Corporations – Corporate Dissolution – Alabama
Related Alabama Legal Forms
CODE OF ALABAMA, Title 10, Article 14 (Dissolution)
An Alabama corporation can be dissolved voluntarily, administratively, or judicially. THIS SUMMARY ADDRESSES ONLY VOLUNTARY DISSOLUTION.
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.
A corporation’s board of directors may propose dissolution for submission to the shareholders. 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 by law.
Subject to the corporation’s articles of incorporation, the board of directors may condition its submission of the proposal for dissolution on any basis. The board of directors may not decrease the vote required for approval required by statute.
The corporation must notify each shareholder, whether or not entitled to vote, of the proposed shareholders’ meeting. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider dissolving the corporation.
Unless the articles of incorporation require a greater or lesser vote or a vote by voting groups, or the board of directors 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.
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. A copy of the written consent or consents signed by all shareholders of the corporation must be filed with the Articles of Dissolution.
A corporation is dissolved upon the effective date of its articles of dissolution.
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.
Dissolution of a corporation does not:
(1) Alter the limited liability status of its subscribers and shareholders under §10-2B-6.22, except as provided in §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 by law;
(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 §10-2B-4.01 until the time for revocation of dissolution has elapsed or, in the case of a corporation administratively dissolved under §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.
A dissolved corporation may dispose of the known claims against it. The dissolved corporation must 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. A claim against the dissolved corporation is barred:
(1) If a claimant who was given written notice 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.
A “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.
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. 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
(1) 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.
If the dissolved corporation publishes a newspaper notice in accordance with the statute. 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;
(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.
If the statutory publication procedures are followed, a claim may be enforced:
(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.
None of the provisions for disposing of claims extends any otherwise applicable statute of limitations.
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 must 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 must pay him or her or his or her representative that amount.
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