According to Alabama corporate law, any corporation formed after January 1, 1981 should have the word or abbreviation of the word “corporation” or “incorporated” in its name. In the case of a banking corporation, the name should contain the word “bank”, “banking” or “bankers.” The law states that the name should not contain any language stating that the corporation is created for any purpose other than provided for in its articles of incorporation.
The name of a corporation should not be deceptively similar to the name of another corporation incorporated in the same state. It should not be deceptively identical to the fictitious name adopted by a foreign corporation having business transactions in the state.
A corporation formed in the state of Alabama should have a single incorporator.
The names and addresses of the initial directors and purpose of incorporation should be set forth in the articles of incorporation. If a person acts on behalf of a corporation knowing that such a corporation does not exist, that person is liable for any loss created by the act.
The directors should conduct an organizational meeting soon after the incorporation. The meeting should provide for creation of bylaws and the appointment of staff. The organizational meeting can be held in or out of the state.
Bylaws have to be adopted by the board of directors of the corporation, unless the right to adopt bylaws is vested with the shareholders. The bylaws should contain all provisions for managing the business and affairs of the corporation.
The incorporated corporation should maintain a registered office in the state. That office could be the same as any place of its business. The corporation should also maintain a registered agent in the state. Such registered agent should be an individual residing in the state. The agent’s business office should be identical with the registered office of the corporation. The agent can be a domestic corporation or a non-profit domestic corporation whose business office is identical with the registered office. The agent can also be a foreign corporation authorized to carry out its business in the state whose office is identical with the registered office.
Generally, subscription for shares entered into before incorporation is irrevocable for a period of six months. If the subscription agreement provides a longer or shorter period or that all the subscribers agreed to revocation, then agreement for the subscription for shares entered into before incorporation is enforceable. The payment terms of subscriptions for shares entered into before incorporation is determined by the board of directors. This may vary according to the subscription agreement. Shares issued pursuant to subscriptions entered into before incorporation are to be paid fully. The corporation can collect any payment defaulted under a subscription agreement entered into before incorporation. The corporation can also terminate the agreement and sell the shares if the debt is unpaid for ten days after a written demand for payment is sent to the subscriber by the corporation.
The board of directors may authorize shares to be issued for consideration consisting of money, labor done or property actually received. Prior to the issuance of shares, the board of directors has to determine if the consideration that would be received will be adequate.
A member of the corporation purchasing its shares is not liable to the corporation or creditors regarding the shares other than to pay consideration for which the shares were authorized to be issued. The subscriber or the shareholder is not personally liable for the debts of the corporation. The corporation may have a lien on the shares of the shareholders for any debt or liability incurred by those shareholders. Such right has to be provided in the articles of incorporation.
Restriction on transfer or registration of transfer of shares may be imposed by the articles, bylaws or the shareholders agreement. This restriction will not affect shares issued before the restriction was adopted, unless the holders of the shares are parties to the restriction agreement. Restriction on registration of transfer of shares is authorized to maintain the corporate status, to preserve exemptions from security laws or for any other reasonable purpose.
Every year, a meeting of the shareholders needs to be held by the corporation at a time stated or fixed by the bylaws. The meeting may be held in or out of the state in accordance with the bylaws. If the bylaws do not suggest any specific place, the meeting can be conducted at the corporation’s principal office. An action required to be taken in an annual meeting can be taken before such a meeting if it is positively voted on by all shareholders, except if the bylaws provide otherwise. All the shareholders should be given notice of the meeting. The notice should contain the purpose of the meeting and the venue. A shareholder has the right to waive the notice by writing before or after the date and time stated in the notice. This waiver notice should be included in the minutes of the meeting.
The shareholders have the right to remove the directors with or without cause unless the articles provide otherwise. If a director is elected by a group of shareholders, that group may vote to remove that director. A director may be removed if the number of votes cast to remove exceeds the number of votes cast not to remove him or her, if cumulative voting is not authorized. Upon authorization of a cumulative voting, a director may not be removed if the number of votes sufficient to elect under cumulative voting is voted against his or her removal. The director can be removed only at a meeting called for removal of the director. An action required to be taken in a meeting of the board of directors can be taken without a meeting unless the bylaws provide otherwise.
The board of directors can repeal or amend the bylaws of the corporation. However, if the articles of incorporation reserve the rights to repeal or amend the bylaws to the shareholders, the board of directors cannot take a decision exclusively. Even if the bylaws are amendable or could be repealed by the board of directors, the share holders can amend or repeal the bylaws.