments to them.

(f) The probate judge may certify restated articles of incorporation, as the articles of incorporation currently in effect, without including the certificate information required by subsection (d).



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-10.08

Section 10-2B-10.08
Amendment pursuant to reorganization.

(a) A corporation's articles of incorporation may be amended without action by the board of directors or shareholders to carry out a plan of reorganization ordered or decreed by a court of competent jurisdiction under federal statute if the articles of incorporation after amendment contain only provisions required or permitted by Section 10-2B-2.02.

(b) The individual or individuals designated by the court shall deliver to the probate judge for filing articles of amendment setting forth:

(1) The name of the corporation;

(2) The text of each amendment approved by the court;

(3) The date of the court's order or decree approving the articles of amendment;

(4) The title of the reorganization proceeding in which the order or decree was entered; and

(5) A statement that the court had jurisdiction of the proceeding under federal statute.

(c) Shareholders of a corporation undergoing reorganization do not have dissenters' rights except as and to the extent provided in the reorganization plan.

(d) This section does not apply after entry of a final decree in the reorganization proceeding even though the court retains jurisdiction of the proceeding for limited purposes unrelated to consummation of the reorganization plan.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-10.09

Section 10-2B-10.09
Effect of amendment.

An amendment to articles of incorporation does not affect a cause of action existing against or in favor of the corporation, a proceeding to which the corporation is a party, or the existing rights of persons other than shareholders of the corporation. An amendment changing a corporation's name does not abate a proceeding brought by or against the corporation in its former name.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-10.20

Section 10-2B-10.20
Amendment by board of directors or shareholders.

(a) A corporation's board of directors may amend or repeal the corporation's bylaws unless:

(1) The articles of incorporation or this chapter reserve this power exclusively to the shareholders in whole or part; or

(2) The shareholders in amending or repealing a particular bylaw provide expressly that the board of directors may not amend or repeal that bylaw.

(b) A corporation's shareholders may amend or repeal the corporation's bylaws even though the bylaws may also be amended or repealed by its board of directors.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-10.21

Section 10-2B-10.21
Bylaw increasing quorum or voting requirement for shareholders.

(a) If authorized by the articles of incorporation, the shareholders may adopt or amend a bylaw that fixes a greater quorum or voting requirement for shareholders (or voting groups of shareholders) than is required by this chapter. The adoption or amendment of a bylaw that adds, changes, or deletes a greater quorum or voting requirement for shareholders must meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirement then in effect or proposed to be adopted, whichever is greater.

(b) A bylaw that fixes a greater quorum or voting requirement for shareholders under subsection (a) may not be adopted, amended, or repealed by the board of directors.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-10.22

Section 10-2B-10.22
Bylaw increasing quorum or voting requirement for directors.

(a) A bylaw that fixes a greater quorum or voting requirement for the board of directors may be amended or repealed:

(1) If originally adopted by the shareholders, only by the shareholders;

(2) If originally adopted by the board of directors, either by the shareholders or by the board of directors.

(b) A bylaw adopted or amended by the shareholders that fixes a greater quorum or voting requirement for the board of directors may provide that it may be amended or repealed only by a specified vote of either the shareholders or the board of directors.

(c) Action by the board of directors under subsection (a)(2) to adopt or amend a bylaw that changes the quorum or voting requirement for the board of directors must meet the same quorum requirement and be adopted by the same vote required to take action under the quorum and voting requirement then in effect or proposed to be adopted, whichever is greater.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-11.01

Section 10-2B-11.01
Merger.

(a) Subject to the limitations of the Constitution of Alabama of 1901 as the same may be amended from time to time, one or more corporations may merge into another corporation if the board of directors of each corporation adopts and its shareholders (if required by Section 10-2B-11.03) approve a plan of merger.

(b) The plan of merger must set forth:

(1) The name of each corporation planning to merge and the name of the surviving corporation into which each other corporation plans to merge;

(2) The terms and conditions of the merger; and

(3) The manner and basis of converting the shares of each corporation into shares, obligations, or other securities of any other corporation or into cash or other property in whole or part.

(c) The plan of merger may set forth:

(1) Amendments to the articles of incorporation of the surviving corporation; and

(2) Other provisions relating to the merger.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-11.02

Section 10-2B-11.02
Share exchange.

(a) Subject to the limitations of the Constitution of Alabama of 1901 as the same may be amended from time to time, a corporation may acquire all of the outstanding shares of one or more classes or series of another corporation if the board of directors of each corporation adopts and its shareholders (if required by Section 10-2B-11.03) approve the exchange.

(b) The plan of exchange must set forth:

(1) The name of the corporation whose shares will be acquired and the name of the acquiring corporation;

(2) The terms and conditions of the exchange; and

(3) The manner and basis of exchanging the shares to be acquired for shares, obligations, or other securities of the acquiring or any other corporation or for cash or other property in whole or part.

(c) The plan of exchange may set forth other provisions relating to the exchange.

(d) This section does not limit the power of a corporation to acquire all or part of the shares of one or more classes or series of another corporation through a voluntary exchange or otherwise.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-11.03

Section 10-2B-11.03
Action on plan.

(a) After adopting a plan of merger or share exchange, the board of directors of each corporation party to the merger, and the board of directors of the corporation whose shares will be acquired in the share exchange, shall submit the plan of merger (except as provided in subsection (g)) or share exchange for approval by its shareholders.

(b) For a plan of merger or share exchange to be approved:

(1) The board of directors must recommend the plan of merger or share exchange to the shareholders, unless the board of directors determines that because of conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the shareholders with the plan; and

(2) The shareholders entitled to vote must approve the plan.

(c) Subject to the corporation's articles of incorporation, the board of directors may condition its submission of the proposed merger or share exchange on any basis, except that the board of directors may not decrease the vote required for approval under subsection (e).

(d) The corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders' meeting in accordance with Section 10-2B-7.05. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider the plan of merger or share exchange and contain or be accompanied by a copy or summary of the plan.

(e) Unless this chapter or the articles of incorporation require a greater or lesser vote or a vote by voting groups, or the board of directors (acting pursuant to subsection (c)) requires a greater vote or a vote by voting groups, the plan of merger or share exchange to be authorized must be approved by each voting group entitled to vote separately on the plan by two thirds of all the votes entitled to be cast on the plan by that voting group; but in no case may the vote required for shareholder approval be set at less than a majority of the votes entitled to be cast on the plan by each voting group.

(f) Separate voting by voting groups is required:

(1) On a plan of merger if the plan contains a provision that, if contained in a proposed amendment to articles of incorporation, would require action by one or more separate voting groups on the proposed amendment under Section 10-2B-10.04;

(2) On a plan of share exchange by each class or series of shares included in the exchange, with each class or series constituting a separate voting group.

(g) Action by the shareholders of the surviving corporation on a plan of merger is not required if:

(1) The articles of incorporation of the surviving corporation will not differ (except for amendments enumerated in Section 10-2B-10.02) from its articles before the merger;

(2) Each shareholder of the surviving corporation whose shares were outstanding immediately before the effective date of the merger will hold the same number of shares, with identical designations, preferences, limitations, and relative rights, immediately after;

(3) The number of voting shares outstanding immediately after the merger, plus the number of voting shares issuable as a result of the merger (either by the conversion of securities issued pursuant to the merger or the exercise of rights and warrants issued pursuant to the merger) will not exceed by more than 20 percent the total number of voting shares of the surviving corporation outstanding immediately before the merger; and

(4) The number of participating shares outstanding immediately after the merger, plus the number of participating shares issuable as a result of the merger (either by the conversion of securities issued pursuant to the merger or the exercise of rights and warrants issued pursuant to the merger), will not exceed by more than 20 percent the total number of participating shares outstanding immediately before the merger.

(h) As used in subsection (g):

(1) "Participating shares" means shares that entitle their holders to participate without limitation in distributions.

(2) "Voting shares" means shares that entitle their holders to vote unconditionally in elections of directors.

(i) After a merger or share exchange is authorized, and at any time before articles of merger or share exchange are filed, the planned merger or share exchange may be abandoned (subject to any contractual rights), without further shareholder action, in accordance with the procedure set forth in the plan of merger or share exchange or, if none is set forth, in the manner determined by the board of directors.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-11.04

Section 10-2B-11.04
Merger of subsidiary.

(a) Subject to the limitations of the Constitution of Alabama of 1901 as the same may be amended from time to time, a parent corporation owning at least 80 percent of the outstanding shares of each class of a subsidiary corporation may merge the subsidiary into itself without approval of the shareholders of the parent or subsidiary.

(b) The board of directors of the parent shall adopt a plan of merger that sets forth:

(1) The names of the parent and subsidiary; and

(2) The manner and basis of converting the shares of the subsidiary into shares, obligations, or other securities of the parent or any other corporation or into cash or other property in whole or part.

(c) The parent shall mail a copy or summary of the plan of merger to each shareholder of the subsidiary who does not waive the mailing requirement in writing.

(d) The parent may not deliver articles of merger to the Secretary of State for filing until at least 30 days after the date it mailed a copy of the plan of merger to each shareholder of the subsidiary who did not waive the mailing requirement.

(e) Articles of merger under this section may not contain amendments to the articles of incorporation of the parent corporation (except for amendments enumerated in Section 10-2B-10.02).



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-11.05

Section 10-2B-11.05
Articles of merger or share exchange.

(a) After a plan of merger or share exchange is approved by the shareholders, or adopted by the board of directors if shareholder approval is not required, the surviving or acquiring corporation shall deliver to the Secretary of State for filing articles of merger or share exchange setting forth:

(1) The plan of merger or share exchange;

(2) If shareholder approval was not required, a statement to that effect;

(3) If approval of the shareholders of one or more corporations party to the merger or share exchange was required:

(i) The designation, number of outstanding shares, and number of votes entitled to be cast by each voting group entitled to vote separately on the plan as to each corporation; and

(ii) Either the total number of votes cast for and against the plan by each voting group entitled to vote separately on the plan or the total number of undisputed votes cast for the plan separately by each voting group and a statement that the number cast for the plan by each voting group was sufficient for approval by that voting group; and

(4) As to each domestic corporation, the county in which its articles of incorporation are filed.

(b) A merger or share exchange takes effect upon the effective date of the articles of merger or share exchange.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-11.06

Section 10-2B-11.06
Effect of merger or share exchange.

(a) When a merger takes effect:

(1) Every other corporation party to the merger merges into the surviving corporation and the separate existence of every corporation except the surviving corporation ceases;

(2) The surviving corporation thereupon and thereafter possesses all the rights, immunities, and franchises, of a public as well as of a private nature, of every corporation party to the merger; and all property, real, personal and mixed, and all debts due each of the corporations so merged, are taken and deemed to be transferred and vested in the surviving corporation without further act or deed; and title to any real estate, or an interest therein, vested in any of such corporations shall not revert nor in any way be impaired by reason of such merger;

(3) The surviving corporation shall be responsible and liable for all the liabilities and obligations of each corporation party to the merger; and neither the rights of creditors nor any liens upon the property of any corporation party to the merger shall be impaired by the merger;

(4) Any claim existing or action or proceeding pending by or against any corporation party to the merger may be prosecuted, or continued, as if the merger had not taken place, or the surviving corporation may be substituted in the action or proceeding for the corporation whose existence ceased;

(5) The articles of incorporation of the surviving corporation are amended to the extent provided in the plan of merger; and

(6) The shares of each corporation party to the merger that are to be converted into shares, obligations, or other securities of the surviving or any other corporation or into cash or other property are converted and the former holders of the shares are entitled only to the rights provided in the articles of merger or to their rights under Article 13.

(b) When a share exchange takes effect, the shares of each acquired corporation are exchanged as provided in the plan, and the former holders of the shares are entitled only to the exchange rights provided in the articles of share exchange or to their rights under Article 13.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-11.07

Section 10-2B-11.07
Merger or share exchange with foreign corporation.

(a) Subject to the limitations of the Constitution of Alabama of 1901 as the same may be amended from time to time, one or more foreign corporations may merge or enter into a share exchange with one or more domestic corporations if:

(1) In a merger, the merger is permitted by the law of the state or country under whose law each foreign corporation is incorporated and each foreign corporation complies with that law in effecting the merger;

(2) In a share exchange, the corporation whose shares will be acquired is a domestic corporation, whether or not a share exchange is permitted by the law of the state or country under whose law the acquiring corporation is incorporated;

(3) The foreign corporation complies with Section 10-2B-11.05 if it is the surviving corporation of the merger or acquiring corporation of the share exchange; and

(4) Each domestic corporation complies with the applicable provisions of Sections 10-2B-11.01 through 10-2B-11.04 and, if it is the surviving corporation of the merger or acquiring corporation of the share exchange, with Section 10-2B-11.05.

(b) Upon the merger or share exchange taking effect, the surviving foreign corporation of a merger and the acquiring foreign corporation of a share exchange is deemed:

(1) To appoint the Secretary of State as its agent for service of process in a proceeding to enforce any obligation or the rights of dissenting shareholders of each domestic corporation party to the merger or share exchange; and

(2) To agree that it will promptly pay to the dissenting shareholders of each domestic corporation party to the merger or share exchange the amount, if any, to which they are entitled under Article 13.

(c) This section does not limit the power of a foreign corporation to acquire all or part of the shares of one or more classes or series of a domestic corporation through a voluntary exchange or otherwise.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-11.08

Section 10-2B-11.08
Merger of limited partnership with corporation.

Insofar as they are applicable, the provisions of Article 11 of this chapter shall apply to mergers pursuant to Article 10A of Chapter 9A, Title 10, between corporations and domestic limited partnerships and "other business entities" as defined in said Article 10A. Domestic limited partnerships and business entities shall be treated as corporations for purposes of applying the procedures, requirements and effects prescribed in said Article 11 of this chapter.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-12.01

Section 10-2B-12.01
Sale of assets in regular course of business and mortgage of assets.

(a) Subject to the limitations of the Constitution of Alabama of 1901 as the same may be amended from time to time, a corporation may, on the terms and conditions and for the consideration determined by the board of directors:

(1) Sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property in the usual and regular course of business;

(2) Mortgage, pledge, dedicate to the repayment of indebtedness (whether with or without recourse), or otherwise encumber any or all of its property whether or not in the usual and regular course of business; or

(3) Transfer any or all of its property to a corporation all the shares of which are owned by the corporation.

(b) Unless the articles of incorporation require it, approval by the shareholders of a transaction described in subsection (a) is not required.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-12.02

Section 10-2B-12.02
Sale of assets other than in regular course of business.

(a) Subject to the limitations of the Constitution of Alabama of 1901 as the same may be amended from time to time, a corporation may sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property (with or without the good will), otherwise than in the usual and regular course of business on the terms and conditions and for the consideration determined by the corporation's board of directors, if the board of directors proposes and its shareholders approve the proposed transaction.

(b) For a transaction to be authorized:

(1) The board of directors must recommend the proposed transaction to the shareholders unless the board of directors determines that because of a conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the shareholders with the submission of the proposed transaction; and

(2) The shareholders entitled to vote must approve the transaction.

(c) Subject to the corporation's articles of incorporation, the board of directors may condition its submission of the proposed transaction on any basis, except that the board of directors may not decrease the vote required for approval under subsection (e).

(d) The corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders' meeting in accordance with Section 10-2B-7.05. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider the sale, lease, exchange, or other disposition of all, or substantially all, the property of the corporation and contain or be accompanied by a description of the transaction.

(e) Unless the articles of incorporation require a greater or lesser vote or a vote by voting groups, or the board of directors (acting pursuant to subsection (c)) requires a greater vote or a vote by voting groups, the transaction to be authorized must be approved by each voting group entitled to vote separately on the transaction by two thirds of all the votes entitled to be cast on the transaction by that voting group; but in no case may the vote required for shareholder approval be set at less than a majority of all the votes entitled to be cast on the transaction by each voting group.

(f) After a sale, lease, exchange, or other disposition of property is authorized, the transaction may be abandoned (subject to any contractual rights) without further shareholder action.

(g) A transaction that constitutes a distribution is governed by Section 10-2B-6.40 and not by this section.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-13.01

Section 10-2B-13.01
Definitions.

(1) "Corporate action" means the filing of articles of merger or share exchange by the probate judge or Secretary of State, or other action giving legal effect to a transaction that is the subject of dissenters' rights.

(2) "Corporation" means the issuer of shares held by a dissenter before the corporate action, or the surviving or acquiring corporation by merger or share exchange of that issuer.

(3) "Dissenter" means a shareholder who is entitled to dissent from corporate action under Section 10-2B-13.02 and who exercises that right when and in the manner required by Sections 10-2B-13.20 through 10-2B-13.28.

(4) "Fair Value," with respect to a dissenter's shares, means the value of the shares immediately before the effectuation of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable.

(5) "Interest" means interest from the effective date of the corporate action until the date of payment, at the average rate currently paid by the corporation on its principal bank loans, or, if none, at a rate that is fair and equitable under all circumstances.

(6) "Record shareholder" means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation.

(7) "Beneficial shareholder" means the person who is a beneficial owner of shares held in a voting trust or by a nominee as the record shareholder.

(8) "Shareholder" means the record shareholder or the beneficial shareholder.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-13.02

Section 10-2B-13.02
Right to dissent.

(a) A shareholder is entitled to dissent from, and obtain payment of the fair value of his or her shares in the event of, any of the following corporate actions:

(1) Consummation of a plan of merger to which the corporation is a party (i) if shareholder approval is required for the merger by Section 10-2B-11.03 or the articles of incorporation and the shareholder is entitled to vote on the merger or (ii) if the corporation is a subsidiary that is merged with its parent under Section 10-2B-11.04;

(2) Consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares will be acquired, if the shareholder is entitled to vote on the plan;

(3) Consummation of a sale or exchange by all, or substantially all, of the property of the corporation other than in the usual and regular course of business, if the shareholder is entitled to vote on the sale or exchange, including a sale in dissolution, but not including a sale pursuant to court order or a sale for cash pursuant to a plan by which all or substantially all of the net proceeds of the sale will be distributed to the shareholders within one year after the date of sale;

(4) To the extent that the articles of incorporation of the corporation so provide, an amendment of the articles of incorporation that materially and adversely affects rights in respect to a dissenter's shares because it:

(i) Alters or abolishes a preferential right of the shares;

(ii) Creates, alters, or abolishes a right in respect of redemption, including a provision respecting a sinking fund for the redemption or repurchase of the shares;

(iii) Alters or abolishes a preemptive right of the holder of the shares to acquire shares or other securities;

(iv) Excludes or limits the right of the shares to vote on any matter, or to cumulate votes, other than a limitation by dilution through issuance of shares or other securities with similar voting rights; or

(v) Reduces the number of shares owned by the shareholder to a fraction of a share if the fractional share so created is to be acquired for cash under Section 10-2B-6.04; or

(5) Any corporate action taken pursuant to a shareholder vote to the extent the articles of incorporation, bylaws, or a resolution of the board of directors provides that voting or nonvoting shareholders are entitled to dissent and obtain payment for their shares.

(b) A shareholder entitled to dissent and obtain payment for shares under this chapter may not challenge the corporate action creating his or her entitlement unless the action is unlawful or fraudulent with respect to the shareholder or the corporation.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-13.03

Section 10-2B-13.03
Dissent by nominees and beneficial owners.

(a) A record shareholder may assert dissenters' rights as to fewer than all of the shares registered in his or her name only if he or she dissents with respect to all shares beneficially owned by any one person and notifies the corporation in writing of the name and address of each person on whose behalf he or she asserts dissenters' rights. The rights of a partial dissenter under this subsection are determined as if the shares to which he or she dissents and his or her other shares were registered in the names of different shareholders.

(b) A beneficial shareholder may assert dissenters' rights as to shares held on his or her behalf only if:

(1) He or she submits to the corporation the record shareholder's written consent to the dissent not later than the time the beneficial shareholder asserts dissenters' rights; and

(2) He or she does so with respect to all shares of which he or she is the beneficial shareholder or over which he or she has power to direct the vote.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-13.20

Section 10-2B-13.20
Notice of dissenters' rights.

(a) If proposed corporate action creating dissenters' rights under Section 10-2B-13.02 is submitted to a vote at a shareholders' meeting, the meeting notice must state that shareholders are or may be entitled to assert dissenters' rights under this article and be accompanied by a copy of this article.

(b) If corporate action creating dissenters' rights under Section 10-2B-13.02 is taken without a vote of shareholders, the corporation shall (1) notify in writing all shareholders entitled to assert dissenters' rights that the action was taken; and (2) send them the dissenters' notice described in Section 10-2B-13.22.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-13.21

Section 10-2B-13.21
Notice of intent to demand payment.

(a) If proposed corporate action creating dissenters' rights under Section 10-2B-13.02 is submitted to a vote at a shareholder's meeting, a shareholder who wishes to assert dissenters' rights (1) must deliver to the corporation before the vote is taken written notice of his or her intent to demand payment or his or her shares if the proposed action is effectuated; and (2) must not vote his or her shares in favor of the proposed action.

(b) A shareholder who does not satisfy the requirements of subsection (a) is not entitled to payment for his or her shares under this article.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-13.22

Section 10-2B-13.22
Dissenters' notice.

(a) If proposed corporate action creating dissenters' rights under Section 10-2B-13.02 is authorized at a shareholders' meeting, the corporation shall deliver a written dissenters' notice to all shareholders who satisfied the requirements of Section 10-2B-13.21.

(b) The dissenters' notice must be sent no later than 10 days after the corporate action was taken, and must:

(1) State where the payment demand must be sent;

(2) Inform holders of shares to what extent transfer of the shares will be restricted after the payment demand is received;

(3) Supply a form for demanding payment;

(4) Set a date by which the corporation must receive the payment demand, which date may not be fewer than 30 nor more than 60 days after the date the subsection (a) notice is delivered; and

(5) Be accompanied by a copy of this article.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-13.23

Section 10-2B-13.23
Duty to demand payment.

(a) A shareholder sent a dissenters' notice described in Section 10-2B-13.22 must demand payment in accordance with the terms of the dissenters' notice.

(b) The shareholder who demands payment retains all other rights of a shareholder until those rights are canceled or modified by the taking of the proposed corporate action.

(c) A shareholder who does not demand payment by the date set in the dissenters' notice is not entitled to payment for his or her shares under this article.

(d) A shareholder who demands payment under subsection (a) may not thereafter withdraw that demand and accept the terms offered under the proposed corporate action unless the corporation shall consent thereto.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-13.24

Section 10-2B-13.24
Share restrictions.

(a) Within 20 days after making a formal payment demand, each shareholder demanding payment shall submit the certificate or certificates representing his or her shares to the corporation for (1) notation thereon by the corporation that such demand has been made and (2) return to the shareholder by the corporation.

(b) The failure to submit his or her shares for notation shall, at the option of the corporation, terminate the shareholders' rights under this article unless a court of competent jurisdiction, for good and sufficient cause, shall otherwise direct.

(c) If shares represented by a certificate on which notation has been made shall be transferred, each new certificate issued therefor shall bear similar notation, together with the name of the original dissenting holder of such shares.

(d) A transferee of such shares shall acquire by such transfer no rights in the corporation other than those which the original dissenting shareholder had after making demand for payment of the fair value thereof.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-13.25

Section 10-2B-13.25
Offer of payment.

(a) As soon as the proposed corporate action is taken, or upon receipt of a payment demand, the corporation shall offer to pay each dissenter who complied with Section 10-2B-13.23 the amount the corporation estimates to be the fair value of his or her shares, plus accrued interest.

(b) The offer of payment must be accompanied by:

(1) The corporation's balance sheet as of the end of a fiscal year ending not more than 16 months before the date of the offer, an income statement for that year, and the latest available interim financial statements, if any;

(2) A statement of the corporation's estimate of the fair value of the shares;

(3) An explanation of how the interest was calculated;

(4) A statement of the dissenter's right to demand payment under Section 10-2B-13.28; and

(5) A copy of this article.

(c) Each dissenter who agrees to accept the corporation's offer of payment in full satisfaction of his or her demand must surrender to the corporation the certificate or certificates representing his or her shares in accordance with terms of the dissenters' notice. Upon receiving the certificate or certificates, the corporation shall pay each dissenter the fair value of his or her shares, plus accrued interest, as provided in subsection (a). Upon receiving payment, a dissenting shareholder ceases to have any interest in the shares.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-13.26

Section 10-2B-13.26
Failure to take corporate action.

(a) If the corporation does not take the proposed action within 60 days after the date set for demanding payment, the corporation shall release the transfer restrictions imposed on shares.

(b) If, after releasing transfer restrictions, the corporation takes the proposed action, it must send a new dissenters' notice under Section 10-2B-13.22 and repeat the payment demand procedure.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-13.27

Section 10-2B-13.27
Reserved.

Reserved.

Section 10-2B-13.28

Section 10-2B-13.28
Procedure if shareholder dissatisfied with offer of payment.

(a) A dissenter may notify the corporation in writing of his or her own estimate of the fair value of his or her shares and amount of interest due, and demand payment of his or her estimate, or reject the corporation's offer under Section 10-2B-13.25 and demand payment of the fair value of his or her shares and interest due, if:

(1) The dissenter believes that the amount offered under Section 10-2B-13.25 is less than the fair value of his or her shares or that the interest due is incorrectly calculated;

(2) The corporation fails to make an offer under Section 10-2B-13.25 within 60 days after the date set for demanding payment; or

(3) The corporation, having failed to take the proposed action, does not release the transfer restrictions imposed on shares within 60 days after the date set for demanding payment.

(b) A dissenter waives his or her right to demand payment under this section unless he or she notifies the corporation of his or her demand in writing under subsection (a) within 30 days after the corporation offered payment for his or her shares.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-13.30

Section 10-2B-13.30
Court action.

(a) If a demand for payment under Section 10-2B-13.28 remains unsettled, the corporation shall commence a proceeding within 60 days after receiving the payment demand and petition the court to determine the fair value of the shares and accrued interest. If the corporation does not commence the proceeding within the 60 day period, it shall pay each dissenter whose demand remains unsettled the amount demanded.

(b) The corporation shall commence the proceeding in the circuit court of the county where the corporation's principal office (or, if none in this state, its registered office) is located. If the corporation is a foreign corporation without a registered office in this state, it shall commence the proceeding in the county in this state where the registered office of the domestic corporation merged with or whose shares were acquired by the foreign corporation was located.

(c) The corporation shall make all dissenters (whether or not residents of this state) whose demands remain unsettled parties to the proceeding as in an action against their shares, and all parties must be served with a copy of the petition. Nonresidents may be served by registered or certified mail or by publication as provided under the Alabama Rules of Civil Procedure.

(d) After service is completed, the corporation shall deposit with the clerk of the court an amount sufficient to pay unsettled claims of all dissenters party to the action in an amount per share equal to its prior estimate of fair value, plus accrued interest, under Section 10-2B-13.25.

(e) The jurisdiction of the court in which the proceeding is commenced under subsection (b) is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend decision on the question of fair value. The appraisers have the powers described in the order appointing them, or in any amendment to it. The dissenters are entitled to the same discovery rights as parties in other civil proceedings.

(f) Each dissenter made a party to the proceeding is entitled to judgment for the amount the court finds to be the fair value of his or her shares, plus accrued interest. If the court's determination as to the fair value of a dissenter's shares, plus accrued interest, is higher than the amount estimated by the corporation and deposited with the clerk of the court pursuant to subsection (d), the corporation shall pay the excess to the dissenting shareholder. If the court's determination as to fair value, plus accrued interest, of a dissenter's shares is less than the amount estimated by the corporation and deposited with the clerk of the court pursuant to subsection (d), then the clerk shall return the balance of funds deposited, less any costs under Section 10-2B-13.31, to the corporation.

(g) Upon payment of the judgment, and surrender to the corporation of the certificate or certificates representing the appraised shares, a dissenting shareholder ceases to have any interest in the shares.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-13.31

Section 10-2B-13.31
Court costs and counsel fees.

(a) The court in an appraisal proceeding commenced under Section 10-2B-13.30 shall determine all costs of the proceeding, including compensation and expenses of appraisers appointed by the court. The court shall assess the costs against the corporation, except that the court may assess costs against all or some of the dissenters, in amounts the court finds equitable, to the extent the court finds the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding payment under Section 10-2B-13.28.

(b) The court may also assess the reasonable fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable:

(1) Against the corporation and in favor of any or all dissenters if the court finds the corporation did not substantially comply with the requirements of Sections 10-2B-13.20 through 10-2B-13.28; or

(2) Against either the corporation or a dissenter, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this chapter.

(c) If the court finds that the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated, and that the fees for those services should not be assessed against the corporation, the court may award to these counsel reasonable fees to be paid out of the amounts awarded the dissenters who were benefitted.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-13.32

Section 10-2B-13.32
Status of shares after payment.

Shares acquired by a corporation pursuant to payment of the agreed value therefor or to payment of the judgment entered therefor, as in this chapter provided, may be held and disposed of by such corporation as in the case of other treasury shares, except that, in the case of a merger or share exchange, they may be held and disposed of as the plan of merger or share exchange may otherwise provide.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.01

Section 10-2B-14.01
Dissolution by incorporators or initial directors.

A majority of the incorporators or initial directors of a corporation that has not issued shares or has not commenced business may dissolve the corporation by delivering for filing to the probate judge articles of dissolution that set forth:

(1) The name of the corporation;

(2) The date of its incorporation;

(3) Either (i) that none of the corporation's shares has been issued or (ii) that the corporation has not commenced business;

(4) That no debt of the corporation remains unpaid;

(5) That the net assets of the corporation remaining after winding up have been distributed to the shareholders, if shares were issued; and

(6) That a majority of the incorporators or initial directors authorized the dissolution.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.02

Section 10-2B-14.02
Dissolution by board of directors and shareholders.

(a) A corporation's board of directors may propose dissolution for submission to the shareholders.

(b) For a proposal to dissolve to be adopted:

(1) The board of directors must recommend dissolution to the shareholders unless the board of directors determines that because of conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the shareholders; and

(2) The shareholders entitled to vote must approve the proposal to dissolve as provided in subsection (e).

(c) Subject to the corporation's articles of incorporation, the board of directors may condition its submission of the proposal for dissolution on any basis, except that the board of directors may not decrease the vote required for approval under subsection (e).

(d) The corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders' meeting in accordance with Section 10-2B-7.05. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider dissolving the corporation.

(e) Unless the articles of incorporation require a greater or lesser vote or a vote by voting groups, or the board of directors (acting pursuant to subsection (c)) requires a greater vote or a vote by voting groups, the proposal to dissolve to be adopted must be approved by each voting group entitled to vote separately on the proposal by two thirds of all the votes entitled to be cast on the proposal by that voting group; but in no case may the vote required for shareholder approval be set at less than a majority of all the votes entitled to be cast on the proposal by each voting group.

(f) In lieu of the procedure set forth in subsections (a) through (e) above, a corporation may be dissolved by the written consent of all of its shareholders, whether or not otherwise entitled to vote, without action by the corporation's board of directors.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.03

Section 10-2B-14.03
Articles of dissolution.

(a) At any time after dissolution is authorized, the corporation may dissolve by delivering to the probate judge for filing articles of dissolution setting forth:

(1) The name of the corporation;

(2) The date dissolution was authorized;

(3) If dissolution was approved by the shareholders:

(i) The number of votes entitled to be cast on the proposal to dissolve; and

(ii) Either the total number of votes cast for and against dissolution or the total number of undisputed votes cast for dissolution and a statement that the number cast for dissolution was sufficient for approval.

(4) If voting by voting groups was required, the information required by subparagraph (3) must be separately provided for each voting group entitled to vote separately on the plan to dissolve.

(5) If dissolution was approved by written consent of all shareholders under Section 10-2B-14.02(f), a statement to that effect in lieu of the information required by subparagraphs (3) and (4), and a copy of the written consent or consents signed by all shareholders of the corporation.

(b) A corporation is dissolved upon the effective date of its articles of dissolution.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.04

Section 10-2B-14.04
Revocation of dissolution.

(a) A corporation may revoke its dissolution within 120 days of its effective date.

(b) Revocation of dissolution must be authorized in the same manner as the dissolution was authorized unless that authorization permitted revocation by action of the board of directors alone, in which event the board of directors may revoke without shareholder action.

(c) After the revocation of dissolution is authorized, the corporation may revoke the dissolution by delivering to the probate judge for filing articles of revocation of dissolution, together with a copy of its articles of dissolution, that set forth:

(1) The name of the corporation;

(2) The effective date of the dissolution that was revoked;

(3) The date that the revocation of dissolution was authorized;

(4) If the corporation's board of directors (or incorporators) revoked the dissolution effected pursuant to Section 10-2B-14.01, a statement to that effect;

(5) If the corporation's board of directors revoked a dissolution authorized by the shareholders pursuant to Section 10-2B-14.02, a statement that revocation was permitted by action by the board of directors alone pursuant to authorization; and

(6) If shareholder action was required to revoke the dissolution effected pursuant to Section 10-2B-14.02, the information required by Section 10-2B-14.03(a)(3) or (4) or by Section 10-2B-14.03(a)(5).

(d) Revocation of dissolution is effective upon the effective date of the articles of revocation of dissolution.

(e) When the revocation of dissolution is effective, it relates back to and takes effect as of the effective date of the dissolution and the corporation resumes carrying on its business as if dissolution had never occurred.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.05

Section 10-2B-14.05
Effect of dissolution.

(a) A dissolved corporation continues its corporate existence but may not carry on any business except that appropriate to wind up and liquidate its business and affairs, including:

(1) Collecting its assets;

(2) Disposing of its properties that will not be distributed in kind to its shareholders;

(3) Discharging or making provision for discharging its liabilities;

(4) Distributing its remaining property among its shareholders according to their interests; and

(5) Doing every other act necessary to wind up and liquidate its business and affairs.

(b) Dissolution of a corporation does not:

(1) Alter the limited liability status of its subscribers and shareholders under Section 10-2B-6.22, except as provided in Section 10-2B-14.07(d)(2) with respect to assets distributed to a shareholder in liquidation;

(2) Transfer title to the corporation's property;

(3) Prevent transfer of its shares or securities, although the authorization to dissolve may provide for closing the corporation's share transfer records;

(4) Subject its directors or officers to standards of conduct different from those prescribed in Article 8;

(5) Change quorum or voting requirements for its board of directors or shareholders; change provisions for selection, resignation, or removal of its directors or officers or both; or change provisions for amending its bylaws;

(6) Prevent commencement of a proceeding by or against the corporation in its corporate name;

(7) Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution;

(8) Terminate the authority of the registered agent of the corporation; or

(9) Result in the corporation's name becoming available for use by another corporation under Section 10-2B-4.01 until the time for revocation of dissolution has elapsed or, in the case of a corporation administratively dissolved under Section 10-2B-14.21, the time for filing an application for reinstatement has elapsed without the filing of such an application, or, if an application is filed, until its final adjudication, including all appeals.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.06

Section 10-2B-14.06
Known claims against dissolved corporation.

(a) A dissolved corporation may dispose of the known claims against it by following the procedure described in this section.

(b) The dissolved corporation shall notify its known claimants in writing of the dissolution at any time after its effective date. The written notice must:

(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 fewer than 120 days from the effective date of the written notice, by which the dissolved corporation must receive the claim; and

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

(c) A claim against the dissolved corporation is barred:

(1) If a claimant who was given written notice under subsection (b) does not deliver the claim to the dissolved corporation by the deadline;

(2) If a claimant whose claim was rejected by the dissolved corporation does not commence a proceeding to enforce the claim within 90 days from the effective date of the rejection notice.

(d) For purposes of this section, "known claim" or "claim" includes unliquidated claims but does not include a contingent liability that has not matured so that there is no immediate right to bring suit, or a claim based on an event occurring after the effective date of dissolution.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.07

Section 10-2B-14.07
Unknown claims against dissolved corporation.

(a) A dissolved corporation may also publish notice of its dissolution and request that persons with claims against the corporation present them in accordance with the notice.

(b) The notice must:

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

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

(3) State that a claim against the corporation will be barred unless a proceeding to enforce the claim is commenced within two years after the publication of the notice.

(c) If the dissolved corporation publishes a newspaper notice in accordance with subsection (b), the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the claim against the dissolved corporation within two years after the publication date of the newspaper notice:

(1) A claimant who did not receive written notice under Section 10-2B-14.06;

(2) A claimant whose claim was timely sent to the dissolved corporation 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 corporation, to the extent of its undistributed assets; or

(2) If the assets have been distributed in liquidation, against a shareholder of the dissolved corporation to the extent of his or her pro rata share of the claim or the corporate assets distributed to him or her in liquidation, whichever is less, but a shareholder's total liability for all claims under this section may not exceed the total amount of assets distributed to him or her in liquidation.

(e) Nothing in this section shall be deemed to extend any otherwise applicable statute of limitations.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.20

Section 10-2B-14.20
Grounds for administrative dissolution.

The Secretary of State may commence a proceeding under Section 10-2B-14.21 to administratively dissolve a corporation if:

(1) The corporation does not pay within six months after they are due any franchise taxes or penalties imposed by this chapter or other law;

(2) The corporation does not deliver its annual report to the Secretary of State within six months after it is due;

(3) The corporation is without a registered agent or registered office in this state for 60 days or more;

(4) The corporation does not notify the Secretary of State within 60 days that its registered agent or registered office has been changed, that its registered agent has resigned, or that its registered office has been discontinued; or

(5) The corporation's period of duration stated in its articles of incorporation expires.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.21

Section 10-2B-14.21
Procedure for and effect of administrative dissolution.

(a) If the Secretary of State determines that one or more grounds exist under Section 10-2B-14.20 for dissolving a corporation, he or she shall serve the corporation with written notice of his or her determination under Section 10-2B-5.04.

(b) If the corporation does not correct each ground for dissolution or demonstrate to the reasonable satisfaction of the Secretary of State that each ground determined by the Secretary of State does not exist within 60 days after service of the notice is perfected under Section 10-2B-5.04, the Secretary of State shall administratively dissolve the corporation by signing a certificate of dissolution that recites the ground or grounds for dissolution and its effective date. The Secretary of State shall file the original of the certificate, deliver a copy to the probate judge for filing, and serve a copy on the corporation under Section 10-2B-5.04.

(c) A corporation administratively dissolved continues its corporate existence but may not carry on any business except that necessary to wind up and liquidate its business and affairs under Section 10-2B-14.05 and notify claimants under Sections 10-2B-14.06 and 10-2B-14.07, or to apply for reinstatement under Section 10-2B-14.22.

(d) The administrative dissolution of a corporation does not terminate the authority of its registered agent.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.22

Section 10-2B-14.22
Reinstatement following administrative dissolution.

(a) A corporation administratively dissolved under Section 10-2B-14.21 may apply to the Secretary of State for reinstatement within two years after the effective date of dissolution. The application must:

(1) Recite the name and address of the corporation and the effective date of its administrative dissolution;

(2) State that the ground or grounds for dissolution either did not exist or have been eliminated;

(3) State that the corporation's name satisfies the requirements of Section 10-2B-4.01; and

(4) Contain a certificate from the Department of Revenue reciting that all taxes owed by the corporation have been paid.

(b) If the Secretary of State determines that the application contains the information required by subsection (a) and that the information is correct, he or she shall cancel the certificate of dissolution and prepare a certificate of reinstatement that recites his or her determination and the effective date of reinstatement, file the original of the certificate and deliver a copy to the probate judge for filing, and serve a copy on the corporation under Section 10-2B-5.04.

(c) When reinstatement is effective, it relates back to and takes effect as of the effective date of the administrative dissolution and the corporation resumes carrying on its business as if the administrative dissolution had never occurred.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.23

Section 10-2B-14.23
Appeal from denial of reinstatement.

(a) If the Secretary of State denies a corporation's application for reinstatement following administrative dissolution, he or she shall serve the corporation under Section 10-2B-5.04 with a written notice that explains the reason or reasons for denial.

(b) The corporation may appeal the denial of reinstatement to the circuit court of the county where its articles of incorporation are filed within 30 days after service of the notice of denial is perfected. A corporation created by an act of the Legislature prior to the adoption of the Constitution of Alabama of 1901 or which resulted from a merger or consolidation, may appeal to the Circuit Court of Montgomery County. The corporation appeals by petitioning the court to set aside the dissolution and attaching to the petition copies of the Secretary of State's certificate of dissolution, the corporation's application for reinstatement, and the Secretary of State's notice of denial.

(c) The court may summarily order the Secretary of State to reinstate the dissolved corporation, may order a trial de novo, or may take other action the court considers appropriate.

(d) The court's final decision may be appealed as in other civil proceedings.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.30

Section 10-2B-14.30
Grounds for judicial dissolution.

The circuit court of the county where a corporation's articles of incorporation are filed, or, in the case of corporations created by an act of the Legislature prior to the adoption of the Constitution of Alabama of 1901 or which have resulted from a merger or consolidation, the Circuit Court of Montgomery County, may dissolve the corporation:

(1) In a proceeding by the Attorney General if it is established that:

(i) The corporation obtained its articles of incorporation through fraud; or

(ii) The corporation has continued to exceed or abuse the authority conferred upon it by law;

(2) In a proceeding by a shareholder if it is established that:

(i) The directors are deadlocked in the management of the corporate affairs, the shareholders are unable to break the deadlock, and irreparable injury to the corporation is threatened or being suffered, or the business and affairs of the corporation can no longer be conducted to the advantage of the shareholders generally, because of the deadlock;

(ii) The directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent;

(iii) The shareholders are deadlocked in voting power and have failed, for a period that includes at least two consecutive annual meeting dates, to elect successors to directors whose terms have expired; or

(iv) The corporate assets are being misapplied or wasted.

(3) In a proceeding by a creditor if it is established that:

(i) The creditor's claim has been reduced to judgment, the execution on the judgment returned unsatisfied, and the corporation is insolvent; or

(ii) The corporation has admitted in writing that the creditor's claim is due and owing and the corporation is insolvent; or

(4) In a proceeding by the corporation to have its voluntary dissolution continued under court supervision.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.31

Section 10-2B-14.31
Procedure for judicial dissolution.

(a) Venue for a proceeding to dissolve a corporation lies in the county where a corporation's articles of incorporation are filed, or, in the case of a corporation created by an act of the Legislature prior to the adoption of the Constitution of Alabama of 1901 or which resulted from a merger or consolidation, in Montgomery County.

(b) It is not necessary to make shareholders parties to a proceeding to dissolve a corporation unless relief is sought against them individually.

(c) A court in a proceeding brought to dissolve a corporation may issue injunctions, appoint a receiver or custodian pendente lite with all powers and duties the court directs, take other action required to preserve the corporate assets wherever located, and carry on the business of the corporation until a full hearing can be held.

(d) Within 10 days of the commencement of a proceeding under Section 10-2B-14.30(2) to dissolve a corporation that has no shares listed on a national securities exchange or regularly traded in a market maintained by one or more members of a national securities exchange, the corporation must send to all shareholders, other than the petitioner, a notice stating that the shareholders are entitled to avoid the dissolution of the corporation by electing to purchase the petitioner's shares under Section 10-2B-14.34 and accompanied by a copy of Section 10-2B-14.34.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.32

Section 10-2B-14.32
Receivership or custodianship.

(a) A court in a judicial proceeding brought to dissolve a corporation may appoint one or more receivers to wind up and liquidate, or one or more custodians to manage the business and affairs of the corporation. The court shall hold a hearing, after notifying all parties to the proceeding and any interested persons designated by the court, before appointing a receiver or custodian. The court appointing a receiver or custodian has exclusive jurisdiction over the corporation and all of its property wherever located.

(b) The court may appoint an individual, domestic or foreign corporation (authorized to transact business in this state), or other entity as receiver or custodian. The court may require the receiver or custodian to post bond, with or without sureties, in an amount the court directs.

(c) The court shall describe the powers and duties of the receiver or custodian in its appointing order, which may be amended from time to time. Among other powers:

(1) The receiver (i) may dispose of all or any part of the assets of the corporation wherever located, at a public or private sale, if authorized by the court; and (ii) may sue and defend in his or her own name as receiver of the corporation in all courts of this state;

(2) The custodian may exercise all of the powers of the corporation, through or in place of its board of directors or officers, to the extent necessary to manage the affairs of the corporation in the best interests of its shareholders and creditors.

(d) The court during a receivership may redesignate the receiver a custodian, and during a custodianship may redesignate the custodian a receiver, if doing so is in the best interests of the corporation, its shareholders, and creditors.

(e) The court from time to time during the receivership or custodianship may order compensation paid and expense disbursements or reimbursements made to the receiver or custodian and his or her counsel from the assets of the corporation or proceeds from the sale of the assets.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.33

Section 10-2B-14.33
Decree of dissolution.

(a) If after a hearing the court determines that one or more grounds for judicial dissolution described in Section 10-2B-14.30 exist, it may enter a decree dissolving the corporation and specifying the effective date of the dissolution, and the clerk of the court shall deliver a certified copy of the decree to the probate judge, who shall file it.

(b) After entering the decree of dissolution, the court shall direct the winding up and liquidation of the corporation's business and affairs in accordance with Section 10-2B-14.05 and the notification of claimants in accordance with Sections 10-2B-14.06 and 10-2B-14.07.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.34

Section 10-2B-14.34
Election to purchase in lieu of dissolution.

(a) In a proceeding under Section 10-2B-14.30(2) to dissolve a corporation that has no shares listed on a national securities exchange or regularly traded in a market maintained by one or more members of a national or affiliated securities association, the corporation may elect or, if it fails to elect, one or more shareholders may elect to purchase all shares owned by the petitioning shareholder at the fair value of the shares. An election pursuant to this section shall be irrevocable unless the court determines that it is equitable to set aside or modify the election.

(b) An election to purchase pursuant to this section may be filed with the court at any time within 90 days after the filing of the petition under Section 10-2B-14.30(2) or at such later time as the court in its discretion may allow. If the election to purchase is filed by one or more shareholders, the corporation shall, within 10 days thereafter, give written notice to all shareholders, other than the petitioner. The notice must state the name and number of shares owned by the petitioner and the name and number of shares owned by each electing shareholder and must advise the recipients of their right to join in the election to purchase shares in accordance with this section. Shareholders who wish to participate must file notice of their intention to join in the purchase no later than 30 days after the effective date of the notice to them. All shareholders who have filed an election or notice of their intention to participate in the election or purchase thereby become parties to the proceeding and shall participate in the purchase in proportion to their ownership of shares as of the date the first election was filed, unless they otherwise agree or the court directs. After an election has been filed by the corporation or one or more shareholders, the proceeding under Section 10-2B-14.30(2) may not be discontinued or settled unless the court determines that it would be equitable to the corporation and the shareholders, other than the petitioner, to permit such discontinuance, settlement, sale, or other disposition.

(c) If, within 60 days of the filing of the first election, the parties reach agreement as to the fair value and terms of purchase of petitioner's shares, the court shall enter an order directing the purchase of petitioner's shares upon the terms and conditions agreed to by the parties.

(d) If the parties are unable to reach an agreement as provided for in subsection (c), the court, upon application by any party, shall stay the Section 10-2B-14.30(2) proceedings and determine the fair value of the petitioner's shares as of the day before the date on which the petition under Section 10-2B-14.30(2) was filed or as of such other date the court deems appropriate under the circumstances.

(e) Upon determining the fair value of the shares, the court shall enter an order directing the purchase upon such terms and conditions as the court deems appropriate, which may include payment of the purchase price in installments, where necessary in the interest of equity, provision for security to assure payment of the purchase price and any additional costs, fees, and expenses as may have been awarded, and, if the shares are to be purchased by shareholders, the allocation of shares among them. In allocating petitioner's shares among holders of different classes of shares, the court should attempt to preserve the existing distribution of voting rights among holders of different classes insofar as practicable and may direct that holders of a specific class or classes shall not participate in the purchase. Interest may be allowed at the rate and from the date determined by the court to be equitable, but if the court finds that the petitioning shareholder had probable grounds for relief under paragraphs (ii) or (iv) of Section 10-2B-14.30(2), it may award to the petitioning shareholder reasonable fees and expenses of counsel and of any experts employed by him or her.

(f) Upon entry of an order under subsections (c) or (e), the court shall dismiss the petition to dissolve the corporation under Section 10-2B-14.30 and the petitioning shareholder shall no longer have any rights or status as a shareholder of the corporation except the right to receive the amounts awarded to him or her by the order of the court which shall be enforceable in the same manner as any other judgment.

(g) The purchase ordered pursuant to subsection (e) shall be made within 10 days after the date the order becomes final unless before that time the corporation files with the court a notice of its intention to adopt articles of dissolution pursuant to Sections 10-2B-14.02 and 10-2B-14.03, which articles must then be adopted and filed within 50 days thereafter. Upon filing of such articles of dissolution, the corporation shall be dissolved in accordance with the provisions of Sections 10-2B-14.05 through 10-2B-14.07, and the order entered pursuant to subsection (e) shall no longer be of any force or effect, except that the court may award the petitioning shareholder reasonable fees and expenses in accordance with the provisions of the last sentence of subsection (e) and the petitioner may continue to pursue any claims previously asserted on behalf of the corporation.

(h) Any payment by the corporation pursuant to an order under subsections (c) or (e) other than an award of fees and expenses pursuant to subsection (e), is subject to the provisions of Section 10-2B-6.40.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-14.40

Section 10-2B-14.40
Deposit with Commissioner of Revenue.

Assets of a dissolved corporation that should be transferred to a creditor, claimant, or shareholder of the corporation who cannot be found or who is not competent to receive them shall be reduced to cash and deposited with the Commissioner of Revenue for safekeeping. When the creditor, claimant, or shareholder furnishes satisfactory proof of entitlement to the amount deposited, the Commissioner of Revenue shall pay him or her or his or her representative that amount.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.01

Section 10-2B-15.01
Authority to transact business required.

(a) A foreign corporation may not transact business in this state until it obtains a certificate of authority from the Secretary of State.

(b) Except as provided in Division D, the provisions of this article do not apply to corporations organized under the laws of the United States.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.02

Section 10-2B-15.02
Consequences of transacting business without authority.

(a) A foreign corporation transacting business in this state without a certificate of authority or without complying with Chapter 14A of Title 40 may not maintain a proceeding in this state without a certificate of authority. All contracts or agreements made or entered into in this state by foreign corporations prior to obtaining a certificate of authority to transact business in this state shall be held void at the action of the foreign corporation or by any person claiming through or under the foreign corporation by virtue of the contract or agreement; but nothing in this section shall abrogate the equitable rule that he who seeks equity must do equity.

(b) The failure of a foreign corporation to obtain a certificate of authority shall not impair the validity of any contract or agreement heretofore or hereafter entered into and consisting of a mortgage upon real property or an interest in real property in this state, and the note secured thereby, where the mortgage is insured by the Federal Housing Administration or guaranteed by the Veterans Administration, if the foreign corporation shall have thereafter obtained a certificate of authority. In all actions against a foreign corporation or against any person claiming under a foreign corporation by virtue of a void contract, the foreign corporation or person claiming under it shall be estopped from setting up the fact that the contract or agreement was made in violation of the law.



(Acts 1994, No. 94-245, p. 343, §1; repealed by Acts 1995, No. 95-663, p. 1374, §2; added by Acts 1995, No. 95-663, p. 1374, §3; Act 99-665, 2nd Sp. Sess., §3.)Section 10-2B-15.03

Section 10-2B-15.03
Application for certificate of authority.

(a) A foreign corporation may apply for a certificate of authority to transact business in this state by delivering an application to the Secretary of State for filing. The application must set forth:

(1) The name of the foreign corporation or, if its name is unavailable for use in this state, a corporate name that satisfies the requirements of Section 10-2B-15.06;

(2) The name of the state or other jurisdiction under whose law it is incorporated;

(3) Its date of incorporation and period of duration;

(4) The street address of its principal office;

(5) The address of its registered office in this state and the name of its registered agent at that office; and

(6) The names and usual business addresses of its current directors and officers.

(b) The foreign corporation shall deliver with the completed application a copy of its articles or certificate of incorporation or association and all amendments thereto duly certified by the Secretary of State or other official having custody of corporate records in the state or other jurisdiction under whose law it is incorporated.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.04

Section 10-2B-15.04
Amended certificate of authority.

(a) A foreign corporation authorized to transact business in this state must obtain an amended certificate of authority from the Secretary of State if it changes:

(1) Its corporate name;

(2) The period of its duration; or

(3) The state or jurisdiction of its incorporation.

(b) The requirements of Section 10-2B-15.03 for obtaining an original certificate of authority apply to obtaining an amended certificate under this section.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.05

Section 10-2B-15.05
Effect of certificate of authority.

(a) A certificate of authority authorizes the foreign corporation to which it is issued to transact business in this state subject, however, to the right of the state to revoke the certificate as provided in this chapter.

(b) A foreign corporation with a valid certificate of authority has the same but no greater rights and has the same but no greater privileges as, and except as otherwise provided by this chapter is subject to the same duties, restrictions, penalties, and liabilities now or later imposed on, a domestic corporation of like character.

(c) This chapter does not authorize this state to regulate the organization or internal affairs of a foreign corporation authorized to transact business in this state.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.06

Section 10-2B-15.06
Corporate name of foreign corporation.

(a) If the corporate name of a foreign corporation does not satisfy the requirements of Section 10-2B-4.01, the foreign corporation to obtain or maintain a certificate of authority to transact business in this state:

(1) May add the word "corporation" or "incorporated" or an abbreviation of one of such words, or if a banking corporation the words "bank," "banking," or "bankers" to its corporate name for use in this state; or

(2) May use a fictitious name that satisfies the requirements of Section 10-2B-4.01 to transact business in this state if its real name is unavailable and it delivers to the Secretary of State for filing a copy of the resolution of its board of directors, certified by its secretary, adopting the fictitious name.

(b) Except as authorized by subsections (c) and (d), the corporate name (including a fictitious name) of a foreign corporation must not be the same as or deceptively similar to:

(1) The corporate name of a corporation incorporated or authorized to transact business in this state;

(2) A corporate name reserved or registered under Section 10-2B-4.02 or 10-2B-4.03; or

(3) The fictitious name of another foreign corporation authorized to transact business in this state.

(c) A foreign corporation may apply to the Secretary of State for authorization to use in this state the name of another corporation (incorporated or authorized to transact business in this state) that is the same as or deceptively similar to the name applied for. The Secretary of State shall authorize use of the name applied for if:

(1) The other corporation consents to the use in writing and submits an undertaking in form satisfactory to the Secretary of State to change its name to a name that is not the same as or deceptively similar to the name of the applying corporation; or

(2) The applicant delivers to the Secretary of State a certified copy of a final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this state.

(d) A foreign corporation may use in this state the name (including the fictitious name) of another domestic or foreign corporation that is used in this state if the other corporation is incorporated or authorized to transact business in this state and the foreign corporation:

(1) Has merged with the other corporation;

(2) Has been formed by reorganization of the other corporation; or

(3) Has acquired all or substantially all of the assets, including the corporate name, of the other corporation.

(e) If a foreign corporation authorized to transact business in this state changes its corporate name to one that does not satisfy the requirements of Section 10-2B-4.01, it may not transact business in this state under the changed name until it adopts a name satisfying the requirements of Section 10-2B-4.01 and obtains an amended certificate of authority under Section 10-2B-15.04.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.07

Section 10-2B-15.07
Registered office and registered agent of foreign corporation.

Each foreign corporation authorized to transact business in this state must continuously maintain in this state:

(1) A registered office that may be the same as any of its places of business; and

(2) A registered agent, who may be:

(i) An individual who resides in this state and whose business office is identical with the registered office;

(ii) A domestic corporation or nonprofit domestic corporation whose business office is identical with the registered office; or

(iii) A foreign corporation authorized to transact business in this state or nonprofit foreign corporation authorized to conduct affairs in this state whose business office is identical with the registered office.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.08

Section 10-2B-15.08
Change of registered office or registered agent of foreign corporation.

(a) A foreign corporation authorized to transact business in this state may change its registered office or registered agent by delivering to the Secretary of State for filing a statement of change that sets forth:

(1) Its name;

(2) The street address of its current registered office;

(3) If the current registered office is to be changed, the street address of its new registered office;

(4) The name of its current registered agent;

(5) If the current registered agent is to be changed, the name of its new registered agent and the new registered agent's written consent (either on the statement or attached to it) to the appointment; and

(6) That after the change or changes are made, the street addresses of its registered office and the business office of its registered agent will be identical.

(b) If a registered agent changes the street address of his or her business office, he or she may change the street address of the registered office of any foreign corporation for which he or she is the registered agent by notifying the corporation in writing of the change and signing (either manually or in facsimile) and delivering to the Secretary of State for filing a statement of change that complies with the requirements of subsection (a) and recites that the corporation has been notified of the change.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.09

Section 10-2B-15.09
Resignation of registered agent of foreign corporation.

(a) The registered agent of a foreign corporation may resign his or her agency appointment by signing and delivering to the Secretary of State for filing the original and two exact or conformed copies of a statement of resignation. The statement of resignation may include a statement that the registered office is also discontinued.

(b) After filing the statement, the Secretary of State shall attach the filing receipt to one copy and mail the copy and receipt to the registered office if not discontinued. The Secretary of State shall mail the other copy to the foreign corporation at its principal office address shown in its most recent annual report.

(c) The agency appointment is terminated, and the registered office discontinued if so provided, on the 31st day after the date on which the statement was filed.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.10

Section 10-2B-15.10
Service on foreign corporation.

(a) The registered agent of a foreign corporation authorized to transact business in this state is the corporation's agent for service of process, notice, or demand required or permitted by law to be served on the foreign corporation.

(b) A foreign corporation may be served as provided by the Alabama Rules of Civil Procedure if the foreign corporation:

(1) Has no registered agent or its registered agent cannot be with reasonable diligence served;

(2) Has withdrawn from transacting business in this state under Section 10-2B-15.20; or

(3) Has had its certificate of authority revoked under Section 10-2B-15.31.

(c) This section does not prescribe the only means, or necessarily the required means, of serving a foreign corporation.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.11

Section 10-2B-15.11
Out of state business or property of foreign corporation not subject to control or regulation.

(a) The public interest lying in the promotion of business and industry in this state, it is the intent of the Legislature and declared to be the policy of the State of Alabama by passage of this section to promote and encourage industry and business in Alabama and specifically to induce the location within this state of the principal administrative office, principal distribution or manufacturing plant or principal place of business of foreign corporations engaged in manufacturing, industrial, commercial, business, transportation, utility, public service, and research enterprises. This section shall be liberally construed in conformity with said intention.

(b) When a foreign corporation that transacts only a portion of its business in this state has located, or is in the process of locating, its principal administrative office, its principal distribution or manufacturing plant or its principal place of business in this state, the authority, jurisdiction or power conferred by any law of this state on any agency, commission, department, or instrumentality of the state to control or regulate such foreign corporation, its business, property, securities or obligations shall not be deemed to apply to, and shall not be exercised with respect to, that portion of its business transacted or its property located without the state nor to the securities or obligations of such foreign corporation; provided that nothing contained in this section shall be construed to repeal, alter, or modify any of the provisions of Title 8 relating to securities.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.12

Section 10-2B-15.12
Right of eminent domain.

Foreign corporations that have complied with the Constitution and laws of this state as to doing business herein shall have the same right of eminent domain and the same remedies for enforcing such rights as domestic corporations of like kind and character possess.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.13

Section 10-2B-15.13
Extension of lines, tracks, ways, or works into state.

Any foreign corporation which has complied with the Constitution and laws of this state for doing business herein and which is engaged in constructing or operating a streetcar, electric light, telegraph, telephone or power lines, pipelines, or works in an adjoining state may extend its lines, tracks, ways, pipelines, or works into this state and connect with other lines, pipelines, ways or works of similar or like character and, for such purposes, may have and exercise the same rights, privileges, immunities and remedies as to right of eminent domain and condemnation proceedings as are had and exercised by domestic corporations engaged in like or similar business.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.20

Section 10-2B-15.20
Withdrawal of foreign corporation.

(a) A foreign corporation authorized to transact business in this state may not withdraw from this state until it obtains a certificate of withdrawal from the Secretary of State.

(b) A foreign corporation authorized to transact business in this state may apply for a certificate of withdrawal by delivering an application to the Secretary of State for filing. The application must set forth:

(1) The name of the foreign corporation and the name of the state or country under whose law it is incorporated;

(2) That it is not transacting business in this state and that it surrenders its authority to transact business in this state;

(3) That it revokes the authority of its registered agent to accept service on its behalf and appoints the Secretary of State as its agent for service of process in any proceeding based on a cause of action arising during the time it was authorized to transact business in this state;

(4) A mailing address to which the Secretary of State may mail a copy of any process served on him or her under subdivision (3); and

(5) A commitment to notify the Secretary of State in the future of any change in its mailing address.

(c) After the withdrawal of the corporation is effective, service of process on the Secretary of State under this section is service on the foreign corporation. Upon receipt of process, the Secretary of State shall mail a copy of the process to the foreign corporation at the mailing address set forth under subsection (b).



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.30

Section 10-2B-15.30
Grounds for revocation.

The Secretary of State may commence a proceeding under Section 10-2B-15.31 to revoke the certificate of authority of a foreign corporation authorized to transact business in this state if:

(1) The foreign corporation does not deliver its annual report to the Secretary of State within 180 days after it is due;

(2) The foreign corporation does not pay within 180 days after they are due any franchise taxes, permit fees, qualification fee or admission tax, or interest or penalties imposed by this chapter or other law;

(3) The foreign corporation is without a registered agent or registered office in this state for 60 days or more;

(4) The foreign corporation does not inform the Secretary of State under Section 10-2B-15.08 or 10-2B-15.09 that its registered agent has resigned, or that its registered office has been discontinued within 60 days of the change, resignation, or discontinuance;

(5) An incorporator, director, officer, or agent of the foreign corporation signed a document he or she knew was false in any material respect with intent that the document be delivered to the Secretary of State for filing;

(6) The Secretary of State receives a duly authenticated certificate from the Secretary of State or other official having custody of corporate records in the state or country under whose laws the foreign corporation is incorporated stating that it has been dissolved or disappeared as the result of a merger.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.31

Section 10-2B-15.31
Procedure for and effect of revocation.

(a) If the Secretary of State determines that one or more grounds exist under Section 10-2B-15.30 for revocation of a certificate of authority, he or she shall serve the foreign corporation with written notice of his or her determination under Section 10-2B-15.10.

(b) If the foreign corporation does not correct each ground for revocation or demonstrate to the reasonable satisfaction of the Secretary of State that each ground determined by the Secretary of State does not exist within 60 days after service of the notice is perfected under Section 10-2B-15.10, the Secretary of State may revoke the foreign corporation's certificate of authority by signing a certificate of revocation that recites the ground or grounds for revocation and its effective date. The Secretary of State shall file the original of the certificate and serve a copy on the foreign corporation under Section 10-2B-15.10.

(c) The authority of a foreign corporation to transact business in this state ceases on the date shown on the certificate revoking its certificate of authority.

(d) The Secretary of State's revocation of a foreign corporation's certificate of authority appoints the Secretary of State the foreign corporation's agent for service of process in any proceeding based on a cause of action which arose during the time the foreign corporation was authorized to transact business in this state. Service of process on the Secretary of State under this subsection is service on the foreign corporation. Upon receipt of process, the Secretary of State shall mail a copy of the process to the secretary of the foreign corporation at its principal office shown in its most recent annual report or in any subsequent communication received from the corporation stating the current mailing address of its principal office, or, if none are on file, in its application for a certificate of authority.

(e) Revocation of a foreign corporation's certificate of authority does not terminate the authority of the registered agent of the corporation.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.32

Section 10-2B-15.32
Appeal from revocation.

(a) A foreign corporation may appeal the Secretary of State's revocation of its certificate of authority to the Circuit Court of Montgomery County within 30 days after service of the certificate of revocation is perfected under Section 10-2B-15.10. The foreign corporation appeals by petitioning the court to set aside the revocation and attaching to the petition copies of its certificate of authority and the Secretary of State's certificate of revocation.

(b) The court may summarily order the Secretary of State to reinstate the certificate of authority, may order a trial de novo, or may take any other action the court considers appropriate.

(c) The court's final decision may be appealed as in other civil proceedings.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.40

Section 10-2B-15.40
Definitions.

The term "foreign corporation," as used in this division, shall mean:

(1) Any bank or other corporation now or hereafter organized or existing under the laws of any state of the United States other than the State of Alabama; and

(2) Any national banking association or other corporation organized under the laws of the United States having its principal place of business in any state of the United States other than Alabama.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.41

Section 10-2B-15.41
Authority of foreign corporation to act as fiduciary.

(a) Any foreign corporation may act in this state as trustee, personal representative, executor, administrator of any kind, guardian, conservator, or in any other like or similar fiduciary capacity, whether the appointment is by law, will, deed, inter vivos trust, mortgage, deed of trust, court order or otherwise, without the necessity of complying with any law of this state relating to the qualification of foreign corporations to do business in this state or the licensing of foreign corporations to do business in this state and notwithstanding any prohibition, limitation, or restriction contained in any law of this state subject to the following conditions:

(1) The foreign corporation is authorized to act in a fiduciary capacity, or capacities, in the state in which it is incorporated or, if the foreign corporation is a national banking association or other corporation organized under the laws of the United States, in the state in which it has its principal place of business.

(2) Any bank or other corporation organized under the laws of this state or a national banking association or other corporation organized under the laws of the United States having its principal place of business in this state which is authorized to act in a fiduciary capacity in this state is authorized to act in a like fiduciary capacity in the other state without the necessity of complying with any law of the other state relating to the qualification of a foreign corporation to do business in the other state.

(b) Nothing contained in this division shall be construed to prohibit or make unlawful any activity in this state by a bank or other corporation which is not incorporated under the laws of this state, or, if a national bank or other corporation organized under the laws of the United States, which does not have its principal place of business in this state which would be lawful in the absence of this division.



(Acts 1994, No. 94-245, p. 343, §1; Acts 1994, No. 94-588, p. 1084, §1.)Section 10-2B-15.42

Section 10-2B-15.42
Filing of verified statement with Commissioner of Revenue by foreign corporation prior to acting as fiduciary.

Prior to the time when any foreign corporation acts pursuant to the authority of this article in any fiduciary capacity or capacities in this state, such foreign corporation shall file with the Commissioner of Revenue of this state a verified statement which shall state:

(1) The correct corporate name of such foreign corporation;

(2) The name of the state under the laws of which it is incorporated or if such foreign corporation is a national banking association or other corporation organized under the laws of the United States shall state that fact;

(3) The address of its principal business office;

(4) In what fiduciary capacity, or capacities, it desires to act in the State of Alabama;

(5) That it is authorized to act in a similar fiduciary capacity or capacities in the state in which it is incorporated or, if it is a national banking association or other corporation organized under the laws of the United States, in which it has its principal place of business; and

(6) Such statement shall irrevocably appoint the Commissioner of Revenue of Alabama as its true and lawful attorney to receive service of process in any action or proceeding against it relating to or growing out of any trust, estate or matter in respect of which such foreign corporation may act in this state in any such fiduciary capacity.

Such statement shall be verified by an officer of such foreign corporation, and there shall be filed with it such certificates of public officials and copies of documents certified by public officials as may be necessary to show that such foreign corporation is authorized to act in a fiduciary capacity or capacities similar to those in which it desires to act in the State of Alabama in the state in which it is incorporated or, if it is a national banking association or other corporation organized under the laws of the United States, in which it has its principal place of business.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.43

Section 10-2B-15.43
Foreign corporation acting as fiduciary not deemed doing business in this state.

A foreign corporation, insofar as it acts in a fiduciary capacity in this state pursuant to the provisions of this division, shall not be deemed to be transacting business in this state, but no foreign corporation shall establish or maintain in this state a place of business, branch office or agency for the conduct of business as a fiduciary.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.44

Section 10-2B-15.44
Foreign corporation previously acting in fiduciary capacity in state.

The provisions of this division shall not prohibit any foreign corporation authorized to act in a fiduciary capacity or capacities in the state in which it is incorporated or any national banking association or other corporation organized under the laws of the United States authorized to act in a fiduciary capacity or capacities in its principal place of business which, prior to April 14, 1956, or in the case of a corporation other than a national banking association, prior to January 1, 1995, was acting or appointed to act in this state in a particular fiduciary capacity or capacities, from continuing in the performance of said fiduciary activity or activities without complying with the provisions of this division.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-15.45

Section 10-2B-15.45
Service of process on foreign corporation acting in fiduciary capacity.

Every foreign corporation acting in a fiduciary capacity in this state pursuant to the terms of this division shall be deemed to have appointed the Commissioner of Revenue to be its true and lawful attorney upon whom may be served all legal process in any action or proceeding against it relating to or growing out of any trust, estate or matter in respect of which such foreign corporation shall have acted in this state in any fiduciary capacity. Service of such process shall be made by delivering a copy of the summons or other process, with a copy of the petition or complaint when service of such copy is required by law, to the Commissioner of Revenue or to any person in his or her office authorized by him or her to receive such service. The Commissioner of Revenue shall immediately forward such process, together with the copy of the petition or complaint, if any, to such foreign corporation by registered or certified mail, addressed to it at the address on file with the commissioner or, if there is none on file, then at its last known address. The Commissioner of Revenue shall keep a permanent record in his or her office showing all for all process served, the style of the action or proceeding, the court in which it was brought, the name and title of the officer serving such process, the day and hour of service, the day of mailing by registered or certified mail to such foreign corporation and the address to which mailed. In case such process is issued by a magistrate or other inferior court, the same may be directed to and served by an officer authorized to serve process in the city or county where the Commissioner of Revenue shall have his or her office at least 30 days before the return thereof.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-16.01

Section 10-2B-16.01
Corporate records.

(a) A corporation shall keep as permanent records minutes of all meetings of its shareholders and board of directors, a record of all actions taken by the shareholders or board of directors without a meeting, and a record of all actions taken by a committee of the board of directors in place of the board of directors on behalf of the corporation.

(b) A corporation shall maintain appropriate accounting records.

(c) A corporation or its agent shall maintain a record of its shareholders, in a form that permits preparation of a list of the names and addresses of all shareholders, in alphabetical order by class or shares showing the number and class of shares held by each.

(d) A corporation shall maintain its records in written form or in another form capable of conversion into written form within a reasonable time.

(e) Each domestic corporation and any foreign corporation having its principal office within this state shall keep a copy of the following records at its principal office:

(1) Its articles or restated articles of incorporation and all amendments to them currently in effect;

(2) Its bylaws or restated bylaws and all amendments to them currently in effect;

(3) Resolutions adopted by its board of directors creating one or more classes or series of shares, and fixing their relative rights, preferences, and limitations, if shares issued pursuant to those resolutions are outstanding;

(4) The minutes of all shareholders' meetings, and records of all actions taken by shareholders without a meeting, for the past three years;

(5) All written communications to shareholders generally within the past three years, including the financial statements furnished for the past three years under Section 10-2B-16.20;

(6) A list of the names and business addresses of its current directors and officers; and

(7) Its most recent annual report delivered to the Secretary of State under Section 10-2B-16.22, or public record information filed with the Department of Revenue in lieu thereof.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-16.02

Section 10-2B-16.02
Inspection of records by shareholders.

(a) A shareholder of a domestic corporation or of a foreign corporation with its principal office within this state is entitled to inspect and copy, during regular business hours at the corporation's principal office, or if its principal office is outside this state, at a reasonable location within this state, specified by the corporation, any of the records of the corporation described in Section 10-2B-16.01(e) if he or she gives the corporation written notice of his or her demand at least five business days before the date on which he or she wishes to inspect and copy.

(b) A shareholder of a domestic corporation or of a foreign corporation with its principal office within this state who shall have been a holder of record of shares for 180 days immediately preceding his or her demand or who is the holder of record of at least five percent of the outstanding shares is entitled to inspect and copy during regular business hours at a reasonable location within this state specified by the corporation, or in the case of accounting records of the corporation, if the records are maintained outside the state and inspection and copying within this state is impracticable, at a reasonable location outside the state specified by the corporation, for any proper purpose, all of its books, papers, records of account, minutes and record of shareholders, if the shareholder gives the corporation written notice of his or her demand, stating the purpose therefor, at least five business days before the date on which he or she wishes to inspect and copy. Provided, however, if a corporation is engaged in the business of banking, its books and records of account and minutes relating to the private financial affairs of borrowers and depositors who are neither officers, directors, or employees of the corporation nor related to or engaged in business with an officer, director, or employee shall not be subject to examination by such a shareholder or by his or her agent or attorney in the absence of an order of a court of competent jurisdiction, after inspection of such books and records of account and minutes in camera, that such examination is necessary; and said order shall be subject to review in the Supreme Court of Alabama on writ of mandamus. Provided, further, that if a corporation is engaged in the business of banking, its said books and records of account and minutes shall be deemed not to include any reports of examination by state or federal supervisory agencies nor any actions taken nor reports made by the corporation to bank supervisory authorities pursuant thereto.

(c) Any officer or agent who, or a corporation which, without reasonable cause, shall refuse to allow any such shareholder, or his or her agent or attorney so to examine and make copies of and extracts from its books, papers, records of account, minutes and record of shareholders, for any proper purpose, shall be liable to such shareholder for a penalty of an amount not to exceed 10 percent of the value of the shares owned by such shareholder, in addition to any other damages or remedy afforded him or her by law. It shall be a defense to an action brought to collect the penalty specified in this section that the person suing therefor within the two years next preceding the demand has sold or offered for sale any list of shareholders of such corporation, or any other corporation or knowingly has aided or abetted any person in procuring any list of shareholders, or improperly has used any information secured through any prior examination of the books, papers, records of account, minutes or record of shareholders, or was not acting in good faith or for a proper purpose in making this demand.

(d) The right of inspection granted by this section may not be abolished or limited by a corporation's articles of incorporation or bylaws.

(e) This section does not affect:

(1) The right of a shareholder to inspect records under Section 10-2B-7.20 or, if the shareholder is in litigation with the corporation, to the same extent as any other litigant; or

(2) The power of a court, independently of this chapter, to compel the production of corporate records for examination.

(f) For purposes of this section, "shareholder" includes a beneficial owner whose shares are held in a voting trust or by a nominee on his or her behalf.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-16.03

Section 10-2B-16.03
Scope of inspection right.

(a) A shareholder's agent or attorney has the same inspection and copying rights as the shareholder he or she represents.

(b) The right to copy records under Section 10-2B-16.02 includes, if reasonable, the right to receive copies made by photographic, xerographic, or other means.

(c) The corporation may impose a reasonable charge, covering the costs of labor and material, for copies of any documents provided to the shareholder. The charge may not exceed the estimated cost of reproduction of the records.

(d) The corporation may comply with a shareholder's demand to inspect the record of shareholders under Section 10-2B-16.02(b) by providing him or her with a list of its shareholders that was compiled no earlier than the date of the shareholder's demand.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-16.04

Section 10-2B-16.04
Court-ordered inspection.

(a) If a domestic corporation or a foreign corporation with its principal office within this state does not allow a shareholder who complies with Section 10-2B-16.02(a) to inspect and copy any records required by that subsection to be available for inspection, the circuit court of the county where the corporation's principal office (or, if none in this state, its registered office) is located may summarily order inspection and copying of the records demanded at the corporation's expense upon application of the shareholder.

(b) If a domestic corporation or a foreign corporation with its principal office within this state does not within a reasonable time allow a shareholder to inspect and copy any other record, the shareholder who complies with Section 10-2B-16.02(b) and (c) may apply to the circuit court in the county where the corporation's principal office (or, if none in this state, its registered office) is located for an order to permit inspection and copying of the records demanded. The court shall dispose of an application under this subsection on an expedited basis.

(c) If the court orders inspection and copying of the records demanded, it shall, in addition to any penalty or damages for which there is liability under Section 10-2B-16.02(d), also order the corporation to pay the shareholder's costs (including reasonable counsel fees) incurred to obtain the order unless the corporation proves that it refused inspection in good faith because it had a reasonable basis for doubt about the right of the shareholder to inspect the records demanded.

(d) If the court orders inspection and copying of the records demanded, it may impose reasonable restrictions on the use or distribution of the records by the demanding shareholder.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-16.20

Section 10-2B-16.20
Financial statements for shareholders.

(a) A corporation shall furnish its shareholders annual financial statements, which may be consolidated or combined statements of the corporation and one or more of its subsidiaries, as appropriate, that include a balance sheet as of the end of the fiscal year, an income statement for that year, and a statement of changes in shareholders' equity for the year unless that information appears elsewhere in the financial statements. If financial statements are prepared for the corporation on the basis of generally accepted accounting principles, the annual financial statements must also be prepared on that basis. If the financial statements for the corporation are not prepared on the basis of generally accepted accounting principles, the annual financial statements furnished shareholders may be prepared either on the same basis used by the corporation for filing its United States income tax returns or as required by appropriate regulatory agencies.

(b) If the annual financial statements are reported upon by a public accountant, his or her report must accompany them. If not, the statements must be accompanied by a statement of the president or the person responsible for the corporation's accounting records:

(1) Stating his or her reasonable belief whether the statements were prepared on the basis of generally accepted accounting principles and, if not, describing the basis of preparation; and

(2) Describing any respects in which the statements were not prepared on a basis of accounting consistent with the statements prepared for the preceding year.

(c) A corporation shall mail the annual financial statements to each shareholder within 120 days after the close of each fiscal year. Thereafter, on written request from a shareholder who was not mailed the statements, the corporation shall mail him or her the latest financial statements.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-16.21

Section 10-2B-16.21
Other reports to shareholders.

If a corporation indemnifies or advances expenses to a director under Section 10-2B-8.51, 10-2B-8.53, or 10-2B-8.54 in connection with a proceeding by or in the right of the corporation, the corporation shall report the indemnification or advance in writing to the shareholders with or before the notice of the next shareholders' meeting.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-16.22

Section 10-2B-16.22
Annual report for Secretary of State.

(a) Each domestic corporation, and each foreign corporation authorized to transact business in this state, shall deliver to the Secretary of State for filing an annual report that sets forth:

(1) The name of the corporation and the state or other jurisdiction under whose law it is incorporated;

(2) The address of its registered office and the name of its registered agent at that office in this state;

(3) The address of its principal office including, in the case of a foreign corporation, the address of its principal office in the state or other jurisdiction under whose law it is incorporated;

(4) The names and respective addresses of its president and secretary; and

(5) A brief statement of the character of business in which it is actually engaged in this state.

(b) Information in the annual report must be current as of the date the annual report is executed on behalf of the corporation.

(c) The first annual report must be delivered to the Secretary of State between January 1 and March 15 of the year following the calendar year in which a domestic corporation was incorporated or a foreign corporation was authorized to transact business. Subsequent annual reports must be delivered to the Secretary of State between January 1 and March 15 of the following calendar years.

(d) If an annual report does not contain the information required by this section, the Secretary of State shall promptly notify the reporting domestic or foreign corporation in writing and return the report to it for correction. If the report is corrected to contain the information required by this section and delivered to the Secretary of State within 30 days after the effective date of notice, it is deemed to be timely filed.

(e) The public record information filed with the Department of Revenue, pursuant to Chapter 14A of Title 40 shall constitute and be accepted in lieu of the annual report required pursuant to this section, provided that a ten dollar ($10) fee for the State of Alabama accompany the public record information filed by the corporation annually with the Department of Revenue. The fee for the annual report shall be deposited in the State Treasury to the credit of the Secretary of State Corporation Fund.



(Acts 1994, No. 94-245, p. 343, §1; Act 99-665, 2nd Sp. Sess., §4.)Section 10-2B-17.01

Section 10-2B-17.01
Application to existing domestic corporations.

This chapter applies to all existing corporations organized under any general or special law of this state providing for the organization of corporations for a purpose or purposes for which a corporation might be organized under this chapter, where the power has been reserved to amend, repeal or modify the law under which such corporation was organized.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-17.02

Section 10-2B-17.02
Application to qualified foreign corporations.

A foreign corporation authorized to transact business in this state on the effective date of this chapter is subject to this chapter but is not required to obtain a new certificate of authority to transact business under this chapter.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-17.03

Section 10-2B-17.03
Saving provisions.

(a) Except as provided in subsection (b), the repeal of a statute by the act adding this chapter does not affect:

(1) The operation of the statute or any action taken under it before its repeal;

(2) Any ratification, right, remedy, privilege, obligation, or liability acquired, accrued, or incurred under the statute before its repeal;

(3) Any violation of the statute, or any penalty, forfeiture, or punishment incurred because of the violation, before its repeal;

(4) Any procedure, reorganization, or dissolution commenced under the statute before its repeal, and the proceeding, reorganization, or dissolution may be completed in accordance with the statute as if it had not been repealed.

(b) If a penalty or punishment imposed for violation of a statute repealed by this chapter is reduced by this chapter, the penalty or punishment if not already imposed shall be imposed in accordance with this chapter.

(c) Any reference to the "Alabama Business Corporation Act" or the like, in the articles of incorporation of a corporation in existence on January 1, 1995 shall be construed as referring to this chapter, unless such construction is unreasonable, and any reference to a particular provision or section of the "Alabama Business Corporation Act" or the like in such articles shall be construed as referring to the corresponding provision of this chapter, unless such construction is unreasonable.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-2.01

Section 10-2B-2.01
Incorporators.

One or more persons may act as the incorporator or incorporators of a corporation by signing and delivering articles of incorporation to the probate judge of the county in which the corporation is to have its initial registered office for filing.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-2.02

Section 10-2B-2.02
Articles of incorporation.

(a) The articles of incorporation must set forth:

(1) A corporate name for the corporation that satisfies the requirements of Section 10-2B-4.01;

(2) The number of shares the corporation is authorized to issue;

(3) The street address of the corporation's initial registered office and the name of its initial registered agent at that office;

(4) The name and address of each incorporator;

(5) The names and addresses of the individuals who are to serve as the initial directors; and

(6) The purpose or purposes for which the corporation is organized, which may be stated to be or to include the transaction of any or all lawful business for which corporations may be incorporated under this chapter.

(b) The articles of incorporation may set forth:

(1) Provisions not inconsistent with law regarding:

(i) Reservation to the shareholders of the right to adopt the initial bylaws of the corporation;

(ii) Managing the business and regulating the affairs of the corporation;

(iii) Defining, limiting, and regulating the powers of the corporation, its board of directors, and shareholders; or

(iv) A par value for authorized shares or classes of shares;

(2) Any provision that under this chapter is required or permitted to be set forth in the bylaws; and

(3) A provision eliminating or limiting the liability of a director to the corporation or its shareholders for money damages for any action taken, or any failure to take any action, as a director, except liability for (A) the amount of a financial benefit received by a director to which he or she is not entitled; (B) an intentional infliction of harm on the corporation or the shareholders; (C) a violation of Section 10-2B-8.33; (D) an intentional violation of criminal law; or (E) a breach of the director's duty of loyalty to the corporation or its shareholders.

(c) The articles of incorporation need not set forth any of the corporate powers enumerated in this chapter.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-2.03

Section 10-2B-2.03
Incorporation.

(a) Unless a delayed effective date is specified, the corporate existence begins when the articles of incorporation are filed.

(b) The probate judge's filing of the articles of incorporation is conclusive proof that the incorporators satisfied all conditions precedent to incorporation except in a proceeding by the state to cancel or revoke the incorporation or involuntarily dissolve the corporation.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-2.04

Section 10-2B-2.04
Liability for preincorporation transaction.

Any person purporting to act as or on behalf of a corporation, knowing there was no incorporation under this chapter, is liable for all liabilities created by so acting.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-2.05

Section 10-2B-2.05
Organization of corporation.

(a) After incorporation the initial directors shall hold an organizational meeting, at the call of a majority of the directors, to complete the organization of the corporation by appointing officers, adopting bylaws (unless the power to adopt initial bylaws has been reserved to the shareholders in the articles of incorporation), and carrying on any other business brought before the meeting.

(b) An organization meeting may be held in or out of this state.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-2.06

Section 10-2B-2.06
Bylaws.

(a) The board of directors of a corporation shall adopt initial bylaws for the corporation unless the right to adopt the initial bylaws is reserved to the shareholders in the articles of incorporation.

(b) The bylaws of a corporation may contain any provision for managing the business and regulating the affairs of the corporation that is not inconsistent with law or the articles of incorporation.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-2.07

Section 10-2B-2.07
Emergency bylaws.

(a) Unless the articles of incorporation provide otherwise, the board of directors of a corporation may adopt bylaws to be effective only in an emergency defined in subsection (d). The emergency bylaws, which are subject to amendment or repeal by the shareholders, may make all provisions necessary for managing the corporation during the emergency, including:

(1) Procedures for calling a meeting of the board of directors;

(2) Quorum requirements for the meeting; and

(3) Designation of additional or substitute directors.

(b) All provisions of the regular bylaws consistent with the emergency bylaws remain effective during the emergency. The emergency bylaws are not effective after the emergency ends.

(c) Corporate action taken in good faith in accordance with emergency bylaws:

(1) Binds the corporation; and

(2) May not be used to impose liability on a corporate director, officer, employee, or agent.

(d) An emergency exists for purposes of this section if a quorum of the corporation's directors cannot readily be assembled because of some catastrophic event.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-2.08

Section 10-2B-2.08
Incorporation by purchasers of property or franchise of corporation.

The purchaser or purchasers at any sale, public or private, of the property or franchises of any corporation, if not a corporation authorized by the laws of this state to purchase and hold the property of such corporation, may, within 30 days after such sale and conveyance, become incorporated under this chapter and such purchaser or purchasers may associate with himself or herself or themselves the requisite number of other persons to become incorporated. Upon the organization of such corporation and the conveyance to it of the property and franchises of such corporation by such purchaser or purchasers, such corporation shall become, and be entitled to, and shall have, hold and enjoy, all such property rights and franchises.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-3.01

Section 10-2B-3.01
Purposes.

Corporations may be organized under this chapter for any lawful purpose or purposes.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-3.02

Section 10-2B-3.02
General powers.

Unless its articles of incorporation provide otherwise, every corporation has perpetual duration and succession in its corporate name and has the same powers as an individual to do all things necessary or convenient to carry out its business and affairs, including without limitation power:

(1) To sue and be sued, complain and defend in its corporate name;

(2) To have a corporate seal, which may be altered at will, and to use it, or a facsimile of it, by impressing or affixing it or in any manner reproducing it;

(3) To make and amend bylaws, not inconsistent with its articles of incorporation or with the laws of this state, for managing the business and regulating the affairs of the corporation;

(4) To purchase, receive, lease, or otherwise acquire, and own, hold, improve, use, and otherwise deal with, real or personal property, or any legal or equitable interest in property, wherever located;

(5) To sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of all or any part of its property;

(6) To purchase, receive, subscribe for, or otherwise acquire; own, hold, vote, use, sell, mortgage, lend, pledge, or otherwise dispose of; and deal in and with shares or other interests in, or obligations of, any other entity;

(7) To make contracts, including guarantee and suretyship contracts and indemnity agreements, incur liabilities, borrow money, issue its notes, bonds, and other obligations (which may be convertible into or include the option to purchase other securities of the corporation), secure any of its obligations (or the obligations of others for whom it can make guarantees, whether or not a guarantee is made) by mortgage or pledge of or creation of security interests in any of its property, franchises, or income, and, without limiting the generality of the foregoing:

a. Make contracts of guarantee and suretyship and indemnity agreements that are necessary or convenient to the conduct, promotion or attainment of the business of the contracting corporation, and

b. Make contracts of guarantee and suretyship and indemnity agreements that are necessary or convenient to the conduct, promotion or attainment of the business of

(i) An entity that is wholly owned, directly or indirectly, by the contracting corporation, or

(ii) A person that owns, directly or indirectly, all of the outstanding stock of the contracting corporation, or

(iii) An entity that is wholly owned, directly or indirectly, by a person that owns, directly or indirectly, all of the outstanding stock of the corporation;

(8) To lend money, invest and reinvest its funds, and receive and hold real and personal property as security for repayment;

(9) To be a promoter, incorporator, partner, member, trustee, associate, or manager of any domestic or foreign corporation, partnership, joint venture, trust, or other entity;

(10) To conduct its business, locate offices, and exercise the powers granted by this chapter within or without this state;

(11) To elect directors and appoint officers, employees, and agents of the corporations, define their duties, fix their compensation, and lend them money and credit;

(12) To pay pensions and establish pension plans, pension trusts, profit sharing plans, share bonus plans, share option plans, or other welfare, benefit or incentive plans for any or all of its current, future, or former directors, officers, employees, and agents;

(13) To make donations for the public welfare or for charitable, scientific, or educational purposes;

(14) To transact any lawful business that will aid governmental policy;

(15) To make payments or donations, or do any other act, not inconsistent with law, that furthers the business and affairs of the corporation.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-3.03

Section 10-2B-3.03
Emergency powers.

(a) In anticipation of or during an emergency defined in subsection (d), the board of directors of a corporation may:

(1) Modify lines of succession to accommodate the incapacity of any director, officer, employee, or agent; and

(2) Relocate the principal office, designate alternative principal offices or regional offices, or authorize the officers to do so.

(b) During an emergency defined in subsection (d), unless emergency bylaws provide otherwise:

(1) Notice of a meeting of the board of directors need be given only to those directors whom it is practicable to reach and may be given in any practical manner, including by publication and radio; and

(2) One or more officers of the corporation present at a meeting of the board of directors may be deemed to be directors for the meeting in order of rank and within the same rank in order of seniority, as necessary to achieve a quorum.

(c) Corporate action taken in good faith during an emergency under this section to further the ordinary business affairs of the corporation:

(1) Binds the corporation; and

(2) May not be used to impose liability on a corporate director, officer, employee, or agent.

(d) An emergency exists for purposes of this section if a quorum of the corporation's directors cannot readily be assembled because of some catastrophic event.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-3.04

Section 10-2B-3.04
Ultra vires.

(a) Except as provided in subsection (b), the validity of corporate action may not be challenged on the ground that the corporation lacks or lacked power to act.

(b) A corporation's power to act may be challenged:

(1) In a proceeding by a shareholder against the corporation to enjoin the act;

(2) In a proceeding by the corporation, directly, derivatively, or through a receiver, trustee, or other legal representative, against an incumbent or former director, officer, employee, or agent of the corporation; or

(3) In a proceeding by the Attorney General under Section 10-2B-14.30.

(c) In a shareholder's proceeding under subsection (b)(1) to enjoin an unauthorized corporate act, the court may enjoin or set aside the act, if equitable and if all affected persons are parties to the proceeding, and may award damages for loss (other than anticipated profits) suffered by the corporation or another party because of enjoining the unauthorized act.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-4.01

Section 10-2B-4.01
Corporate name.

(a) A corporate name:

(1) Must contain, in the case of any corporation organized after January 1, 1981, or any other corporation that amends its articles of incorporation to change its name, the word "corporation," or "incorporated," or an abbreviation of one of such words, or if a banking corporation the words "bank," "banking," or "bankers"; and

(2) May not contain, in the case of any corporation organized after January 1, 1981, or any other corporation that amends its articles of incorporation to change its name, language stating or implying that the corporation is organized for a purpose other than that permitted by its articles of incorporation.

(b) Except as authorized by subsections (c) and (d), a corporate name shall not be the same as, or deceptively similar to:

(1) The corporate name of a corporation incorporated or authorized to transact business in this state;

(2) A corporate name reserved or registered under Section 10-2B-4.02 or 10-2B-4.03; or

(3) The fictitious name adopted by a foreign corporation authorized to transact business in this state because its real name is unavailable.

(c) A corporation may apply to the Secretary of State for authorization to use a name that is the same as, or deceptively similar to a name described in subsection (b). The Secretary of State shall authorize use of the name applied for if:

(1) The other corporation consents to the use in writing and submits an undertaking in form satisfactory to the Secretary of State to change its name to a name that is not the same as or deceptively similar to the name of the applying corporation; or

(2) The applicant delivers to the Secretary of State a certified copy of the final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this state.

(d) A corporation may use the name (including the fictitious name) of another domestic or foreign corporation that is used in this state if the other corporation is incorporated or authorized to transact business in this state and the proposed user corporation:

(1) Has merged with the other corporation;

(2) Has been formed by reorganization of the other corporation; or

(3) Has acquired all or substantially all of the assets, including the corporate name, of the other corporation.

(e) This chapter does not control the use of fictitious names.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-4.02

Section 10-2B-4.02
Reserved name.

(a) A person may reserve the exclusive use of a corporate name, including a fictitious name for a foreign corporation whose corporate name is not available, by delivering an application to the Secretary of State for filing. The application must set forth the name and address of the applicant and the name proposed to be reserved. The name may also be reserved by telephone or other electronic means, subject to such requirements as the Secretary of State may establish for reservation of corporate names by such means. If the Secretary of State finds that the corporate name applied for is available, he or she shall reserve the name for the applicant's exclusive use for a 120-day period.

(b) The owner of a reserved corporate name may transfer the reservation to another person by delivering to the Secretary of State a signed notice of the transfer that states the name and address of the transferee.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-4.03

Section 10-2B-4.03
Registered name.

(a) A foreign corporation may register its corporate name, or its corporate name with any addition required by Section 10-2B-15.06, if the name is not the same as or deceptively similar to any corporate names that are not available under Section 10-2B-4.01(b).

(b) A foreign corporation registers its corporate name, or its corporate name with any addition required by Section 10-2B-15.06, by delivering to the Secretary of State for filing an application:

(1) Setting forth its corporate name, or its corporate name with any addition required by Section 10-2B-15.06, the state or the country and date of its incorporation, and a brief description of the nature of the business in which it is engaged; and

(2) Accompanied by a certificate of existence (or document of similar import) from the state or country of incorporation.

(c) The name is registered for the applicant's exclusive use upon the effective date of the application.

(d) A foreign corporation whose registration is effective may renew it for successive years by delivering to the Secretary of State for filing a renewal application, which complies with the requirements of subsection (b), between October 1 and December 31 of the preceding year. The renewal application when filed renews the registration for the following calendar year.

(e) A foreign corporation whose registration is effective may thereafter qualify as a foreign corporation under the registered name or consent in writing to the use of that name by a corporation thereafter incorporated under this chapter or by another foreign corporation thereafter authorized to transact business in this state. The registration terminates when the domestic corporation is incorporated or the foreign corporation qualifies or consents to the qualification of another foreign corporation under the registered name.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-5.01

Section 10-2B-5.01
Registered office and registered agent.

Each corporation must continuously maintain in this state:

(1) A registered office that may be the same as any of its places of business; and

(2) A registered agent, who may be:

(i) An individual who resides in this state and whose business office is identical with the registered office;

(ii) A domestic corporation or nonprofit domestic corporation whose business office is identical with the registered office; or

(iii) A foreign corporation authorized to transact business in this state or nonprofit foreign corporation authorized to conduct affairs in this state whose business office is identical with the registered office.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-5.02

Section 10-2B-5.02
Change of registered office or registered agent.

(a) A corporation may change its registered office or registered agent by delivering to the Secretary of State for filing a statement of change that sets forth:

(1) The name of the corporation;

(2) The street address of its current registered office;

(3) If the current registered office is to be changed, the street address of the new registered office;

(4) The name of the current registered agent;

(5) If the current registered agent is to be changed, the name of the new registered agent and the new agent's written consent (either on the statement or attached to it) to the appointment; and

(6) That after the change or changes are made, the street addresses of its registered office and the business office of its registered agent will be identical.

(b) If a registered agent changes the street address of his or her business office, he or she may change the street address of the registered office of any corporation for which he or she is registered agent by notifying the corporation in writing of the change and signing (either manually or in facsimile) and delivering to the Secretary of State for filing a statement that complies with the requirements of subsection (a) and recites that the corporation has been notified of the change.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-5.03

Section 10-2B-5.03
Resignation of registered agent.

(a) A registered agent may resign his or her agency appointment by signing and delivering to the Secretary of State for filing the signed original and two exact or conformed copies of a statement of resignation. The statement may include a statement that the registered office is also discontinued.

(b) After filing the statement the Secretary of State shall mail one copy to the registered office (if not discontinued) and the other copy to the corporation at its principal office.

(c) The agency appointment is terminated, and the registered office discontinued if so provided, on the 31st day after the date on which the statement was filed.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-5.04

Section 10-2B-5.04
Service on corporation.

(a) A corporation's registered agent is the corporation's agent for service of process, notice, or demand required or permitted by law to be served on the corporation.

(b) If a corporation has no registered agent, or the agent cannot with reasonable diligence be served, the corporation may be served as provided by the Alabama Rules of Civil Procedure.

(c) This section does not prescribe the only means, or necessarily the required means, of serving a corporation.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-6.01

Section 10-2B-6.01
Authorized shares.

(a) The articles of incorporation must prescribe the classes of shares and the number of shares of each class that the corporation is authorized to issue. If more than one class of shares is authorized, the articles of incorporation must prescribe a distinguishing designation for each class, and, prior to the issuance of shares of a class, the preferences, limitations, and relative rights of that class must be described in the articles of incorporation. All shares of a class must have preferences, limitations, and relative rights identical with those of other shares of the same class except to the extent otherwise permitted by Section 10-2B-6.02.

(b) The articles of incorporation must authorize (1) one or more classes of shares that together have unlimited voting rights, and (2) one or more classes of shares (which may be the same class or classes as those with voting rights) that together are entitled to receive the net assets of the corporation upon dissolution.

(c) The articles of incorporation may authorize one or more classes of shares that:

(1) Have special, conditional, or limited voting rights, or no right to vote, except to the extent prohibited by this chapter or other law;

(2) Are redeemable or convertible as specified in the articles of incorporation (i) at the option of the corporation, the shareholder, or another person or upon the occurrence of a designated event; (ii) for cash, indebtedness, securities, or other property; (iii) in a designated amount or in an amount determined in accordance with a designated formula or by reference to extrinsic data or events;

(3) Entitle the holders to distributions calculated in any manner, including dividends that may be cumulative, noncumulative, or partially cumulative;

(4) Have preference over any other class of shares with respect to distributions whether upon the dissolution of the corporation or otherwise.

(d) The description of the designations, preferences, limitations, and relative rights of share classes in subsection (c) is not exhaustive.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-6.02

Section 10-2B-6.02
Terms of class or series determined by board of directors.

(a) If the articles of incorporation so provide, and if such action is not inconsistent with the provisions of the Constitution of Alabama of 1901, as the same may be amended from time to time, the board of directors may determine, in whole or in part, the preferences, limitations, and relative rights (within the limits set forth in Section 10-2B-6.01) of (1) any class of shares before the issuance of any shares of that class or (2) one or more series within a class before the issuance of any shares of that series.

(b) Each series of a class must be given a distinguishing designation.

(c) All shares of a series must have preferences, limitations, and relative rights identical with those of other shares of the same series, and except to the extent otherwise provided in the description of that series, with those of other series of the same class.

(d) Before issuing any shares of a class or series created under this section, the corporation must deliver to the probate judge for filing articles of amendment which, except as required by the Constitution of Alabama of 1901 as the same may be amended from time to time, are effective without shareholder approval and constitute an amendment to the articles of incorporation. Such articles shall set forth:

(1) The name of the corporation;

(2) The text of the amendment determining the terms of the class or series of shares;

(3) The date it was adopted; and

(4) A statement that the amendment was duly adopted by the board of directors.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-6.03

Section 10-2B-6.03
Issued and outstanding shares.

(a) A corporation may issue the number of shares of each class or series authorized by the articles of incorporation. Shares that are issued are outstanding shares until they are reacquired, redeemed, converted, or canceled.

(b) The reacquisition, redemption, or conversion of outstanding shares is subject to the limitations of subsection (c) of this section and to Section 10-2B-6.40.

(c) At all times that shares of the corporation are outstanding, one or more shares that together have unlimited voting rights and one or more shares that together are entitled to receive the net assets of the corporation upon dissolution must be outstanding.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-6.04

Section 10-2B-6.04
Fractional shares.

(a) A corporation may:

(1) Issue fractions of a share or pay in money the value of fractions of a share;

(2) Arrange for disposition of fractional shares by the shareholders;

(3) Issue scrip in registered or bearer form entitling the holder to receive a full share upon surrendering enough scrip to equal a full share.

(b) Each certificate representing scrip must be conspicuously labeled "scrip" and must contain the information required by Section 10-2B-6.25(b).

(c) The holder of a fractional share is entitled to exercise the rights of a shareholder, including the right to vote, to receive dividends, and to participate in the assets of the corporation upon liquidation. The holder of scrip is not entitled to any of these rights unless the scrip provides for them.

(d) The board of directors may authorize the issuance of scrip subject to any condition considered desirable, including:

(1) That the scrip will become void if not exchanged for full shares before a specified date; and

(2) That the shares for which the scrip is exchangeable may be sold and the proceeds paid to the scripholders.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-6.20

Section 10-2B-6.20
Subscription for shares before incorporation.

(a) A subscription for shares entered into before incorporation is irrevocable for six months unless the subscription agreement provides a longer or shorter period or all the subscribers agree to revocation.

(b) The board of directors may determine the payment terms of subscriptions for shares that were entered into before incorporation, unless the subscription agreement specifies them. A call for payment by the board of directors must be uniform so far as practicable as to all shares of the same class or series, unless the subscription agreement specifies otherwise.

(c) Shares issued pursuant to subscriptions entered into before incorporation are fully paid and nonassessable when the corporation receives the consideration specified in the subscription agreement.

(d) If a subscriber defaults in payment of money or property under a subscription agreement entered into before incorporation, the corporation may collect the amount owed as any other debt. Alternatively, unless the subscription agreement provides otherwise, the corporation may terminate the agreement and may sell the shares if the debt remains unpaid more than 10 days after the corporation sends written demand for payment to the subscriber.

(e) A subscription agreement entered into after incorporation is a contract between the subscriber and the corporation subject to Section 10-2B-6.21.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-6.21

Section 10-2B-6.21
Issuance of shares.

(a) The powers granted in this section to the board of directors may be reserved to the shareholders by the articles of incorporation.

(b) The board of directors may authorize shares to be issued for consideration consisting of money, labor done or property actually received.

(c) Before the corporation issues shares, the board of directors must determine that the consideration received or to be received before issuance for shares to be issued is adequate. That determination by the board of directors is conclusive insofar as the adequacy of consideration for the issuance of shares relates to whether the shares are validly issued, fully paid, and nonassessable.

(d) When the corporation receives the consideration for which the board of directors authorized the issuance of shares, the shares issued therefor are fully paid, and nonassessable.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-6.22

Section 10-2B-6.22
Liability of shareholders and subscribers.

(a) A purchaser from a corporation of its own shares is not liable to the corporation or its creditors with respect to the shares except to pay the consideration for which the shares were authorized to be issued (Section 10-2B-6.21) or specified in the subscription agreement (Section 10-2B-6.20).

(b) Neither a subscriber nor a shareholder of a corporation is personally liable for the acts or debts of the corporation.

(c) A corporation may have a lien on the shares of its shareholders for any debt or liability incurred to it by such shareholders before notice or transfer of or levy on such shares, if the right to such a lien is provided for in the articles of incorporation and is recited conspicuously on its certificates for shares of stock.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-6.23

Section 10-2B-6.23
Share dividends.

(a) Unless the articles of incorporation provide otherwise, shares may be issued pro rata and without consideration to the corporation's shareholders of one or more classes or series. An issuance of shares under this subsection is a share dividend.

(b) Shares of one class or series may not be issued as a share dividend in respect of shares of another class or series unless (1) the articles of incorporation so authorize, (2) a majority of the votes entitled to be cast by the class or series to be issued approve the issue, or (3) there are no outstanding shares of the class or series to be issued.

(c) An issuance of shares under this section must also meet the requirements of the Constitution of Alabama of 1901, as the same may be amended from time to time.

(d) If the board of directors does not fix the record date for determining shareholders entitled to a share dividend, it is the date the board of directors authorizes the share dividend.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-6.24

Section 10-2B-6.24
Share options.

Subject to requirements of the Constitution of Alabama of 1901 as the same may be amended from time to time, a corporation may issue rights, options, or warrants for the purchase of shares of the corporation. The board of directors shall determine the terms upon which the rights, options, or warrants are issued, their form and content, and the consideration for which the shares are to be issued.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-6.25

Section 10-2B-6.25
Form and content of certificates.

(a) Shares shall be represented by certificates.

(b) At a minimum each share certificate must state on its face:

(1) The name of the issuing corporation and that it is organized under the law of this state;

(2) The name of the person to whom issued; and

(3) The number and class of shares and the designation of the series, if any, the certificate represents.

(c) If the issuing corporation is authorized to issue different classes of shares or different series within a class, the designations, relative rights, preferences, and limitations applicable to each class and the variations in rights, preferences, and limitations determined for each series (and the authority of the board of directors to determine variations for future series) must be set forth or summarized on the front or back of each certificate. Alternatively, each certificate may state conspicuously on its front or back that the corporation will furnish the shareholders this information on request in writing and without charge.

(d) Each share certificate: (1) must be signed (either manually or in facsimile) by two officers designated in the bylaws or by the board of directors; and (2) may bear the corporate seal or its facsimile.

(e) If the person who signed (either manually or in facsimile) a share certificate no longer holds office when the certificate is issued, the certificate is nevertheless valid.

(f) Shares or interests in the stock of corporations are personal property, transferable on the books of the corporation in the manner provided by law.

(g) Abbreviations may be used in the inscribing of certificates representing shares of stock. Without limiting the use of other abbreviations, however, the following or substantially similar abbreviations may be used in the inscribing of such certificates, and shall be construed as though they were written out in full and shall be accorded the meaning ascribed herein:

Abbreviation:Meaning:
TEN COMAs tenants in common.
JT TENAs joint tenants with right of survivorship and not as tenants in common.
CUSTODIAN FOR, UTMAAs custodian for ______ (name of minor) under the Uniform Transfer to Minors Act.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-6.26

Section 10-2B-6.26
Shares without certificates.

(a) Unless the articles of incorporation or bylaws provide otherwise, the board of directors of a corporation may authorize the issue of some or all of the shares of any or all of its classes or series without certificates. The authorization does not affect shares already represented by certificates until they are surrendered to the corporation.

(b) Within a reasonable time after the issue or transfer of shares without certificates, the corporation shall send the shareholder a written statement of the information required on certificates by Section 10-2B-6.25(b) and (c), and, if applicable, Section 10-2B-6.27.



(Acts 1996, No. 96-742, p. 1241, §6.)Section 10-2B-6.27

Section 10-2B-6.27
Restriction on transfer of shares and other securities.

(a) The articles of incorporation, bylaws, an agreement among shareholders, or an agreement between shareholders and the corporation may impose restrictions on the transfer or registration of transfer of shares of corporation. A restriction does not affect shares issued before the restriction was adopted unless the holders of the shares are parties to the restriction agreement or voted in favor of the restriction.

(b) A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder including an executor, administrator, trustee, guardian, conservator or other fiduciary entrusted with like responsibility for the person or estate of the holder, provided the restriction is authorized by this section and its existence is noted conspicuously on the front or back of the certificate or is contained in the information statement required by Section 10-2B-6.26(b). Even if not so noted, a restriction is enforceable against a person with actual knowledge of the restriction.

(c) A restriction on the transfer or registration of transfer of shares is authorized:

(1) To maintain the corporation's status when it is dependent on the number or identity of its shareholders; or

(2) To preserve exemptions under federal or state securities law; or

(3) For any other reasonable purpose.

(d) A restriction on the transfer or registration of transfer of shares may include, but shall not be limited to, a restriction that:

(1) Obligates the shareholder first to offer the corporation or other persons (separately, consecutively, or simultaneously) an opportunity to acquire the restricted shares;

(2) Obligates the corporation or other persons (separately, consecutively, or simultaneously) to acquire the restricted shares;

(3) Requires the corporation, the holders of any class of its shares, or another person to approve the transfer of the restricted shares, if the requirement is not manifestly unreasonable;

(4) Prohibits the transfer or registration of the restricted shares to or in the name of designated persons or classes of persons, if the prohibition is not manifestly unreasonable; or

(5) Requires the corporation to refuse to transfer the shares.

(e) For purposes of this section, "shares" includes a security convertible into or carrying a right to subscribe for or acquire shares.



(Acts 1994, No. 94-245, p. 343, §1; Acts 1996, No. 96-742, p. 1241, §6.)Section 10-2B-6.28

Section 10-2B-6.28
Expense of issue.

A corporation may pay the expenses of selling or underwriting its shares, and of organizing or reorganizing the corporation, from the consideration received for shares.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-6.30

Section 10-2B-6.30
Shareholders' preemptive rights.

(a) The shareholders of a corporation have a preemptive right to acquire the corporation's unissued shares except to the extent the articles of incorporation otherwise provide.

(b) The following principles govern a shareholder's preemptive rights under this section, except to the extent the articles of incorporation expressly provide otherwise:

(1) The shareholders of the corporation have a preemptive right, granted on uniform terms and conditions prescribed by the board of directors to provide a fair and reasonable opportunity to exercise the right, to acquire proportional amounts of the corporation's unissued shares upon the decision of the board of directors to issue them.

(2) A shareholder may waive his or her preemptive right. A waiver evidenced by a writing is irrevocable even though it is not supported by consideration.

(3) There is no preemptive right with respect to:

(i) Shares issued as compensation to directors, officers, agents, or employees of the corporation, its subsidiaries or affiliates;

(ii) Shares issued to satisfy conversion or option rights created to provide compensation to directors, officers, agents, or employees of the corporation, its subsidiaries or affiliates; or

(iii) Shares sold otherwise than for money.

(4) Holders of shares of any class without general voting rights but with preferential rights to distributions or assets have no preemptive rights with respect to shares of any class.

(5) Holders of shares of any class with general voting rights but without preferential rights to distributions or assets have no preemptive rights with respect to shares of any class with preferential rights to distributions or assets unless the shares with preferential rights are convertible into or carry a right to subscribe for or acquire shares without preferential rights.

(6) Shares subject to preemptive rights that are not acquired by shareholders may be issued to any person for a period of one year after being offered to shareholders at a consideration set by the board of directors that is not lower than the consideration set for the exercise of preemptive rights. An offer at a lower consideration or after the expiration of one year is subject to the shareholders' preemptive rights.

(c) For purposes of this section, "shares" include a security convertible into or carrying a right to subscribe for or acquire shares.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-6.31

Section 10-2B-6.31
Corporation's acquisition of its own shares.

(a) Except as otherwise provided in its articles of incorporation, a corporation may acquire its own shares. Unless the articles of incorporation prohibit their reissuance, shares so acquired shall constitute treasury shares.

(b) If the articles of incorporation prohibit the reissuance of acquired shares, the reacquisition of such shares shall effect a cancellation of them. A statement of cancellation as to such shares shall be filed as provided in Section 10-2B-6.32. The filing of a statement of cancellation with respect to such shares shall constitute an amendment to the corporation's articles of incorporation reducing the number of shares of the class of shares so canceled that the corporation is authorized to issue by the number of shares so canceled.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-6.32

Section 10-2B-6.32
Cancellation of reacquired shares.

(a) A corporation may at any time, by resolution of its board of directors, and without shareholder action:

(1) Cancel all or any part of the shares of the corporation reacquired by it other than shares the reissuance of which is prohibited by the articles of incorporation, and in such event a statement of cancellation shall be filed under this section; or

(2) File a statement of cancellation with respect to shares the reissuance of which is prohibited by the articles of incorporation.

(b) The statement of cancellation shall be executed by the corporation and delivered to the probate judge for filing. The statement shall set forth:

(1) The name of the corporation;

(2) The number of reacquired shares canceled by resolution duly adopted by the board of directors, itemized by classes and series, and the date of its adoption;

(3) The aggregate number of issued shares, itemized by classes and series, after giving effect to the cancellation; and

(4) If the articles of incorporation provide that any portion of the canceled shares shall not be reissued, the number of shares which the corporation will have authority to issue itemized by classes and series, after giving effect to the cancellation.

(c) Upon the filing of a statement of cancellation with respect to shares other than shares whose reissuance was prohibited by the articles of incorporation, the shares so canceled shall constitute authorized but unissued shares. The filing of a statement of cancellation with respect to shares the reissuance of which was prohibited by the articles of incorporation shall constitute an amendment of the articles of incorporation reducing the number of shares of the class of shares so canceled that the corporation is authorized to issue by the number of shares so canceled.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-6.40

Section 10-2B-6.40
Distributions to shareholders.

(a) A board of directors may authorize and the corporation may make distributions subject to restriction by the articles of incorporation and the limitation in subsection (c).

(b) If the board of directors does not fix the record date for determining shareholders entitled to a distribution (other than one involving a repurchase or reacquisition of shares), it is the date the board of directors authorizes the distribution.

(c) No distribution may be made if, after giving it effect:

(1) The corporation would not be able to pay its debts as they become due in the usual course of business; or

(2) The corporation's total assets would be less than the sum of its total liabilities plus (unless the articles of incorporation permit otherwise) the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution.

(d) The board of directors may base a determination that a distribution is not prohibited under subsection (c) either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair revaluation or other method that is reasonable in the circumstances.

(e) The effect of a distribution under subsection (c) is measured:

(1) In the case of distribution by purchase, redemption, or other acquisition of the corporation's shares, as of the earlier of (i) the date money or other property is transferred or debt incurred by the corporation or (ii) the date the shareholder ceases to be a shareholder with respect to the acquired shares;

(2) In the case of any other distribution of indebtedness, as of the date the indebtedness is distributed;

(3) In all other cases, as of (i) the date the distribution is authorized if the payment occurs within 120 days after the date of authorization or (ii) the date the payment is made if it occurs more than 120 days after the date of authorization.

(f) A corporation's indebtedness to a shareholder incurred by reason of a distribution made in accordance with this section is at parity with the corporation's indebtedness to its general, unsecured creditors except to the extent subordinated by agreement.

(g) Indebtedness of a corporation, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations under subsection (c) if its terms provide that payment of principal and interest are to be made only if and to the extent that payment of a distribution could then be made under this section. If the indebtedness is issued as a distribution, each payment of principal or interest is treated as a distribution, the effect of which is measured on the date the payment is actually made.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.01

Section 10-2B-7.01
Annual meeting.

(a) A corporation shall hold a meeting of shareholders annually at a time stated or fixed in accordance with the bylaws.

(b) Annual shareholders' meetings may be held in or out of this state at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, annual meetings shall be held at the corporation's principal office.

(c) The failure to hold an annual meeting at the time stated in or fixed in accordance with a corporation's bylaws does not affect the validity of any corporate action.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.02

Section 10-2B-7.02
Special meeting.

(a) A corporation shall hold a special meeting of shareholders:

(1) On call of its board of directors or the person or persons authorized to do so by the articles of incorporation or bylaws; or

(2) If the holders of at least 10 percent of all the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting sign, date, and deliver to the corporation's president or secretary one or more written demands for the meeting describing the purpose or purposes for which it is to be held, who shall, within 21 days of the receipt of such demand, cause notice to be given of the meeting to be held within the minimum time following the notice prescribed by Section 10-2B-7.05(a); or

(3) On call of the holders of at least 10 percent of the votes entitled to be cast at the proposed special meeting who signed a demand for a special meeting valid under Section 10-2B-7.02(a)(2), if:

(i) Notice of the special meeting was not given within 21 days after the date the demand was delivered to the corporation's president or secretary; or

(ii) The special meeting was not held in accordance with the notice.

(b) If not otherwise fixed under Section 10-2B-7.03 or 10-2B-7.07, the record date for determining shareholders entitled to demand a special meeting is the date the first shareholder signs the demand.

(c) Special shareholders' meetings may be held in or out of this state at the place stated in or fixed in accordance with the bylaws. If no place is stated or fixed in accordance with the bylaws, special meetings shall be held at the corporation's principal office.

(d) Only business within the purpose or purposes described in the meeting notice required by Section 10-2B-7.05(c) may be conducted at a special shareholders' meeting.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.03

Section 10-2B-7.03
Court-ordered meeting.

(a) The circuit court of the county where a corporation's principal office (or, if none in this state, its registered office) is located may summarily order a meeting to be held:

(1) On application of any shareholder of the corporation entitled to participate in an annual meeting if an annual meeting was not held within the earlier of 12 months after the end of the fiscal year or 15 months after its last annual meeting; or

(2) On application of a shareholder who signed a demand for a special meeting valid under Section 10-2B-7.02, if:

(i) Notice of the special meeting was not given within 30 days after the date the demand was delivered to the corporation's president or secretary; or

(ii) The special meeting was not held in accordance with the notice.

(b) The court may fix the time and place of the meeting, determine the shares entitled to participate in the meeting, specify a record date for determining shareholders entitled to notice of and to vote at the meeting, prescribe the form and content of the meeting notice, fix the quorum required for specific matters to be considered at the meeting (or direct that the votes represented at the meeting constitute a quorum for action on those matters), and enter other orders necessary to accomplish the purpose or purposes of the meeting.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.04

Section 10-2B-7.04
Action without meeting.

(a) Except as provided in the articles of incorporation, action required or permitted by the Constitution of Alabama of 1901 or by this chapter to be taken at a shareholders' meeting may be taken without a meeting if the action is taken by all shareholders entitled to vote on the action. The action must be evidenced by one or more written consents describing the action taken, signed by all the shareholders entitled to vote on the action, and delivered to the corporation for inclusion in the minutes or filing with the corporate records.

(b) If not otherwise fixed under Section 10-2B-7.03 or 10-2B-7.07, the record date for determining shareholders entitled to take action without a meeting is the date the first shareholder signs the consent under subsection (a).

(c) A consent signed under this section has the effect of a meeting vote and may be described as such in any document.

(d) If this chapter requires that notice of proposed action be given to nonvoting shareholders and the action is to be taken by unanimous consent of the voting shareholders, the corporation must give its nonvoting shareholders written notice of the proposed action at least 10 days before the action is taken. The notice must contain or be accompanied by the same material that, under this chapter, would have been required to be sent to nonvoting shareholders in a notice of meeting at which the proposed action would have been submitted to the shareholders for action.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.05

Section 10-2B-7.05
Notice of meeting.

(a) A corporation, or, in the case of a special meeting called pursuant to Section 10-2B-7.02(a)(3), the persons calling the meeting, shall notify shareholders in writing of the date, time, and place of each annual and special shareholders' meeting no fewer than 10 nor more than 60 days before the meeting date. Unless this chapter or the articles of incorporation require otherwise, the corporation, or other persons calling the meeting, are required to give notice only to shareholders entitled to vote at the meeting. Notwithstanding the provisions of this section or any other provisions of this chapter, the stock or bonded indebtedness of a corporation shall not be increased at a meeting unless notice of such meeting shall have been given as may be required by Section 234 of the Constitution of Alabama of 1901 as the same may be amended from time to time.

(b) Unless this chapter or the articles of incorporation require otherwise, notice of an annual meeting need not include a statement of the purpose or purposes for which the meeting is called.

(c) Notice of a special meeting must include a statement of the purpose or purposes for which the meeting is called.

(d) If not otherwise fixed under Section 10-2B-7.03 or 10-2B-7.07, the record date for determining shareholders entitled to notice of and to vote at an annual or special shareholders' meeting is the day before the first notice is delivered to shareholders.

(e) Unless the bylaws require otherwise, if an annual or special shareholders' meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time, or place if the new date, time, or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed under Section 10-2B-7.07, however, notice of the adjourned meeting must be given under this section to persons who are shareholders as of the new record date.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.06

Section 10-2B-7.06
Waiver of notice.

(a) A shareholder may waive any notice required by the Constitution of Alabama of 1901, this chapter, the articles of incorporation, or bylaws before or after the date and time stated in the notice. The waiver must be in writing, be signed by the shareholder entitled to the notice, and be delivered to the corporation for inclusion in the minutes or filing with the corporate records.

(b) A shareholder's attendance at a meeting:

(1) Waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting;

(2) Waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter before action is taken on the matter.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.07

Section 10-2B-7.07
Record date.

(a) The bylaws may fix or provide the manner of fixing the record date for one or more voting groups in order to determine the shareholders entitled to notice of a shareholders' meeting, to demand a special meeting, to vote, or to take any other action. If the bylaws do not fix or provide for fixing a record date, the board of directors of the corporation may fix a future date as the record date.

(b) A record date fixed under this section may not be more than 70 days before the meeting or action requiring a determination of shareholders.

(c) A determination of shareholders entitled to notice of or to vote at a shareholders' meeting is effective for any adjournment of the meeting unless the board of directors fixes a new record date, which it must do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting.

(d) If a court orders a meeting adjourned to a date more than 120 days after the date fixed for the original meeting, it may provide that the original record date continues in effect or it may fix a new record date.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.20

Section 10-2B-7.20
Shareholders' list for meeting.

(a) After fixing a record date for a meeting, a corporation shall prepare an alphabetical list of the names of all its shareholders who are entitled to notice of a shareholders' meeting. The list must be arranged by voting group (and within each voting group by class or series of shares) and show the address of and number of shares held by each shareholder.

(b) The shareholders' list must be available for inspection by any shareholder, beginning two business days after notice of the meeting is given for which the list was prepared and continuing through the meeting, at the corporation's principal office or, if the corporation's principal office is located outside this state, at its registered office. A shareholder, his or her agent, or attorney is entitled on written demand to inspect and, for a proper purpose, to copy the list, during regular business hours and at his or her expense, during the period it is available for inspection.

(c) The corporation shall make the shareholders' list available at the meeting, and any shareholder, his or her agent, or attorney is entitled to inspect the list at any time during the meeting or any adjournment.

(d) If the corporation refuses to allow a shareholder, his or her agent, or attorney to inspect the shareholders' list before or at the meeting (or copy the list as permitted by subsection (b)), the circuit court of the county where a corporation's principal office (or, if none in this state, its registered office) is located, on application of the shareholder, may summarily order the inspection or copying at the corporation's expense, may postpone the meeting for which the list was prepared until the inspection or copying is complete, and shall order the corporation to pay the shareholder's costs (including reasonable counsel fees) incurred in obtaining the order in the same circumstances and subject to the same defense as applicable to orders to pay costs under Section 10-2B-16.04(c).

(e) Refusal or failure to prepare or make available the shareholders' list does not affect the validity of action taken at the meeting.

(f) The stock transfer records of the corporation shall be prima facie evidence as to who are the shareholders entitled to examine the shareholders' list or transfer records or to vote at any meeting of shareholders.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.21

Section 10-2B-7.21
Voting entitlement of shares.

(a) Except as provided in subsections (b) and (c) or unless the articles of incorporation provide otherwise, each outstanding share, regardless of class, is entitled to one vote on each matter voted on at a shareholders' meeting. Only shares are entitled to vote.

(b) The shares of a corporation are not entitled to vote if they are owned, directly or indirectly, by a second corporation, domestic or foreign, and the first corporation owns, directly or indirectly, a majority of the shares entitled to vote for directors of the second corporation, unless a court of competent jurisdiction determines that the voting of such shares is not for the purpose of perpetuation of management or other improper purpose.

(c) Subsection (b) does not limit the power of a corporation to vote any shares, including its own shares, held by it in a fiduciary capacity.

(d) Redeemable shares are not entitled to vote after notice of redemption is mailed to the holders and a sum sufficient to redeem the shares has been deposited with a bank, trust company, or other financial institution under an irrevocable obligation to pay the holders the redemption price on surrender of the shares.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.22

Section 10-2B-7.22
Proxies.

(a) A shareholder may vote his or her shares in person or by proxy.

(b) A shareholder may appoint a proxy to vote or otherwise act for him or her by signing an appointment form, either personally or by his or her attorney-in-fact.

(c) An appointment of a proxy is effective when received by the secretary or other officer or agent authorized to tabulate votes. An appointment is valid for 11 months unless a longer period is expressly provided in the appointment form.

(d) An appointment of a proxy is revocable by the shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest. Appointments coupled with an interest include the appointment of:

(1) A pledgee;

(2) A person who purchased or agreed to purchase the shares;

(3) A creditor of the corporation who extended it credit under terms requiring the appointment;

(4) An employee of the corporation whose employment contract requires the appointment; or

(5) A party to a voting agreement created under Section 10-2B-7.31.

(e) The revocation of an appointment or the death or incapacity of the shareholder appointing a proxy does not affect the right of the corporation to accept the proxy's authority unless notice of the revocation, death or incapacity is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises his or her authority under the appointment.

(f) An appointment made irrevocable under subsection (d) is revoked when the interest with which it is coupled is extinguished.

(g) A transferee for value of shares subject to an irrevocable appointment may revoke the appointment if he or she did not know of its existence when he or she acquired the shares and the existence of the irrevocable appointment was not noted conspicuously on the certificate representing the shares.

(h) Subject to Section 10-2B-7.24 and to any express limitation on the proxy's authority appearing on the face of the appointment form, a corporation is entitled to accept the proxy's vote or other action as that of the shareholder making the appointment.

(i) Nothing in this section shall be construed as limiting, or extending, authority granted under a durable power of attorney as provided in Section 26-1-2.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.23

Section 10-2B-7.23
Shares held by nominees.

(a) A corporation may establish a procedure by which the beneficial owner of shares that are registered in the name of a nominee is recognized by the corporation as the shareholder. The extent of this recognition may be determined in the procedure.

(b) The procedure may set forth:

(1) The types of nominees to which it applies;

(2) The rights or privileges that the corporation recognizes in a beneficial owner;

(3) The manner in which the procedure is selected by the nominee;

(4) The information that must be provided when the procedure is selected;

(5) The period for which selection of the procedure is effective; and

(6) Other aspects of the rights and duties created.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.24

Section 10-2B-7.24
Corporation's acceptance of votes.

(a) If the name signed on a vote, consent, waiver, or proxy appointment corresponds to the name of a shareholder, the corporation if acting in good faith is entitled to accept the vote, consent, waiver, or proxy appointment and give it effect as the act of the shareholder.

(b) If the name signed on a vote, consent, waiver, or proxy appointment does not correspond to the name of its shareholder, the corporation if acting in good faith is nevertheless entitled to accept the vote, consent, waiver, or proxy appointment and give it effect as the act of the shareholder if:

(1) The shareholder is an entity and the name signed purports to be that of an officer or agent of the entity;

(2) The name signed purports to be that of an administrator, executor, guardian, or conservator representing the shareholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented with respect to the vote, consent, waiver, or proxy appointment;

(3) The name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the corporation requests, evidence of his or her status acceptable to the corporation has been presented with respect to the vote, consent, waiver, or proxy appointment;

(4) The name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable to the corporation of the signatory's authority to sign for the shareholder has been presented with respect to the vote, consent, waiver, or proxy appointment; or

(5) Two or more persons are the shareholder as cotenants or fiduciaries and the name signed purports to be the name of at least one of the co-owners and the person signing appears to be acting on behalf of all co-owners.

(c) The corporation is entitled to reject a vote, consent, waiver, or proxy appointment if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder.

(d) The corporation and its officer or agent who accepts or rejects a vote, consent, waiver, or proxy appointment in good faith and in accordance with the standards of this section are not liable in damages to the shareholder for the consequences of the acceptance or rejection.

(e) Corporate action based on the acceptance or rejection of a vote, consent, waiver, or proxy appointment under this section is valid unless a court of competent jurisdiction determines otherwise.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.25

Section 10-2B-7.25
Quorum and voting requirements for voting groups.

(a) Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. Unless the articles of incorporation or this chapter provide otherwise, a majority of the votes entitled to be cast on the matter by the voting group constitutes a quorum of that voting group for action on that matter, but in no event shall a quorum consist of less than one-third of the votes entitled to be cast on the matter by the voting group.

(b) Once a share is represented for any purpose at a meeting, it is, unless established to the contrary, presumed present for quorum purposes for the remainder of the meeting.

(c) If a quorum is present when a vote is taken, action on a matter (other than the election of directors) by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the Constitution of Alabama of 1901 as the same may be amended from time to time, the articles of incorporation, or this chapter require a greater number of affirmative votes.

(d) An amendment of articles of incorporation adding, changing, or deleting a quorum or voting requirement for a voting group greater than specified in subsection (a) or (c) is governed by Section 10-2B-7.27.

(e) The election of directors is governed by Section 10-2B-7.28.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.26

Section 10-2B-7.26
Action by single and multiple voting groups.

(a) If the articles of incorporation or this chapter provide for voting by a single voting group on a matter, action on that matter is taken when voted upon by that voting group as provided in Section 10-2B-7.25.

(b) If the articles of incorporation or this chapter provide for voting by two or more voting groups on a matter, action on that matter is taken only when voted upon by each of those voting groups counted separately as provided in Section 10-2B-7.25. Action may be taken by one voting group on a matter even though no action is taken by another group entitled to vote on the matter.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.27

Section 10-2B-7.27
Greater quorum or voting requirements.

(a) The articles of incorporation may provide for a greater quorum or voting requirement for shareholders (or voting groups of shareholders) than is provided for by this chapter.

(b) An amendment to the articles of incorporation that adds, changes, or deletes a greater quorum or voting requirement must meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirements then in effect or proposed to be adopted, whichever is greater.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.28

Section 10-2B-7.28
Voting for directors; cumulative voting.

(a) Unless otherwise provided in the articles of incorporation, directors are elected by a majority of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present when the vote is taken.

(b) Shareholders do not have a right to cumulate their votes for directors unless the articles of incorporation so provide.

(c) A statement included in the articles of incorporation that "[all] [a designated voting group of] shareholders are entitled to cumulate their votes for directors" (or words of similar import) means that the shareholders designated are entitled to multiply the number of votes they are entitled to cast by the number of directors for whom they are entitled to vote and cast the product for a single candidate or distribute the product among two or more candidates.

(d) Shares otherwise entitled to vote cumulatively may not be voted cumulatively at a particular meeting unless:

(1) The meeting notice or proxy statement accompanying the notice states conspicuously that cumulative voting is authorized; or

(2) A shareholder who has the right to cumulate his or her votes gives notice to the corporation not less than 48 hours before the time set for the meeting of his or her intent to cumulate his or her votes during the meeting, and if one shareholder gives this notice all other shareholders in the same voting group participating in the election are entitled to cumulate their votes without giving further notice.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.30

Section 10-2B-7.30
Voting trust.

(a) One or more shareholders may create a voting trust, conferring on a trustee the right to vote or otherwise act for them, by signing an agreement setting out the provisions of the trust (which may include anything consistent with its purpose) and transferring their shares to the trustee. When a voting trust agreement is signed, the trustee shall prepare a list of the names and addresses of all owners of beneficial interests in the trust, together with the number and class of shares each transferred to the trust, and deliver copies of the list and agreement to the corporation's principal office.

(b) A voting trust becomes effective on the date the first shares subject to the trust are registered in the trustee's name. A voting trust is valid for not more than 10 years after its effective date unless extended under subsection (c).

(c) All or some of the parties to a voting trust may extend it for additional terms of not more than 10 years each by signing an extension agreement and obtaining the voting trustee's written consent to the extension. Any extension is valid from the date the first shareholder signs the extension agreement. The voting trustee must deliver copies of the extension agreement and list of beneficial owners to the corporation's principal office. An extension agreement binds only those parties signing it.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.31

Section 10-2B-7.31
Voting agreements.

(a) Two or more shareholders may provide for the manner in which they will vote their shares by signing an agreement for that purpose. A voting agreement created under this section is not subject to the provisions of Section 10-2B-7.30.

(b) A voting agreement created under this section is specifically enforceable.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-7.32

Section 10-2B-7.32
Shareholder agreements.

(a) An agreement among the shareholders of a corporation that complies with this section is effective among the shareholders and the corporation even though it is inconsistent with one or more provisions of this chapter in that it:

(1) Eliminates the authority of the board of directors or restricts the discretion or powers of the board of directors;

(2) Governs the authorization or making of distributions whether or not in proportion to ownership of shares, subject to the limitations in Section 10-2B-6.40;

(3) Establishes who shall be directors or officers of the corporation, or their terms of office or manner of selection or removal;

(4) Governs, in general or in regard to specific matters, the exercise or division of voting power by or between the shareholders and directors or by or among any of them, including use of weighted voting rights or director proxies;

(5) Establishes the terms and conditions of any agreement for the transfer or use of property or the provision of services between the corporation and any shareholder, director, officer, or employee of the corporation or among any of them;

(6) Transfers to one or more shareholders or other persons all or part of the authority to exercise the corporate powers or to manage the business and affairs of the corporation, including the resolution of any issue about which there exists a deadlock among directors or shareholders;

(7) Requires dissolution of the corporation at the request of one or more of the shareholders or upon the occurrence of a specified event or contingency; or

(8) Otherwise governs the exercise of the corporate powers or the management of the business and affairs of the corporation or the relationship among the shareholders, the directors and the corporation, or among any of them, and is not contrary to public policy.

(b) An agreement authorized by this section shall be:

(1) Set forth (A) in the articles of incorporation or bylaws and approved by all persons who are shareholders at the time of the agreement or (B) in a written agreement that is signed by all persons who are shareholders at the time of the agreement and is made known to the corporation; and

(2) Subject to amendment only by all persons who are shareholders at the time of the amendment, unless the agreement provides otherwise.

(c) The existence of an agreement authorized by this section shall be noted conspicuously on the front or back of each certificate for outstanding shares. If at the time of the agreement the corporation has shares outstanding represented by certificates, the corporation shall recall the outstanding certificates and either add the notation or issue substitute certificates that comply with this subsection. The failure to note the existence of the agreement on the certificate shall not affect the validity of the agreement or any action taken pursuant to it. Any purchaser of shares who, at the time of purchase, did not have knowledge of the existence of the agreement shall be entitled to recision of the purchase. A purchaser shall be deemed to have knowledge of the existence of the agreement if its existence is noted on the certificate for the shares in compliance with this subsection. An action to enforce the right of recision authorized by this subsection must be commenced within the earlier of 90 days after discovery of the existence of the agreement or two years after the time of purchase of the shares.

(d) An agreement authorized by this section shall cease to be effective when shares of the corporation are listed on a national securities exchange or regularly traded in a market maintained by one or more members of a national or affiliated securities association. If the agreement ceases to be effective for any reason, the board of directors may, if the agreement is contained or referred to in the corporation's articles of incorporation or bylaws, adopt an amendment of the articles of incorporation or bylaws, without shareholder action, to delete the agreement and any references to it.

(e) An agreement authorized by this section that limits the discretion or powers of the board of directors shall relieve the directors of, and impose upon the person or persons in whom such discretion or powers are vested, liability for acts or omissions imposed by law on directors to the extent that the discretion or powers of the directors are limited by the agreement.

(f) The existence or performance of an agreement authorized by this section shall not be a ground for imposing personal liability on any shareholder for the acts or debts of the corporation even if the agreement or its performance treats the corporation as if it were a partnership or results in failure to observe the corporate formalities otherwise applicable to the matters governed by the agreement.

(g) Incorporators or subscribers for shares may act as shareholders with respect to an agreement authorized by this section if no shares have been issued when the agreement is made.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.01

Section 10-2B-8.01
Requirement for and duties of board of directors.

(a) Each corporation must have a board of directors.

(b) All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of, its board of directors, subject to any limitation set forth in the articles of incorporation or in an agreement authorized under Section 10-2B-7.32.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.02

Section 10-2B-8.02
Qualifications of directors.

The articles of incorporation or bylaws may prescribe qualifications for directors. A director shall be a natural person of the age of at least nineteen (19) years but need not be a resident of this state or a shareholder of the corporation unless the articles of incorporation or bylaws so prescribe.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.03

Section 10-2B-8.03
Number and election of directors.

(a) The number of directors shall be one or more, as specified in or fixed in accordance with the articles of incorporation or bylaws.

(b) If a board of directors has power to fix or change the number of directors, the board may increase or decrease by 30 percent or less the number of directors last approved by the shareholders, but only the shareholders may increase or decrease by more than 30 percent the number of directors last approved by the shareholders.

(c) The articles of incorporation or bylaws may establish a variable range for the size of the board of directors by fixing a minimum and maximum number of directors. If a variable range is established, the number of directors may be fixed or changed from time to time, within the minimum and maximum, by the shareholders, or, if the articles of incorporation so provide, by the board of directors. After shares are issued, only the shareholders may change the range for the size of the board or change from a fixed to a variable-range size board or vice versa.

(d) Directors are elected at the first annual shareholder's meeting and at each annual meeting thereafter unless their terms are staggered under Section 10-2B-8.06.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.04

Section 10-2B-8.04
Election of directors by certain classes of shareholders.

If the articles of incorporation authorize dividing the shares into classes, the articles may also authorize the election of all or a specified number of directors by the holders of one or more authorized classes of shares. A class (or classes) of shares entitled to elect one or more directors is a separate voting group for purposes of the election of directors.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.05

Section 10-2B-8.05
Terms of directors generally.

(a) The terms of the initial directors of a corporation expire at the first shareholders' meeting at which directors are elected.

(b) The terms of all other directors expire at the next annual shareholders' meeting following their election unless their terms are staggered under Section 10-2B-8.06.

(c) A decrease in the number of directors does not shorten an incumbent director's term.

(d) The term of a director elected to fill a vacancy expires at the next shareholders' meeting at which directors are elected.

(e) Despite the expiration of a director's term, he or she continues to serve until his or her successor is elected and qualified or until there is a decrease in the number of directors.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.06

Section 10-2B-8.06
Staggered terms for directors.

If there are nine or more directors, the articles of incorporation may provide for staggering their terms by dividing the total number of directors into two or three groups, with each group containing one-half or one-third of the total, as near as may be. In that event, the terms of directors in the first group expire at the first annual shareholders' meeting after their election, the terms of the second group expire at the second annual shareholders' meeting after their election, and the terms of the third group, if any, expire at the third annual shareholders' meeting after their election. At each annual shareholders' meeting held thereafter, directors shall be chosen for a term of two years or three years, as the case may be, to succeed those whose terms expire.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.07

Section 10-2B-8.07
Resignation of directors.

(a) A director may resign at any time by delivering written notice to the board of directors, its chair, or to the corporation.

(b) A resignation is effective when the notice is delivered unless the notice specifies a later effective date.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.08

Section 10-2B-8.08
Removal of directors by shareholders.

(a) The shareholders may remove one or more directors with or without cause unless the articles of incorporation provide that directors may be removed only for cause.

(b) If a director is elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove him or her.

(c) If cumulative voting is authorized, a director may not be removed if the number of votes sufficient to elect him or her under cumulative voting is voted against his or her removal. If cumulative voting is not authorized, a director may be removed only if the number of votes cast to remove him or her exceeds the number of votes cast not to remove him or her.

(d) A director may be removed by the shareholders only at a meeting called for the purpose of removing him or her and the meeting notice must state that the purpose, or one of the purposes, of the meeting is the removal of the director.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.09

Section 10-2B-8.09
Removal of directors by judicial proceeding.

(a) The circuit court of the county where a corporation's principal office (or, if none in this state, its registered office) is located may remove a director of the corporation from office in a proceeding commenced either by the corporation or by its shareholders holding at least 10 percent of the outstanding shares of any class if the court finds that (1) the director engaged in fraudulent or dishonest conduct, or gross abuse of authority or discretion, with respect to the corporation and (2) removal is in the best interest of the corporation.

(b) The court that removes a director may bar the director from reelection for a period prescribed by the court.

(c) If shareholders commence a proceeding under subsection (a), they shall make the corporation a party defendant.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.10

Section 10-2B-8.10
Vacancy on board.

(a) Unless the articles of incorporation provide otherwise, if a vacancy occurs on a board of directors:

(1) The shareholders may fill the vacancy, whether resulting from an increase in the number of directors or otherwise; or

(2) The board of directors may fill the vacancy, except that the directors shall have the power to fill a vacancy resulting from an increase in the number of directors only if expressly provided for in the articles of incorporation; or

(3) If the directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy, if it is one that the directors are authorized to fill, by the affirmative vote of a majority of all the directors remaining in office.

(b) If the vacant office was held by a director elected by a voting group of shareholders, only the holders of shares of that voting group are entitled to vote to fill the vacancy if it is filled by the shareholders.

(c) A vacancy that will occur at a specific later date (by reason of a resignation effective at a later date under Section 10-2B-8.07(b) or otherwise) may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.11

Section 10-2B-8.11
Compensation of directors.

Unless the articles of incorporation or bylaws provide otherwise, the board of directors may fix the compensation of directors.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.20

Section 10-2B-8.20
Meetings.

(a) The board of directors may hold regular or special meetings in or out of this state.

(b) Unless the articles of incorporation or bylaws provide otherwise, the board of directors may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.21

Section 10-2B-8.21
Action without meeting.

(a) Unless the articles of incorporation or bylaws provide otherwise, action required or permitted by this chapter to be taken at a board of directors' meeting may be taken without a meeting if the action is taken by all members of the board. The action must be evidenced by one or more written consents describing the action taken, signed by each director, and included in the minutes or filed with the corporate records reflecting the action taken.

(b) Action taken under this section is effective when the last director signs the consent, unless the consent specifies a different effective date.

(c) A consent signed under this section has the effect of a meeting vote and may be described as such in any document.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.22

Section 10-2B-8.22
Notice of meeting.

(a) Regular meetings of the board of directors may be held with or without notice as prescribed in the bylaws.

(b) Unless the articles of incorporation or bylaws provide for a longer or shorter period, special meetings of the board of directors must be preceded by at least two days' notice of the date, time, and place of the meeting. The notice need not describe the purpose of the special meeting unless required by the articles of incorporation or bylaws.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.23

Section 10-2B-8.23
Waiver of notice.

(a) A director may waive any notice required by this chapter, the articles of incorporation, or bylaws before or after the date and time stated in the notice. Except as provided by subsection (b), the waiver must be in writing, signed by the director entitled to notice, and filed with the minutes or corporate records.

(b) A director's attendance at or participation in a meeting:

(1) Waives objection to lack of any required notice to him or her or defective notice of the meeting unless the director at the beginning of the meeting (or promptly upon his or her arrival) objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting, and

(2) Waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the director objects to considering the matter before action is taken on the matter.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.24

Section 10-2B-8.24
Quorum and voting.

(a) Unless the articles of incorporation or bylaws require a greater number, a quorum of a board of directors consists of:

(1) A majority of the fixed number of directors if the corporation has a fixed board size; or

(2) A majority of the fixed number of directors prescribed, or if no number is prescribed the number in office immediately before the meeting begins, if the corporation has a variable-range size board.

(b) The articles of incorporation or bylaws may authorize a quorum of a board of directors to consist of no fewer than one-third of the fixed or prescribed number of directors determined under subsection (a).

(c) If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the board of directors unless the articles of incorporation or bylaws require the vote of a greater number of directors. A director is, unless established to the contrary, presumed present for quorum purposes for the remainder of a meeting at which he or she has been present for any purpose.

(d) A director who is present at a meeting of the board of directors or a committee of the board of directors when corporate action is taken is deemed to have assented to the action taken unless: (1) he or she objects at the beginning of the meeting (or promptly upon his or her arrival) to holding it or transacting business at the meeting or, as to a matter required under the articles of incorporation or the bylaws to be included in the notice of the purpose of the meeting, he or she objects before action is taken on the matter; (2) his or her dissent or abstention from action taken is entered in the minutes of the meeting; or (3) he or she delivers written notice of his or her dissent or abstention to the presiding officer of the meeting before its adjournment or to the corporation immediately after adjournment of the meeting. The right of dissent or abstention is not available to a director who votes in favor of the action taken.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.25

Section 10-2B-8.25
Committees.

(a) Unless the articles of incorporation or bylaws provide otherwise, a board of directors may create one or more committees and appoint members of the board of directors to serve on them. Each committee may have one or more members, who serve at the pleasure of the board of directors.

(b) The creation of a committee and appointment of members to it must be approved by the greater of (1) a majority of all the directors in office when the action is taken or (2) the number of directors required by the articles of incorporation or bylaws to take action under Section 10-2B-8.24.

(c) Sections 10-2B-8.20 through 10-2B-8.24, which govern meetings, action without meetings, notice and waiver of notice, and quorum and voting requirements of the board of directors, apply to committees and their members as well.

(d) To the extent specified by the board of directors or in the articles of incorporation or bylaws, each committee may exercise the authority of the board of directors under Section 10-2B-8.01.

(e) A committee may not however:

(1) Authorize distributions;

(2) Approve or propose to shareholders action that this chapter requires be approved by shareholders;

(3) Fill vacancies on the board of directors or on any of its committees;

(4) Amend articles of incorporation pursuant to Section 10-2B-10.02;

(5) Adopt, amend, or repeal bylaws;

(6) Approve a plan of merger not requiring shareholder approval;

(7) Authorize or approve reacquisition of shares, except according to formula or method prescribed by the board of directors; or

(8) Authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares, except that the board of directors may authorize a committee (or a senior executive officer of the corporation) to do so within limits specifically prescribed by the board of directors.

(f) The creation of, delegation of authority to, or action by a committee does not alone constitute compliance by a director with the standards of conduct described in Section 10-2B-8.30.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.30

Section 10-2B-8.30
General standards for directors.

(a) A director shall discharge his or her duties as a director, including duties as a member of a committee:

(1) In good faith;

(2) With the care an ordinarily prudent person in a like position would exercise under similar circumstances; and

(3) In a manner the director believes to be in the best interests of the corporation.

(b) In discharging his or her duties, a director is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by:

(1) One or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matters;

(2) Legal counsel, public accountants, or other persons as to matters the director reasonably believes are within the person's professional or expert competence; or

(3) A committee of the board of directors of which he or she is not a member if the director reasonably believes the committee merits confidence.

(c) A director is not acting in good faith if he or she has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (b) unwarranted.

(d) A director is not liable for any action taken as a director, or any failure to take any action, if the director performed the duties of his or her office in compliance with this section.

(e) The above standards are subject to any provision of the articles of incorporation that may be adopted pursuant to Section 10-2B-2.02(b)(3).



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.31

Section 10-2B-8.31
Fiduciary obligations not impaired.

Neither an unqualified statement of rights or powers, nor an unqualified grant of authority in this chapter, shall be taken or construed to abrogate, repeal, displace, modify or impair the fiduciary obligations of directors or other officers or employees of a corporation, or of shareholders having or exercising control thereof, or any function thereof, whether by reason of ownership of a majority, or other controlling, interest therein, or otherwise, or the jurisdiction of the courts to grant relief by way of injunction or otherwise, in order to forestall, prevent, correct, remedy or allow damages for fraud, oppression, imposition or other inequitable or remedial conduct in conformity with the applicable principles and practices of law.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.32

Section 10-2B-8.32
Depreciating stocks or bonds of corporation with intent to buy.

No president, director, or managing officer of any corporation, by whatsoever name or title he or she may be known or called, shall do or omit to do any act, or shall make any declaration or statement in writing, or otherwise, with the intent to depreciate the market value of the stock or bonds of such corporation, and with the further intent to enable such president, director, or other managing officer, or any other person, to buy any such stock or bonds at less than the real value thereof.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.33

Section 10-2B-8.33
Liability for unlawful distributions.

(a) Unless he or she complies with the applicable standards of conduct described in Section 10-2B-8.30, a director who votes for or assents to a distribution made in violation of this chapter or the articles of incorporation is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating this chapter or the articles of incorporation.

(b) A director held liable for an unlawful distribution under subsection (a) is entitled to contribution:

(1) From every other director who voted for or assented to the distribution without complying with the applicable standards of conduct described in Section 10-2B-8.30, and

(2) From each shareholder for the amount the shareholder accepted knowing the distribution was made in violation of this chapter or the articles of incorporation.

(c) A proceeding under subsection (a) is barred unless it is commenced within three years after the date on which the effect of the distribution was measured under Section 10-2B-6.40.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.40

Section 10-2B-8.40
Required officers.

(a) A corporation has the officers described in its bylaws or appointed by the board of directors in accordance with the bylaws.

(b) A duly appointed officer may appoint one or more officers or assistant officers if authorized by the bylaws or the board of directors.

(c) The bylaws or the board of directors shall delegate to one of the officers responsibility for preparing minutes of the directors' and shareholders' meetings and for authenticating records of the corporation.

(d) Unless the bylaws provide otherwise, the same individual may simultaneously hold more than one office in a corporation.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.41

Section 10-2B-8.41
Duties of officers.

Each officer has the authority and shall perform the duties set forth in the bylaws or, to the extent consistent with the bylaws, the duties prescribed by the board of directors or by direction of an officer authorized by the board of directors to prescribe the duties of other officers.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.42

Section 10-2B-8.42
Standards of conduct for officers.

(a) An officer with discretionary authority shall discharge his or her duties under that authority:

(1) In good faith;

(2) With the care an ordinarily prudent person in a like position would exercise under similar circumstances; and

(3) In a manner he or she reasonably believes to be in the best interests of the corporation.

(b) In discharging his or her duties an officer is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by:

(1) One or more officers or employees of the corporation whom the officer reasonably believes to be reliable and competent in the matters presented; or

(2) Legal counsel, public accountants, or other persons as to matters the officer reasonably believes are within the person's professional or expert competence.

(c) An officer is not acting in good faith if he or she has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (b) unwarranted.

(d) An officer is not liable for any action taken as an officer, or any failure to take any action, if he or she performed the duties of his or her office in compliance with this section.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.43

Section 10-2B-8.43
Resignation and removal of officers.

(a) An officer may resign at any time by giving notice to the corporation. A resignation is effective when the notice is given unless the notice specifies a later effective date. If a resignation is made effective at a later date and the corporation accepts the future effective date, its board of directors may fill the pending vacancy before the effective date if the board of directors provides that the successor does not take office until the effective date.

(b) A board of directors may remove any officer at any time with or without cause.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.44

Section 10-2B-8.44
Contract rights of officers.

(a) The appointment of an officer does not itself create contract rights.

(b) An officer's removal does not affect the officer's contract rights, if any, with the corporation. An officer's resignation does not affect the officer's contract rights, if any, with the corporation.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.50

Section 10-2B-8.50
Definitions.

In Division E of this Article 8:

(1) "Corporation" includes any domestic or foreign predecessor entity of a corporation in a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction.

(2) "Director" means an individual who is or was a director of a corporation or an individual who, while a director of a corporation, is or was serving at the corporation's request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise. A director is considered to be serving an employee benefit plan at the corporation's request if his or her duties to the corporation also impose duties on, or otherwise involve services by, the director to the plan or to participants in or beneficiaries of the plan. "Director" includes, unless the context requires otherwise, the estate or personal representative of a director.

(3) "Expenses" include counsel fees.

(4) "Liability" means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or reasonable expenses incurred with respect to a proceeding.

(5) "Official capacity" means (i) when used with respect to a director, the office of director in a corporation; and (ii) when used with respect to an individual other than a director, as contemplated in Section 10-2B-8.56, the office in a corporation held by an officer or the employment or agency relationship undertaken by the employee or agent on behalf of the corporation. "Official capacity" does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, employee benefit plan, or other enterprise.

(6) "Party" includes an individual who was, is or is threatened to be made a named defendant or respondent in a proceeding.

(7) "Proceeding" means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.51

Section 10-2B-8.51
Authority to indemnify.

(a) Except as provided in subsection (d), a corporation may indemnify an individual made a party to a proceeding because he or she is or was a director against liability incurred in the proceeding if:

(1) The individual conducted himself or herself in good faith; and

(2) The individual reasonably believed:

(i) In the case of conduct in his or her official capacity with the corporation, that the conduct was in its best interests; and

(ii) In all other cases, that the conduct was at least not opposed to its best interests; and

(3) In the case of any criminal proceeding, the individual had no reasonable cause to believe his or her conduct was unlawful.

(b) A director's conduct with respect to an employee benefit plan for a purpose he or she reasonably believed to be in the interests of the participants in, and beneficiaries of the plan is conduct that satisfies the requirement of subsection (a)(2)(ii).

(c) The termination of a proceeding by judgement, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this section.

(d) A corporation may not indemnify a director under this section:

(1) In connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or

(2) In connection with any other proceeding charging improper personal benefit to the director, whether or not involving action in his or her official capacity, in which the director was adjudged liable on the basis that personal benefit was improperly received by him or her.

(e) Indemnification permitted under this section in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.52

Section 10-2B-8.52
Mandatory indemnification.

A corporation shall indemnify a director who was successful, on the merits or otherwise, in the defense of any proceeding, or of any claim, issue or matter in such proceeding, where he or she was a party because he or she is or was a director of the corporation, against reasonable expenses incurred in connection therewith, notwithstanding that he or she was not successful on any other claim, issue or matter in any such proceeding.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.53

Section 10-2B-8.53
Advance for expenses.

(a) A corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if:

(1) The director furnishes the corporation a written affirmation of good faith belief that he or she has met the standard of conduct described in Section 10-2B-8.51;

(2) The director furnishes the corporation a written undertaking, executed personally or on the director's behalf, to repay the advance if it is ultimately determined that the director did not meet the standard of conduct, or is not otherwise entitled to indemnification under Section 10-2B-8.51(d), unless indemnification is approved by the court under Section 10-2B-8.54;

(3) A determination is made that the facts then known to those making the determination would not preclude indemnification under Division E of this article.

(b) The undertaking required by subsection (a)(2) must be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment.

(c) Determinations and authorizations of payments under this section shall be made in the manner specified in Section 10-2B-8.55.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.54

Section 10-2B-8.54
Court-ordered indemnification.

A director of the corporation who is a party to a proceeding may apply for indemnification to the court conducting the proceeding, or may file an action therefor in another court of competent jurisdiction if such court has jurisdiction over the corporation and the corporation is a party to the proceeding. On receipt of such an application or the filing of such an action, the court after giving any notice it considers necessary may order indemnification if it determines:

(1) The director is entitled to mandatory indemnification under Section 10-2B-8.52, in which case the court shall also order the corporation to pay the director's reasonable expenses incurred to obtain court-ordered indemnification; or

(2) The director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not he or she met the standard of conduct set forth in Section 10-2B-8.51 or was adjudged liable as described in Section 10-2B-8.51(d), but if he or she was adjudged so liable the indemnification is limited to reasonable expenses incurred.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.55

Section 10-2B-8.55
Determination and authorization of indemnification.

(a) A corporation may not indemnify a director under Section 10-2B-8.51 unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the standard of conduct set forth in Section 10-2B-8.51.

(b) The determination shall be made:

(1) By the board of directors by majority vote of a quorum consisting of directors not at the time parties to the proceeding;

(2) If a quorum cannot be obtained under subdivision (1), by majority vote of a committee duly designated by the board of directors (in which designation directors who are parties may participate) consisting solely of two or more directors not at the time parties to the proceeding;

(3) By special legal counsel;

(i) Selected by the board of directors or its committee in the manner prescribed in subdivision (1) or (2); or

(ii) If a quorum of the board of directors cannot be obtained under subdivision (1) and a committee cannot be designated under subdivision (2), selected by majority vote of the full board of directors (in which selection directors who are parties may participate); or

(4) By the shareholders, but shares owned by or voted under the control of directors who are at the time parties to the proceeding may not be voted on the determination. A majority of the shares that are entitled to vote on the transaction by virtue of not being owned by or under the control of such directors constitutes a quorum for the purpose of taking action under this section.

(c) Authorization of indemnification and evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under subsection (b)(3) to select counsel.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.56

Section 10-2B-8.56
Indemnification of officers, employees, and agents.

(a) An officer of a corporation who is not a director is entitled to mandatory indemnification under Section 10-2B-8.52, and is entitled to apply for court-ordered indemnification under Section 10-2B-8.54, in each case to the same extent as a director.

(b) A corporation may indemnify and may advance expenses under Division E of this article to an officer, employee, or agent of the corporation who is not a director to the same extent as to a director.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.57

Section 10-2B-8.57
Insurance.

A corporation may purchase and maintain insurance, or furnish similar protection (including but not limited to trust funds, self-insurance reserves, or the like), on behalf of an individual who is or was a director, officer, employee, or agent of the corporation, or who, while a director, officer, employee, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture trust, employee benefit plan, or other enterprise, against liability asserted against or incurred by him or her in that capacity or arising from his or her status as a director, officer, employee, or agent, whether or not the corporation would have power to indemnify him or her against the same liability under Section 10-2B-8.51 or 10-2B-8.52.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.58

Section 10-2B-8.58
Application of indemnification provisions.

(a) Any indemnification, or advance for expenses, authorized under Division E of this article shall not be deemed exclusive of and shall be in addition to that which may be contained in a corporation's articles of incorporation, bylaws, a resolution of its shareholders or board of directors, or in a contract or otherwise.

(b) Division E of this article does not limit a corporation's power to pay or reimburse expenses incurred by a director in connection with the director's appearance as a witness in a proceeding at a time when he or she has not been made a named defendant or respondent to the proceeding.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.60

Section 10-2B-8.60
Definitions.

In Division F of this Article 8:

(1) "Conflicting interest" with respect to a corporation means the interest a director of the corporation has respecting a transaction effected or proposed to be effected by the corporation (or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest) if:

(i) Whether or not the transaction is brought before the board of directors of the corporation for action, the director knows at the time of commitment that he or she or a related person is a party to the transaction or has a beneficial interest in or so closely linked to the transaction and of such financial significance to the director or a related person that the interest would reasonably be expected to exert an influence on the director's judgement if the director were called upon to vote on the transaction; or

(ii) The transaction is brought (or is of such character and significance to the corporation that it would in the normal course be brought) before the board of directors of the corporation for action, and the director knows at the time of commitment that any of the following persons is either a party to the transaction or has a beneficial financial interest in or so closely linked to the transaction and of such financial significance to the person that the interest would reasonably be expected to exert an influence on the director's judgment if the director were called upon to vote on the transaction: (A) an entity (other than the corporation) of which the director is a director, general partner, agent, or employee; (B) a person that controls one or more of the entities specified in subclause (A) or an entity that is controlled by, or is under common control with, one or more of the entities specified in subclause (A); or (C) an individual who is a general partner, principal, or employer of the director.

(2) "Director's conflicting interest transaction" with respect to a corporation means a transaction effected or proposed to be effected by the corporation (or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest) respecting which a director of the corporation has a conflicting interest.

(3) "Related person" of a director means (i) the spouse (or a parent or sibling thereof) of the director, or a child, grandchild, sibling, parent (or spouse of any thereof) of the director, or an individual having the same home as the director, or a trust or estate of which an individual specified in this clause (i) is a substantial beneficiary; or (ii) a trust, estate, incompetent, conservatee, or minor of which the director is a fiduciary.

(4) "Required disclosure" means disclosure by the director who has a conflicting interest of (i) the existence and nature of his or her conflicting interest, and (ii) all facts known to him or her respecting the subject matter of the transaction that an ordinarily prudent person would reasonably believe to be material to a judgment about whether or not to proceed with the transaction.

(5) "Time of commitment" respecting a transaction means the time when the transaction is consummated or, if made pursuant to contract, the time when the corporation (or its subsidiary or the entity in which it has a controlling interest) becomes contractually obligated so that its unilateral withdrawal from the transaction would entail significant loss, liability, or other damage.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.61

Section 10-2B-8.61
Judicial action.

(a) A transaction effected or proposed to be effected by a corporation (or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest) that is not a director's conflicting interest transaction may not be enjoined, set aside, or give rise to an award of damages or other sanctions, in a proceeding by a shareholder or by or in the right of the corporation, because a director of the corporation, or any person with whom or which he or she has a personal, economic, or other association, has an interest in the transaction.

(b) A director's conflicting interest transaction may not be enjoined, set aside, or give rise to an award of damages or other sanctions, in a proceeding by a shareholder or by or in the right of the corporation, because the director, or any person with whom or which he or she has a personal, economic, or other association, has an interest in the transaction, if:

(1) Director's action respecting the transaction was at any time taken in compliance with Section 10-2B-8.62; or

(2) Shareholders' action respecting the transaction was at any time taken in compliance with Section 10-2B-8.63; or

(3) The transaction, judged according to the circumstances at the time of commitment, is established to have been fair to the corporation.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.62

Section 10-2B-8.62
Directors' action.

(a) Directors' action respecting a transaction is effective for purposes of Section 10-2B-8.61(b)(1) if the transaction received the affirmative vote of a majority (but no fewer than two) of those qualified directors on the board of directors or on a duly empowered committee of the board who voted on the transaction after either required disclosure to them (to the extent the information was not known by them) or compliance with subsection (b); provided that action by a committee is to be effective only if (1) all its members are qualified directors, and (2) its members are either all the qualified directors on the board or are appointed by the affirmative vote of a majority of the qualified directors on the board.

(b) If a director has a conflicting interest respecting a transaction but neither the director nor a related person of the director specified in Section 10-2B-8.60(3)(i) is a party to the transaction such that the director may not make the disclosure described in Section 10-2B-8.60(4)(ii), then disclosure is sufficient for purposes of subsection (a) if the director (1) discloses to the directors voting on the transaction the existence and nature of his or her conflicting interest and informs them of the character and limitations imposed by that duty before their vote on the transaction and (2) plays no part, directly or indirectly, in their deliberations or vote.

(c) A majority (but no fewer than two) of all the qualified directors on the board of directors, or on the committee, constitutes a quorum for purposes of action that complies with this section. Directors' action that otherwise complies with this section is not affected by the presence or vote of a director who is not a qualified director.

(d) For purposes of this section, "qualified director" means, with respect to a director's conflicting interest transaction, any director who does not have either (1) a conflicting interest respecting the transaction or (2) a familial, financial, professional, or employment relationship with a second director who does have a conflicting interest respecting the transaction, which relationship would, in the circumstances, reasonably be expected to exert an influence on the first director's judgement when voting on the transaction.



(Acts 1994, No. 94-245, p. 343, §1.)Section 10-2B-8.63

Section 10-2B-8.63
Shareholders' action.

(a) Shareholders' action respecting a transaction is effective for purposes of Section 10-2B-8.61(b)(2) if a majority of the votes entitled to be cast by the holders of all qualified shares were cast in favor of the transaction after (1) notice to shareholders describing the director's conflicting interest transactions, (2) provision of the information referred to in subsection (d), and (3) required disclosure to the shareholders who voted on the transaction (to the extent the information was not known by them).

(b) For purposes of this section, "qualified shares" means any shares entitled to vote with respect to the director's conflicting interest transaction except shares that, to the knowledge, before the vote, of the secretary (or other officer or agent of the corporation authorized to tabulate votes), are beneficially owned (or the voting of which is controlled) by a director who has a conflicting interest respecting the transaction or by a related person of the director, or both.

(c) A majority of the votes entitled to be cast by the holders of all qualified shares constitutes a quorum for purposes of action that complies with this section. Subject to the provisions of subsections (d) and (e), shareholders' action that otherwise complies with this section is not affected by the presence of holders, or the voting, of shares that are not qualified shares.

(d) For purposes of compliance with subsection (a), a director who has a conflicting interest respecting the transaction shall, before the shareholders' vote, inform the secretary (or other officer or agent of the corporation authorized to tabulate votes) of the number, and the identity of persons holding or controlling the vote, of all shares that the director knows are beneficially owned (or the voting of which is controlled) by the director or by a related person of the director, or both.

(e) If a shareholder's vote does not comply with subsection (a) solely because of the failure of a director to comply with subsection (a), and if the director establishes that his or her failure did not determine and was not intended by him or her to influence the outcome of the vote, the court may, with or without further proceedings respecting Section 10-2B-8.61(b)(3), take such action respecting the transaction and the director, and give such effect, if any, to the shareholder's vote, as it considers appropriate in the circumstances.



(Acts 1994, No. 94-245, p. 343, §1.)

USA Statutes : alabama