Source: official Alabama Legislature ALISON GraphQL service (alison.legislature.state.al.us/graphql), CodeOfAlabamaPrintContent, retrieved 2026-07-07. Sections: 179
(a) This chapter and the provisions of Chapter 1 to the extent applicable to nonprofit corporations may be cited as the Alabama Nonprofit Corporation Law.
(b) The provisions of this chapter relating to nonprofit corporations shall apply to:
(1) All nonprofit corporations organized hereunder; and
(2) All nonprofit corporations heretofore organized under any act hereby or heretofore repealed, for a purpose or purposes for which a nonprofit corporation might be organized under this chapter.
(c) The provisions of this chapter relating to foreign nonprofit corporations shall apply to all foreign nonprofit corporations conducting affairs in Alabama for a purpose or purposes for which a nonprofit corporation might be organized under this chapter.
(d) Beginning May 1, 2004, the Young Men’s Christian Association (YMCA) of Mobile which was incorporated by Act 405 approved on February 18, 1895, shall be subject to this chapter. Prospectively from May 1, 2004, the YMCA of Mobile shall be entitled to all of the rights and privileges of a nonprofit corporation including, but not limited to, the right to amend its charter and bylaws as provided by this chapter.
(Act 2023-503, §1.)
As used in this chapter, unless otherwise specified or unless the context otherwise requires, the following terms have the following meanings:
(1) CERTIFICATE OF INCORPORATION means the certificate of incorporation described in Section 10A-3A-2.02, all amendments to the certificate of incorporation, and any other documents permitted or required to be delivered for filing by a nonprofit corporation with the Secretary of State under this chapter or Chapter 1 that modify, amend, supplement, restate, or replace the certificate of incorporation. After the filing of a filing instrument under this chapter or Chapter 1 that restates or amends and restates the certificate of incorporation in its entirety, the certificate of incorporation shall not include any prior documents, but the original date of incorporation shall remain unchanged. When used with respect to a nonprofit corporation incorporated and existing on December 31, 2023, under a predecessor law of this state, the term “certificate of incorporation” means articles of incorporation, charter, or similar incorporating document, and all amendments and restatements to the articles of incorporation, charter, or similar incorporating document. When used with respect to a foreign nonprofit corporation, a business corporation, or a foreign business corporation, the “certificate of incorporation” of that entity means the document of that entity that is equivalent to the certificate of incorporation of a corporation. The term “certificate of incorporation” as used in this chapter is synonymous to the term certificate of formation used in Chapter 1.
(2) BOARD or BOARD OF DIRECTORS means the group of individuals responsible for the management or direction, and oversight, of the activities and affairs of the nonprofit corporation, regardless of the name used to refer to the group or other persons authorized to perform the functions of the board of directors.
(3) BUSINESS CORPORATION, except in the phrase foreign business corporation, means an entity incorporated or existing under the Alabama Business Corporation Law.
(4) BYLAWS means the code or codes of rules (other than the certificate of incorporation) adopted for the regulation or management of the affairs of the nonprofit corporation, regardless of the name or names by which the rules are designated.
(5) DELIVER or DELIVERY means any method of delivery used in conventional commercial practice, including delivery by hand, mail, commercial delivery, and, if authorized in accordance with Section 10A-3A-1.03, by electronic transmission.
(6) DIRECTOR means an individual designated, elected, or appointed, by that or any other name or title, to act as a member of the board of directors, while the individual is holding that position.
(7) DISTRIBUTION means a direct or indirect transfer of cash or other property from a nonprofit corporation to a member, director, or officer of that nonprofit corporation in that person’s capacity as a member, director, or officer, but does not mean payments or benefits made in accordance with Section 10A-3A-6.41.
(8) DOCUMENT means a writing as defined in Chapter 1.
(9) EFFECTIVE DATE when referring to a document accepted for filing by the Secretary of State, means the time and date determined in accordance with Article 4 of Chapter 1.
(10) ELECTRONIC MAIL means an electronic transmission directed to a unique electronic mail address.
(11) ELECTRONIC MAIL ADDRESS means a destination, commonly expressed as a string of characters, consisting of a unique user name or mailbox (commonly referred to as the “local part” of the address) and a reference to an internet domain (commonly referred to as the “domain part” of the address), whether or not displayed, to which electronic mail can be sent or delivered.
(12) EMPLOYEE does not include an individual serving as an officer or director who is not otherwise employed by the nonprofit corporation.
(13) ENTITLED TO VOTE means entitled to vote on the matter under consideration pursuant to the certificate of incorporation or bylaws of the nonprofit corporation, or applicable provisions of this chapter or Chapter 1.
(14) ENTITY includes nonprofit corporation; foreign nonprofit corporation; business corporation; foreign business corporation; estate; trust; unincorporated entity; foreign unincorporated entity; and state, United States, and foreign government.
(15) EXPENSES means reasonable expenses of any kind that are incurred in connection with a matter.
(16) FOREIGN BUSINESS CORPORATION means a business corporation incorporated under a law other than the law of this state which would be a business corporation if incorporated under the law of this state.
(17) FOREIGN NONPROFIT CORPORATION means a nonprofit corporation incorporated under a law other than the law of this state which would be a nonprofit corporation if incorporated under the law of this state.
(18) FOREIGN UNINCORPORATED ENTITY means an unincorporated entity whose internal affairs are governed by the law of a jurisdiction other than this state.
(19) FUNDAMENTAL TRANSACTION means an amendment of the certificate of incorporation, an amendment to the bylaws, a merger, a conversion, a sale of all or substantially all of the assets, or the dissolution of a nonprofit corporation.
(20) GOVERNING STATUTE means the statute governing the internal affairs of a nonprofit corporation, foreign nonprofit corporation, business corporation, foreign business corporation, unincorporated entity, or foreign unincorporated entity.
(21) INCLUDES and INCLUDING denote a partial definition or a nonexclusive list.
(22) INTEREST means:
(a) a share;
(b) a membership or membership interests; or
(c) either or both of the following rights under the governing statute governing an organization other than a nonprofit corporation, foreign nonprofit corporation, business corporation, or foreign business corporation:
(i) the right to receive distributions from that organization either in the ordinary course or upon liquidation; or
(ii) the right to receive notice or vote on issues involving that organization’s internal affairs, other than as an agent, assignee, proxy, or person responsible for managing that organization’s business and affairs.
(23) INTEREST HOLDER means a person who holds of record an interest.
(24) KNOWLEDGE is determined as follows:
(a) A person knows a fact when the person:
(1) has actual knowledge of it; or
(2) is deemed to know it under law other than this chapter.
(b) A person has notice of a fact when the person:
(1) knows of it;
(2) receives notification of it in accordance with Section 10A-3A-1.03;
(3) has reason to know the fact from all of the facts known to the person at the time in question; or
(4) is deemed to have notice of the fact under subsection (d).
(c) A person notifies another of a fact by taking steps reasonably required to inform the other person in ordinary course in accordance with Section 10A-3A-1.03, whether or not the other person knows the fact.
(d) A person is deemed to have notice of a nonprofit corporation’s:
(1) matters included in the certificate of incorporation upon filing;
(2) dissolution, 90 days after a certificate of dissolution under Section 10A-3A-11.05 becomes effective;
(3) conversion or merger under Article 13 or Article 12, 90 days after a statement of conversion or statement of merger becomes effective;
(4) conversion or merger under Article 8 of Chapter 1, 90 days after a statement of conversion or statement of merger becomes effective; and
(5) revocation of dissolution and reinstatement, 90 days after certificate of revocation of dissolution and reinstatement under Section 10A-3A-11.06 becomes effective.
(e) A member’s knowledge, notice, or receipt of a notification of a fact relating to the nonprofit corporation is not knowledge, notice, or receipt of a notification of a fact by that nonprofit corporation solely by reason of the member’s capacity as a member.
(f) The date and time of the effectiveness of a notice delivered in accordance with Section 10A-3A-1.03, is determined by Section 10A-3A-1.03.
(25) MEANS denotes an exhaustive definition.
(26) MEMBER means a person in whose name a membership is registered on the records of the membership nonprofit corporation and who has the right to (i) select or vote for the election of directors or (ii) vote on any type of fundamental transaction.
(27) MEMBERSHIP or MEMBERSHIP INTERESTS means the rights and any obligations of a member in a membership nonprofit corporation or a foreign membership nonprofit corporation.
(28) MEMBERSHIP NONPROFIT CORPORATION means, except as provided in Section 10A-3A-14.01(c)(1), a nonprofit corporation whose certificate of incorporation provides that it will have members.
(29) NONMEMBERSHIP NONPROFIT CORPORATION means a nonprofit corporation whose certificate of incorporation provides that it will not have members.
(30) NONPROFIT CORPORATION, except in the phrase foreign nonprofit corporation, means a nonprofit corporation incorporated under or existing under this chapter.
(31) ORGANIZATIONAL DOCUMENTS means the public organic record and private organizational documents of a nonprofit corporation, foreign nonprofit corporation, business corporation, foreign business corporation, or other organization.
(32) PRINCIPAL OFFICE means the office (in or out of this state) where the principal executive offices of a nonprofit corporation or foreign nonprofit corporation are located.
(33) PRIVATE ORGANIZATIONAL DOCUMENTS means (i) the bylaws of a nonprofit corporation, foreign nonprofit corporation, business corporation, or foreign business corporation or (ii) the rules, regardless of whether in writing, that govern the internal affairs of an unincorporated entity or foreign unincorporated entity, are binding on all its interest holders, and are not part of its public organic record, if any. Where private organizational documents have been amended or restated, the term means the private organizational documents as last amended or restated.
(34) PROCEEDING includes any civil suit and criminal, administrative, and investigatory action.
(35) PUBLIC ORGANIC RECORD means (i) the certificate of incorporation of a nonprofit corporation, foreign nonprofit corporation, business corporation, or foreign business corporation, or (ii) the document, if any, the filing of which is required to create an unincorporated entity or foreign unincorporated entity, or which creates the unincorporated entity or foreign unincorporated entity and is required to be filed. Where a public organic record has been amended or restated, the term means the public organic record as last amended or restated.
(36) RECORD DATE means the date fixed for determining the identity of the nonprofit corporation’s members and their interests for purposes of this chapter. Unless another time is specified when the record date is fixed, the determination shall be made as of the close of business at the principal office of the nonprofit corporation on the date so fixed.
(37) SECRETARY means the corporate officer to whom the certificate of incorporation, bylaws, or board of directors has delegated responsibility under Section 10A-3A-8.40(c) to maintain the minutes of the meetings of the board of directors, committees, and the members, and for authenticating records of the nonprofit corporation.
(38) SHARES means the units into which the proprietary interests in a domestic or foreign business corporation are divided.
(39) TYPE OF ENTITY means a generic form of entity: (i) recognized at common law; or (ii) formed under a governing statute, regardless of whether some entities formed under that law are subject to provisions of that law that create different categories of the form of entity.
(40) UNINCORPORATED ENTITY means an organization or artificial legal person that either has a separate legal existence or has the power to acquire an estate in real property in its own name and that is not any of the following: a corporation, foreign corporation, nonprofit corporation, foreign nonprofit corporation, a series of a limited liability company or of another type of entity, an estate, a trust, a state, United States, or foreign government. The term includes a general partnership, limited liability company, limited partnership, business trust, joint stock association, and unincorporated nonprofit association.
(41) UNITED STATES includes a district, authority, bureau, commission, department, and any other agency of the United States.
(42) VOTE, VOTING, or CASTING A VOTE includes the giving of consent in writing without a meeting. The term does not include either recording the fact of abstention or failing to vote for a candidate or for approval or disapproval of a matter, whether or not the person entitled to vote characterizes that conduct as voting or casting a vote.
(43) VOTING GROUP means one or more classes of members that under the certificate of incorporation, bylaws, or this chapter are entitled to vote and be counted together collectively on a matter at a meeting of members. All members entitled by the certificate of incorporation, bylaws, or this chapter to vote generally on the matter are for that purpose a single voting group.
(44) VOTING POWER means the current power to vote in the election of directors, or to vote on approval of any type of fundamental transaction.
(Act 2023-503, §1; Act 2024-413, §1.)
(a) A notice under this chapter must be in writing unless oral notice is reasonable in the circumstances. Unless otherwise agreed between the sender and the recipient, words in a notice or other communication under this chapter must be in English.
(b) A notice or other communication may be given by any method of delivery, except that notice or other communication by electronic transmission must be in accordance with this section. If the methods of delivery are impracticable, a notice or other communication from the nonprofit corporation may be given by means of a broad non-exclusionary distribution to the public (which may include a newspaper of general circulation in the area where published; radio, television, or other form of public broadcast communication; or other methods of distribution that the nonprofit corporation has previously identified to its recipients).
(c) A notice or other communication to a nonprofit corporation or to a foreign nonprofit corporation registered to transact business in this state may be delivered to the registered agent of the nonprofit corporation or the foreign nonprofit corporation at that registered agent’s registered office or to the secretary at the principal office of the nonprofit corporation or the foreign nonprofit corporation.
(d) A notice or other communication from a nonprofit corporation to a member may be delivered by electronic mail to the electronic mail address for that member maintained pursuant to Section 10A-3A-4.01(d), unless that member has previously notified the nonprofit corporation in writing that the member objects to receiving notices and other communications by electronic mail. Any notice or other communication may be delivered to a member by another form of electronic transmission if consented to by that member or if authorized by subsection (j). Any notice or other communication from a nonprofit corporation to any other person may be delivered by electronic transmission if consented to by the recipient or if authorized by subsection (j). Any consent under this subsection or subsection (j) may be revoked with respect to future notices or communications by the person who consented by written notice to the person to whom the consent was delivered.
(e) A notice or other communication may no longer be delivered to an electronic mail address or other electronic transmission address pursuant to subsection (d) if (i) the nonprofit corporation receives notice from the information processing system into which the notice or other communication was entered that two consecutive notices or other communications given by electronic transmission have not been delivered to the electronic mail address or other electronic transmission address to which the notice or other communication was directed, and (ii) the notice of non-delivery becomes known to the secretary or an assistant secretary, or another person responsible for the giving of notices or other communications for the nonprofit corporation; provided, however, that the inadvertent failure to recognize the notice of non-delivery as a cessation of authority to provide a member with notice by electronic mail or other electronic transmission shall not invalidate any meeting or other action.
(f) Unless otherwise agreed between the sender and the recipient, a notice or other communication by electronic transmission is received when:
(1) it enters an information processing system directed to: (i) in the case of a member, the electronic mail address for the member maintained pursuant to Section 10A-3A-4.01(d) or other electronic transmission address at which the member has consented to receive notice or other communication by electronic transmission; or (ii) in the case of any other recipient, the electronic transmission address at which the recipient has consented to receive notice or other communication by electronic transmission; and
(2) it is in a form capable of being processed by that system.
(g) Receipt of an electronic acknowledgment from an information processing system described in subsection (f)(1) establishes that an electronic transmission was received but, by itself, does not establish that the content sent corresponds to the content received.
(h) An electronic transmission is received under this section even if no person is aware of its receipt.
(i) A notice or other communication, if in a comprehensible form or manner, is effective at the earliest of the following:
(1) if in a physical form, the earliest of when it is actually received, or when it is left at:
(i) a member’s address included in the record of members maintained pursuant to Section 10A-3A-4.01(d);
(ii) a director’s residence or usual place of business; or
(iii) the nonprofit corporation’s principal office;
(2) if mailed by United States mail postage prepaid and addressed to a member at the member’s address included in the record of members maintained pursuant to Section 10A-3A-4.01(d), upon deposit in the United States mail;
(3) if mailed by United States mail postage prepaid and addressed to a recipient other than a member, at the address of the recipient reflected in the books and records of the nonprofit corporation, the earliest of when it is actually received, or:
(i) if sent by registered or certified mail, return receipt requested, the date shown on the return receipt signed by or on behalf of the addressee; or
(ii) five days after it is deposited in the United States mail;
(4) if sent by a nationally recognized commercial carrier that issues a receipt or other confirmation of delivery, the earliest of when it is actually received or the date shown on the receipt or other confirmation of delivery issued by the commercial carrier;
(5) if an electronic transmission, when it is received as provided in subsection (f); and
(6) if oral, when communicated.
(j) A notice or other communication may be in the form of an electronic transmission that cannot be directly reproduced in paper form by the recipient through an automated process used in conventional commercial practice only if (i) the electronic transmission is otherwise retrievable in perceivable form and (ii) the sender and the recipient have consented in writing to the use of that form of electronic transmission.
(k) If this chapter prescribes requirements for notices or other communications in particular circumstances, those requirements govern. If the certificate of incorporation or bylaws prescribe requirements for notices or other communications, not inconsistent with this section or other provisions of this chapter, those requirements govern. The certificate of incorporation or bylaws may authorize or require delivery of notices of meetings of directors by electronic transmission.
(l) In the event that any provisions of this chapter are deemed to modify, limit, or supersede the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. §§ 7001 et seq., the provisions of this chapter shall control to the maximum extent permitted by Section 102(a)(2) of that federal act.
(m) Whenever a notice or communication would otherwise be required to be given under any provision of this chapter to a member, the notice or communication need not be given if the nonprofit corporation is not permitted to deliver the notice or communication by electronic transmission pursuant to subsections (d) and (e) and:
(1) notices and communications to members of two consecutive annual meetings, and all notices and communications of meetings during the period between those two consecutive annual meetings, have been sent to that member at that member’s address included in the record of members maintained pursuant to Section 10A-3A-4.01(d) and have been returned undeliverable or could not be delivered; or
(2) no address has been provided to the nonprofit corporation by or on behalf of a member and the nonprofit corporation has not otherwise obtained an address for that member it believes to be reliable.
In addition if any member to which this subsection (m) applies delivers to the nonprofit corporation a written notice or communication setting forth that member’s then-current address, the requirement that notice and communication be given to that member shall be reinstated.
(n) Whenever a notice or communication is required to be given, under any provision of this chapter or of the certificate of incorporation or bylaws of any nonprofit corporation, to any person with whom notice to or communication with is unlawful, the giving of the notice or communication to that person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give the notice or communication to that person. Any action or meeting which shall be taken or held without notice or communication to the person with whom notice to or communication with is unlawful shall have the same force and effect as if the notice or communication had been duly given. In the event that the action taken by the nonprofit corporation requires the filing of a certificate or other filing instrument under any of the other sections of this chapter, the certificate or other filing instrument shall state, if that is the fact and if notice or communication is required, that notice or communication was given to all persons entitled to receive notice or communication except those persons with whom notice to or communication with is unlawful.
(Act 2023-503, §1.)
(a) Whenever any filing instrument is to be delivered to the Secretary of State for filing in accordance with this chapter, the instrument shall be executed as follows:
(1) Except as provided in subsection (a)(3), the certificate of incorporation, and any other instrument to be filed before the election of the initial board of directors if the initial directors were not named in the certificate of incorporation, shall be signed by the incorporator or incorporators or the successors and assigns of the incorporator or incorporators. If any incorporator is not available then any other instrument may be signed, with the same effect as if the incorporator had signed it, by any person for whom or on whose behalf the incorporator, in executing the certificate of incorporation, was acting directly or indirectly as employee or agent, provided that the other instrument shall state that the incorporator is not available and the reason therefor, that the incorporator in executing the certificate of incorporation was acting directly or indirectly as employee or agent for or on behalf of the person, and that the person’s signature on the instrument is otherwise authorized and not wrongful.
(2) Except as provided in subsection (a)(3), all other filing instruments shall be signed:
(i) by any authorized officer of the nonprofit corporation; or
(ii) if it shall appear from the filing instrument that there are no authorized officers, then by a majority of the directors or by the directors as may be designated by a majority of the board of directors; or
(iii) if it shall appear from the filing instrument that there are no authorized officers or directors, then by a majority of the members or by the members as may be designated by a majority of the members.
(3) If the nonprofit corporation is in the hands of a receiver, trustee, or other court-appointed fiduciary, by that fiduciary.
(b) The person executing the filing instrument shall sign it and state beneath or opposite the person’s signature the person’s name and the capacity in which the filing instrument is signed. The filing instrument may, but need not, contain a corporate seal, attestation, acknowledgment, or verification.
(c) Whenever a provision of this chapter permits any of the terms of a plan or a filing instrument to be dependent on facts objectively ascertainable outside the plan or filing instrument, the following provisions apply:
(1) The manner in which the facts will operate upon the terms of the plan or filing instrument must be set forth in the plan or filing instrument.
(2) The facts may include:
(i) any of the following that are available in a nationally recognized news or information medium either in print or electronically: statistical or market indices, market prices of any security or group of securities, interest rates, currency exchange rates, or similar economic or financial data;
(ii) a determination or action by any person or body, including the nonprofit corporation or any other party to a plan or filing instrument; or
(iii) the terms of, or actions taken under, an agreement to which the nonprofit corporation is a party, or any other agreement or document.
(3) As used in this subsection (c), “plan” means a plan of conversion or merger.
(4) The following provisions of a plan or filing instrument may not be made dependent on facts outside the plan or filed document:
(i) the name and address of any person required in a filing instrument;
(ii) the registered office of any entity required in a filing instrument;
(iii) the registered agent of any entity required in a filing instrument;
(iv) the effective date and time of a filing instrument as determined under Article 4 of Chapter 1; and
(v) any required statement in a filing instrument of the date on which the underlying transaction was approved or the manner in which that approval was given.
(5) If a provision of a filing instrument is made dependent on a fact ascertainable outside of the filing instrument, and that fact is neither ascertainable by reference to a source described in subsection (c)(2)(i) or a document that is a matter of public record, nor have the affected members, if any, and if none, the affected directors, received notice of the fact from the nonprofit corporation, then the nonprofit corporation shall deliver to the Secretary of State for filing a certificate of amendment to the filing instrument setting forth the fact promptly after the time when the fact referred to is first ascertainable or thereafter changes. A certificate of amendment under this subsection is deemed to be authorized by the authorization of the original filing instrument to which it relates and may be filed by the nonprofit corporation without further action by the board of directors or the members.
(Act 2023-503, §1.)
(a) The Secretary of State, upon request and payment of the requisite fee, shall furnish to any person a certificate of existence for a nonprofit corporation if the writings filed in the office of the Secretary of State show that the nonprofit corporation has been incorporated under the laws of this state. A certificate of existence shall reflect only the information on file with the Secretary of State. A certificate of existence must state:
(1) the nonprofit corporation’s name;
(2) that the nonprofit corporation was incorporated under the laws of this state, the date of incorporation, and the filing office in which the certificate of incorporation was filed;
(3) whether the nonprofit corporation has delivered to the Secretary of State for filing a certificate of dissolution;
(4) whether the nonprofit corporation has delivered to the Secretary of State for filing a certificate of reinstatement; and
(5) other facts of record in the office of the Secretary of State that are specified by the person requesting the certificate.
(b) The Secretary of State, upon request and payment of the requisite fee, shall furnish to any person a certificate of registration for a foreign nonprofit corporation if the writings filed in the office of the Secretary of State show that the Secretary of State has filed an application for registration for authority to transact business in this state and the registration has not been revoked, withdrawn, or terminated. A certificate of registration must state:
(1) the foreign nonprofit corporation’s name and any alternate name adopted for use in this state;
(2) that the foreign nonprofit corporation is authorized to transact business in this state;
(3) that the Secretary of State has not revoked the foreign nonprofit corporation’s registration;
(4) that the foreign nonprofit corporation has not filed with the Secretary of State a certificate of withdrawal or otherwise terminated its registration; and
(5) other facts of record in the office of the Secretary of State that are specified by the person requesting the certificate.
(c) Subject to any qualification stated in the certificate, a certificate of existence or certificate of registration issued by the Secretary of State is conclusive evidence that the nonprofit corporation is in existence or the foreign nonprofit corporation is authorized to transact business in this state.
(Act 2023-503, §1.)
In this Division:
(1) “CORPORATE ACTION” means any action taken by or on behalf of the nonprofit corporation, including any action taken by the incorporator, the board of directors, a committee of the board of directors, an officer or agent of the nonprofit corporation, or the members, if any.
(2) “DATE OF THE DEFECTIVE CORPORATE ACTION” means the date (or the approximate date, if the exact date is unknown) the defective corporate action was purported to have been taken.
(3) “DEFECTIVE CORPORATE ACTION” means (i) any corporate action purportedly taken that is, and at the time that corporate action was purportedly taken would have been, within the power of the nonprofit corporation, but is void or voidable due to a failure of authorization, and (ii) an overissue.
(4) “FAILURE OF AUTHORIZATION” means the failure to authorize, approve, or otherwise effect a corporate action in compliance with the provisions of this chapter, the certificate of incorporation or bylaws, a corporate resolution, or any plan or agreement to which the nonprofit corporation is a party, if and to the extent that failure would render that corporate action void or voidable.
(5) “OVERISSUE” means the purported issuance of:
(i) membership interests of a class in excess of the number, if any, of membership interests of a class the nonprofit corporation has the power to issue under its certificate of incorporation or bylaws at the time of issuance; or
(ii) membership interests of any class that is not then authorized for issuance by the certificate of incorporation or bylaws.
(6) “PUTATITVE MEMBERSHIP INTEREST” means a membership interest of any class (including a membership interest issued upon exercise of rights, options, warrants, or other securities convertible into a membership interest of the nonprofit corporation, or interests with respect to that membership interest) that was created or issued as a result of a defective corporate action, that (i) but for any failure of authorization would constitute a valid membership interest, or (ii) cannot be determined by the board of directors to be a valid membership interest.
(7) “VALID MEMBERSHIP INTEREST” means the membership interest of any class that has been duly authorized and validly issued in accordance with this chapter, including as a result of ratification or validation under this article.
(8) “VALIDATION EFFECTIVE TIME” with respect to any defective corporate action ratified under this article means the later of:
(i) the time at which the ratification of the defective corporate action is approved by the members, if any, and if none, by the board of directors; and
(ii) the time at which any certificate of validation filed in accordance with Section 10A-3A-1.26 becomes effective.
The validation effective time shall not be affected by the filing or pendency of a judicial proceeding under Section 10A-3A-1.27 or otherwise, unless otherwise ordered by the court.
(Act 2023-503, §1.)
(a) A defective corporate action shall not be void or voidable if ratified in accordance with Section 10A-3A-1.22 or validated in accordance with Section 10A-3A-1.27.
(b) Ratification under Section 10A-3A-1.22 or validation under Section 10A-2A-1.27 shall not be deemed to be the exclusive means of ratifying or validating any defective corporate action, and the absence or failure of ratification in accordance with this Division shall not, of itself, affect the validity or effectiveness of any corporate action properly ratified under common law or otherwise, nor shall it create a presumption that any such corporate action is or was a defective corporate action or void or voidable.
(c) In the case of an overissue, a putative membership interest shall be valid a membership interest effective as of the date originally issued or purportedly issued upon:
(1) the effectiveness under this article and under Article 9 of an amendment to the certificate of incorporation or bylaws authorizing, designating, or creating that membership interest; or
(2) the effectiveness of any other corporate action under this article ratifying the authorization, designation, or creation of a membership interest.
(Act 2023-503, §1.)
(a) To ratify a defective corporate action under this section (other than the ratification of an election of the initial board of directors under subsection (b)), the board of directors shall take action ratifying the action in accordance with Section 10A-3A-1.23, stating:
(1) the defective corporate action to be ratified and, if the defective corporate action involved the issuance of a putative membership interest, the number and types of putative membership interests purportedly issued;
(2) the date of the defective corporate action;
(3) the nature of the failure of authorization with respect to the defective corporate action to be ratified; and
(4) that the board of directors approves the ratification of the defective corporate action.
(b) In the event that a defective corporate action to be ratified relates to the election of the initial board of directors of the nonprofit corporation under Section 10A-3A-2.04(a)(2), a majority of the persons who, at the time of the ratification, are exercising the powers of directors may take an action stating:
(1) the name of the person or persons who first took action in the name of the nonprofit corporation as the initial board of directors of the nonprofit corporation;
(2) the earlier of the date on which those persons first took the action or were purported to have been elected as the initial board of directors; and
(3) that the ratification of the election of the person or persons as the initial board of directors is approved.
(c) If any provision of this chapter, the certificate of incorporation or bylaws, any corporate resolution, or any plan or agreement to which a membership nonprofit corporation is a party in effect at the time action under subsection (a) is taken requires member approval or would have required member approval at the date of the occurrence of the defective corporate action, the ratification of the defective corporate action approved in the action taken by the directors under subsection (a) shall be submitted to the members for approval in accordance with Section 10A-3A-1.23.
(d) If the certificate of incorporation of a nonprofit corporation in effect at the time action under subsection (a) is taken requires the approval of a person or group of persons specified in the certificate of incorporation or would have required approval of that person or group of persons at the date of the occurrence of the defective corporate action, the ratification of the defective corporate action approved in the action taken by the directors under subsection (a) shall be submitted to that person or group of persons for approval in accordance with Section 10A-3A-1.23.
(e) Unless otherwise provided in the action taken by the board of directors under subsection (a), after the action by the board of directors has been taken and, if required, approved in accordance with subsection (c) or subsection (d), the board of directors may abandon the ratification at any time before the validation effective time without further action of the members, if any, or the person or group of persons, if any, specified in the certificate of incorporation.
(Act 2023-503, §1.)
(a) The quorum and voting requirements applicable to a ratifying action by the board of directors under Section 10A-3A-1.22(a) shall be the quorum and voting requirements applicable to the corporate action proposed to be ratified at the time the ratifying action is taken.
(b) If the ratification of the defective corporate action requires approval by the members under Section 10A-3A-1.22(c), and if the approval is to be given at a meeting, the membership nonprofit corporation shall notify each holder of valid and putative membership interests, regardless of whether entitled to vote of (i) the date of the action by the board of directors under Section 10A-3A-1.22(a) which shall be the record date and (ii) the date of the occurrence of the defective corporate action, provided that notice shall not be required to be given to holders of valid or putative membership interests whose identities or addresses for notice cannot be determined from the records of the membership nonprofit corporation. The notice must state that the purpose, or one of the purposes, of the meeting, is to consider ratification of a defective corporate action and must be accompanied by (i) either a copy of the action taken by the board of directors in accordance with Section 10A-3A-1.22(a) or the information required by Section 10A-3A-1.22(a)(1) through (a)(4), and (ii) a statement that any claim that the ratification of the defective corporate action and any putative membership interest issued as a result of the defective corporate action should not be effective, or should be effective only on certain conditions, shall be brought within 120 days from the applicable validation effective time.
(c) Except as provided in subsection (d) with respect to the voting requirements to ratify the election of a director, the quorum and voting requirements applicable to the approval by the members, if any, and if none, by the directors shall be the quorum and voting requirements applicable to the corporate action proposed to be ratified at the time of the member or director approval.
(d) The approval by members to ratify the election of a director requires that the votes cast within the voting group favoring the ratification exceed the votes cast opposing the ratification of the election at a meeting at which a quorum is present.
(e) Putative membership interests on the date of the action by the board of directors under Section 10A-3A-1.22(a) (and without giving effect to any ratification of putative membership interests that becomes effective as a result of the vote) shall neither be entitled to vote nor counted for quorum purposes in any vote to approve the ratification of any defective corporate action.
(f) If the approval under this section of putative membership interests would result in an overissue, in addition to the approval required by Section 10A-3A-1.22, approval of an amendment to the certificate of incorporation under Article 9 to increase the number of membership interests of an authorized class or to authorize the creation of a class of membership interests so there would be no overissue shall also be required.
(g) If the ratification of the defective corporate action requires approval by a person or group of persons specified in the certificate of incorporation, the directors shall provide that person or group of persons with (i) either a copy of the action taken by the board of directors in accordance with Section 10A-3A-1.22(a) or the information required by Section 10A-3A-1.22(a)(1) through (a)(4), and (ii) a statement that any claim that the ratification of the defective corporate action and any putative membership interest issued as a result of the defective corporate action should not be effective, or should be effective only on certain conditions, shall be brought within 120 days from the applicable validation effective time.
(Act 2023-503, §1; Act 2024-413, §1.)
(a) In a membership nonprofit corporation, unless member approval is required under Section 10A-3A-1.22(c), prompt notice of an action taken under Section 10A-3A-1.22 shall be given to each holder of a valid and putative membership interest in the membership nonprofit corporation, regardless of whether entitled to vote, as of: (i) the date of the action by the board of directors; and (ii) the date of the defective corporate action ratified, provided that notice shall not be required to be given to holders of a valid and putative membership interest whose identities or addresses for notice cannot be determined from the records of the nonprofit corporation.
(b) The notice set forth in subsection (a) must contain: (i) either a copy of the action taken by the board of directors in accordance with Section 10A-3A-1.22(a) or (b) or the information required by Section 10A-3A-1.22(a)(1) through (a)(4) or Section 10A-3A-1.22(b)(1) through (b)(3), as applicable; and (ii) a statement that any claim that the ratification of the defective corporate action and any putative membership interest issued as a result of the defective corporate action should not be effective, or should be effective only on certain conditions, shall be brought within 120 days from the applicable validation effective time.
(c) In a membership nonprofit corporation, no notice under this section is required with respect to any action required to be submitted to members for approval under Section 10A-3A-1.22(c) if notice is given in accordance with Section 10A-3A-1.24(b).
(d) A notice required by this section may be given in any manner permitted by Section 10A-3A-1.03.
(Act 2023-503, §1.)
From and after the validation effective time, and without regard to the 120-day period during which a claim may be brought under Section 10A-3A-1.27:
(a) Each defective corporate action ratified in accordance with Section 10A-3A-1.22 shall not be void or voidable as a result of the failure of authorization identified in the action taken under Section 10A-3A-1.22(a) or (b) and shall be deemed a valid corporate action effective as of the date of the defective corporate action;
(b) The issuance of each putative membership interest purportedly issued pursuant to a defective corporate action identified in the action taken under Section 10A-3A-1.22 shall not be void or voidable, and each putative membership interest shall be deemed to be an identical membership interest as of the time it was purportedly issued; and
(c) Any corporate action taken subsequent to the defective corporate action ratified in accordance with this Division B of Article 1 in reliance on the defective corporate action having been validly effected and any subsequent defective corporate action resulting directly or indirectly from the original defective corporate action shall be valid as of the time taken.
(Act 2023-503, §1.)
(a) If the defective corporate action ratified under this Division B of Article 1 would have required under any other section of this chapter a filing instrument to be delivered to a filing officer for filing and either (i) the filing instrument requires any change to give effect to the defective corporate action in accordance with Division B of Article 1 (including any change to the date and time of the effectiveness of the filing instrument) or (ii) a filing instrument under any other section of this chapter was not previously delivered to a filing officer for filing in respect of the defective corporate action, then, in lieu of a filing instrument otherwise required by this chapter, the nonprofit corporation shall deliver a certificate of validation to the appropriate filing officer for filing in accordance with this section, and that certificate of validation shall serve to amend or substitute for any other filing instrument with respect to the defective corporate action required by this chapter.
(b) The certificate of validation must set forth:
(1) the name of the nonprofit corporation;
(2) the unique identifying number or other designation as assigned by the Secretary of State;
(3) a statement that the defective corporate action was ratified in accordance with Section 10A-3A-1.22, including the date on which the board of directors ratified that defective corporate action, and if applicable, the date on which the members approved the ratification of that defective corporate action, and the date on which the person or group of persons specified in the certificate of incorporation approved the ratification of that defective corporate action; and
(4) the information required by subsection (c).
(c) The certificate of validation must also contain the following information:
(1) if a filing instrument was previously delivered to a filing officer for filing in respect of the defective corporate action and that filing instrument requires any change to give effect to the ratification of that defective corporate action in accordance with Section 10A-3A-1.22, the certificate of validation must set forth (i) the name, title, and filing date of the filing instrument previously delivered to a filing officer for filing and any certificate of correction to that filing instrument, (ii) a statement that a filing instrument containing all of the information required to be included under the applicable section or sections of this chapter to give effect to that defective corporate action is attached as an exhibit to the certificate of validation, and (iii) the date and time that filing instrument is deemed to have become effective; or
(2) if a filing instrument was not previously delivered to a filing officer for filing in respect of the defective corporate action and the defective corporate action ratified under Section 10A-3A-1.22 would have required a filing instrument under any other section of this chapter, the certificate of validation must set forth (i) a statement that a filing instrument containing all of the information required to be included under the applicable section or sections of this chapter to give effect to that defective corporate action is attached as an exhibit to the certificate of validation, and (ii) the date and time that filing instrument is deemed to have become effective.
(Act 2023-503, §1; Act 2024-413, §1.)
(a) Upon application by the nonprofit corporation, any successor entity to the nonprofit corporation, a director of the nonprofit corporation, any member (if applicable) of the nonprofit corporation, including any member as of the date of the defective corporate action ratified under Section 10A-3A-1.22, the person or group of persons (if applicable) specified in the certificate of incorporation, or any other person claiming to be substantially and adversely affected by a ratification under Section 10A-3A-1.22, the designated court, and if none, the circuit court for the county in which the nonprofit corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the nonprofit corporation’s most recent registered office, is located, may:
(1) determine the validity and effectiveness of any corporate action or defective corporate action;
(2) determine the validity and effectiveness of any ratification under Section 10A-3A-1.22;
(3) determine the validity of any putative membership interest; and
(4) modify or waive any of the procedures specified in Section 10A-3A-1.22 or Section 10A-3A-1.23 to ratify a defective corporate action.
(b) In connection with an action under this section, the court may make findings or orders, and take into account any factors or considerations, regarding any matters as it deems proper under the circumstances.
(c) Service of process of the application under subsection (a) on the nonprofit corporation may be made in any manner provided by statute of this state or by rule of the applicable court for service on the nonprofit corporation, and no other party need be joined in order for the court to adjudicate the matter. In an action filed by the nonprofit corporation, the court may require notice of the action be provided to other persons specified by the court and permit those other persons to intervene in the action.
(d) Notwithstanding any other provision of this section or otherwise under applicable law, any action asserting that the ratification of any defective corporate action and any putative membership interest issued as a result of a defective corporate action should not be effective, or should be effective only on certain conditions, shall be brought within 120 days of the validation effective time.
(Act 2023-503, §1.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) A “qualified director” is a director who, at the time action is to be taken under:
(1) Section 10A-3A-2.02(b)(6), is not a director (i) to whom the limitation or elimination of the duty of an officer to offer potential business opportunities to the nonprofit corporation would apply, or (ii) who has a material relationship with any other person to whom the limitation or elimination would apply;
(2) Section 10A-3A-8.53 or Section 10A-3A-8.55 (i) is not a party to the proceeding, (ii) is not a director as to whom a transaction is a director’s conflicting interest transaction or who sought a disclaimer of the nonprofit corporation’s interest in a business opportunity under Section 10A-2A-8.60, which transaction or disclaimer is challenged, and (iii) does not have a material relationship with a director described in either clause (i) or clause (ii) of this subsection (a)(2); or
(3) Section 10A-2A-8.60, is not a director (i) as to whom the contract or transaction is a director’s conflicting interest transaction, (ii) who has a material relationship with another director as to whom the transaction is a director’s conflicting interest transaction, (iii) who pursues or takes advantage of the business opportunity, directly, or indirectly through or on behalf of another person, or (iv) has a material relationship with a director or officer who pursues or takes advantage of the business opportunity, directly, or indirectly through or on behalf of another person.
(b) For purposes of this section:
(1) “MATERIAL RELATIONSHIP” means a familial, financial, professional, employment, or other relationship that would reasonably be expected to impair the objectivity of the director’s judgment when participating in the action to be taken; and
(2) “MATERIAL INTEREST” means an actual or potential benefit or detriment (other than one which would devolve on the nonprofit corporation or the members generally) that would reasonably be expected to impair the objectivity of the director’s judgment when participating in the action to be taken.
(c) The presence of one or more of the following circumstances shall not automatically prevent a director from being a qualified director:
(1) nomination or election of the director to the current board of directors by any director who is not a qualified director with respect to the matter (or by any person that has a material relationship with that director), acting alone or participating with others; or
(2) service as a director of another nonprofit corporation of which a director who is not a qualified director with respect to the matter (or any individual who has a material relationship with that director), is or was also a director.
(Act 2023-503, §1.)
[Effective: 2026-08-01]
(a) As used in this chapter, unless otherwise specified or unless the context otherwise requires, “qualified director” is a director who, at the time action is to be taken under:
(1) Section 10A-3A-2.02(b)(6), is not a director (i) to whom the limitation or elimination of the duty of an officer to offer potential corporate opportunities to the nonprofit corporation would apply or (ii) who has a material relationship with any other person to whom the limitation or elimination would apply;
(2) Section 10A-3A-8.53 or Section 10A-3A-8.55, (i) is not a party to the proceeding, (ii) is not a director as to whom a transaction is a conflicting interest transaction or who sought a disclaimer of the nonprofit corporation’s interest in a corporate opportunity under Section 10A-3A-8.70, which transaction or disclaimer is challenged, and (iii) does not have a material relationship with a director described in either clause (i) or clause (ii) of this subsection (a)(2);
(3) Sections 10A-3A-8.61 or 10A-3A-8.62, is not a director (i) as to whom the act or transaction is a conflicting interest transaction, (ii) who has a material relationship with another director as to whom the act or transaction is a conflicting interest transaction, or (iii) who has a material relationship with a controlling person that has a material financial interest in the act or transaction; or
(4) Section 10A-3A-8.70, is not a director who (i) pursues or takes advantage of a corporate opportunity, directly, or indirectly through or on behalf of another person or (ii) has a material relationship with a director or officer who pursues or takes advantage of a corporate opportunity, directly, or indirectly through or on behalf of another person.
(b) As used in this chapter, unless otherwise specified or unless the context otherwise requires, a “material relationship” means a familial, financial, professional, employment, or other relationship that would reasonably be expected to impair the objectivity of the director’s judgment when participating in the negotiation, authorization, or approval of the act or transaction at issue.
(c) The presence of one or more of the following circumstances shall not automatically prevent a director from being a qualified director:
(1) designation, nomination, or vote in the election of the director to the current board of directors by any director who is not a qualified director with respect to the matter (or by any person that has a material financial interest in an act or transaction), acting alone or participating with others; or
(2) service as a director of another nonprofit corporation of which a director who is not a qualified director with respect to the matter (or any individual who has a material relationship with that director), is or was also a director.
(Act 2023-503, §1; Act 2026-495, §1.)
(a) A membership nonprofit corporation has delivered written notice or any other report or statement under this chapter, the certificate of incorporation, or the bylaws to all members who share a common address if:
(1) the membership nonprofit corporation delivers one copy of the notice, report, or statement to the common address;
(2) the membership nonprofit corporation addresses the notice, report, or statement to those members either as a group or to each of those members individually or to the members in a form to which each of those members has consented; and
(3) each of those members consents to delivery of a single copy of the notice, report, or statement to the members’ common address.
(b) A consent described in subsection (a)(2) or (a)(3) shall be revocable by any members who deliver written notice of revocation to the membership nonprofit corporation. If a written notice of revocation is delivered, the membership nonprofit corporation shall begin providing individual notices, reports, or other statements to the revoking member no later than 30 days after delivery of the written notice of revocation.
(c) Any member who fails to object by written notice to the membership nonprofit corporation, within 60 days of written notice by the membership nonprofit corporation of its intention to deliver single copies of notices, reports, or statements to members who share a common address as permitted by subsection (a), shall be deemed to have consented to receiving a single copy at the common address; provided that the notice of intention explains that consent may be revoked and the method for revoking.
(Act 2023-503, §1.)
(a) The law of the jurisdiction of formation of a foreign nonprofit corporation governs:
(1) the incorporation and internal affairs of the foreign nonprofit corporation;
(2) the liability of its members as members for the debts, obligations, or other liabilities of the foreign nonprofit corporation; and
(3) the authority of the directors and officers of the foreign nonprofit corporation.
(b) A foreign nonprofit corporation is not precluded from registering to do business in this state because of any difference between the law of the foreign nonprofit corporation’s jurisdiction of formation and the law of this state.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
Section 10A-1-3.05 shall not apply to this chapter. Instead:
(a) The certificate of incorporation must set forth:
(1) a name for the nonprofit corporation that satisfies the requirements of Article 5 of Chapter 1;
(2) the street and mailing address of the nonprofit corporation’s initial registered office, the county within this state in which the street and mailing address is located, and the name of the nonprofit corporation’s initial registered agent at that office as required by Article 5 of Chapter 1;
(3) that the nonprofit corporation is incorporated under this chapter;
(4) the name and address of each incorporator; and
(5)(i) if the nonprofit corporation will have members, a statement to that effect; or
(ii) if the nonprofit corporation will not have members, a statement to that effect.
(b) The certificate of incorporation may set forth:
(1) the names and addresses of the individuals who are to serve as the initial directors;
(2) provisions not inconsistent with law regarding:
(i) the purpose or purposes for which the nonprofit corporation is organized;
(ii) managing the activities and regulating the affairs of the nonprofit corporation;
(iii) defining, limiting, and regulating the powers of the nonprofit corporation, its board of directors, and the members;
(iv) the characteristics, qualifications, rights, limitations, and obligations attaching to each or any class of members;
(v) subject to Section 10A-3A-4.20, limiting a member’s right to inspect and copy the records of the nonprofit corporation under Section 10A-3A-4.02(b);
(vi) the distribution of assets on dissolution;
(vii) provisions for the election, appointment, or designation of directors;
(viii) provisions granting inspection rights to a person or group of persons under Section 10A-3A-4.07; and
(ix) provisions specifying a person or group of persons whose approval is required under Sections 10A-3A-9.30, 10A-3A-10.04, 10A-3A-11.04, 10A-3A-12.08, or 10A-3A-13.08;
(3) any provision that under this chapter is permitted to be set forth in the certificate of incorporation or required or permitted to be set forth in the bylaws;
(4) a provision eliminating or limiting the liability of a director or officer to a nonprofit corporation or its members for money damages for any action taken, or any failure to take any action, as a director or officer, except liability for (i) the amount of a financial benefit received by a director or officer to which the director or officer is not entitled, (ii) an intentional infliction of harm on the nonprofit corporation or its members, (iii) in the case of a director, a violation of Section 10A-3A-8.32, (iv) an intentional violation of criminal law, or (v) in the case of an officer, any claim by or in the right of the nonprofit corporation;
(5) a provision permitting or making obligatory indemnification of a director for liability as defined in Section 10A-3A-8.50 to any person for any action taken, or any failure to take any action, as a director, except liability for (i) receipt of a financial benefit to which the director is not entitled, (ii) an intentional infliction of harm on the nonprofit corporation or its members, (iii) a violation of Section 10A-3A-8.32, or (iv) an intentional violation of criminal law;
(6) a provision limiting or eliminating any duty of a director or any other person to offer the nonprofit corporation the right to have or participate in any, or one or more classes or categories of, corporate opportunities, before the pursuit or taking of the opportunity by the director or other person; provided that the application of that provision to an officer or a related person of that officer (i) also requires approval of that application by the board of directors, subsequent to the effective date of the provision, by action of the disinterested or qualified directors taken in compliance with the same procedures as are set forth in Section 10A-3A-8.60, and (ii) may be limited by the authorizing action of the board of directors; and
(7) provisions required if the nonprofit corporation is to be exempt from taxation under federal, state, or local law.
(c) The certificate of incorporation need not set forth any of the corporate powers enumerated in Sections 10A-1-2.11, 10A-1-2.12, and 10A-1-2.13.
(d) Provisions of the certificate of incorporation may be made dependent upon facts objectively ascertainable outside the certificate of incorporation in accordance with Section 10A-3A-1.04.
(e) As used in this section, “related person” means: (i) the individual’s spouse; (ii) a child, stepchild, grandchild, parent, stepparent, grandparent, sibling, stepsibling, half sibling, aunt, uncle, niece, or nephew (or spouse of any such person) of the individual or of the individual’s spouse; (iii) a natural person living in the same home as the individual; (iv) an entity (other than the nonprofit corporation or an entity controlled by the nonprofit corporation) controlled by the individual or any person specified above in this definition; (v) a domestic or foreign (A) business or nonprofit corporation (other than the nonprofit corporation or an entity controlled by the nonprofit corporation) of which the individual is a director, (B) unincorporated entity of which the individual is a general partner or a member of the governing authority, or (C) individual, trust, or estate for whom or of which the individual is a trustee, guardian, personal representative, or like fiduciary; or (vi) a person that is, or an entity that is, controlled by, an employer of the individual.
(f) The certificate of incorporation may not contain any provision that would impose liability on a member or a director for the attorney’s fees or expenses of the nonprofit corporation or any other party in connection with an internal corporate claim, as defined in Section 10A-3A-2.07(d).
(g) The certificate of incorporation is a part of a binding contract between the nonprofit corporation and (i) the members in a membership nonprofit corporation and (ii) the directors in a nonmembership nonprofit corporation, subject to the provisions of this chapter.
(h) For purposes of subsection (b)(4) only, unless the certificate of incorporation otherwise provides, “officer” means an individual appointed or elected in accordance with Section 10A-3A-8.40 as (i) president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, secretary, controller, treasurer, or chief accounting officer of the nonprofit corporation and (ii) any officer of the nonprofit corporation designated by resolution of the board of directors as an “officer” for purposes of subsection (b)(4). The board of directors may from time to time by resolution determine that one or more of the officers designated in accordance with subsection (h)(ii) shall no longer be an “officer” for purposes of subsection (b)(4), but no such resolution shall be effective as to any such officer, or any act or omission of any such officer, prior to the adoption of such resolution.
(i) No provision in the certificate of incorporation pursuant to subsection (b)(4) shall eliminate or limit the liability of a director or officer for any act or omission occurring prior to the date when the provision in the certificate of incorporation becomes effective. Any amendment, repeal, or elimination of a provision in the certificate of incorporation pursuant to subsection (b)(4) shall not affect its application with respect to an act or omission by a director or officer occurring before the amendment, repeal, or elimination unless the provision in the certificate of incorporation provides otherwise at the time of the act or omission.
(Act 2023-503, §1; Act 2024-413, §1.)
[Effective: 2026-08-01]
Section 10A-1-3.05 shall not apply to this chapter. Instead:
(a) The certificate of incorporation must set forth:
(1) a name for the nonprofit corporation that satisfies the requirements of Article 5 of Chapter 1;
(2) the street and mailing address of the nonprofit corporation’s initial registered office, the county within this state in which the street and mailing address is located, and the name of the nonprofit corporation’s initial registered agent at that office as required by Article 5 of Chapter 1;
(3) that the nonprofit corporation is incorporated under this chapter;
(4) the name and address of each incorporator; and
(5)(i) if the nonprofit corporation will have members, a statement to that effect; or
(ii) if the nonprofit corporation will not have members, a statement to that effect.
(b) The certificate of incorporation may set forth:
(1) the names and addresses of the individuals who are to serve as the initial directors;
(2) provisions not inconsistent with law regarding:
(i) the purpose or purposes for which the nonprofit corporation is organized;
(ii) managing the activities and regulating the affairs of the nonprofit corporation;
(iii) defining, limiting, and regulating the powers of the nonprofit corporation, its board of directors, and the members;
(iv) the characteristics, qualifications, rights, limitations, and obligations attaching to each or any class of members;
(v) limiting a member’s right to inspect and copy the records of the nonprofit corporation under Section 10A-3A-4.02(b);
(vi) the distribution of assets on dissolution;
(vii) provisions for the election, appointment, or designation of directors;
(viii) provisions granting inspection rights to a person or group of persons under Section 10A-3A-4.07; and
(ix) provisions specifying a person or group of persons whose approval is required under Sections 10A-3A-9.30, 10A-3A-10.04, 10A-3A-11.04, 10A-3A-12.08, or 10A-3A-13.08;
(3) any provision that under this chapter is permitted to be set forth in the certificate of incorporation or required or permitted to be set forth in the bylaws;
(4) a provision eliminating or limiting the liability of a director or officer to a nonprofit corporation or its members for money damages for any action taken, or any failure to take any action, as a director or officer, except liability for (i) the amount of a financial benefit received by a director or officer to which the director or officer is not entitled, (ii) an intentional infliction of harm on the nonprofit corporation or its members, (iii) in the case of a director, a violation of Section 10A-3A-8.32, (iv) an intentional violation of criminal law, or (v) in the case of an officer, any claim by or in the right of the nonprofit corporation;
(5) a provision permitting or making obligatory indemnification of a director for liability as defined in Section 10A-3A-8.50 to any person for any action taken, or any failure to take any action, as a director, except liability for (i) receipt of a financial benefit to which the director is not entitled, (ii) an intentional infliction of harm on the nonprofit corporation or its members, (iii) a violation of Section 10A-3A-8.32, or (iv) an intentional violation of criminal law;
(6) a provision limiting or eliminating any duty of a director or any other person to offer the nonprofit corporation the right to have or participate in any, or one or more classes or categories of, corporate opportunities, before the pursuit or taking of the corporate opportunity by the director or other person; provided that the application of that provision to an officer or a related person of that officer (i) also requires approval of that application by the board of directors, subsequent to the effective date of the provision, by action of the disinterested or qualified directors taken in compliance with the same procedures as are set forth in Section 10A-3A-8.70; and (ii) may be limited by the authorizing action of the board of directors; and
(7) provisions required if the nonprofit corporation is to be exempt from taxation under federal, state, or local law.
(c) The certificate of incorporation need not set forth any of the corporate powers enumerated in Sections 10A-1-2.11, 10A-1-2.12, and 10A-1-2.13.
(d) Provisions of the certificate of incorporation may be made dependent upon facts objectively ascertainable outside the certificate of incorporation in accordance with Section 10A-3A-1.04.
(e) As used in this section, the term “control” or “controlled” has the meaning specified in Section 10A-3A-8.60 and the term “related person” means:
(i) the individual’s spouse;
(ii) a child, stepchild, grandchild, parent, stepparent, grandparent, sibling, stepsibling, half sibling, aunt, uncle, niece, or nephew (or spouse of any such person) of the individual or of the individual’s spouse;
(iii) a natural person living in the same home as the individual; (iv) an entity (other than the nonprofit corporation or an entity controlled by the nonprofit corporation) controlled by the individual or any person specified above in this definition;
(v) a domestic or foreign:
(A) business or nonprofit corporation (other than the nonprofit corporation or an entity controlled by the nonprofit corporation) of which the individual is a director,
(B) unincorporated entity of which the individual is a general partner or a member of the governing authority, or
(C) individual, trust, or estate for whom or of which the individual is a trustee, guardian, personal representative, or like fiduciary; or
(vi) a person that is, or an entity that is, controlled by, an employer of the individual.
(f) The certificate of incorporation may not contain any provision that would impose liability on a member or a director for the attorney’s fees or expenses of the nonprofit corporation or any other party in connection with an internal corporate claim, as defined in Section 10A-3A-2.07(c), or in connection with a claim that a member, director, or a person or group of persons specified in the certificate of incorporation, acting in that person’s capacity as a member, director, or person or group of persons specified in the certificate of incorporation, has brought in an action, suit, or proceeding described in Section 10A-3A-2.07(b).
(g) The certificate of incorporation is a part of a binding contract between the nonprofit corporation and (i) the members in a membership nonprofit corporation; and (ii) the directors in a nonmembership nonprofit corporation, subject to the provisions of this chapter.
(h) For purposes of subsection (b)(4) only, unless the certificate of incorporation otherwise provides, “officer” means an individual appointed or elected in accordance with Section 10A-3A-8.40 as (i) president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, secretary, controller, treasurer, or chief accounting officer of the nonprofit corporation and (ii) any officer of the nonprofit corporation designated by resolution of the board of directors as an “officer” for purposes of subsection (b)(4). The board of directors may from time to time by resolution determine that one or more of the officers designated in accordance with subsection (h)(ii) shall no longer be an “officer” for purposes of subsection (b)(4), but no such resolution shall be effective as to any such officer, or any act or omission of any such officer, prior to the adoption of such resolution.
(i) No provision in the certificate of incorporation pursuant to subsection (b)(4) shall eliminate or limit the liability of a director or officer for any act or omission occurring prior to the date when the provision in the certificate of incorporation becomes effective. Any amendment, repeal, or elimination of a provision in the certificate of incorporation pursuant to subsection (b)(4) shall not affect its application with respect to an act or omission by a director or officer occurring before the amendment, repeal, or elimination unless the provision in the certificate of incorporation provides otherwise at the time of the act or omission.
(Act 2023-503, §1; Act 2024-413, §1; Act 2026-495, §1.)
(Act 2023-503, §1.)
(a) After incorporation:
(1) if initial directors are named in the certificate of incorporation, the initial directors shall hold an organizational meeting, at the call of a majority of the directors, to complete the organization of the nonprofit corporation by appointing officers, adopting bylaws, and carrying on any other business brought before the meeting; or
(2) if initial directors are not named in the certificate of incorporation, the incorporator or incorporators shall hold an organizational meeting at the call of a majority of the incorporators:
(i) to elect initial directors and complete the organization of the nonprofit corporation; or
(ii) to elect a board of directors who shall complete the organization of the nonprofit corporation.
(b) Action required or permitted by this chapter to be taken by incorporators at an organizational meeting may be taken without a meeting if the action taken is evidenced by one or more written consents describing the action taken and signed by each incorporator.
(Act 2023-503, §1.)
(a) The incorporators or board of directors of a nonprofit corporation shall adopt initial bylaws for the nonprofit corporation.
(b) The bylaws of a nonprofit corporation may contain any provision that is not inconsistent with law or the certificate of incorporation.
(c) The bylaws are a part of a binding contract between the nonprofit corporation and (i) the members in a membership nonprofit corporation and (ii) the directors in a nonmembership nonprofit corporation, subject to the provisions of this chapter.
(Act 2023-503, §1.)
(a) Unless the certificate of incorporation provides otherwise, bylaws may be adopted to be effective only in an emergency defined in subsection (d). The emergency bylaws, which are subject to amendment or repeal in accordance with Section 10A-3A-9.20, may make all provisions necessary for managing the nonprofit 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 not inconsistent 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 the emergency bylaws:
(1) binds the nonprofit corporation; and
(2) may not be used to impose liability on a member, director, officer, employee, or agent of the nonprofit corporation.
(d) An emergency exists for purposes of this section if a quorum of the board of directors cannot readily be assembled because of some catastrophic event.
(Act 2023-503, §1.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) The certificate of incorporation or the bylaws may require that any or all internal corporate claims shall be brought exclusively in any specified court or courts of this state and, if so specified, in any additional courts in this state or in any other jurisdictions with which the nonprofit corporation has a reasonable relationship.
(b) A provision of the certificate of incorporation or bylaws adopted under subsection (a) shall not have the effect of conferring jurisdiction on any court or over any person or claim, and shall not apply if none of the courts specified by that provision has the requisite personal and subject matter jurisdiction. If the court or courts of this state specified in a provision adopted under subsection (a) do not have the requisite personal and subject matter jurisdiction and another court of this state does have jurisdiction, then the internal corporate claim may be brought in the other court of this state, notwithstanding that the other court of this state is not specified in that provision, and in any other court specified in that provision that has the requisite jurisdiction.
(c) No provision of the certificate of incorporation or the bylaws may prohibit bringing an internal corporate claim in the courts of this state or require those claims to be determined by arbitration.
(d) “Internal corporate claim” means, for the purposes of this section, (i) any claim that is based upon a violation of a duty under the laws of this state by a current or former director, officer, or member in their capacities as such, (ii) any action asserting a claim arising pursuant to any provision of this chapter or the certificate of incorporation or bylaws, or (iii) any action asserting a claim governed by the internal affairs doctrine that is not included in (i) through (ii) above.
(Act 2023-503, §1.)
[Effective: 2026-08-01]
(a) The certificate of incorporation or the bylaws may require, consistent with applicable jurisdictional requirements, that any or all internal corporate claims shall be brought exclusively in any specified court or courts of this state and, if so specified, in any additional courts in this state or in any other jurisdictions with which the nonprofit corporation has a reasonable relationship and no provision of the certificate of incorporation or the bylaws may prohibit bringing those claims in the courts of this state or require those claims to be determined by arbitration.
(b) With respect to claims that are not internal corporate claims, the certificate of incorporation or bylaws may require members, directors, officers, and the person or group of persons specified in the certificate of incorporation, when acting in that person’s capacity as a member, director, officer, or person or group of persons specified in the certificate of incorporation, to bring any or all such claims only in any specified court or courts of this state and, if so specified, in any additional courts in this state or in any other jurisdictions with which the nonprofit corporation has a reasonable relationship, if those claims relate to the business and affairs of the nonprofit corporation, the conduct of its affairs, or the rights or powers of the nonprofit corporation or its members, directors, officers, or person or persons specified in the certificate of incorporation; provided that such requirement is consistent with applicable jurisdictional requirements and allows a member, director, officer, and person or group of persons specified in the certificate of incorporation to bring such claims in at least one court in this state that has jurisdiction over those claims.
(c) “Internal corporate claim” means, for the purposes of this section, any claim, action, suit, or proceeding (i) that is based upon a violation of a duty under the laws of this state by a current or former director, officer, or member in their capacities as such, (ii) that arises from, is pursuant to, or seeks to interpret, apply, enforce, or determine the validity of, any provision of this chapter, the certificate of incorporation, the bylaws, or any agreement entered into pursuant to Section 10A-3A-7.30 to which the nonprofit corporation is a party or a stated beneficiary thereof, or (iii) that is governed by the internal affairs doctrine that is not included in (i) through (ii) above.
(d) This section does not prohibit any nonprofit corporation from consenting, or require any nonprofit corporation to consent, to any alternative forum in any instance.
(Act 2023-503, §1; Act 2026-495, §1.)
(a) Every nonprofit corporation has the purpose of engaging in any lawful activity unless a more limited purpose is set forth in the certificate of incorporation.
(b) If a nonprofit corporation will engage in an activity that is subject to regulation under another statute of the state, the nonprofit corporation may incorporate under this chapter only if not prohibited by, and subject to all limitations of, the other statute.
(c) Labor unions, cooperative organizations, and organizations subject to any of the provisions of the insurance laws of Alabama may not be organized under this chapter.
(d) Whenever 10 or more retail merchants wish to form a nonprofit association, cooperative society, or corporation in the sense of paying interest or dividends on stock, but for mutual benefit through the application of cooperation or other economic principles, they may become a body corporate in the manner provided in this chapter.
(e) Whenever 10 or more wholesale merchants wish to form a nonprofit association, cooperative society, or corporation in the sense of paying interest or dividends on stock, but for mutual benefit through the application of cooperation or other economic principles, they may become a body corporate in the manner provided in this chapter.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
(a) In anticipation of or during an emergency defined in subsection (d), the board of directors of a nonprofit 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 practicable manner; and
(2) one or more officers of the nonprofit 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 nonprofit corporation:
(1) binds the nonprofit corporation; and
(2) may not be used to impose liability on a member, director, officer, employee, or agent.
(d) An emergency exists for purposes of this section if a quorum of the board of directors cannot readily be assembled because of some catastrophic event.
(Act 2023-503, §1.)
(a) Except as provided in subsection (b), the validity of corporate action may not be challenged on the ground that the nonprofit corporation lacks or lacked power to act.
(b) The power of a nonprofit corporation to act may be challenged:
(1) in a proceeding by a member or director against the nonprofit corporation to enjoin the act;
(2) in a proceeding by the nonprofit corporation, directly, or through a receiver, trustee, or other legal representative, against an incumbent or former director, officer, employee, or agent of the nonprofit corporation; or
(3) in a proceeding by the Attorney General.
(c) In a proceeding by a member or a director 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 nonprofit corporation or another party because of enjoining the unauthorized corporate act.
(Act 2023-503, §1.)
Action validly taken pursuant to one provision of this chapter shall not be deemed invalid solely because it is identical or similar in substance to an action that could have been taken pursuant to some other provision of this chapter but fails to satisfy one or more requirements prescribed by such other provision.
(Act 2025-281, §8.)
(a) A nonprofit corporation must maintain the following records:
(1) its certificate of incorporation as currently in effect;
(2) any notices to members referred to in Section 10A-3A-1.04(c)(5) specifying facts on which a filed document is dependent if those facts are not included in the certificate of incorporation or otherwise available as specified in Section 10A-3A-1.04(c)(5);
(3) its bylaws as currently in effect;
(4) all written communications within the past three years to members generally;
(5) minutes of all meetings of, and records of all actions taken without a meeting by, its members, its board of directors, and board committees established under Section 10A-3A-8.25; and
(6) a list of the names and business addresses of its current directors and officers.
(b) A nonprofit corporation shall maintain all annual financial statements prepared for the nonprofit corporation for its last three fiscal years (or such shorter period of existence) and any audit or other reports with respect to those financial statements.
(c) A nonprofit corporation shall maintain accounting records in a form that permits preparation of the financial statements.
(d) A membership nonprofit corporation must maintain a record of its current members in alphabetical order by class of membership showing the address for each member to which notices and other communications from the membership nonprofit corporation are to be sent. In addition if a member has provided an electronic mail address to the membership nonprofit corporation or has consented to receive notices or other communications by electronic mail or other electronic transmission, the record of members shall include the electronic mail or other electronic transmission address of the member if notices or other communications are being delivered by the membership nonprofit corporation to the member at that electronic mail or other electronic transmission address pursuant to Section 10A-3A-1.03(d). An electronic mail address of a member shall be deemed to be provided by a member if it is contained in a communication to the membership nonprofit corporation by or on behalf of the member, unless the communication expressly indicates that the electronic mail address may not be used to deliver notices or other communications.
(e) A nonprofit corporation must maintain the records specified in this section in a manner so that they may be made available for inspection within a reasonable time.
(Act 2023-503, §1.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) A member of a membership nonprofit corporation is entitled to inspect and copy, during regular business hours at the membership nonprofit corporation’s principal office, any of the records of the membership nonprofit corporation described in Section 10A-3A-4.01(a), excluding minutes of meetings of, and records of actions taken without a meeting by, the membership nonprofit corporation’s board of directors and board committees established under Section 10A-3A-8.25, if the member gives the membership nonprofit corporation a signed written notice of the member’s demand at least five business days before the date on which the member wishes to inspect and copy.
(b) A member of a membership nonprofit corporation is entitled to inspect and copy, during regular business hours at a reasonable location specified by the membership nonprofit corporation, any of the following records of the membership nonprofit corporation if the member meets the requirements of subsection (c) and gives the membership nonprofit corporation a signed written notice of the member’s demand at least five business days before the date on which the member wishes to inspect and copy:
(1) the financial statements of the membership nonprofit corporation maintained in accordance with Section 10A-3A-4.01(b);
(2) accounting records of the membership nonprofit corporation; and
(3) excerpts from minutes of any meeting of, or records of any actions taken without a meeting by, the board of directors and board committees maintained in accordance with Section 10A-3A-4.01(a); and
(4) subject to Section 10A-3A-4.06, the record of members maintained in accordance with Section 10A-3A-4.01(d).
(c) A member may inspect and copy the records described in subsection (b) only if:
(1) the member’s demand is made in good faith and for a proper purpose;
(2) the member’s demand describes with reasonable particularity the member’s purpose and the records the member desires to inspect; and
(3) the records are directly connected with the member’s purpose.
(d) The membership nonprofit corporation may impose reasonable restrictions and conditions on access to and use of the records to be inspected and copied under subsections (a) and (b), including designating information confidential and imposing nondisclosure and safeguarding, and may further keep confidential from its members and other persons, for a period of time as the membership nonprofit corporation deems reasonable any information that the membership nonprofit corporation reasonably believes to be in the nature of a trade secret or other information the disclosure of which the membership nonprofit corporation in good faith believes is not in the best interest of the membership nonprofit corporation or could damage the membership nonprofit corporation or its activities or affairs, or that the membership nonprofit corporation is required by law or by agreement with a third party to keep confidential. In any dispute concerning the reasonableness of a restriction under this subsection, the membership nonprofit corporation has the burden of proving reasonableness.
(e) For any meeting of members for which the record date for determining members entitled to vote at the meeting is different than the record date for notice of the meeting, any person who becomes a member subsequent to the record date for notice of the meeting and is entitled to vote at the meeting is entitled to obtain from the membership nonprofit corporation upon request the notice and any other information provided by the membership nonprofit corporation to members in connection with the meeting, unless the membership nonprofit corporation has made that information generally available to members by posting it on its website or by other generally recognized means. Failure of a membership nonprofit corporation to provide that information does not affect the validity of action taken at the meeting.
(f) Subject to Section 10A-3A-4.20, the right of inspection granted by subsection (b) may be limited by a membership nonprofit corporation’s certificate of incorporation.
(g) This section does not affect:
(1) the right of a member to inspect records under Section 10A-3A-7.20 or, if the member is in litigation with the membership nonprofit 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 and to impose reasonable restrictions as provided in Section 10A-3A-4.04(c), provided that, in the case of production of records described in subsection (b) of this section at the request of the member, the member has met the requirements of subsection (c) of this section.
(Act 2023-503, §1.)
[Effective: 2026-08-01]
Subject to subsection (h):
(a) A member of a membership nonprofit corporation is entitled to inspect and copy, during regular business hours at the membership nonprofit corporation’s principal office, any of the records of the membership nonprofit corporation described in Section 10A-3A-4.01(a), excluding minutes of meetings of, and records of actions taken without a meeting by, the membership nonprofit corporation’s board of directors and board committees established under Section 10A-3A-8.25, if the member gives the membership nonprofit corporation a signed written notice of the member’s demand at least five business days before the date on which the member wishes to inspect and copy.
(b) A member of a membership nonprofit corporation is entitled to inspect and copy, during regular business hours at a reasonable location specified by the membership nonprofit corporation, any of the following records of the membership nonprofit corporation if the member meets the requirements of subsection (c) and gives the membership nonprofit corporation a signed written notice of the member’s demand at least five business days before the date on which the member wishes to inspect and copy:
(1) the financial statements of the membership nonprofit corporation maintained in accordance with Section 10A-3A-4.01(b); provided, however, that the membership nonprofit corporation may deliver or make available the financial statements to the requesting member by posting them on the membership nonprofit corporation’s website or by other generally recognized means. If financial statements have been prepared for the membership nonprofit corporation on the basis of generally accepted accounting principles for that specified period, the membership nonprofit corporation shall deliver or make available those financial statements to the requesting member. If the annual financial statements to be delivered or made available to the requesting member are audited or otherwise reported upon by a public accountant, the report shall also be delivered or made available to the requesting member.
(2) the accounting records of the membership nonprofit corporation maintained in accordance with Section 10A-3A-4.01(c) that permitted the preparation of the financial statements maintained in accordance with Section 10A-3A-4.01(b); and
(3) excerpts from minutes of any meeting of, or records of any actions taken without a meeting by, the board of directors and board committees maintained in accordance with Section 10A-3A-4.01(a); and
(4) subject to Section 10A-3A-4.06, the record of members maintained in accordance with Section 10A-3A-4.01(d); provided however, the membership nonprofit corporation may withhold the record of members maintained in accordance with Section 10A-3A-4.01(d) if the demanding member of the membership nonprofit corporation has used, or has aided or abetted any person to use, the record of members in violation of Section 10A-3A-4.06.
(c)(1) A member may inspect and copy the records described in subsection (b) only if:
(i) the member has delivered to the membership nonprofit corporation a signed written notice of the member’s demand at least five business days before the date on which the member wishes to inspect and copy;
(ii) the member’s demand is made in good faith and for a proper purpose;
(iii) the member’s demand describes with reasonable particularity the member’s purpose and the records the member desires to inspect; and
(iv) the records are directly related to the member’s purpose.
(2) For purposes of this subsection (c), a proper purpose shall mean a purpose directly related to the member’s interest as a member; provided, however, that a demand shall not be for a proper purpose if the membership nonprofit corporation reasonably determines that the demand is in connection with an active or pending civil lawsuit to which the membership nonprofit corporation, or its affiliate, and the member, or the member’s affiliate, are, or are expected to be, adversarial named parties.
(d) The membership nonprofit corporation may redact portions of the records to be inspected and copied under subsections (a) and (b) to the extent the portions so redacted are not directly related to the member’s purpose. The membership nonprofit corporation may also impose reasonable restrictions and conditions on access to and use of the records to be inspected and copied under subsections (a) and (b), including designating information confidential and imposing nondisclosure and safeguarding, and may further keep confidential from its members and other persons, for a period of time as the membership nonprofit corporation deems reasonable any information that the membership nonprofit corporation reasonably believes to be in the nature of a trade secret or other information the disclosure of which the membership nonprofit corporation in good faith believes is not in the best interest of the membership nonprofit corporation or could damage the membership nonprofit corporation or its activities or affairs, or that the membership nonprofit corporation is required by law or by agreement with a third party to keep confidential. In any dispute concerning the reasonableness of a restriction under this subsection, the membership nonprofit corporation has the burden of proving reasonableness.
(e) For any meeting of members for which the record date for determining members entitled to vote at the meeting is different than the record date for notice of the meeting, any person who becomes a member subsequent to the record date for notice of the meeting and is entitled to vote at the meeting is entitled to obtain from the membership nonprofit corporation upon request the notice and any other information provided by the membership nonprofit corporation to members in connection with the meeting, unless the membership nonprofit corporation has made that information generally available to members by posting it on the membership nonprofit corporation’s website or by other generally recognized means. Failure of a membership nonprofit corporation to provide that information does not affect the validity of action taken at the meeting.
(f) The right of inspection granted by subsection (b) may be limited by a membership nonprofit corporation’s certificate of incorporation.
(g) This section does not affect
the right of a member to inspect records under Section 10A-3A-7.20 or, if the member is in litigation with the membership nonprofit corporation, to the same extent as any other litigant.
(h) The right of a member to inspect and copy the records described in subsections (a) and (b) may be denied by the membership nonprofit corporation if the membership nonprofit corporation determines that the demanding member has within two years preceding his, her, or its demand improperly used any information secured through any prior examination of the records of the membership nonprofit corporation.
(Act 2023-503, §1; Act 2026-495, §1.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) A member may appoint an agent or attorney to exercise the member’s inspection and copying rights under Section 10A-3A-4.02.
(b) The membership nonprofit corporation may, if reasonable, satisfy the right of a member to copy records under Section 10A-3A-4.02 by furnishing to the member copies by photocopy or other means as are chosen by the membership nonprofit corporation, including furnishing copies through electronic transmission.
(c) The membership nonprofit corporation may comply at its expense with a member’s demand to inspect the record of members under Section 10A-3A-4.02(b)(4) by providing the member with a list of members that was compiled no earlier than the date of the member’s demand.
(d) The membership nonprofit corporation may impose a reasonable charge to cover the costs of providing copies of documents to the member, which may be based on an estimate of those costs.
(Act 2023-503, §1.)
[Effective: 2026-08-01]
If a member is entitled to inspection and copying rights under Section 10A-3A-4.02:
(a) A member may appoint an agent or attorney to exercise the member’s inspection and copying rights under Section 10A-3A-4.02. In that case, the demand shall be accompanied by a power of attorney or other writing which authorizes the agent or attorney to so act on behalf of the member.
(b) The membership nonprofit corporation may, if reasonable, satisfy the right of a member to copy records under Section 10A-3A-4.02 by furnishing to the member copies by photocopy or other means as are chosen by the membership nonprofit corporation, including furnishing copies through electronic transmission.
(c) The membership nonprofit corporation may comply at its expense with a member’s demand to inspect the record of members under Section 10A-3A-4.02(b)(4) by providing the member with a list of members that was compiled no earlier than the date of the member’s demand.
(d) The membership nonprofit corporation may impose a reasonable charge to cover the costs of providing copies of documents to the member, which may be based on an estimate of those costs.
(Act 2023-503, §1; Act 2026-495, §1.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) If a membership nonprofit corporation does not allow a member who complies with Section 10A-3A-4.02(a) to inspect and copy any records required by that section to be available for inspection, the designated court, and if none, the circuit court for the county in which the membership nonprofit corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the membership nonprofit corporation’s most recent registered office is located may summarily order inspection and copying of the records demanded at the membership nonprofit corporation’s expense upon application of the member.
(b) If a membership nonprofit corporation does not within a reasonable time allow a member who complies with Section 10A-3A-4.02(b) to inspect and copy the records as required by that section, the member who complies with Section 10A-3A-4.02(c) may apply to the designated court, and if none, the circuit court for the county in which the membership nonprofit corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the membership nonprofit corporation’s most recent 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 under Section 10A-3A-4.02(b), it may impose reasonable restrictions on their confidentiality, use or distribution by the demanding member and it shall also order the membership nonprofit corporation to pay the member’s expenses incurred to obtain the order unless the membership nonprofit corporation establishes that it refused inspection in good faith because the membership nonprofit corporation had:
(1) a reasonable basis for doubt about the right of the member to inspect the records demanded; or
(2) required reasonable restrictions on the confidentiality, use, or distribution of the records demanded to which the demanding member had been unwilling to agree.
(Act 2023-503, §1.)
[Effective: 2026-08-01]
If a member is entitled to inspection and copying rights under Section 10A-3A-4.02:
(a) If a membership nonprofit corporation does not allow a member who complies with Section 10A-3A-4.02(a) to inspect and copy any records required by that section to be available for inspection, the designated court, and if none, the circuit court for the county in which the membership nonprofit corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the membership nonprofit corporation’s most recent registered office is located may summarily order inspection and copying of the records demanded at the membership nonprofit corporation’s expense upon application of the member.
(b) If a membership nonprofit corporation does not within a reasonable time allow a member who complies with Section 10A-3A-4.02(b) to inspect and copy the records as required by that section, the member who complies with Section 10A-3A-4.02(c) may apply to the designated court, and if none, the circuit court for the county in which the membership nonprofit corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the membership nonprofit corporation’s most recent 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 under Section 10A-3A-4.02(b), it may impose reasonable restrictions on their confidentiality, use, or distribution by the demanding member and the court shall also order the membership nonprofit corporation to pay the member’s expenses incurred to obtain the order unless the membership nonprofit corporation establishes that it refused inspection in good faith because the membership nonprofit corporation had:
(1) a reasonable basis for doubt about the right of the member to inspect the records demanded; or
(2) required reasonable restrictions on the confidentiality, use, or distribution of the records demanded to which the demanding member had been unwilling to agree. If the membership nonprofit corporation has declined to deliver or make available the records because the member had been unwilling to agree to restrictions proposed by the membership nonprofit corporation on the confidentiality, use, or distribution of the records, the membership nonprofit corporation shall have the burden of demonstrating that the restrictions proposed by the membership nonprofit corporation were reasonable.
(Act 2023-503, §1; Act 2026-495, §1.)
(a) A director of a nonprofit corporation is entitled to inspect and copy the books, records, and documents of the nonprofit corporation at any reasonable time to the extent reasonably related to the performance of the director’s duties as a director, including duties as a member of a board committee, but not for any other purpose or in any manner that would violate any duty to the nonprofit corporation.
(b) The designated court, and if none, the circuit court for the county in which the nonprofit corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the nonprofit corporation’s most recent registered office is located may order inspection and copying of the books, records, and documents at the nonprofit corporation’s expense, upon application of a director who has been refused inspection rights, unless the nonprofit corporation establishes that the director is not entitled to inspection rights. The court shall dispose of an application under this subsection on an expedited basis.
(c) If an order is issued, the court may include provisions protecting the nonprofit corporation from undue burden or expense, and prohibiting the director from using information obtained upon exercise of the inspection rights in a manner that would violate a duty to the nonprofit corporation, and may also order the nonprofit corporation to reimburse the director for the director’s expenses incurred in connection with the application.
(Act 2023-503, §1.)
(a) Unless otherwise permitted by the certificate of incorporation or bylaws of a membership nonprofit corporation, a membership list or any part thereof may not be obtained or used by any person for any purpose unrelated to a member’s interest as a member without the consent of the board of directors, including without limitation:
(1) to solicit money or property unless the money or property will be used solely to solicit the votes of the members in an election to be held by the membership nonprofit corporation;
(2) for any commercial purpose; or
(3) to be sold or purchased by any person.
(b) Instead of making a membership list available for inspection and copying under this Division, a membership nonprofit corporation may elect to proceed under the procedures set forth in Section 10A-3A-7.20(e).
(Act 2023-503, §1.)
(Act 2023-503, §1.)
[Superseded: 2026-08-01]
THIS SECTION WAS REPEALED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026.
(a) Upon the written request of a member, a membership nonprofit corporation shall deliver or make available to the requesting member by posting on its website or by other generally recognized means annual financial statements for the most recent fiscal year of the membership nonprofit corporation for which annual financial statements have been prepared for the membership nonprofit corporation. If financial statements have been prepared for the membership nonprofit corporation on the basis of generally accepted accounting principles for that specified period, the membership nonprofit corporation shall deliver or make available those financial statements to the requesting member. If the annual financial statements to be delivered or made available to the requesting member are audited or otherwise reported upon by a public accountant, the report shall also be delivered or made available to the requesting member.
(b) A membership nonprofit corporation shall deliver, or make available and provide written notice of availability of, the financial statements required under subsection (a) to the requesting member within five business days of delivery of the written request to the membership nonprofit corporation.
(c) Notwithstanding the provisions of subsections (a) and (b) of this section:
(1) as a condition to delivering or making available financial statements to a requesting member, the membership nonprofit corporation may require the requesting member to agree to reasonable restrictions on the confidentiality, use, and distribution of the financial statements; and
(2) the membership nonprofit corporation may, if it reasonably determines that the member’s request is not made in good faith or for a proper purpose, decline to deliver or make available the financial statements to that member.
(d) If a membership nonprofit corporation does not respond to a member’s request for annual financial statements pursuant to this section in accordance with subsection (b) within five business days of delivery of the request to the membership nonprofit corporation:
(1) The requesting member may apply to the designated court, and if none, the circuit court for the county in which the membership nonprofit corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the membership nonprofit corporation’s most recent registered office is located for an order requiring delivery of or access to the requested financial statements. The court shall dispose of an application under this subsection on an expedited basis.
(2) If the court orders delivery or access to the requested financial statements, it may impose reasonable restrictions on their confidentiality, use, or distribution.
(3) In the proceeding, if the membership nonprofit corporation has declined to deliver or make available the financial statements because the member had been unwilling to agree to restrictions proposed by the membership nonprofit corporation on the confidentiality, use, and distribution of the financial statements, the membership nonprofit corporation shall have the burden of demonstrating that the restrictions proposed by the membership nonprofit corporation were reasonable.
(4) In the proceeding, if the membership nonprofit corporation has declined to deliver or make available the financial statements pursuant to Section 10A-3A-4.20(c)(2), the membership nonprofit corporation shall have the burden of demonstrating that it had reasonably determined that the member’s request was not made in good faith or for a proper purpose.
(5) If the court orders delivery or access to the requested financial statements, it shall order the membership nonprofit corporation to pay the member’s expenses incurred to obtain the order unless the membership nonprofit corporation establishes that it had refused delivery or access to the requested financial statements because the member had refused to agree to reasonable restrictions on the confidentiality, use, or distribution of the financial statements or that the membership nonprofit corporation had reasonably determined that the member’s request was not made in good faith or for a proper purpose.
(Act 2023-503, §1.)
[Effective: 2026-08-01]
THIS SECTION WAS REPEALED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026.
(Act 2023-503, §1; Act 2026-495, §5.)
(a) A nonprofit corporation may have one or more classes of members or may have no members. If the nonprofit corporation has one or more classes of members, the designation of the class or classes, the manner of admission and the qualifications and rights of the members of each class shall be set forth in the certificate of incorporation or bylaws. Subject to Section 10A-3A-14.01(c), if the nonprofit corporation will have members, that fact shall be set forth in the certificate of incorporation. If the nonprofit corporation will not have members, that fact shall be set forth in the certificate of incorporation.
(b) Except as otherwise provided in this chapter or in the certificate of incorporation, if the certificate of incorporation of a nonprofit corporation states that the nonprofit corporation will have members, but that nonprofit corporation has in fact no members entitled to vote on a matter, then any provision of this chapter or any other provision of law requiring notice to, the presence of, or the vote, consent, or other action by members of that nonprofit corporation in connection with the matter shall be satisfied by notice to, the presence of, or the vote, consent, or other action by the board of directors of the nonprofit corporation.
(c) Except as otherwise provided in the certificate of incorporation, if the certificate of incorporation of a nonprofit corporation states that the nonprofit corporation will not have members, then notice to, the presence of, or the vote, consent, or other action by board of directors of the nonprofit corporation in connection with the matter shall be satisfied by notice to, the presence of, or the vote, consent, or other action by the board of directors of the nonprofit corporation.
(Act 2023-503, §1.)
(a) A person may not be admitted as a member of a nonprofit corporation without that person’s consent.
(b) If a membership nonprofit corporation provides certificates of membership to the members, the certificates shall not be registered or transferable except as provided in the certificate of incorporation or bylaws. Each certificate of membership shall comply with Sections 10A-1-3.42, 10A-1-3.43(b), and 10A-1-3.44. No membership certificate shall be issued in bearer form.
(c) A person is not a member of a nonprofit corporation unless (i) the nonprofit corporation is a membership nonprofit corporation and (ii) the person meets the definition of a “member” in Section 10A-3A-1.02, regardless of whether the nonprofit corporation designates or refers to the person as a member.
(d) A person is not a member of a nonmembership nonprofit corporation, regardless of whether the nonmembership nonprofit corporation designates or refers to the person as a member.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
(Act 2023-503, §1.)
(a) Except as provided in the certificate of incorporation or bylaws, a member of a membership nonprofit corporation may not transfer a membership or any right arising therefrom.
(b) Where the right to transfer a membership has been provided, a restriction on that right shall not be binding with respect to a member holding a membership issued prior to the adoption of the restriction unless the restriction is approved by the affected member.
(Act 2023-503, §1.)
A member of a nonprofit corporation is not personally liable for any liabilities of the nonprofit corporation (including liabilities arising from acts of the nonprofit corporation).
(Act 2023-503, §1.)
(a) A membership nonprofit corporation may levy dues, assessments, fees, fines, late charges, interest, penalties, and other such sums on its members to the extent authorized in the certificate of incorporation or bylaws. Dues, assessments, fees, fines, late charges, interest, penalties, and other such sums may be imposed on members of the same class either alike or in different amounts or proportions, and may be imposed on a different basis on different classes of members. Members of a class may be made exempt from dues, assessments, fees, fines, late charges, interest, penalties, and other such sums to the extent provided in the certificate of incorporation or bylaws.
(b) The amount and method of collection of dues, assessments, fees, fines, late charges, interest, penalties, and other such sums may be fixed in the certificate of incorporation or bylaws, or the certificate of incorporation or bylaws may authorize the board of directors or members to fix the amount and method of collection.
(c) The certificate of incorporation or bylaws may provide reasonable means to enforce the collection of dues, assessments, fees, fines, late charges, interest, penalties, and other such sums, including, but not limited to, termination, suspension, or reinstatement of membership.
(Act 2023-503, §1.)
[Effective: 2026-08-01]
A person shall not have any right to commence or maintain a derivative action in the right of a nonprofit corporation to enforce a right of the nonprofit corporation.
(Act 2026-495, §3.)
(a) A member of a membership nonprofit corporation may resign at any time.
(b) The resignation of a member does not relieve the member from any obligations incurred or commitments made prior to resignation.
(Act 2023-503, §1.)
(a) A membership in a membership nonprofit corporation may be terminated or suspended for the reasons and in the manner provided in the certificate of incorporation or bylaws.
(b) A proceeding challenging a termination or suspension for any reason must be commenced within one year after the effective date of the termination or suspension.
(c) The termination or suspension of a member does not relieve the member from any obligations incurred or commitments made prior to the termination or suspension.
(Act 2023-503, §1.)
(a) Except as permitted or required by law other than this chapter, or contractual obligations, a nonprofit corporation shall not make distributions to its members, directors, or officers. Any permitted or required distribution is subject to the limitations set forth in subsection (c).
(b) The board of directors of a membership nonprofit corporation may fix the record date for determining members entitled to a distribution, which date may not be retroactive. If the board of directors does not fix a record date for determining members entitled to a distribution, the record date is the date the board of directors authorizes the distribution.
(c) No distribution may be made if, after giving it effect:
(1) the nonprofit corporation would not be able to pay its debts as they become due in the usual course of its activities and affairs; or
(2) the nonprofit corporation’s unrestricted total assets would be less than the sum of its total liabilities other than those liabilities which are solely secured by the nonprofit corporation’s restricted assets.
(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 valuation or other method that is reasonable in the circumstances.
(e) The effect of a distribution under subsection (c) is measured 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) This section shall not apply to distributions in liquidation under Article 11.
(g) This section shall not apply to a contract or transaction with a member, director, or officer, which contract or transaction is authorized pursuant to Section 10A-3A-8.60.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
(a) A membership nonprofit corporation may provide in its certificate of incorporation or bylaws that members, upon or subsequent to admission, must make capital contributions. Except as provided in the certificate of incorporation or bylaws, the amount shall be fixed by the board of directors. The requirement of a capital contribution may apply to all members, or to the members of a single class, or to members of different classes in different amounts or proportions.
(b) The adoption or amendment of a capital contribution requirement, whether or not approved by the members, shall not apply to a member who did not vote in favor of the adoption or amendment until 30 days after notice of the adoption or amendment has been delivered to the member.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
(a) Unless otherwise provided in the certificate of incorporation, a membership nonprofit corporation shall hold a meeting of members annually at a time stated in or fixed in accordance with the certificate of incorporation or bylaws.
(b) A membership nonprofit corporation may hold regular meetings of the members at times stated in or fixed in accordance with the certificate of incorporation or bylaws.
(c) Unless the board of directors determines to hold the meeting solely by means of remote communication in accordance with Section 10A-3A-7.09(c), annual and regular meetings of the members may be held (i) in or out of this state at the place stated in or fixed in accordance with the certificate of incorporation or bylaws or (ii) if no place is stated in or fixed in accordance with the certificate of incorporation or bylaws, at the membership nonprofit corporation’s principal office.
(d) The failure to hold an annual or regular meeting of the members at the time stated in or fixed in accordance with a membership nonprofit corporation’s certificate of incorporation or bylaws does not affect the validity of any corporate action.
(Act 2023-503, §1.)
(a) Special meetings of the members in a membership nonprofit corporation may be called by the board of directors or by the person or persons as may be authorized by the certificate of incorporation or by the bylaws.
(b) In the event that the certificate of incorporation or bylaws of a membership nonprofit corporation allow members to demand a special meeting of the members, then if not otherwise fixed under Section 10A-3A-7.03 or Section 10A-3A-7.07, the record date for determining members entitled to demand a special meeting shall be the first date on which a signed member’s demand is delivered to the membership nonprofit corporation. No written demand for a special meeting shall be effective unless, within 60 days of the earliest date on which the demand delivered to the membership nonprofit corporation as allowed by the certificate of incorporation or bylaws was signed, written demands signed by members holding at least the percentage of votes specified in or fixed in accordance with the certificate of incorporation or bylaws have been delivered to the membership nonprofit corporation.
(c) Unless the board of directors determines to hold the meeting solely by means of remote participation in accordance with Section 10A-3A-7.09(c), special meetings of members may be held (i) in or out of this state at the place stated in or fixed in accordance with the certificate of incorporation or bylaws or (ii) if no place is stated in or fixed in accordance with the certificate of incorporation or bylaws, at the membership nonprofit corporation’s principal office.
(d) Only business within the purpose or purposes described in the meeting notice required by Section 10A-3A-7.05(c) may be conducted at a special meeting of members.
(Act 2023-503, §1.)
(a) The designated court, and if none, the circuit court for the county in which the membership nonprofit corporation’s principal office is located in this state, and, if none in this state, the circuit court for the county in which the membership nonprofit corporation’s most recent registered office is located may summarily order a meeting to be held:
(1) on application of any member of the membership nonprofit corporation entitled to participate in an annual meeting if an annual meeting was not held or action by written consent in lieu of an annual meeting did not become effective within the earlier of 12 months after the end of the membership nonprofit corporation’s fiscal year or 15 months after its last annual meeting; or
(2) on application of one or more members who signed a demand for a special meeting valid under Section 10A-3A-7.02, if:
(i) notice of the special meeting was not given within 30 days after the first day on which the requisite number of demands have been delivered to the membership nonprofit corporation; 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 members entitled to participate in the meeting, specify a record date or dates for determining members 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 members 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.
(Act 2023-503, §1.)
(a) Unless otherwise provided in the certificate of incorporation, any action required or permitted by this chapter to be taken at any meeting of the members may be taken without a meeting, and without prior notice, if one or more consents in writing setting forth the action so taken are signed by the members having not less than the minimum number of votes that would be required to authorize or take the action at a meeting at which all members entitled to vote on the action were present and voted. The action must be evidenced by one or more written consents describing the action taken, signed by the members approving the action and delivered to the membership nonprofit corporation for filing by the membership nonprofit corporation with the minutes or corporate records.
(b) If not otherwise fixed under Section 10A-3A-7.07 and if prior action by the board of directors is not required respecting the action to be taken without a meeting, the record date for determining the members entitled to take action without a meeting shall be the first date on which a written consent signed by a member is delivered to the membership nonprofit corporation. If not otherwise fixed under Section 10A-3A-7.07 and if prior action by the board of directors is required respecting the action to be taken without a meeting, the record date shall be the close of business on the day the resolution of the board of directors taking the prior action is adopted. No written consent of a member shall be effective to take the corporate action referred to therein unless, within 60 days of the earliest date on which a consent is delivered to the membership nonprofit corporation as required by this section, written consents signed by sufficient members to take the action have been delivered to the membership nonprofit corporation. Any person signing a consent may provide, whether through instruction to an agent or otherwise, that the consent will be effective at a future time, including a time determined upon the happening of an event, occurring not later than 60 days after the instruction is given or the provision is made, if evidence of the instruction or provision is provided to the membership nonprofit corporation. If a person signs a consent when that person is not a member, then that person’s consent shall not be valid unless that person is a member as of the record date for determining members entitled to consent to the action. Unless a person’s written consent states that it is irrevocable, that written consent may be revoked by that person by a writing to that effect delivered to the membership nonprofit corporation before unrevoked written consents sufficient in number to take the corporate action have been delivered to the membership nonprofit corporation.
(c) A consent signed pursuant to the provisions of this section has the effect of a vote taken at a meeting and may be described as such in any document. Unless the certificate of incorporation, bylaws, or a resolution of the board of directors provides for a reasonable delay to permit tabulation of written consents, the action taken by written consent shall be effective when written consents signed by sufficient members to take the action have been delivered to the membership nonprofit corporation.
(d) If action is taken by less than unanimous written consent of the voting members, the membership nonprofit corporation shall give its nonconsenting voting members written notice of the action not more than 10 days after (i) written consents sufficient to take the action have been delivered to the membership nonprofit corporation or (ii) any later date that tabulation of consents is completed pursuant to an authorization under subsection (c). The notice must reasonably describe the action taken.
(e) The notice requirements in subsection (d) shall not delay the effectiveness of actions taken by written consent, and a failure to comply with those notice requirements shall not invalidate actions taken by written consent, provided that this subsection shall not be deemed to limit judicial power to fashion any appropriate remedy in favor of a member adversely affected by a failure to give the notice within the required time period.
(Act 2023-503, §1; Act 2024-413, §1.)
(a) A membership nonprofit corporation shall notify members of the place, if any, date, and time of each annual, regular, or special meeting of the members no fewer than 10 nor more than 60 days before the meeting date. If the board of directors has authorized participation by means of remote communication pursuant to Section 10A-3A-7.09 for any class of members or voting group, the notice to that class of members or voting group must describe the means of remote communication to be used. The notice must include the record date for determining the members entitled to vote at the meeting, if that date is different from the record date for determining members entitled to notice of the meeting. Unless the certificate of incorporation requires otherwise, the membership nonprofit corporation is required to give notice only to members entitled to vote at the meeting as of the record date for determining the members entitled to notice of the meeting.
(b) Unless this chapter, the certificate of incorporation, or the bylaws require otherwise, notice of an annual or regular meeting of the members need not include a description of the purpose or purposes for which the meeting is called.
(c) Notice of a special meeting of members must include a description of the purpose or purposes for which the meeting is called.
(d) If not otherwise fixed under Section 10A-3A-7.03 or Section 10A-3A-7.07, the record date for determining members entitled to notice of and to vote at an annual, regular, or special meeting of the members is the earlier of (i) the date of the action by the board of directors calling the meeting of the members or (ii) the day before the first notice is delivered to members.
(e) Unless the certificate of incorporation or bylaws require otherwise, if an annual, regular, or special meeting of the members is adjourned to a different place, if any, date, or time (including an adjournment taken to address a technical failure to convene or continue a meeting using remote communication pursuant to Section 10A-3A-7.09), notice need not be given of the new place, if any, date, or time if the new place, if any, date, or time is (i) announced at the meeting before adjournment or (ii) displayed, during the time scheduled for the meeting, on the same electronic network used to enable members and proxy holders to participate in the meeting by means of remote communication. If a new record date for the adjourned meeting is or must be fixed under Section 10A-3A-7.07, however, notice of the adjourned meeting shall be given under this section to members entitled to vote at the adjourned meeting as of the record date fixed for notice of the adjourned meeting.
(Act 2023-503, §1; Act 2024-413, §1.)
(a) A member may waive any notice required by this chapter or the certificate 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 member entitled to the notice, and be delivered to the membership nonprofit corporation for filing by the membership nonprofit corporation with the minutes or corporate records.
(b) A member’s attendance at a meeting:
(1) waives objection to lack of notice or defective notice of the meeting, unless the member at the beginning of the meeting objects to holding the meeting or transacting business 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 member objects to considering the matter when it is presented.
(Act 2023-503, §1.)
(a) The certificate of incorporation or bylaws may fix or provide the manner of fixing the record date or dates for one or more voting groups of members to determine the members entitled to notice of a members’ meeting, to demand a special meeting, to vote, or to take any other action. If the certificate of incorporation or bylaws do not fix or provide for fixing a record date, the board of directors may fix 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 members and may not be retroactive.
(c) A determination of members entitled to notice of or to vote at a members’ meeting is effective for any adjournment of the meeting unless the board of directors fixes a new record date or dates, which it shall 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 or dates continues in effect or it may fix a new record date or dates.
(Act 2023-503, §1.)
(a) At each meeting of members, an individual appointed in one of the following ways must preside as chair:
(1) as provided in the certificate of incorporation or bylaws;
(2) in the absence of a provision in the certificate of incorporation or bylaws, by the board of directors; or
(3) in the absence of both a provision in the certificate of incorporation or bylaws and an appointment by the board of directors, by the members at the meeting.
(b) At each meeting of members, the order of business and the rules for the conduct of the meeting must be:
(1) as provided in the certificate of incorporation or bylaws;
(2) in the absence of a provision in the certificate of incorporation or bylaws, established by the board of directors; or
(3) in the absence of both a provision in the certificate of incorporation or bylaws and the establishment by the board of directors, established by the members at the meeting.
(c) Any rules established for, and the conduct of, the meeting must be fair to the members.
(d) At the meeting the chair may announce when the polls close for each matter voted upon. If no announcement is made, the polls close upon the final adjournment of the meeting. After the polls close, no ballots, proxies, or votes, nor any revocations or changes to ballots, proxies, or votes may be accepted.
(Act 2023-503, §1.)
(a) Members of any class or voting group may participate in any meeting of members by means of remote communication to the extent the board of directors authorizes that participation for that class or voting group. Participation as a member by means of remote communication is subject to any guidelines and procedures the board of directors adopts and shall be in conformity with subsection (b).
(b) Members participating in a members’ meeting by means of remote communication shall be deemed present and may vote at that meeting if the membership nonprofit corporation has implemented reasonable measures:
(1) to verify that each person participating remotely as a member is a member; and
(2) to provide the members participating remotely a reasonable opportunity to participate in the meeting and to vote on matters submitted to the members, including an opportunity to communicate, and to read or hear the proceedings of the meeting, substantially concurrently with the proceedings.
(c) Unless the certificate of incorporation or bylaws require the meeting of members to be held at a place, the board of directors may determine that any meeting of members shall not be held at any place and shall instead be held solely by means of remote communication, but only if the membership nonprofit corporation implements the measures specified in subsection (b).
(Act 2023-503, §1.)
(a) Except as otherwise provided in the certificate of incorporation or bylaws, any action that may be taken at any meeting of members may be taken without a meeting if the membership nonprofit corporation delivers notice that includes a ballot to every member entitled to vote on the matter.
(b) A ballot must:
(1) be in writing;
(2) set forth each proposed action;
(3) provide an opportunity to vote for, or withhold a vote for, each candidate for election as a director, if any; and
(4) provide an opportunity to vote for or against each other proposed action.
(c) Approval by ballot pursuant to this section of action other than election of directors is valid only when the number of votes cast by ballot equals or exceeds the quorum required to be present at a meeting authorizing the action, and the number of approvals equals or exceeds the number of votes that would be required to approve the matter at a meeting at which the total number of votes cast was the same as the number of votes cast by ballot.
(d) All solicitations for votes by ballot must:
(1) indicate the number of responses needed to meet the quorum requirements;
(2) state the percentage of approvals necessary to approve each matter other than election of directors; and
(3) specify the time by which a ballot must be received by the membership nonprofit corporation in order to be counted.
(e) Except as otherwise provided in the certificate of incorporation or bylaws, a ballot may not be revoked.
(Act 2023-503, §1.)
(a) After fixing a record date for a meeting, a membership nonprofit corporation shall prepare an alphabetical list of the names of all its members who are entitled to notice of and to vote at the members’ meeting. Each list must be arranged by voting group (and within each voting group by class) and contain the address of, and number and class of members and votes held by, each member, and if the notice or other communications regarding the meeting have been or will be sent by the membership nonprofit corporation to a member by electronic mail or other electronic transmission, the electronic mail or other electronic transmission address of that member.
(b) The list of members entitled to notice shall be available for inspection by any member no later than the tenth day before each meeting of members; provided, however, if the record date for determining the members entitled to vote is less than 10 days before the meeting date, the list shall reflect the members entitled to vote as of the tenth day before the meeting date. The list shall be available (i) at the membership nonprofit corporation’s principal office or at a place identified in the meeting notice in the city where the meeting will be held or (ii) on a reasonably accessible electronic network, provided that the information required to gain access to the list is provided with the notice of the meeting. In the event that the membership nonprofit corporation determines to make a list of members available on an electronic network, the membership nonprofit corporation may take reasonable steps to ensure that such information is available only to members of the membership nonprofit corporation. A member, or the member’s agent or attorney, is entitled on written demand to inspect and, subject to the requirements of Section 10A-3A-4.02(c), to copy a list of members, during regular business hours and at the member’s expense, during the period it is available for inspection. A membership nonprofit corporation may satisfy the member’s right to copy a list of members by furnishing a copy in the manner described in Section 10A-3A-4.03(b). A member and the member’s agent or attorney who inspects or is furnished a copy of a list of members under this subsection (b) or who copies the list under this subsection (b) may use the information on that list only for purposes related to the meeting and its subject matter and must keep the information on that list confidential.
(c) If the membership nonprofit corporation refuses to allow a member, or the member’s agent or attorney, to inspect a list of members before the meeting or any adjournment (or copy a list as permitted by subsection (b)), the designated court, and if none, the circuit court for the county in which the membership nonprofit corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the membership nonprofit corporation’s most recent registered office is located, on application of the member, may summarily order the inspection or copying at the membership nonprofit corporation’s expense and may postpone the meeting for which the list was prepared until the inspection or copying is complete.
(d) Refusal or failure to prepare or make available a list of members does not affect the validity of action taken at the meeting.
(e) Instead of making the list of members available as provided in subsection (b), a membership nonprofit corporation may state in a notice of meeting that the membership nonprofit corporation has elected to proceed under this subsection (e). If a membership nonprofit corporation has elected to proceed under this subsection (e), a member of that membership nonprofit corporation must state in that member’s demand for inspection a proper purpose for which inspection is demanded. Within three business days after receiving a demand under this subsection (e), the membership nonprofit corporation must deliver to the member making the demand an offer of a reasonable alternative method of achieving the purpose identified in the demand without providing access to or a copy of the list of members. An alternative method that reasonably and in a timely manner accomplishes the proper purpose set forth in the demand relieves the membership nonprofit corporation from making the list of members available under subsection (b), unless within a reasonable time after acceptance of the offer the membership nonprofit corporation fails to do the things it offered to do. Any rejection of the membership nonprofit corporation’s offer must be in writing and must indicate the reasons the alternative proposed by the membership nonprofit corporation does not meet the proper purpose of the demand.
(f) The record of members of the membership nonprofit corporation shall be prima facie evidence as to who are the members entitled to examine the members’ list or record of members to vote at any meeting of members.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
(a) Except as otherwise provided in the certificate of incorporation or bylaws, a member may vote in person or by proxy.
(b) A member or the member’s agent or attorney-in-fact may appoint a proxy to vote or otherwise act for the member by signing an appointment form, or by an electronic transmission. An electronic transmission must contain or be accompanied by information from which the recipient can determine the date of the transmission and that the transmission was authorized by the sender or the sender’s agent or attorney-in-fact.
(c) An appointment of a proxy is effective when a signed appointment form or an electronic transmission of the appointment is received by the inspector of election or the officer or agent of the membership nonprofit corporation authorized to count votes. An appointment is valid for the term provided in the appointment form, and, if no term is provided, is valid for 11 months unless the appointment is irrevocable under subsection (d).
(d) An appointment of a proxy is revocable unless the appointment form or electronic transmission states that it is irrevocable and the appointment is coupled with an interest.
(e) The death or incapacity of the member appointing a proxy does not affect the right of the membership nonprofit corporation to accept the proxy’s authority unless notice of the death or incapacity is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises 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) Subject to Section 10A-3A-7.23 and to any express limitation on the proxy’s authority stated in the appointment form or electronic transmission, a membership nonprofit corporation is entitled to accept the proxy’s vote or other action as that of the member making the appointment.
(h) Nothing in this section shall be construed as limiting, or extending, authority granted under a durable power of attorney under Section 26-1-2 or Chapter 1A of Title 26, and any successor statute or statutes thereto.
(Act 2023-503, §1.)
(a) If the name signed on a vote, ballot, consent, waiver, member demand, or proxy appointment corresponds to the name of a member, the membership nonprofit corporation, if acting in good faith, is entitled to accept the vote, ballot, consent, waiver, member demand, or proxy appointment and give it effect as the act of the member.
(b) If the name signed on a vote, ballot, consent, waiver, member demand, or proxy appointment does not correspond to the name of its member, the membership nonprofit corporation, if acting in good faith, is nevertheless entitled to accept the vote, ballot, consent, waiver, member demand, or proxy appointment and give it effect as the act of the member if:
(1) the member 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 member and, if the membership nonprofit corporation requests, evidence of fiduciary status acceptable to the membership nonprofit corporation has been presented with respect to the vote, ballot, consent, waiver, member demand, or proxy appointment;
(3) the name signed purports to be that of a receiver or trustee in bankruptcy of the member and, if the membership nonprofit corporation requests, evidence of this status acceptable to the membership nonprofit corporation has been presented with respect to the vote, ballot, consent, waiver, member demand, or proxy appointment;
(4) the name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the member and, if the membership nonprofit corporation requests, evidence acceptable to the membership nonprofit corporation of the signatory’s authority to sign for the member has been presented with respect to the vote, ballot, consent, waiver, member demand, or proxy appointment; or
(5) two or more persons are the members as co-tenants 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 the co-owners.
(c) The membership nonprofit corporation is entitled to reject a vote, ballot, consent, waiver, member demand, or proxy appointment if the person authorized to accept or reject that instrument, 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 member.
(d) Neither the membership nonprofit corporation or any person authorized by it, nor an inspector of election appointed under Section 10A-3A-7.28, that accepts or rejects a vote, ballot, consent, waiver, member demand, or proxy appointment in good faith and in accordance with the standards of this Section 10A-3A-7.23 or Section 10A-3A-7.22(b) is liable in damages to the member for the consequences of the acceptance or rejection.
(e) Corporate action based on the acceptance or rejection of a vote, ballot, consent, waiver, member demand, or proxy appointment under this section is valid unless the designated court, and if none, the circuit court for the county in which the membership nonprofit corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the membership nonprofit corporation’s most recent registered office is located, determines otherwise.
(f) If an inspector of election has been appointed under Section 10A-2A-7.28, the inspector of election also has the authority to request information and make determinations under subsections (a), (b), and (c). Unless otherwise provided in the certificate of incorporation or bylaws, any determination made by the inspector of election under those subsections is controlling.
(Act 2023-503, §1.)
(a) Members entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those votes exists with respect to that matter. Except as provided in the certificate of incorporation or bylaws, members representing 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.
(b) Except as otherwise provided in the certificate of incorporation or bylaws, once a member is present or represented for any purpose at a meeting, the member is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be fixed for that adjourned meeting.
(c) If a quorum exists, 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 certificate of incorporation or bylaws require a greater number of affirmative votes.
(d) An amendment of the certificate of incorporation or bylaws adding, changing, or deleting a quorum or voting requirement for a voting group greater than specified in subsection (a) or subsection (c) is governed by Section 10A-3A-7.26.
(e) If a meeting cannot be organized because a quorum is not present, those members present may adjourn the meeting to a time and place as they may determine. The certificate of incorporation or bylaws may provide that when a meeting that has been adjourned for lack of a quorum is reconvened, those members present, although less than a quorum as fixed in this section, the certificate of incorporation, or the bylaws, nonetheless constitute a quorum if the original notice of the meeting, or a notice of the adjourned meeting, states that those members who attend a meeting that has been adjourned for lack of a quorum will constitute a quorum even though they are less than a quorum.
(Act 2023-503, §1.)
(a) If this chapter, the certificate of incorporation, or the bylaws 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 10A-3A-7.24.
(b) If this chapter, the certificate of incorporation, or the bylaws 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 10A-3A-7.24. Action may be taken by different voting groups on a matter at different times.
(Act 2023-503, §1.)
(a) The certificate of incorporation or bylaws may provide for a higher or lower quorum or voting requirement for members (or voting groups of members) than is provided for by this chapter.
(b) An amendment to the certificate of incorporation or bylaws that adds, changes, or deletes a 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.
(Act 2023-503, §1.)
(a) Except as otherwise provided in the certificate of incorporation or bylaws, directors of a membership nonprofit corporation are elected by a plurality of the votes cast by the members entitled to vote in the election at a meeting at which a quorum is present.
(b) Members do not have a right to cumulate their votes for directors.
(Act 2023-503, §1.)
(a) A membership nonprofit corporation may appoint one or more inspectors to act at a meeting of members and make a written report thereof. The membership nonprofit corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of members, the person presiding at the meeting may appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of the inspector’s ability. The inspectors may appoint or retain other persons to assist the inspectors in the performance of the duties of inspector under subsection (b), and may rely on information provided by those persons and other persons, including those appointed to count votes, unless the inspectors believe reliance is unwarranted.
(b) The inspectors must:
(1) ascertain the number of members and their voting power;
(2) determine the number of votes represented at the meeting and the validity of proxies and ballots;
(3) count all votes;
(4) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors; and
(5) certify their determination of the number of votes represented at the meeting, and their count of all votes.
(c) No ballot, proxies, or votes, nor any revocations thereof or changes thereto, shall be accepted by the inspectors after the closing of the polls unless the designated court, and if none, the circuit court for the county in which the membership nonprofits corporation’s principal office is located in this state, and if none in this state, in the circuit court for the county in which the membership nonprofit corporation’s most recent registered office is located, upon application by a member, shall determine otherwise.
(d) In performing their duties, the inspectors may examine:
(1) the proxy appointment forms and any other information provided in accordance with Section 10A-3A-7.22;
(2) any envelope or related writing submitted with those appointment forms;
(3) any ballots;
(4) any evidence or other information specified in Section 10A-3A-7.23; and
(5) the relevant books and records of the membership nonprofit corporation relating to its members and their entitlement to vote.
(e) The inspectors also may consider other information that they believe is relevant and reliable for the purpose of performing any of the duties assigned to them pursuant to subsection (b).
(f) An inspector and any person appointed by an inspector to assist with the inspector’s duties may, but need not, be a director, member, officer, or employee of the membership nonprofit corporation. A person who is a candidate for office to be filled at the meeting may not be an inspector or a person so appointed.
(Act 2023-503, §1.)
(a) Except as provided in the certificate of incorporation or bylaws, two or more members may provide for the manner in which they will vote by signing a written agreement for that purpose. A voting agreement is valid for the period provided in the agreement.
(b) A voting agreement created under this section is specifically enforceable, except that a voting agreement is not enforceable to the extent that enforcement of the agreement would violate the purposes of the membership nonprofit corporation.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
(a) The certificate of incorporation or bylaws may prescribe qualifications for directors or for nominees for directors. Qualifications must be reasonable as applied to the nonprofit corporation and be lawful. Qualifications may include not being or having been subject to specified criminal, civil, or regulatory sanctions or not having been removed as a director by judicial action or for cause.
(b) A director shall be a natural person of the age of at least 19 years but need not be a resident of this state or a member unless the certificate of incorporation or bylaws so prescribe.
(c) A qualification for nomination, election, or appointment for director prescribed before the earlier of a person’s nomination, election, or appointment shall apply to that person at the time of the earlier of that person’s nomination, election, or appointment and shall apply to that director during that director’s term. A qualification for nomination, election, or appointment for director prescribed after the earlier of a person’s nomination, election, or appointment shall not apply to that person with respect to that person’s nomination, election, or appointment and shall not apply to that director during that director’s term.
(d) A person who did not meet a qualification for nomination, election, or appointment, but who is elected or appointed as a director, may serve as a director until removed in accordance with Section 10A-3A-8.08 or 10A-3A-8.09.
(Act 2023-503, §1.)
(a) A board of directors shall consist of one or more individuals, with the number specified in or fixed in accordance with the certificate of incorporation or bylaws.
(b) The number of directors may be increased or decreased from time to time by amendment to, or in the manner provided in, the certificate of incorporation or bylaws.
(Act 2023-503, §1.)
(a) Except as set forth in Section 10A-3A-2.04, the directors of a membership nonprofit corporation are elected, appointed, or designated as provided in the certificate of incorporation or bylaws. If no method of election, appointment, or designation is set forth in the certificate of incorporation or bylaws, the directors of a membership nonprofit corporation are elected by the members entitled to vote at the time at the first annual meeting of members, and at each annual meeting thereafter.
(b) Except as set forth in Section 10A-3A-2.04, the directors of a nonmembership nonprofit corporation are elected, appointed, or designated as provided in the certificate of incorporation or bylaws. If no method of election, appointment, or designation is set forth in the certificate of incorporation or bylaws, the directors are elected by the board.
(c) If the certificate of incorporation or bylaws divide, or authorize dividing, the members into classes, the certificate of incorporation or bylaws may also authorize the election of all or a specified number of directors by one or more authorized classes of members. A class or multiple classes of members entitled to elect one or more directors is a separate voting group for purposes of the election of directors.
(Act 2023-503, §1.)
(a) The certificate of incorporation or bylaws may specify the terms of directors. If a term is not specified in the certificate of incorporation or bylaws, the term of a director is one year.
(b) A decrease in the number of directors or term of office does not shorten an incumbent director’s term.
(c) Except as provided in the certificate of incorporation or bylaws, the term of a director elected to fill a vacancy expires at the end of the unexpired term that the director is filling.
(d) Despite the expiration of a director’s term, the director continues to serve until the director’s successor is elected, appointed, or designated and until the director’s successor takes office unless otherwise provided in the certificate of incorporation or bylaws or there is a decrease in the number of directors.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
(a) A director may resign at any time by delivering a written notice of resignation to the board of directors or its chair, to the secretary, or to the nonprofit corporation.
(b) A resignation is effective as provided in Section 10A-3A-1.03(i) unless the resignation provides for a delayed effectiveness, including effectiveness determined upon a future event or events.
(Act 2023-503, §1.)
(a) Except as provided in the certificate of incorporation or bylaws, a director of a membership nonprofit corporation may be removed with or without cause by the members who are eligible under Section 10A-3A-8.10 to vote to fill the vacancy created by the removal of that director.
(b) The notice of a meeting of members of a membership nonprofit corporation at which removal of a director is to be considered must state that the purpose, or one of the purposes, of the meeting is removal of the director.
(c) Except as provided in the certificate of incorporation or bylaws, the board of directors of a membership nonprofit corporation may not remove a director.
(d) Except as provided in the certificate of incorporation or bylaws, the board of directors may remove a director of a nonmembership nonprofit corporation with or without cause.
(e) In addition to the removal provisions of subsections (a) and (d), the board of directors of a membership nonprofit corporation or nonmembership nonprofit corporation may remove a director who:
(1) did not satisfy the qualifications for directors as set forth in the certificate of incorporation or bylaws at the time that director was nominated, elected, appointed, or designated to that director’s current term, if the decision that the director failed to satisfy a qualification is made by the vote of a majority of the directors who meet all of the required qualifications; or
(2) no longer satisfies the qualifications for directors as set forth in the certificate of incorporation or bylaws at the time that director was nominated, elected, appointed, or designated to that director’s current term, if the decision that the director failed to satisfy a qualification is made by the vote of a majority of the directors who meet all of the required qualifications.
(Act 2023-503, §1.)
The designated court, and if none, the circuit court for the county in which the nonprofit corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the nonprofit corporation’s most recent registered office is located may remove a director from office or may order other relief, including barring the director from reelection, redesignation, or reappointment for a period prescribed by the court, in a proceeding commenced by or in the right of the nonprofit corporation if the court finds that: (i) the director engaged in fraudulent conduct with respect to the nonprofit corporation or its members, grossly abused the position of director, or intentionally inflicted harm on the nonprofit corporation; and (ii) considering the director’s course of conduct and the inadequacy of other available remedies, removal or such other relief would be in the best interest of the nonprofit corporation.
(Act 2023-503, §1.)
(a) Except as otherwise provided in subsection (b), the certificate of incorporation, or the bylaws, if a vacancy occurs on the board of directors, including a vacancy resulting from an increase in the number of directors:
(1) the members may fill the vacancy;
(2) the board of directors may fill the vacancy; or
(3) if the directors remaining in office are less than a quorum, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office.
(b) Unless the certificate of incorporation or bylaws provides otherwise, if the vacant office was held by a director who is:
(1) elected by a voting group of members, only the members of that voting group are entitled to vote to fill the vacancy if it is filled by the members, and only the remaining directors elected by that voting group, even if less than a quorum, are entitled to fill the vacancy if it is filled by the directors;
(2) appointed by a person or group of persons specified in the certificate of incorporation, may be filled only by that person or that group of persons; or
(3) designated in the certificate of incorporation or bylaws, may only be filled as specified in the certificate of incorporation or bylaws.
(c) A vacancy that will occur at a specific later time (by reason of a resignation effective at a later time under Section 10A-3A-8.07(b) or otherwise) may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
(a) The board of directors may hold regular or special meetings in or out of the state.
(b) Unless restricted by the certificate of incorporation or bylaws, any or all directors may participate in a meeting of the board 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.
(Act 2023-503, §1.)
(a) Except to the extent that the certificate of incorporation or bylaws require that action by the board of directors be taken at a meeting, action required or permitted by this chapter to be taken by the board of directors may be taken without a meeting if each director signs a consent in a record describing the action to be taken and delivers it to the nonprofit corporation.
(b) Action taken under this section is the act of the board of directors when one or more consents signed by all the directors are delivered to the nonprofit corporation. Any director executing a consent may provide, whether through instruction to an agent or otherwise, that the consent will be effective at a future time, including a time determined upon the happening of an event, occurring not later than 60 days after the instruction is given or the provision is made, if evidence of the instruction or provision is provided to the nonprofit corporation. A director’s consent may be withdrawn by a revocation signed by the director and delivered to the nonprofit corporation before delivery to the nonprofit corporation of unrevoked consents signed by all the directors.
(c) A consent signed under this section has the effect of action taken at a meeting of the board of directors and may be described as such in any document.
(Act 2023-503, §1.)
(a) Unless the certificate of incorporation or bylaws provide otherwise, regular meetings of the board of directors may be held without notice of the place, if any, date, time, or purpose of the meeting.
(b) Unless the certificate 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 place, if any, date, time, of the meeting. The notice need not describe the purpose of the special meeting unless required by the certificate of incorporation or bylaws.
(Act 2023-503, §1.)
(a) A director may waive any notice required by this chapter, the certificate of incorporation, or the 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 the notice, and delivered to the nonprofit corporation for filing by the nonprofit corporation with the minutes or corporate records.
(b) A director’s attendance at or participation in a meeting waives any required notice to the director of the meeting, unless the director at the beginning of the meeting (or promptly upon arrival) objects to holding the meeting or transacting business at the meeting and does not, after objecting, vote for or assent to action taken at the meeting.
(Act 2023-503, §1.)
(a) Unless the certificate of incorporation or bylaws provide for a greater or lesser number or unless otherwise expressly provided in this chapter, a quorum of a board of directors consists of a majority of the number of directors specified in or fixed in accordance with the certificate of incorporation or bylaws.
(b) The quorum of the board of directors specified in or fixed in accordance with the certificate of incorporation or bylaws may not consist of less than one-third of the specified or fixed number of directors.
(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 certificate of incorporation or bylaws require the vote of a greater number of directors or unless otherwise expressly provided in this chapter.
(d) A director who is present at a meeting of the board of directors or a committee when corporate action is taken is deemed to have assented to the action taken unless: (i) the director objects at the beginning of the meeting (or promptly upon arrival) to holding it or transacting business at the meeting; (ii) the dissent or abstention from the action taken is entered in the minutes of the meeting; or (iii) the director delivers written notice of the director’s dissent or abstention to the presiding officer of the meeting before its adjournment or to the nonprofit 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.
(Act 2023-503, §1.)
(a) A committee of the board of directors composed exclusively of one or more directors may be established to perform functions of the board:
(1) by the certificate of incorporation or bylaws; or
(2) except as restricted by the certificate of incorporation or bylaws, by the board of directors.
(b) Unless this chapter, the certificate of incorporation, or the bylaws provide otherwise, the establishment of a committee and appointment of directors 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 certificate of incorporation or bylaws to take action under Section 10A-3A-8.24.
(c) Sections 10A-3A-8.20 through 10A-3A-8.24 apply to board committees and their members.
(d) A board committee may exercise the powers of the board of directors under Section 10A-3A-8.01, to the extent specified by the board of directors or in the certificate of incorporation or bylaws, except that a board committee may not:
(1) in the case of a membership nonprofit corporation, approve or propose to members action that this chapter requires be approved by members;
(2) remove a director from office;
(3) fill a vacancy on the board of directors; or, subject to subsection (e), on any committee of the board; or
(4) adopt, amend, or repeal a provision of the certificate of incorporation or bylaws.
(e) The board of directors may appoint one or more directors as alternate members of any board committee to replace any absent or disqualified member during the member’s absence or disqualification. If the certificate of incorporation, bylaws, or the action creating a board committee so provides, the member or members present at any board committee meeting and not disqualified from voting may, by unanimous action, appoint another director to act in place of an absent or disqualified member during that member’s absence or disqualification.
(f) The certificate of incorporation, bylaws, or board of directors may create or authorize the creation of one or more advisory committees whose members need not be directors. An advisory committee:
(1) is not a committee of the board; and
(2) may not exercise any of the powers of the board.
(Act 2023-503, §1.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) Whenever this chapter expressly requires the board of directors to approve or take other action with respect to any agreement, instrument, plan, or document, such agreement, instrument, plan, or document may be approved by the board of directors in final form or in substantially final form. Substantially final form means that all of the material terms are set forth in the agreement, instrument, plan, or document, or are determinable through other information or materials presented to or known by the board of directors, or are determinable by a combination thereof.
(b) If the board of directors shall have acted to approve or take other action with respect to an agreement, instrument, plan, or document that is expressly required by this chapter to be approved by the board of directors, the board of directors may, but is not required to, at any time after providing the approval or taking such other action adopt a resolution ratifying the agreement, instrument, plan, or document, and the ratification shall be deemed to be effective as of the time of the original approval or other action by the board of directors and to satisfy any requirement under this chapter that the board of directors approve or take other action with respect to the agreement, instrument, plan, or document in a specific manner or sequence.
(Act 2025-281, §8.)
[Effective: 2026-08-01]
(a) Whenever this chapter expressly requires the board of directors to approve or take other action with respect to any agreement, instrument, plan, or document, such agreement, instrument, plan, or document may be approved by the board of directors in final form or in substantially final form. Substantially final form means that all of the material terms are set forth in the agreement, instrument, plan, or document, or are determinable through other information or materials presented to or known by the board of directors, or are determinable by a combination thereof, except as otherwise described in subsection (c).
(b) If the board of directors shall have acted to approve or take other action with respect to an agreement, instrument, plan, or document that is expressly required by this chapter to be approved by the board of directors, the board of directors may, but is not required to, at any time after providing the approval or taking such other action adopt a resolution ratifying the agreement, instrument, plan, or document, and the ratification shall be deemed to be effective as of the time of the original approval or other action by the board of directors and to satisfy any requirement under this chapter that the board of directors approve or take other action with respect to the agreement, instrument, plan, or document in a specific manner or sequence.
(c) At the time of the approval of any agreement, instrument, plan, or document by the board of directors, the agreement, instrument, plan, or document is not required to contain or have attached thereto any disclosure letter, disclosure schedules, or similar documents or instruments contemplated by the agreement, instrument, plan, or document that modify, supplement, qualify, or make exceptions to representations, warranties, covenants, or conditions contained in the agreement, instrument, plan, or document.
(Act 2025-281, §8; Act 2026-495, §1.)
Division C of Article 3 of Chapter 1 shall not apply to this chapter. Instead:
(a) Each member of the board of directors, when discharging the duties of a director, shall act: (i) in good faith, and (ii) in a manner the director reasonably believes to be in the best interests of the nonprofit corporation.
(b) The members of the board of directors or a board committee, when becoming informed in connection with their decision-making function or devoting attention to their oversight function, shall discharge their duties with the care that a person in a like position would reasonably believe appropriate under similar circumstances.
(c) In discharging board of directors or board committee duties, a director shall disclose, or cause to be disclosed, to the other board of directors or board committee members information not already known by them but known by the director to be material to the discharge of their decision-making or oversight functions, except that disclosure is not required to the extent that the director reasonably believes that doing so would violate a duty imposed under law, a legally enforceable obligation of confidentiality, or a professional ethics rule.
(d) In discharging board of directors or board committee duties, a director who does not have knowledge that makes reliance unwarranted is entitled to rely on the performance by any of the persons specified in subsection (f)(1) or subsection (f)(3) to whom the board of directors may have delegated, formally or informally by course of conduct, the authority or duty to perform one or more of the board of directors’ functions that are delegable under applicable law.
(e) In discharging board of directors or board committee duties, a director who does not have knowledge that makes reliance unwarranted is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, prepared or presented by any of the persons specified in subsection (f).
(f) A director is entitled to rely, in accordance with subsection (d) or (e), on:
(1) one or more officers, employees, or volunteers of the nonprofit corporation or one or more persons associated with the nonprofit corporation, whom the director reasonably believes to be reliable and competent in the functions performed or the information, opinions, reports, or statements provided;
(2) legal counsel, public accountants, or other persons retained by the nonprofit corporation as to matters involving skills or expertise the director reasonably believes are matters (i) within the particular person’s professional or expert competence, or (ii) as to which the particular person merits confidence; or
(3) a board committee of which the director is not a member if the director reasonably believes the committee merits confidence.
(g) Except as set forth in subsections (a) and (b), a director, when discharging the duties of a director, has no duty to any person other than the nonprofit corporation.
(Act 2023-503, §1.)
Division C of Article 3 of Chapter 1 shall not apply to this chapter. Instead:
(a) A director shall not be liable to the nonprofit corporation or its members for any decision to take or not to take action, or any failure to take any action, as a director, unless the party asserting liability in a proceeding establishes that:
(1) no defense interposed by the director based on: (i) any provision in the certificate of incorporation authorized by Section 10A-3A-2.02(b)(4) or by Section 10A-3A-2.02(b)(6), or (ii) the protection afforded by Section 10A-3A-8.60, precludes liability; and
(2) the challenged conduct consisted or was the result of:
(i) action not in good faith; or
(ii) a decision:
(A) which the director did not reasonably believe to be in the best interests of the nonprofit corporation, or
(B) as to which the director was not informed to an extent the director reasonably believed appropriate in the circumstances; or
(iii) a lack of objectivity due to the director’s familial, financial or business relationship with, or a lack of independence due to the director’s domination or control by, another person having a material interest in the challenged conduct:
(A) which relationship or which domination or control could reasonably be expected to have affected the director’s judgment respecting the challenged conduct in a manner adverse to the nonprofit corporation, and
(B) after a reasonable expectation to that effect has been established, the director shall not have established that the challenged conduct was reasonably believed by the director to be in the best interests of the nonprofit corporation; or
(iv) a sustained failure of the director to devote attention to ongoing oversight of the activities and affairs of the nonprofit corporation, or a failure to devote timely attention, by making (or causing to be made) appropriate inquiry, when particular facts and circumstances of significant concern materialize that would alert a reasonably attentive director to the need for that inquiry; or
(v) receipt of a financial benefit to which the director was not entitled or any other breach of the director’s duties to deal fairly with the nonprofit corporation and its members that is actionable under applicable law.
(b) The party seeking to hold the director liable:
(1) for money damages, shall also have the burden of establishing that:
(i) harm to the nonprofit corporation or its members has been suffered, and
(ii) the harm suffered was proximately caused by the director’s challenged conduct; or
(2) for other money payment under a legal remedy, such as compensation for the unauthorized use of corporate assets, shall also have whatever persuasion burden may be called for to establish that the payment sought is appropriate in the circumstances; or
(3) for other money payment under an equitable remedy, such as profit recovery by or disgorgement to the nonprofit corporation, shall also have whatever persuasion burden may be called for to establish that the equitable remedy sought is appropriate in the circumstances.
(c) Nothing contained in this section shall:
(1) in any instance where fairness is at issue alter the burden of proving the fact or lack of fairness otherwise applicable;
(2) alter the fact or lack of liability of a director under another section of this chapter, such as the provisions governing the consequences of an unlawful distribution under Section 10A-3A-8.32 or a transactional interest under Section 10A-3A-8.60;
(3) affect any rights to which a director may be entitled under another statute of this state or the United States; or
(4) affect any rights to which the nonprofit corporation or a member may be entitled under another statute of this state or the United States.
(Act 2023-503, §1.)
(a) A director who votes for or assents to a distribution in excess of what may be authorized and made pursuant to Section 10A-3A-6.40 or Section 10A-3A-11.07 is personally liable to the nonprofit corporation for the amount of the distribution that exceeds what could have been distributed without violating Section 10A-3A-6.40 or Section 10A-3A-11.07 if the party asserting liability establishes that when taking the action the director did not comply with Section 10A-3A-8.30.
(b) A director held liable under subsection (a) for an unlawful distribution is entitled to:
(1) contribution from every other director who could be held liable under subsection (a) for the unlawful distribution; and
(2) recoupment from each person of the pro-rata portion of the amount of the unlawful distribution the person received, whether or not the person knew the distribution was made in violation of Section 10A-3A-6.40 or Section 10A-3A-11.07.
(c) A proceeding to enforce:
(1) the liability of a director under subsection (a) is barred unless it is commenced within two years after the date on which the distribution was made; or
(2) contribution or recoupment under subsection (b) is barred unless it is commenced within one year after the liability of the claimant has been finally adjudicated under subsection (a).
(Act 2023-503, §1.)
(a) A nonprofit corporation may not lend money to or guarantee the obligation of a director or officer of the nonprofit corporation.
(b) The fact that a loan or guarantee is made in violation of this section does not affect the borrower’s liability on the loan.
(Act 2023-503, §1.)
(a) A nonprofit corporation has the officers described in its certificate of incorporation or bylaws or appointed by the board of directors in accordance with the certificate of incorporation or bylaws.
(b) The board of directors may elect individuals to fill one or more offices of the nonprofit corporation.
(c) The certificate of incorporation, bylaws, or the board of directors shall assign to an officer responsibility for maintaining and authenticating the records of the nonprofit corporation required to be kept under Section 10A-3A-4.01.
(d) Unless the certificate of incorporation or bylaws provide otherwise, the same individual may simultaneously hold more than one office in a nonprofit corporation.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
Division C of Article 3 of Chapter 1 shall not apply to this chapter. Instead:
(a) An officer, when performing in that capacity, has the duty to act:
(1) in good faith;
(2) with the care that a person in a like position would reasonably exercise under similar circumstances; and
(3) in a manner the officer reasonably believes to be in the best interests of the nonprofit corporation.
(b) The duty of an officer includes the obligation:
(1) to inform the superior officer to whom, or the board of directors or the board committee to which, the officer reports of information about the affairs of the nonprofit corporation known to the officer, within the scope of the officer’s functions, and known to the officer to be material to the superior officer, board of directors, or board committee; and
(2) to inform the officer’s superior officer, or another appropriate person within the nonprofit corporation, or the board of directors, or a board committee, of any actual or probable material violation of law involving the nonprofit corporation or material breach of duty to the nonprofit corporation by an officer, employee, or agent of the nonprofit corporation, that the officer believes has occurred or is likely to occur.
(c) In discharging the officer’s duties, an officer who does not have knowledge that makes reliance unwarranted is entitled to rely on:
(1) the performance of properly delegated responsibilities by one or more employees, one or more volunteers of the nonprofit corporation, or one or more other persons associated with the nonprofit corporation, to whom that officer has delegated responsibilities and whom the officer reasonably believes to be reliable and competent in performing the responsibilities delegated;
(2) information, opinions, reports, or statements, including financial statements and other financial data, prepared or presented by one or more officers or employees, one or more volunteers of the nonprofit corporation, or one or more other persons associated with the nonprofit corporation, whom the officer reasonably believes to be reliable and competent in the matters presented, or legal counsel, public accountants, or other persons retained by the nonprofit corporation as to matters involving skills or expertise the officer reasonably believes are matters: (i) within the particular person’s professional or expert competence, or (ii) as to which the particular person merits confidence; or
(3) volunteers of the nonprofit corporation or one or more persons associated with the nonprofit corporation.
(d) An officer is not liable to the nonprofit corporation or its members for any decision to take or not to take action, or any failure to take any action, as an officer, if the duties of the office are performed in compliance with this section. Whether an officer who does not comply with this section shall have liability will depend in such instance on applicable law, including those principles of Section 10A-3A-8.31 that have relevance.
(Act 2023-503, §1.)
Division C of Article 3 of Chapter 1 shall not apply to this chapter. Instead:
(a) An officer may resign at any time by delivering a written notice to the board of directors, its chair, the appointing officer, the secretary, or the nonprofit corporation. A resignation is effective as provided in Section 10A-3A-1.03 unless the notice provides for a delayed effectiveness, including effectiveness determined upon a future event or events. If effectiveness of a resignation is stated to be delayed and the board of directors or the appointing officer accepts the delay, the board of directors or the appointing officer may fill the pending vacancy before the delayed effectiveness, but the new officer may not take office until the vacancy occurs.
(b) An officer may be removed at any time with or without cause by (i) the board of directors; (ii) the appointing officer, unless the certificate of incorporation, bylaws, or the board of directors provide otherwise; or (iii) any other officer if authorized by the certificate of incorporation, bylaws, or the board of directors.
(c) In this section, “appointing officer” means the officer (including any successor to that officer) who appointed the officer resigning or being removed.
(Act 2023-503, §1.)
(a) The election or 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 nonprofit corporation. An officer’s resignation does not affect the nonprofit corporation’s contract rights, if any, with the officer.
(Act 2023-503, §1.)
In this division:
(1) “DIRECTOR” or “OFFICER” means an individual who is or was a director or officer, respectively, of a nonprofit corporation or who, while a director or officer of the nonprofit corporation, is or was serving at the nonprofit corporation’s request as a director, officer, manager, member, partner, trustee, employee, or agent of another entity or employee benefit plan. A director or officer is considered to be serving an employee benefit plan at the nonprofit corporation’s request if the individual’s duties to the nonprofit corporation also impose duties on, or otherwise involve services by, the individual to the plan or to participants in or beneficiaries of the plan. “Director” or “officer” includes, unless the context requires otherwise (i) the estate or personal representative of a director or officer and (ii) with respect to a director, an individual designated, elected, or appointed by that or any other name or title.
(2) “LIABILITY” means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or expenses incurred with respect to a proceeding.
(3) “NONPROFIT CORPORATION” includes any domestic or foreign predecessor entity of a nonprofit corporation.
(4) “OFFICIAL CAPACITY” means: (i) when used with respect to a director, the office of director in a nonprofit corporation; and (ii) when used with respect to an officer, as contemplated in Section 10A-3A-8.56, the office in a nonprofit corporation held by the officer. “Official capacity” does not include service for any other corporation or foreign corporation or any joint venture, trust, employee benefit plan, or other entity.
(5) “PARTY” means an individual who was, is, or is threatened to be made, a defendant or respondent in a proceeding.
(6) “PROCEEDING” means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative, or investigative and whether formal or informal.
(Act 2023-503, §1.)
(a) Except as otherwise provided in this section, a nonprofit corporation may indemnify an individual who is a party to a proceeding because the individual is a director against liability incurred in the proceeding if:
(1)(i) the director conducted himself or herself in good faith; and
(ii) the director reasonably believed:
(A) in the case of conduct in an official capacity, that his or her conduct was in the best interests of the nonprofit corporation; and
(B) in all other cases, that the director’s conduct was at least not opposed to the best interests of the nonprofit corporation; and
(iii) in the case of any criminal proceeding, the director had no reasonable cause to believe his or her conduct was unlawful; or
(2) the director engaged in conduct for which broader indemnification has been made permissible or obligatory under a provision of the certificate of incorporation (as authorized by Section 10A-3A-2.02).
(b) A director’s conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in, and the beneficiaries of, the plan is conduct that satisfies the requirement of subsection (a)(1)(ii)(B).
(c) The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, is not, of itself, determinative that the director did not meet the relevant standard of conduct described in this section.
(d) Unless ordered by a court under Section 10A-3A-8.54(a)(3), a nonprofit corporation may not indemnify a director:
(1) in connection with a proceeding by the nonprofit corporation, except for expenses incurred in connection with the proceeding if it is determined that the director has met the relevant standard of conduct under subsection (a); or
(2) in connection with any proceeding with respect to conduct for which the director was adjudged liable on the basis of receiving a financial benefit to which the director was not entitled, regardless of whether it involved action in the director’s official capacity.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
(a) A nonprofit corporation may, before final disposition of a proceeding, advance funds to pay for or reimburse expenses incurred in connection with the proceeding by an individual who is a party to the proceeding because that individual is a director if the director delivers to the nonprofit corporation a signed written undertaking of the director to repay any funds advanced if (i) the director is not entitled to mandatory indemnification under Section 10A-3A-8.52 and (ii) it is ultimately determined under Section 10A-3A-8.54 or Section 10A-3A-8.55 that the director is not entitled to indemnification.
(b) The undertaking required by subsection (a) must be an unlimited general obligation of the director but need not be secured and may be accepted without reference to the financial ability of the director to make repayment.
(c) Authorizations under this section shall be made:
(1) by the board of directors:
(i) if there are two or more qualified directors, by a majority vote of all the qualified directors (a majority of whom shall for that purpose constitute a quorum) or by a majority of the members of a committee consisting solely of two or more qualified directors appointed by a majority vote of qualified directors; or
(ii) if there are fewer than two qualified directors, by the vote necessary for action by the board of directors in accordance with Section 10A-3A-8.24(c), in which authorization directors who are not qualified directors may participate; or
(2) by the members, but membership interests owned by or voted under the control of a director who at the time is not a qualified director may not be voted on the authorization.
(Act 2023-503, §1.)
(a) A director who is a party to a proceeding because he or she is a director may apply for indemnification or an advance for expenses to the court conducting the proceeding or to another court of competent jurisdiction. After receipt of an application and after giving any notice it considers necessary, the court shall:
(1) order indemnification if the court determines that the director is entitled to indemnification pursuant to a provision authorized by Section 10A-3A-8.52;
(2) order indemnification or advance for expenses if the court determines that the director is entitled to indemnification or advance for expenses pursuant to a provision authorized by Section 10A-3A-8.58(a); or
(3) order indemnification or advance for expenses if the court determines, in view of all the relevant circumstances, that it is fair and reasonable: (i) to indemnify the director, or (ii) to advance expenses to the director, even if, in the case of (i) or (ii), the director has not met the relevant standard of conduct set forth in Section 10A-3A-8.51(a), failed to comply with Section 10A-3A-8.53, or was adjudged liable in a proceeding referred to in Section 10A-3A-8.51(d)(1) or Section 10A-3A-8.51(d)(2), but if the director was adjudged so liable indemnification shall be limited to expenses incurred in connection with the proceeding.
(b) If the court determines that the director is entitled to indemnification under subsection (a)(1) or to indemnification or advance for expenses under subsection (a)(2), it shall also order the nonprofit corporation to pay the director’s expenses incurred in connection with obtaining court-ordered indemnification or advance for expenses. If the court determines that the director is entitled to indemnification or advance for expenses under subsection (a)(3), it may also order the nonprofit corporation to pay the director’s expenses to obtain court-ordered indemnification or advance for expenses.
(Act 2023-503, §1.)
(a) A nonprofit corporation may not indemnify a director under Section 10A-3A-8.51 unless authorized for a specific proceeding after a determination has been made that indemnification is permissible because the director has met the relevant standard of conduct set forth in Section 10A-3A-8.51.
(b) The determination shall be made:
(1) if there are two or more qualified directors, by the board of directors by a majority vote of all the qualified directors (a majority of whom shall for that purpose constitute a quorum), or by a majority of the members of a committee of two or more qualified directors appointed by a majority vote of qualified directors;
(2) by special legal counsel:
(i) selected in the manner prescribed in subsection (b)(1); or
(ii) if there are fewer than two qualified directors, selected by the board of directors (in which selection directors who are not qualified directors may participate); or
(3) by the members, but membership interests owned by or voted under the control of a director who at the time is not a qualified director may not be voted on the determination.
(c) Authorization of indemnification shall be made in the same manner as the determination that indemnification is permissible except that if there are fewer than two qualified directors, or if the determination is made by special legal counsel, authorization of indemnification shall be made by those entitled to select special legal counsel under subsection (b)(2)(ii).
(Act 2023-503, §1.)
(a) A nonprofit corporation may indemnify and advance expenses under this Division E of this Article 8 to an officer who is a party to a proceeding because he or she is an officer:
(1) to the same extent as a director; and
(2) if he or she is an officer but not a director, to such further extent as may be provided by the certificate of incorporation or the bylaws, or by a resolution adopted or a contract approved by the board of directors or members except for
(i) liability in connection with a proceeding by the nonprofit corporation other than for expenses incurred in connection with the proceeding, or
(ii) liability arising out of conduct that constitutes
(A) receipt by the officer of a financial benefit to which the officer is not entitled,
(B) an intentional infliction of harm on the nonprofit corporation or the members, or
(C) an intentional violation of criminal law.
(b) Subsection (a)(2) shall apply to an officer who is also a director if the person is made a party to the proceeding based on an act or omission solely as an officer.
(c) An officer who is not a director is entitled to indemnification under Section 10A-3A-8.52 if the certificate of incorporation or bylaws of the nonprofit corporation allows for such indemnification, and may apply to a court under Section 10A-3A-8.54 for indemnification or an advance for expenses, in each case to the same extent to which a director may be entitled to indemnification or advance for expenses under those sections, unless otherwise provided in the certificate of incorporation or bylaws.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
(a) A nonprofit corporation may, by a provision in its certificate of incorporation, bylaws, or in a resolution adopted or a contract approved by the board of directors or members, obligate itself in advance of the act or omission giving rise to a proceeding to provide indemnification in accordance with Section 10A-3A-8.51 or advance funds to pay for or reimburse expenses in accordance with Section 10A-3A-8.53. Any obligatory provision shall be deemed to satisfy the requirements for authorization referred to in Section 10A-3A-8.53(c) and in Section 10A-3A-8.55(c). Any provision that obligates the nonprofit corporation to provide indemnification to the fullest extent permitted by law shall be deemed to obligate the nonprofit corporation to advance funds to pay for or reimburse expenses in accordance with Section 10A-3A-8.53 to the fullest extent permitted by law, unless the provision expressly provides otherwise.
(b) A right of indemnification or to advances for expenses created by this Division E of this Article 8 or under subsection (a) and in effect at the time of an act or omission shall not be eliminated or impaired with respect to the act or omission by an amendment of the certificate of incorporation, bylaws, or a resolution of the board of directors or members, adopted after the occurrence of the act or omission, unless, in the case of a right created under subsection (a), the provision creating the right and in effect at the time of the act or omission explicitly authorizes elimination or impairment after the act or omission has occurred.
(c) Any provision pursuant to subsection (a) shall not obligate the nonprofit corporation to indemnify or advance expenses to a director of a predecessor of the nonprofit corporation, pertaining to conduct with respect to the predecessor, unless otherwise expressly provided. Any provision for indemnification or advance for expenses in the certificate of incorporation, bylaws, or a resolution of the board of directors or other similar governing authority of a predecessor of the nonprofit corporation in a merger or in a contract to which the predecessor is a party, existing at the time the merger takes effect, shall be governed by Section 10A-3A-12.06(a)(4).
(d) Subject to subsection (b), a nonprofit corporation may, by a provision in its certificate of incorporation, limit any of the rights to indemnification or advance for expenses created by or pursuant to this Division E of this Article 8.
(e) This Division E of this Article 8 does not limit a nonprofit corporation’s power to pay or reimburse expenses incurred by a director or an officer in connection with appearing as a witness in a proceeding at a time when the director or officer is not a party.
(f) This Division E of this Article 8 does not limit a nonprofit corporation’s power to indemnify, advance expenses to or provide or maintain insurance on behalf of an employee, agent, or volunteer.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) No contract or transaction between a nonprofit corporation and one or more of its directors or officers, or between a nonprofit corporation and any other corporation, partnership, association, or other entity in which one or more of its directors or officers, are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board of directors or committee which authorizes the contract or transaction, or solely because the director’s or officer’s votes are counted for that purpose, if:
(1) The material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee of a nonmembership nonprofit corporation, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the qualified directors, even though the qualified directors be less than a quorum; or
(2) The material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to (i) the members in a membership nonprofit corporation entitled to vote thereon or (ii) the qualified directors of the board of directors in a membership nonprofit corporation, and the contract or transaction is specifically approved in good faith by vote of the members in a membership nonprofit corporation or the qualified directors of the board of directors in a membership nonprofit corporation; or
(3) The contract or transaction is fair as to the nonprofit corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee, or the members.
(b) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction.
(Act 2023-503, §1.)
[Effective: 2026-08-01]
As used in this chapter, unless otherwise specified or unless the context otherwise requires, the following terms shall mean:
(a) CONFLICTING INTEREST TRANSACTION means an act or transaction effected or proposed to be effected by the nonprofit corporation (or by an entity controlled by the nonprofit corporation):
(1) to which, at the relevant time, a director or officer is a party;
(2) respecting which, at the relevant time, the director or officer had knowledge and a material financial interest known to the director or officer; or
(3) respecting which, at the relevant time, the director or officer knew that a related person was a party or had a material financial interest.
(b) CONTROL or CONTROLLED BY means (i) having the power, directly or indirectly, to elect or remove a majority of the members of the board of directors or other governing authority of an entity, whether through the ownership of voting shares or interests, by contract, or otherwise or (ii) being subject to a majority of the risk of loss from the entity’s activities or entitled to receive a majority of the entity’s residual returns.
(c) CONTROL GROUP means two or more persons that, by virtue of an agreement, arrangement, or understanding between or among those persons, constitute a controlling person.
(d) CONTROLLING PERSON means any person that, together with (i) any related person; and (ii) any person that controls, is controlled by, or is under common control with that person:
(1) With respect to a membership nonprofit corporation:
(i) owns or controls a majority in voting power of the outstanding membership interests entitled to vote generally in the election of directors or in the election of directors who have a majority in voting power of the votes of all directors on the board of directors;
(ii) has the right, by contract or otherwise, to cause the election of nominees who are selected at the discretion of that person and who constitute either a majority of the members of the board of directors of a membership nonprofit corporation or directors entitled to cast a majority in voting power of the votes of all directors on the board of directors of a membership nonprofit corporation;
(iii) has the power functionally equivalent to that of a member that owns or controls a majority in voting power of the outstanding membership interests entitled to vote generally in the election of directors by virtue of ownership or control of at least one-third in voting power of the outstanding membership interests entitled to vote generally in the election of directors or in the election of directors who have a majority in voting power of the votes of all directors on the board of directors and the power to exercise managerial authority over the business and affairs of the membership nonprofit corporation; or
(iv) either (A) has the power and authority to exercise and perform certain corporate powers, activities and affairs pursuant to a provision in the certificate of incorporation permitted by Section 10A-3A-8.01 or (B) has the right to approve certain matters as permitted by Section 10A-3A-2.02(b)(2)(ix).
(2) With respect to a nonmembership nonprofit corporation:
(i) has the right, by contract or otherwise, to cause the election of nominees who are selected at the discretion of that person and who constitute either a majority of the members of the board of directors of a nonmembership nonprofit corporation or directors entitled to cast a majority in voting power of the votes of all directors on the board of directors of a nonmembership nonprofit corporation; or
(ii) either (A) has the power and authority to exercise and perform certain corporate powers, activities, and affairs pursuant to a provision in the certificate of incorporation permitted by Section 10A-3A-8.01 or (B) has the right to approve certain matters as permitted by Section 10A-3A-2.02(b)(2)(ix).
(e) CONTROLLING PERSON TRANSACTION means an act or transaction between the nonprofit corporation or one or more of its subsidiaries, on the one hand, and a controlling person or a control group, on the other hand, or an act or transaction from which a controlling person or a control group receives a material financial interest.
(f) DISINTERESTED PERSON means any member or other person that does not have a material financial interest in the act or transaction at issue or, if applicable, a material relationship with the controlling person or other member of the control group, or any other person that has a material financial interest in the act or transaction.
(g) FAIR TO THE NONPROFIT CORPORATION means the act or transaction at issue, as a whole, is beneficial to the nonprofit corporation or its members, if any, in their capacity as members, given the consideration paid to or received by the nonprofit corporation or its members or other benefit conferred on the nonprofit corporation or its members, if any, and taking into appropriate account whether the act or transaction meets both of the following: (i) it is fair in terms of the director’s, officer’s, controlling person’s, or control group’s dealings with the nonprofit corporation, as the case may be; and (ii) it is comparable to what might have been obtainable in an arm’s length transaction available to the nonprofit corporation.
(h) MATERIAL FINANCIAL INTEREST means a nonspeculative financial interest in an act or transaction, other than one that would devolve on the nonprofit corporation or the members generally, that would reasonably be expected to impair the objectivity of the director’s or officer’s judgment when participating in the negotiation, authorization, or approval of the act or transaction at issue.
(i) MATERIAL RELATIONSHIP has the meaning set forth in Section 10A-3A-1.60.
(j) QUALIFIED DIRECTOR has the meaning set forth in Section 10A-3A-1.60.
(k) RELATED PERSON has the meaning set forth in Section 10A-3A-2.02.
(l) RELEVANT TIME means (i) the time at which directors’ action respecting the act or transaction is taken in compliance with Sections 10A-3A-8.61(c) or 10A-3A-8.62(c) or (ii) if the act or transaction is not brought before the board of directors (or a committee) for action under Section 10A-3A-8.61(d), at the time the nonprofit corporation (or an entity controlled by the nonprofit corporation) becomes legally obligated to consummate the act or transaction.
(m) REQUIRED DISCLOSURE means disclosure of (i) the existence and nature of the director’s or officer’s conflicting interest and (ii) all facts known to the director or officer respecting the subject matter of the act or transaction that a qualified director would reasonably believe to be material in deciding whether to proceed with the act or transaction.
(Act 2023-503, §1; Act 2026-495, §1.)
[Effective: 2026-08-01]
(a) An act or transaction effected or proposed to be effected by a membership nonprofit corporation (or by an entity controlled by the membership nonprofit corporation) may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director or officer of the membership nonprofit corporation, on the grounds that the director or officer has an interest respecting the act or transaction, if the act or transaction is not a conflicting interest transaction.
(b) A conflicting interest transaction may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director or officer of the membership nonprofit corporation, in a proceeding by a member, on the grounds that the director or officer has an interest respecting the conflicting interest transaction, if:
(1) the directors’ action respecting the act or transaction was taken in compliance with subsection (c) at any time; or
(2) the members’ action respecting the act or transaction was taken in compliance with subsection (d) at any time; or
(3) the act or transaction is at the relevant time fair to the membership nonprofit corporation.
(c)(1) Directors’ action respecting a conflicting interest transaction is effective for purposes of subsection (b)(1) if the conflicting interest transaction has been authorized, after required disclosure by the conflicted director or officer of information not already known by the qualified directors, or after modified disclosure in compliance with subsection (c)(2), by (A) the affirmative vote of a majority (but no fewer than two) of the qualified directors who voted on the conflicting interest transaction or (B) the affirmative vote of a majority of the members of a board committee that is composed of only qualified directors (but no fewer than two). Directors’ action respecting a conflicting interest transaction is effective even though the conflicted director or officer is present at or participates in the meeting of the board or committee which authorizes the act or transaction or was involved in the initiation, negotiation, or approval of the act or transaction.
(2) Notwithstanding subsection (c)(1), when a transaction is a conflicting interest transaction only because a related person described in clause (v) or (vi) of the definition of “related person” in Section 10A-3A-2.02 is a party to or has a material financial interest in the conflicting interest transaction, the conflicted director or officer is not obligated to make required disclosure to the extent that the director or officer reasonably believes that doing so would violate a duty imposed under law, a legally enforceable obligation of confidentiality, or a professional ethics rule, provided that the conflicted director or officer discloses to the qualified directors voting on the conflicting interest transaction:
(i) all information required to be disclosed that is not so violative;
(ii) the existence and nature of the director’s or officer’s conflicting interest; and
(iii) the nature of the conflicted director’s or officer’s duty not to disclose the confidential information.
(3) A majority (but no fewer than two) of all the qualified directors on the board of directors, or on the board committee, constitutes a quorum for purposes of action that complies with this section.
(4) Where directors’ action under this subsection (c) does not satisfy a quorum or voting requirement applicable to the authorization of the conflicting interest transaction by reason of the certificate of incorporation, bylaws, or another provision of this chapter, independent action to satisfy those authorization requirements shall be taken by the board of directors or a board committee, in which action directors who are not qualified directors may participate.
(5) Where directors’ action under this subsection (c) is taken without a meeting in accordance with Section 10A-3A-8.21, the action is effective even though a conflicted director signs a consent to that action.
(d)(1) Members’ action respecting a conflicting interest transaction is effective for purposes of subsection (b)(2) if a majority of the votes cast by the holders of all qualified membership interests are in favor of the conflicting interest transaction after (i) notice to members describing the action to be taken respecting the conflicting interest transaction; (ii) provision to the membership nonprofit corporation of the information referred to in subsection (d)(2); and (iii) communication to the members entitled to vote on the conflicting interest transaction of the information that is the subject of required disclosure, to the extent the information is not already known by them. In the case of members’ action at a meeting, the members entitled to vote shall be determined as of the record date for notice of the meeting.
(2) A director or officer who has a conflicting interest respecting the conflicting interest transaction shall, before the members’ vote, inform the secretary or other officer or agent of the membership nonprofit corporation authorized to tabulate votes, in writing, of the number of membership interests that the director or officer knows are not qualified membership interests under subsection (d)(3), and the identity of the holders of those membership interests.
(3) For purposes of this section: (i) “holder” means and “held by” refers to membership interests held by a member; and (ii) “qualified membership interests” means all membership interests entitled to be voted with respect to the conflicting interest transaction except for membership interests that the secretary or other officer or agent of the membership nonprofit corporation authorized to tabulate votes either knows, or under subsection (d)(2) is notified, are held by (A) a director or officer who has a conflicting interest respecting the conflicting interest transaction or (B) a related person of the director or officer (excluding a person described in clause (vi) of the definition of “related person” in Section 10A-3A-2.02).
(4) A majority of the votes entitled to be cast by the holders of all qualified membership interests constitutes a quorum for purposes of compliance with this section. Members’ action that otherwise complies with this section is not affected by the presence of holders, or by the voting, of membership interests that are not qualified membership interests.
(5) If a members’ vote does not comply with subsection (d)(1) solely because of a director’s or officer’s failure to comply with subsection (d)(2), and if the director or officer establishes that the failure was not intended to influence and did not in fact determine the outcome of the vote, then the action by the members respecting the conflicting interest transaction shall be given effect.
(6) Where members’ action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the conflicting interest transaction by reason of the certificate of incorporation, the bylaws, or another provision of this chapter, independent action to satisfy those authorization requirements shall be taken by the members, in which action membership interests that are not qualified membership interests may participate.
(7) Where members’ action under this subsection (d) is taken without a meeting in accordance with Section 10A-3A-7.04, the action is effective even though members holding membership interests that are not qualified membership interests sign a consent to that action.
(e) Notwithstanding subsections (c) and (d), if a controlling person has the power and authority to approve the conflicting interest transaction pursuant to a provision in the certificate of incorporation permitted by Section 10A-3A-8.01, the conflicting interest transaction shall be approved by that controlling person.
(f) An act or transaction effected or proposed to be effected by a membership nonprofit corporation (or by an entity controlled by the membership nonprofit corporation) may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a controlling person or a member of a control group of the membership nonprofit corporation, on the grounds that the controlling person or member of a control group has an interest respecting the act or transaction, if the act or transaction is not a controlling person transaction.
(g) A controlling person transaction may not be the subject of equitable relief, or give rise to an award of damages or other sanctions, against a director or officer of the membership nonprofit corporation or any controlling person or member of a control group, by reason of a claim based on a breach of duty by a director, officer, controlling person, or member of a control group, if:
(1) the controlling person transaction is approved in accordance with the provisions of the certificate of incorporation, bylaws, rules, regulations, policies, or agreements among the members and the membership nonprofit corporation; or
(2) the controlling person transaction is at the relevant time fair to the membership nonprofit corporation.
(Act 2026-495, §3.)
[Effective: 2026-08-01]
(a) An act or transaction effected or proposed to be effected by a nonmembership nonprofit corporation (or by an entity controlled by the nonmembership nonprofit corporation) may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director or officer of the nonmembership nonprofit corporation, on the grounds that the director or officer has an interest respecting the act or transaction, if the act or transaction is not a conflicting interest transaction.
(b) A conflicting interest transaction may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director or officer of the nonmembership nonprofit corporation, on the grounds that the director or officer has an interest respecting the conflicting interest transaction, if:
(1) the directors’ action respecting the act or transaction was taken in compliance with subsection (c) at any time; or
(2) the act or transaction is at the relevant time fair to the nonmembership nonprofit corporation.
(c)(1) Directors’ action respecting a conflicting interest transaction is effective for purposes of subsection (b)(1) if the conflicting interest transaction has been authorized, after required disclosure by the conflicted director or officer of information not already known by the qualified directors, or after modified disclosure in compliance with subsection (c)(2), by (A) the affirmative vote of a majority (but no fewer than two) of the qualified directors who voted on the conflicting interest transaction or (B) the affirmative vote of a majority of the members of a board committee that is composed of only qualified directors (but no fewer than two). Directors’ action respecting a conflicting interest transaction is effective even though the conflicted director or officer is present at or participates in the meeting of the board or committee which authorizes the act or transaction or was involved in the initiation, negotiation, or approval of the act or transaction.
(2) Notwithstanding subsection (c)(1), when a transaction is a conflicting interest transaction only because a related person described in clause (v) or (vi) of the definition of “related person” in Section 10A-3A-2.02 is a party to or has a material financial interest in the conflicting interest transaction, the conflicted director or officer is not obligated to make required disclosure to the extent that the director or officer reasonably believes that doing so would violate a duty imposed under law, a legally enforceable obligation of confidentiality, or a professional ethics rule, provided that the conflicted director or officer discloses to the qualified directors voting on the conflicting interest transaction:
(i) all information required to be disclosed that is not so violative;
(ii) the existence and nature of the director’s or officer’s conflicting interest; and
(iii) the nature of the conflicted director’s or officer’s duty not to disclose the confidential information.
(3) A majority (but no fewer than two) of all the qualified directors on the board of directors, or on the board committee, constitutes a quorum for purposes of action that complies with this section.
(4) Where directors’ action under this subsection (c) does not satisfy a quorum or voting requirement applicable to the authorization of the conflicting interest transaction by reason of the certificate of incorporation, the bylaws, or another provision of this chapter, independent action to satisfy those authorization requirements shall be taken by the board of directors or a board committee, in which action directors who are not qualified directors may participate.
(5) Where directors’ action under this subsection (c) is taken without a meeting in accordance with Section 10A-3A-8.21, the action is effective even though a conflicted director signs a consent to that action.
(d) Notwithstanding subsection (c), if a controlling person has the power and authority to approve the conflicting interest transaction pursuant to a provision in the certificate of incorporation permitted by Section 10A-3A-8.01, the conflicting interest transaction shall be approved by that controlling person.
(e) An act or transaction effected or proposed to be effected by a nonmembership nonprofit corporation (or by an entity controlled by the nonmembership nonprofit corporation) may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a controlling person or a member of a control group of the nonmembership nonprofit corporation, on the grounds that the controlling person or member of a control group has an interest respecting the act or transaction, if the act or transaction is not a controlling person transaction.
(f) A controlling person transaction may not be the subject of equitable relief, or give rise to an award of damages or other sanctions, against a director or officer of the nonmembership nonprofit corporation or any controlling person or member of a control group, by reason of a claim based on a breach of duty by a director, officer, controlling person, or member of a control group, if:
(1) the controlling person transaction is approved in accordance with the provisions of the certificate of incorporation, bylaws, rules, regulations, or policies of the nonmembership nonprofit corporation; or
(2) the controlling person transaction is at the relevant time fair to the nonmembership nonprofit corporation.
(Act 2026-495, §3.)
[Effective: 2026-08-01]
(a) If a director or officer pursues or takes advantage of a corporate opportunity directly, or indirectly through or on behalf of another person, that action may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against the director, officer, or other person on the grounds that the corporate opportunity should have first been offered to the nonprofit corporation, if (1) before the director, officer, or other person becomes legally obligated respecting the corporate opportunity the director or officer brings it to the attention of the nonprofit corporation and either: (i) action by qualified directors disclaiming the nonprofit corporation’s interest in the corporate opportunity is taken in compliance with the same procedures as are set forth in Section 10A-3A-8.61(c) or Section 10A-3A-8.62(c); (ii) with respect to a membership nonprofit corporation, members’ action disclaiming the membership nonprofit corporation’s interest in the corporate opportunity is taken in compliance with the procedures set forth in Section 10A-3A-8.61(d); or (iii) if a controlling person has the power and authority to disclaim the nonprofit corporation’s interest in the corporate opportunity pursuant to a provision in the certificate of incorporation permitted by Section 10A-3A-8.01, action disclaiming the nonprofit corporation’s interest in the corporate opportunity is taken by that controlling person, in each case as if the decision being made concerned a conflicting interest transaction, except that, rather than making “required disclosure” as defined in Section 10A-3A-8.60, the director or officer shall have made prior disclosure to those acting on behalf of the nonprofit corporation of all material facts concerning the corporate opportunity known to the director or officer; or (2) the duty to offer the nonprofit corporation the corporate opportunity has been limited or eliminated pursuant to a provision of the certificate of incorporation adopted (and where required, made effective by action of qualified directors) in accordance with Section 10A-3A-2.02(b)(6).
(b) In any proceeding seeking equitable relief or other remedies based upon an alleged improper pursuit or taking advantage of a corporate opportunity by a director or officer directly, or indirectly through or on behalf of another person, the fact that the director or officer did not employ the procedure described in subsection (a)(1) before pursuing or taking advantage of the corporate opportunity shall not create an implication that the corporate opportunity should have been first presented to the nonprofit corporation or alter the burden of proof otherwise applicable to establish that the director or officer breached a duty to the nonprofit corporation in the circumstances.
(Act 2026-495, §4.)
(Act 2023-503, §1.)
(a) A nonprofit corporation may amend its certificate of incorporation at any time to add or change a provision that is required or permitted in the certificate of incorporation as of the effective date of the amendment or to delete a provision that is not required to be contained in the certificate of incorporation. Whether a provision is required or permitted in the certificate of incorporation is determined as of the effective date of the amendment.
(b) Neither (i) a member of a membership nonprofit corporation nor (ii) a person having rights under the certificate of incorporation, has a vested property right resulting from any provision in the certificate of incorporation, including provisions relating to management, control, purpose, or duration of the nonprofit corporation.
(Act 2023-503, §1.)
Subject to Section 10A-3A-9.30, if a membership nonprofit corporation has not yet admitted any members, the board of directors, or its incorporators if it has no board of directors, may adopt one or more amendments to the membership nonprofit corporation’s certificate of incorporation.
(Act 2023-503, §1.)
If a membership nonprofit corporation has admitted any members, an amendment to the certificate of incorporation shall be adopted in the following manner:
(a) The proposed amendment shall first be adopted by the board of directors.
(b) Except as provided in subsection (g) and Sections 10A-3A-9.07 and 10A-3A-9.08, the amendment shall then be approved by the members entitled to vote on the amendment. In submitting the proposed amendment to the members for approval, the board of directors shall recommend that the members approve the amendment, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board of directors must inform the members of the basis for that determination.
(c) The board of directors may set conditions for the approval of the amendment by the members or the effectiveness of the amendment.
(d) If the amendment is required to be approved by the members, and the approval is to be given at a meeting, the membership nonprofit corporation shall notify each member entitled to vote on the amendment of the meeting of members at which the amendment is to be submitted for approval. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the amendment. The notice must contain or be accompanied by a copy of the amendment.
(e) Unless the certificate of incorporation, or the board of directors acting pursuant to subsection (c), requires a greater vote or a greater quorum, approval of the amendment requires the approval of the members at a meeting at which a quorum consisting of a majority of the votes entitled to be cast on the amendment exists, and, if any class of members is entitled to vote as a separate group on the amendment, except as provided in Section 10A-3A-9.04(d), the approval of each separate voting group at a meeting at which a quorum of the voting group exists consisting of a majority of the votes entitled to be cast on the amendment by that voting group.
(f) In addition to the adoption and approval of an amendment by the board of directors and members as required by this section, an amendment must also be approved by a person or group of persons, if any, whose approval is required by the certificate of incorporation in accordance with Section 10A-3A-9.30.
(g) Unless the certificate of incorporation provides otherwise, the board of directors of a membership nonprofit corporation may adopt amendments to the membership nonprofit corporation’s certificate of incorporation without approval of the members to:
(1) extend the duration of the membership nonprofit corporation if it was incorporated at a time when limited duration was required by law;
(2) delete the names and addresses of the incorporators or initial directors;
(3) 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) delete a class of members from the certificate of incorporation when there are no members in that class; or
(5) change the membership nonprofit corporation name, provided that the name complies with Article 5 of Chapter 1.
(Act 2023-503, §1.)
Except as provided in the certificate of incorporation or bylaws:
(a) If a membership nonprofit corporation has more than one class of members, the members of each class are entitled to vote as a separate voting group (if member voting is otherwise required by this chapter) on a proposed amendment to the certificate of incorporation if the amendment would:
(1) effect an exchange or reclassification of all or part of the memberships of the class into memberships of another class;
(2) effect an exchange or reclassification, or create the right of exchange, of all or part of the memberships of another class into memberships of the class;
(3) change the rights, preferences, or limitations of all or part of the memberships of the class;
(4) change the rights, preferences, or limitations of all or part of the memberships of the class by changing the rights, preferences, or limitations of another class;
(5) create a new class of memberships having rights or preferences that are prior or superior to the other memberships;
(6) increase or decrease the number of memberships authorized for the class;
(7) increase or decrease the number of memberships authorized for another class; or
(8) authorize a new class of memberships.
(b) If a class of members will be divided into two or more classes by an amendment to the certificate of incorporation, the amendment must be approved by a majority of the members of each class that will be created.
(c) If a proposed amendment would affect less than all of the members of a class in one or more of the ways described in subsection (a), the members so affected are entitled to vote as a separate voting group on the proposed amendment.
(d) If a proposed amendment that entitles the holders of two or more classes of memberships to vote as separate voting groups under this section would affect those two or more classes in the same or a substantially similar way, the holders of the memberships of all the classes so affected shall vote together as a single voting group on the proposed amendment, unless added as a condition by the board of directors pursuant to Section 10A-3A-9.03(c).
(Act 2023-503, §1.)
Except as otherwise provided in the certificate of incorporation:
(1) the board of directors of a nonmembership nonprofit corporation, or if the initial board of directors of a nonmembership nonprofit corporation is not named in the certificate of incorporation and has not yet been elected, appointed, or designated, its incorporators may adopt amendments to the nonmembership nonprofit corporation’s certificate of incorporation; and
(2) an amendment adopted under this section must also be approved by that person or group of persons, if any, whose approval is required by the certificate of incorporation in accordance with Section 10A-3A-9.30.
(Act 2023-503, §1; Act 2024-413, §1.)
(a) After an amendment to the certificate of incorporation has been adopted and approved in the manner required by this chapter, the certificate of incorporation, and bylaws, the nonprofit corporation must deliver to the Secretary of State, for filing, a certificate of amendment, which must set forth:
(1) the name of the nonprofit corporation;
(2) the text of each amendment adopted or the information required by Section 10A-3A-1.04(c)(5);
(3) if an amendment provides for an exchange, reclassification, or cancellation of memberships, provisions for implementing the amendment if not contained in the amendment itself (which may be made dependent upon facts objectively ascertainable outside the articles of amendment in accordance with Section 10A-3A-1.04(c)(5));
(4) the date of each amendment’s adoption;
(5) a statement that the amendment was adopted:
(i) in accordance with Sections 10A-3A-9.02, if the nonprofit corporation is a membership nonprofit corporation which has not yet admitted one or more members;
(ii) in accordance with Sections 10A-3A-9.03 and 10A-3A-9.04, if the nonprofit corporation is a membership nonprofit corporation which has admitted one of more members;
(iii) in accordance with Section 10A-3A-9.05, if the nonprofit corporation is a nonmembership nonprofit corporation; or
(iv) in accordance with Section 10A-3A-1.04(c)(5);
(6) a statement that the amendment was adopted in accordance with Section 10A-9A-9.30, if applicable; and
(7) the unique identifying number or other designation as assigned by the Secretary of State.
(b) A certificate of amendment shall take effect at the effective date and time determined in accordance with Article 4 of Chapter 1.
(Act 2023-503, §1.)
(a)(1) A membership nonprofit corporation’s board of directors may restate its certificate of incorporation at any time, without the approval of the members or any person or group of persons specified in the certificate of incorporation, to consolidate all amendments into a single document. Unless the certificate of incorporation of a membership nonprofit corporation provides otherwise, the restated certificate of incorporation may amend the certificate of incorporation with those amendments that the board of directors is permitted to adopt in accordance with Sections 10A-3A-9.02 and 10A-3A-9.03(g) without the approval of the members or any person or group of persons specified in the certificate of incorporation. Unless the certificate of incorporation of a membership nonprofit corporation provides otherwise, the restated certificate of incorporation of a membership nonprofit corporation may also amend the certificate of incorporation with those amendments that the member or any person or group of persons specified in the certificate of incorporation must approve in accordance with Sections 10A-3A-9.02, 10A-3A-9.03, 10A-3A-9.04, and 10A-3A-9.30.
(2) A nonmembership nonprofit corporation’s board of directors may restate its certificate of incorporation at any time without the approval of any person or group of persons specified in the certificate of incorporation to consolidate all amendments into a single document. Unless the certificate of incorporation of a nonmembership nonprofit corporation provides otherwise, the restated certificate of incorporation may amend the certificate of incorporation with those amendments that the board of directors is permitted to adopt in accordance with Section 10A-3A-9.05 without the approval of any person or group of persons specified in the certificate of incorporation. Unless the certificate of incorporation of a nonmembership nonprofit corporation provides otherwise, the restated certificate of incorporation of a nonmembership nonprofit corporation may also amend the certificate of incorporation with those amendments that any person or group of persons specified in the certificate of incorporation must approve in accordance with Sections 10A-3A-9.02, 10A-3A-9.05, and 10A-3A-9.30.
(b) If the restated certificate of incorporation includes one or more new amendments, the amendments must be adopted and approved as provided in (i) Section 10A-3A-9.02, (ii) Sections 10A-3A-9.03 and 10A-3A-9.04, or (iii) Section 10A-3A-9.05.
(c) A nonprofit corporation that restates its certificate of incorporation shall deliver to the Secretary of State for filing a certificate of restatement setting forth:
(1) the name of the nonprofit corporation;
(2) the text of the restated certificate of incorporation;
(3) a statement that the restated certificate of incorporation consolidates all amendments into a single document;
(4) if a new amendment is included in the restated certificate of incorporation, the statements required under Section 10A-3A-9.06 with respect to the new amendment; and
(5) the unique identifying number or other designation as assigned by the Secretary of State.
(d) The duly adopted restated certificate of incorporation supersedes the original certificate of incorporation and all amendments to the certificate of incorporation.
(e) Unless the certificate of incorporation provides otherwise, a restated certificate of incorporation may omit the information that may be deleted pursuant to Section 10A-3A-9.03(g).
(Act 2023-503, §1; Act 2024-413, §1.)
(a) A nonprofit corporation’s certificate of incorporation may be amended without action by the board of directors, the members, if any, or a person or group of persons, if any, whose approval is required by the certificate of incorporation in accordance with Section 10A-3A-9.30, to carry out a plan of reorganization ordered or decreed by a court of competent jurisdiction under the authority of a law of the United States if the certificate of incorporation after the amendment only contains provisions required or permitted by Section 10A-3A-2.02.
(b) The individual or individuals designated by the court shall deliver to the Secretary of State for filing a certificate of amendment setting forth:
(1) the name of the nonprofit corporation;
(2) the text of each amendment approved by the court;
(3) the date of the court’s order or decree approving the certificate of amendment;
(4) the title of the reorganization proceeding in which the order or decree was entered;
(5) a statement that the court had jurisdiction of the proceeding under federal statute; and
(6) the unique identifying number or other designation as assigned by the Secretary of State.
(c) 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.
(Act 2023-503, §1.)
(a) An amendment to the certificate of incorporation does not affect:
(1) a cause of action existing against or in favor of the nonprofit corporation;
(2) a proceeding to which the nonprofit corporation is a party; or
(3) the existing rights of persons other than (i) members of the nonprofit corporation, if any, or (ii) a person or group of persons, if any, specified in the certificate of incorporation as having approval rights under Section 10A-3A-9.30.
(b) An amendment changing a nonprofit corporation’s name does not affect a proceeding brought by or against the nonprofit corporation in its former name.
(Act 2023-503, §1.)
(a) A restated certificate of incorporation takes effect when the filing of the restated certificate of incorporation takes effect as provided by Article 4 of Chapter 1.
(b) On the date and time the restated certificate of incorporation takes effect, the original certificate of incorporation and each prior amendment or restatement of the certificate of incorporation is superseded and the restated certificate of incorporation is the effective certificate of incorporation.
(c) Section 10A-3A-9.09 applies to an amendment effected by a restated certificate of incorporation.
(Act 2023-503, §1.)
(a) The members of a membership nonprofit corporation may amend or repeal the membership nonprofit corporation’s bylaws except as provided in the certificate of incorporation or bylaws.
(b) The board of directors of a membership nonprofit corporation or nonmembership nonprofit corporation may amend or repeal the nonprofit corporation’s bylaws, except as provided in the certificate of incorporation, bylaws, Section 10A-3A-9.21, or Section 10A-3A-9.22.
(c) Neither (i) a member of a membership nonprofit corporation nor (ii) a person or group of persons having rights under the certificate of incorporation, has a vested property right resulting from any provision in the bylaws, including provisions relating to management, control, or purpose of the nonprofit corporation.
(Act 2023-503, §1.)
In a membership nonprofit corporation:
(a) A bylaw that increases a quorum or voting requirement for the board of directors or that requires a meeting of the members to be held at a place may be amended or repealed:
(1) if originally adopted by the members, only by the members, unless the bylaw otherwise provides;
(2) if adopted by the board of directors, either by the members or the board of directors.
(b) A bylaw adopted or amended by the members that increases a quorum or voting requirement for the board of directors may provide that it can be amended or repealed only by a specified vote of either the members or the board of directors.
(c) Action by the board of directors under subsection (a) to amend or repeal a bylaw that changes a quorum or voting requirement for the board of directors shall meet the same quorum requirement and be adopted by the same vote required to take action under the quorum.
(Act 2023-503, §1.)
In a membership nonprofit corporation, except as provided in the certificate of incorporation or bylaws:
(a) The board of directors of a membership nonprofit corporation that has one or more members at the time may not adopt or amend a bylaw under:
(1) Section 10A-3A-6.10 providing that some of the members shall have different rights or obligations than other members with respect to voting, dissolution, transfer of memberships, or other matters;
(2) Section 10A-3A-6.13 levying dues, assessments, or fees on some or all of the members;
(3) Section 10A-3A-6.21 relating to the termination or suspension of members;
(4) Section 10A-3A-8.08(a):
(i) requiring cause to remove a director; or
(ii) specifying what constitutes cause to remove a director; or
(5) Section 10A-3A-8.08(e) relating to the removal of a director who is designated in a manner other than election or appointment.
(b) The board of directors of a membership nonprofit corporation may not amend the certificate of incorporation or bylaws to vary the application of subsection (a) to the membership nonprofit corporation.
(c) If a membership nonprofit corporation has more than one class of members, the members of a class are entitled to vote as a separate voting group on an amendment to the bylaws that:
(1) is described in subsection (a) if the amendment would affect the members of that class differently than the members of another class; or
(2) has any of the effects described in Section 10A-3A-9.04.
(d) If a class of members will be divided into two or more classes by an amendment to the bylaws, the amendment must be approved by a majority of the members of each class that will be created.
(Act 2023-503, §1.)
(a) The certificate of incorporation of a membership nonprofit corporation may require that an amendment to the certificate of incorporation, including amendments under Section 10A-3A-9.03(g), be approved in writing by a specified person or group of persons in addition to the board of directors and members. The certificate of incorporation of a nonmembership nonprofit corporation may require that an amendment to the certificate of incorporation be approved in writing by a specified person or group of persons in addition to the board of directors.
(b) The certificate of incorporation or bylaws of a membership nonprofit corporation may require that an amendment to the bylaws be approved in writing by a specified person or group of persons in addition to the board of directors and members. The certificate of incorporation or bylaws of a nonmembership nonprofit corporation may require that an amendment to the bylaws be approved in writing by a specified person or group of persons in addition to the board of directors.
(c) A requirement in the certificate of incorporation or bylaws described in subsection (a) or (b) may only be amended with the approval in writing of the specified person or group of persons.
(Act 2023-503, §1.)
In a membership nonprofit corporation:
(a) No approval of the members or any person or group of persons specified in the certificate of incorporation is required, unless the certificate of incorporation otherwise provides:
(1) to sell, lease, exchange, or otherwise dispose of any or all of the membership nonprofit corporation’s assets in the usual and regular course of the membership nonprofit corporation’s activities;
(2) to mortgage, pledge, dedicate to the repayment of indebtedness (whether with or without recourse), or otherwise encumber any or all of the membership nonprofit corporation’s assets, regardless of whether in the usual and regular course of its activities; or
(3) to transfer any or all of the membership nonprofit corporation’s assets to one or more corporations or other entities all of the memberships or interests of which are owned by the membership nonprofit corporation.
(b) Unless the certificate of incorporation otherwise provides, without limiting the rights of a secured party under applicable law, no approval by members or any person or group of persons specified in the certificate of incorporation shall be required by Section 10A-3A-10.02 for a sale, lease, exchange, or other disposition of any of the membership nonprofit corporation’s assets if those assets are mortgaged, pledged, dedicated to the repayment of indebtedness, or otherwise encumbered for the benefit of a secured party or other creditor and either:
(1) The secured party or other creditor exercises its rights under the law governing the mortgage, pledge, dedication, or encumbrance, or other applicable law, whether under the Uniform Commercial Code, a real property law, or other law, to effect the sale, lease, exchange, or other disposition of those assets without the consent of the corporation; or
(2) In lieu of the secured party or other creditor exercising such rights, the board of directors of the membership nonprofit corporation authorizes an alternative sale, lease, exchange, or other disposition of those assets, whether with the secured party or other creditor, that results in the reduction or elimination of the total liabilities or obligations secured by those assets, provided that (i) the value of those assets is less than or equal to the total amount of the liabilities or obligations being eliminated or reduced and (ii) the sale, lease, exchange, or other disposition of those assets is not prohibited by the law governing the mortgage, pledge, dedication, or encumbrance. The provision of consideration to the membership nonprofit corporation shall not create a presumption that the value of the assets is greater than the total amount of the liabilities or obligations being eliminated or reduced.
(c) A failure to satisfy the condition in subsection (b)(2)(i) shall not result in the invalidation of a sale, lease, exchange, or other disposition of the membership nonprofit corporation’s assets if the transferee of those assets (i) provided value therefor (which may include the reduction or elimination of the total liabilities or obligations secured by those assets) and (ii) acted in good faith (as defined in Section 7-1-201(b)). The preceding sentence shall not apply to a proceeding against the membership nonprofit corporation and any other necessary parties to enjoin the sale, lease, exchange, or other disposition of the membership nonprofit corporation’s assets before the consummation thereof and shall not eliminate any liability for monetary damages for any claim, including a claim in the right of the membership nonprofit corporation, based upon a violation of a duty by a current or former director or officer, or other person.
(d) A provision of the certificate of incorporation that requires the authorization or consent of members or any person or group of persons specified in the certificate of incorporation for a sale, lease, exchange, or other disposition of the membership nonprofit corporation’s assets shall not apply to a transaction permitted by subsection (b) unless that provision expressly so requires.
(Act 2023-503, §1; Act 2024-413, §1.)
(a) A sale, lease, exchange, or other disposition of assets, other than a disposition described in Section 10A-3A-10.01, requires approval of the membership nonprofit corporation’s members if the disposition would leave the membership nonprofit corporation without a significant continuing activity. A membership nonprofit corporation will conclusively be deemed to have retained a significant continuing activity if it retains an activity that represented, for the membership nonprofit corporation and its subsidiaries on a consolidated basis, at least (i) 25 percent of total assets at the end of the most recently completed fiscal year, and (ii) either 25 percent of either income from continuing operations before taxes or 25 percent of revenues from continuing operations, in each case for the most recently completed fiscal year.
(b) To obtain the approval of the members under subsection (a), the board of directors shall first adopt a resolution authorizing the disposition. The disposition shall then be approved by the members. In submitting the disposition to the members for approval, the board of directors shall recommend that the members approve the disposition, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make a recommendation, in which case the board of directors must inform the members of the basis for that determination.
(c) The board of directors may set conditions for the approval by the members of a disposition or the effectiveness of the disposition.
(d) If a disposition is required to be approved by the members under subsection (a), and if the approval is to be given at a meeting, the membership nonprofit corporation shall notify each member entitled to vote on the matter of the meeting of members at which the disposition is to be submitted for approval. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the disposition and must contain a description of the disposition, including the terms and conditions of the disposition and the consideration to be received by the membership nonprofit corporation.
(e) Unless the certificate of incorporation, bylaws, or the board of directors acting pursuant to subsection (c) requires a greater vote or a greater quorum, the approval of a disposition by the members shall require the approval of the members at a meeting at which a quorum exists consisting of a majority of the votes entitled to be cast on the disposition.
(f) After a disposition has been approved by the members under this Article 10, and at any time before the disposition has been consummated, it may be abandoned by the membership nonprofit corporation without action by the members, subject to any contractual rights of other parties to the disposition.
(g) A disposition of assets in the course of dissolution under Article 11 is not governed by this section.
(h) For purposes of this section only, the property and assets of the membership nonprofit corporation include the property and assets of any subsidiary of the membership nonprofit corporation. As used in this subsection, “subsidiary” means any entity wholly owned and controlled, directly or indirectly, by the membership nonprofit corporation and includes, without limitation, nonprofit corporations, business corporations, partnerships (including limited liability partnerships), limited partnerships (including limited liability limited partnerships), limited liability companies, and/or statutory trusts, whether domestic or foreign.
(i) In addition to the approval of a disposition of assets by the board of directors and members as required by this section, the disposition must also be approved in writing by a person or group of persons whose approval is required under the certificate of incorporation in accordance with Section 10A-3A-10.04.
(Act 2023-503, §1.)
In a nonmembership nonprofit corporation:
(a) Unless the certificate of incorporation otherwise provides:
(1) a sale, lease, exchange, mortgage, pledge, or other disposition of all, or substantially all, the property and assets of the nonmembership nonprofit corporation may be approved by the board of directors; and
(2) a sale, lease, exchange, mortgage, pledge, or other disposition of all, or substantially all, of the property and assets of the nonmembership nonprofit corporation approved by the board of directors under this section must also be approved by that person or group of persons whose approval is required by the certificate of incorporation in accordance with Section 10A-3A-10.04.
(b) Unless the certificate of incorporation otherwise provides, without limiting the rights of a secured party under applicable law, no approval by any person or group of persons specified in the certificate of incorporation shall be required by this section for a sale, lease, exchange, or other disposition of any of the nonmembership nonprofit corporation’s assets if those assets are mortgaged, pledged, dedicated to the repayment of indebtedness, or otherwise encumbered for the benefit of a secured party or other creditor and either:
(1) The secured party or other creditor exercises its rights under the law governing the mortgage, pledge, dedication, or encumbrance, or other applicable law, whether under the Uniform Commercial Code, a real property law, or other law, to effect the sale, lease, exchange, or other disposition of those assets without the consent of the nonmembership nonprofit corporation; or
(2) In lieu of the secured party or other creditor exercising such rights, the board of directors of the nonmembership nonprofit corporation authorizes an alternative sale, lease, exchange, or other disposition of those assets, whether with the secured party or other creditor, that results in the reduction or elimination of the total liabilities or obligations secured by those assets, provided that (i) the value of those assets is less than or equal to the total amount of the liabilities or obligations being eliminated or reduced and (ii) the sale, lease, exchange, or other disposition of those assets is not prohibited by the law governing the mortgage, pledge, dedication, or encumbrance. The provision of consideration to the nonmembership nonprofit corporation shall not create a presumption that the value of the assets is greater than the total amount of the liabilities or obligations being eliminated or reduced.
(c) A failure to satisfy the condition in subsection (b)(2)(i) shall not result in the invalidation of a sale, lease, exchange, or other disposition of the nonmembership nonprofit corporation’s assets if the transferee of those assets (i) provided value therefor (which may include the reduction or elimination of the total liabilities or obligations secured by those assets) and (ii) acted in good faith (as defined in Section 7-1-201(b)). The preceding sentence shall not apply to a proceeding against the nonmembership nonprofit corporation and any other necessary parties to enjoin the sale, lease, exchange, or other disposition of the nonmembership nonprofit corporation’s assets before the consummation thereof and shall not eliminate any liability for monetary damages for any claim, including a claim in the right of the nonmembership nonprofit corporation, based upon a violation of a duty by a current or former director or officer, or other person.
(d) A provision of the certificate of incorporation that requires the authorization or consent of any person or group of persons specified in the certificate of incorporation for a sale, lease, exchange, or other disposition of the nonmembership nonprofit corporation’s assets shall not apply to a transaction permitted by subsection (b) unless that provision expressly so requires.
(Act 2023-503, §1; Act 2024-413, §1.)
(a) The certificate of incorporation of a membership nonprofit corporation may require that a disposition of assets under either or both Section 10A-3A-10.01 and Section 10A-3A-10.02 be approved in writing by a specified person or group of persons in addition to the board of directors and members.
(b) The certificate of incorporation of a nonmembership nonprofit corporation may require that a disposition of assets under Section 10A-3A-10.03 be approved in writing by a specified person or group of persons in addition to the board of directors.
(c) A requirement in the certificate of incorporation described in subsection (a) or (b) may only be approved by the written approval of the specified person or group of persons.
(Act 2023-503, §1; Act 2024-413, §1.)
A majority of the incorporators or initial directors of a nonprofit corporation that has not commenced activity may dissolve the nonprofit corporation by delivering to the Secretary of State for filing a certificate of dissolution that sets forth:
(1) the name of the nonprofit corporation;
(2) the date of its incorporation;
(3) that the nonprofit corporation has not commenced activity;
(4) that no debt of the nonprofit corporation remains unpaid;
(5) that the net assets of the nonprofit corporation remaining after winding up have been distributed;
(6) that a majority of the incorporators or directors authorized the dissolution; and
(7) the unique identifying number or other designation as assigned by the Secretary of State.
(Act 2023-503, §1.)
(a) The board of directors of a membership nonprofit corporation may propose dissolution for submission to the members by first adopting a resolution authorizing the dissolution.
(b) For a proposal to dissolve to be adopted, it shall then be approved by the members entitled to vote thereon. In submitting the proposal to dissolve to the members for approval, the board of directors shall recommend that the members approve the dissolution, unless the board of directors determines that because of conflict of interest or other special circumstances it should make no recommendation in which case the board of directors must inform the members of the basis for that determination.
(c) The board of directors may set conditions for the approval of the proposal for dissolution by the members or the effectiveness of the dissolution.
(d) If the approval of the members is to be given at a meeting, the membership nonprofit corporation shall notify each member entitled to vote on the dissolution, of the meeting of members at which the dissolution is to be submitted for approval. The notice must state that the purpose, or one of the purposes, of the meeting is to consider dissolving the membership nonprofit corporation and how the assets of the membership nonprofit corporation will be distributed after all creditors have been paid, or how the distribution of assets will be determined.
(e) Unless the certificate of incorporation, the bylaws, or the board of directors acting pursuant to subsection (c), requires a greater vote, a greater quorum, or a vote by voting groups, adoption of the proposal to dissolve shall require the approval of the members at a meeting at which a quorum exists consisting of a majority of the votes entitled to be cast on the proposal to dissolve.
(f) Dissolution of a membership nonprofit corporation may also be authorized without action of the directors if all the members entitled to vote thereon shall consent in writing and a certificate of dissolution shall be delivered to the Secretary of State for filing pursuant to Section 10A-3A-11.05.
(g) In addition to the approval of the dissolution of a membership nonprofit corporation as set forth in subsections (a) through (f), the dissolution must also be approved in writing by a person or group of persons whose approval is required under the certificate of incorporation in accordance with Section 10A-3A-11.04.
(Act 2023-503, §1.)
Except as otherwise provided in the certificate of incorporation:
(1) the dissolution of a nonmembership nonprofit corporation may be approved by the board of directors; and
(2) the dissolution of the nonmembership nonprofit corporation approved by the board of directors under this section must also be approved by those persons whose approval is required by the certificate of incorporation in accordance with Section 10A-3A-11.04.
(Act 2023-503, §1.)
(a) The certificate of incorporation of a membership nonprofit corporation may require that a dissolution of a membership nonprofit corporation under Section 10A-3A-11.02 be approved in writing by a specified person or group of persons in addition to the board of directors and members.
(b) The certificate of incorporation of a nonmembership nonprofit corporation may require that a dissolution of a nonmembership nonprofit corporation under Section 10A-3A-11.03 be approved in writing by a specified person or group of persons in addition to the board of directors.
(c) A requirement in the certificate of incorporation described in subsection (a) or (b) may only be approved by the written approval of the specified person or group of persons.
(Act 2023-503, §1.)
(a) At any time after dissolution is authorized, the nonprofit corporation may dissolve by delivering to the Secretary of State for filing a certificate of dissolution setting forth:
(1) the name of the nonprofit corporation;
(2) the date that dissolution was authorized;
(3) if dissolution of a membership nonprofit corporation was approved in accordance with Section 10A-3A-11.02, a statement that the proposal to dissolve was duly approved in the manner required by this chapter and by the certificate of incorporation;
(4) if dissolution of a nonmembership nonprofit corporation was approved in accordance with Section 10A-3A-11.03, a statement that the proposal to dissolve was duly approved in the manner required by this chapter and by the certificate of incorporation;
(5) if dissolution of a nonprofit corporation was approved in accordance with Section 10A-3A-11.02 or Section 10A-3A-11.03, and the certificate of incorporation required the dissolution to also be approved by a specified person or group of persons in accordance with Section 10A-3A-11.04, a statement that the proposal to dissolve was duly approved by the manner required by this chapter and by the certificate of incorporation; and
(6) the unique identifying number or other designation as assigned by the Secretary of State.
(b) The certificate of dissolution shall take effect at the effective date determined in accordance with Article 4 of Chapter 1. A nonprofit corporation is dissolved upon the effective date of its certificate of dissolution.
(c) For purposes of this Division A of this Article 11, “dissolved nonprofit corporation” means a nonprofit corporation whose certificate of dissolution has become effective and includes a successor entity to which the remaining assets of the nonprofit corporation are transferred subject to its liabilities for purposes of liquidation.
(Act 2023-503, §1.)
(a) A nonprofit corporation may revoke its dissolution within 120 days after its effective date and be reinstated.
(b) Revocation of dissolution and reinstatement shall be authorized in the same manner as the dissolution was authorized unless that authorization permitted revocation and reinstatement by action of the board of directors alone, in which event the board of directors may revoke the dissolution and effect the reinstatement without member action and without the action of the specified person or group of persons set forth in the certificate of incorporation in accordance with Section 10A-3A-11.04.
(c) After the revocation of dissolution and reinstatement is authorized, the nonprofit corporation may revoke the dissolution and effect the reinstatement by delivering to the Secretary of State for filing a certificate of revocation of dissolution and reinstatement, together with a copy of its certificate of dissolution, that sets forth:
(1) the name of the nonprofit corporation;
(2) the effective date of the dissolution that was revoked;
(3) the date that the revocation of dissolution and reinstatement was authorized;
(4) if the nonprofit corporation’s board of directors (or incorporators) revoked the dissolution and effected the reinstatement, a statement to that effect;
(5) if the nonprofit corporation’s board of directors revoked a dissolution and effected the reinstatement as authorized by the members and any specified person or group of persons set forth in the certificate of incorporation in accordance with Section 10A-3A-11.04, a statement that revocation and reinstatement was permitted by action by the board of directors alone pursuant to that authorization;
(6) if member action was required to revoke the dissolution and effect the reinstatement, a statement that the revocation and reinstatement was duly approved by the members in the manner required by this chapter and by the certificate of incorporation;
(7) if the action of a specified person or group of persons set forth in the certificate of incorporation in accordance with Section 10A-3A-11.04 was required to revoke the dissolution and effect the reinstatement, a statement that the revocation and reinstatement was duly approved by that specified person or group of persons in the manner required by this chapter and by the certificate of incorporation; and
(8) the unique identifying number or other designation as assigned by the Secretary of State.
(d) The certificate of revocation of dissolution and reinstatement shall take effect at the effective date determined in accordance with Article 4 of Chapter 1. Revocation of dissolution and reinstatement is effective upon the effective date of the certificate of revocation of dissolution and reinstatement.
(e)(1) Subject to subdivision (2), upon revocation and reinstatement, the nonprofit corporation shall be deemed for all purposes to have continued its activities and affairs as if dissolution had never occurred; and each right inuring to, and each debt, obligation, and liability incurred by, the nonprofit corporation after the dissolution shall be determined as if the dissolution had never occurred.
(2) The rights of persons acting in reliance on the dissolution before those persons had notice of the revocation and reinstatement shall not be adversely affected by the revocation and reinstatement.
(f) If the nonprofit corporation is listed in the Secretary of State’s records as a nonprofit corporation that has been dissolved, then the name of the nonprofit corporation following revocation and reinstatement shall be that nonprofit corporation name at the time of revocation and reinstatement if that nonprofit corporation name complies with Article 5 of Chapter 1 at the time of revocation and reinstatement. If that nonprofit corporation name does not comply with Article 5 of Chapter 1, the name of the nonprofit corporation following revocation and reinstatement shall be that nonprofit corporation name followed by the word “reinstated.”
(Act 2023-503, §1.)
(a) A dissolved nonprofit corporation continues its existence as a nonprofit corporation but may not carry on any activity except as is appropriate to wind up and liquidate its activities and affairs, including:
(1) collecting its assets;
(2) disposing of its properties that will not be distributed in kind;
(3) discharging or making provisions for discharging its liabilities;
(4) distributing its remaining property as required by law, its certificate of incorporation, bylaws, and as approved when the dissolution was authorized; and
(5) doing every other act necessary to wind up and liquidate its activities and affairs.
(b) In winding up its activities and affairs, a dissolved nonprofit corporation may:
(1) preserve the nonprofit corporation’s activities and affairs and property as a going concern for a reasonable time;
(2) prosecute, defend, or settle actions or proceedings whether civil, criminal, or administrative;
(3) transfer the nonprofit corporation’s assets;
(4) resolve disputes by mediation or arbitration; and
(5) merge or convert in accordance with Article 12 or 13 of this chapter or Article 8 of Chapter 1.
(c) Dissolution of a nonprofit corporation does not:
(1) transfer title to the nonprofit corporation’s property;
(2) subject its directors or officers to standards of conduct different from those prescribed in Article 8 of this chapter;
(3) change:
(i) quorum or voting requirements for its board of directors or members;
(ii) provisions for selection, resignation, or removal of its directors or officers or both; or
(iii) provisions for amending its bylaws;
(4) prevent commencement of a proceeding by or against the nonprofit corporation in its corporate name;
(5) abate or suspend a proceeding pending by or against the nonprofit corporation on the effective date of dissolution; or
(6) terminate the authority of the registered agent of the nonprofit corporation.
(d) A distribution in liquidation under this section may only be made by a dissolved nonprofit corporation.
(Act 2023-503, §1; Act 2024-413, §1.)
(a) A dissolved nonprofit corporation may dispose of any known claims against it by following the procedures described in subsection (b) at any time after the effective date of the dissolution of the nonprofit corporation.
(b) A dissolved nonprofit corporation may give written notice of the dissolution to the holder of any known claim. The notice must:
(1) identify the dissolved nonprofit corporation;
(2) describe the information required to be included in a claim;
(3) provide a mailing address to which the claim is to be sent;
(4) state the deadline, which may not be fewer than 120 days from the effective date of the notice, by which the dissolved nonprofit corporation must receive the claim; and
(5) state that if not sooner barred, the claim will be barred if not received by the deadline.
(c) Unless sooner barred by any other statute limiting actions, a claim against a dissolved nonprofit corporation is barred:
(1) if a claimant who was given notice under subsection (b) does not deliver the claim to the dissolved nonprofit corporation by the deadline; or
(2) if a claimant whose claim was rejected by the dissolved nonprofit 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.
(e) Nothing in this section shall be deemed to extend any otherwise applicable statute of limitations.
(Act 2023-503, §1.)
(a) A dissolved nonprofit corporation may publish notice of its dissolution and request that persons with claims against the dissolved nonprofit corporation present them in accordance with the notice.
(b) The notice authorized by subsection (a) must:
(1) be published at least one time in a newspaper of general circulation in the county in which the dissolved nonprofit corporation’s principal office is located or, if it has none in this state, in the county in which the nonprofit corporation’s most recent registered office is located;
(2) describe the information that must be included in a claim and provide a mailing address to which the claim is to be sent; and
(3) state that if not sooner barred, a claim against the dissolved nonprofit corporation will be barred unless a proceeding to enforce the claim is commenced within two years after the publication of the notice.
(c) If a dissolved nonprofit corporation publishes a newspaper notice in accordance with subsection (b), unless sooner barred by any other statute limiting actions, the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the claim against the dissolved nonprofit corporation within two years after the publication date of the newspaper notice:
(1) a claimant who was not given notice under Section 10A-3A-11.08;
(2) a claimant whose claim was timely sent to the dissolved nonprofit corporation but not acted on by the dissolved nonprofit corporation; and
(3) a claimant whose claim is contingent at the effective date of the dissolution of the nonprofit corporation, or is based on an event occurring after the effective date of the dissolution of the nonprofit corporation.
(d) A claim that is not barred under this section, any other statute limiting actions, or Section 10A-3A-11.08 may be enforced:
(1) against a dissolved nonprofit corporation, to the extent of its undistributed assets; and
(2) except as provided in subsection (h), if the assets of a dissolved nonprofit corporation have been distributed after dissolution, against any person, other than a creditor of the dissolved nonprofit corporation, to whom the nonprofit corporation distributed its property to the extent of the distributee’s pro rata share of the claim or the corporate assets distributed to the distributee in liquidation, whichever is less, but a distributee’s total liability for all claims under this section may not exceed the total amount of assets distributed to the distributee.
(e) A dissolved nonprofit corporation that published a notice under this section may file an application with the circuit court for the county in which the dissolved nonprofit corporation’s principal office is located in this state and if the dissolved nonprofit corporation does not have a principal office within this state, with the circuit court for the county in which the dissolved nonprofit corporation’s most recent registered office is located, for a determination of the amount and form of security to be provided for payment of claims that are contingent or have not been made known to the dissolved nonprofit corporation or that are based on an event occurring after the effective date of the dissolution of the nonprofit corporation but that, based on the facts known to the dissolved nonprofit corporation, are reasonably estimated to arise after the effective date of the dissolution of the nonprofit corporation. Provision need not be made for any claim that is or is reasonably anticipated to be barred under subsection (c).
(f) Within 10 days after the filing of the application provided for in subsection (e), notice of the proceeding shall be given by the dissolved nonprofit corporation to each potential claimant as described in subsection (e).
(g) The circuit court under subsection (e) may appoint a guardian ad litem to represent all claimants whose identities are unknown in any proceeding brought under this section. The reasonable fees and expenses of the guardian, including all reasonable expert witness fees, shall be paid by the dissolved nonprofit corporation.
(h) Provision by the dissolved nonprofit corporation for security in the amount and the form ordered by the circuit court under subsection (e) shall satisfy the dissolved nonprofit corporation’s obligation with respect to claims that are contingent, have not been made known to the dissolved nonprofit corporation, or are based on an event occurring after the effective date of the dissolution of the nonprofit corporation, and those claims may not be enforced against a distributee to whom assets have been distributed by the dissolved nonprofit corporation after the effective date of the dissolution of the nonprofit corporation.
(i) Nothing in this section shall be deemed to extend any otherwise applicable statute of limitations.
(j) If a claim has been satisfied, disposed of, or barred under Section 10A-3A-11.08, this section, or other law, the person or persons designated to wind up the affairs of a dissolved nonprofit corporation, and the distributees receiving assets from the dissolved nonprofit corporation, shall not be liable for that claim.
(Act 2023-503, §1.)
(a) Directors shall cause the dissolved nonprofit corporation to discharge or make reasonable provision for the payment of claims and make distributions in liquidation of assets to the persons designated to receive the assets of the dissolved nonprofit corporation after payment or provision for claims.
(b) Directors of a dissolved nonprofit corporation which has disposed of claims under Section 10A-3A-11.08 or Section 10A-3A-11.09 shall not be liable for breach of subsection (a) with respect to claims against the dissolved nonprofit corporation that are barred or satisfied under Section 10A-3A-11.08 or Section 10A-3A-11.09.
(Act 2023-503, §1.)
The circuit court for the county in which the nonprofit corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the nonprofit corporation’s most recent registered office is located may dissolve a nonprofit corporation:
(1) in a proceeding by the Attorney General if it is established that:
(i) the nonprofit corporation obtained its certificate of incorporation through fraud; or
(ii) the nonprofit corporation has continued to exceed or abuse the authority conferred upon it by law;
(2) in a proceeding by a director, or members holding at least 25 percent of the aggregate voting power of all of the members entitled to vote on dissolution, unless the certificate of incorporation reduces or eliminates that percentage requirement, if it is established that:
(i) the directors are deadlocked in the management of the corporate affairs, the members, if any, are unable to break the deadlock, and irreparable injury to the nonprofit corporation or its mission is threatened or being suffered, because of the deadlock;
(ii) the directors or those in control of the nonprofit corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent;
(iii) the members 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;
(iv) the corporate assets are being misapplied or wasted;
(v) the nonprofit corporation has insufficient assets to continue its activities and affairs;
(vi) the nonprofit corporation is not able to assemble a quorum of directors or members; or
(vii) the nonprofit corporation has abandoned its activities and affairs and has failed within a reasonable time to liquidate and distribute its assets and dissolve; or
(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 nonprofit corporation is insolvent; or
(ii) the nonprofit corporation has admitted in writing that the creditor’s claim is due and owing and the nonprofit corporation is insolvent;
(4) in a proceeding by the nonprofit corporation to have its voluntary dissolution continued under court supervision; or
(5) in a proceeding by an interested person, as determined by the court, if it is established that:
(i) there is not at least one member or director of the nonprofit corporation; and
(ii) a member or director cannot be elected in accordance with the certificate of incorporation or bylaws of the nonprofit corporation.
(Act 2023-503, §1.)
(a) Venue for a proceeding by the Attorney General to dissolve a nonprofit corporation lies in circuit court for the county in which the nonprofit corporation’s principal office is located in this state, and if none in this state, in the circuit court for the county in which the nonprofit corporation’s most recent registered office is located. Venue for a proceeding brought by any other party named in Section 10A-3A-11.20 lies in circuit court for the county in which the nonprofit corporation’s principal office is located in this state, and if none in this state, in the circuit court for the county in which the nonprofit corporation’s most recent registered office is located.
(b) It is not necessary to make members or directors parties to a proceeding to dissolve a nonprofit corporation unless relief is sought against them individually.
(c) A court in a proceeding brought to dissolve a nonprofit corporation may issue injunctions, appoint a receiver or custodian during the proceeding with all powers and duties the court directs, take other action required to preserve the corporate assets wherever located, and carry on the activities and affairs of the nonprofit corporation until a full hearing can be held.
(Act 2023-503, §1.)
(a) A court in a judicial proceeding brought to dissolve a nonprofit corporation may (i) appoint one or more receivers to wind up and liquidate, (ii) appoint one or more custodians to manage the activities and affairs of the nonprofit corporation, or (iii) appoint one or more custodians to determine whether the nonprofit corporation should be dissolved. 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 jurisdiction over the nonprofit corporation and all of its property wherever located.
(b) The court may appoint an individual, nonprofit corporation, or other entity as a receiver or custodian, which, if a foreign entity, must be registered to do business in this state. 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 nonprofit corporation wherever located, at a public or private sale; and (ii) may sue and defend in the receiver’s own name as receiver of the nonprofit corporation in all courts of this state.
(2) the custodian may exercise all of the powers of the nonprofit corporation, through or in place of its board of directors, to the extent necessary to manage the affairs of the nonprofit corporation in the best interests of the mission of the nonprofit corporation and in the best interests of the nonprofit corporation, its members, if any, and creditors.
(3) in lieu of dissolution, the court may authorize a custodian in a proceeding brought under Section 10A-3A-11.20, to determine whether the nonprofit corporation should be dissolved. If the custodian determines that the nonprofit corporation should not be dissolved, the custodian shall prepare and present to the court a plan of operation which shall set forth:
(i) the reasons that it is in the best interest of the nonprofit corporation to continue its activities and affairs and not be dissolved;
(ii) that the continuation of the activities and affairs of the nonprofit corporation will not be in contravention of the certificate of incorporation or bylaws of the nonprofit corporation;
(iii) any amendments to the certificate of incorporation or bylaws necessary for the nonprofit corporation to continue its activities and affairs in accordance with the plan of operation;
(iv) for a membership nonprofit corporation that does not have any members, the name of at least one person proposed to be a member; and
(v) for a nonmembership nonprofit corporation that does not have any directors, the name of at least one person proposed to be a director.
(4) the receiver or custodian shall have any other powers and duties as the court may provide in the appointing order, which may be amended from time to time.
(d) The court during a receivership may redesignate the receiver a custodian and during a custodianship may redesignate the custodian a receiver.
(e) The court from time to time during the receivership or custodianship may order compensation paid and expenses paid or reimbursed to the receiver or custodian from the assets of the nonprofit corporation or proceeds from the sale of the assets.
(Act 2023-503, §1.)
(a) If after a hearing the court determines that one or more grounds for judicial dissolution described in Section 10A-3A-11.20 exist, the court may enter a decree dissolving the nonprofit corporation and specifying the effective date of the dissolution. If the court enters a decree dissolving the nonprofit corporation, then the clerk of the court shall deliver a certified copy of the decree to the Secretary of State for filing.
(b) After entering the decree of dissolution, the court shall direct the winding up and liquidation of the nonprofit corporation’s activities and affairs in accordance with Section 10A-3A-11.07 and the notification of claimants in accordance with Sections 10A-3A-11.08 and 10A-3A-11.09.
(c) If after a hearing the court determines pursuant to Section 10A-3A-11.22(c)(3) that a nonprofit corporation should not be dissolved, but should continue its activities and affairs, the court shall issue a decree naming at least one person as a member of the nonprofit corporation if it is a membership nonprofit corporation, naming at least one director if the nonprofit corporation is a nonmembership nonprofit corporation, and such other matters as the court may determine. If the court approves an amendment to the certificate of incorporation in accordance with Section 10A-3A-11.22(c)(3), then the court’s decree shall also set forth that amendment, specifying the effective date of that amendment, and the clerk of the court shall deliver a certified copy of the decree to the Secretary of State for filing.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
As used in this article, unless the context otherwise requires, the following terms mean:
(1) CONSTITUENT CORPORATION means a constituent organization that is a nonprofit corporation.
(2) CONSTITUENT ORGANIZATION means an organization that is party to a merger under this article.
(3) GOVERNING STATUTE of an organization means the statute that governs the organization’s internal affairs.
(4) ORGANIZATION means a general partnership, including a limited liability partnership; limited partnership, including a limited liability limited partnership; limited liability company; business trust; business corporation; nonprofit corporation; professional corporation; or any other person having a governing statute. The term includes domestic and foreign organizations whether or not organized for profit.
(5) ORGANIZATIONAL DOCUMENTS means:
(A) for a general partnership or foreign general partnership, its partnership agreement and if applicable, its registration as a limited liability partnership or a foreign limited liability partnership;
(B) for a limited partnership or foreign limited partnership, its certificate of formation and partnership agreement, or comparable writings as provided in its governing statute;
(C) for a limited liability company or foreign limited liability company, its certificate of formation and limited liability company agreement, or comparable writings as provided in its governing statute;
(D) for a business or statutory trust or foreign business or statutory trust its agreement of trust and declaration of trust, or comparable writings as provided in its governing statute;
(E) for a business corporation or foreign business corporation, its certificate of incorporation, bylaws, and other agreements among its stockholders that are authorized by its governing statute, or comparable writings as provided in its governing statute;
(F) for a nonprofit corporation or foreign nonprofit corporation, its certificate of incorporation, bylaws, and other agreements that are authorized by its governing statute, or comparable writings as provided in its governing statute;
(G) for a professional corporation or foreign professional corporation, its certificate of incorporation, bylaws, and other agreements among its stockholders that are authorized by its governing statute, or comparable writings as provided in its governing statute; and
(H) for any other organization, the basic writings that create the organization and determine its internal governance and the relations among the persons that own it, have an interest in it, or are members of it.
(6) PLAN OF MERGER. Except as set forth in Section 10A-3A-12.02(g), a plan of merger, whether referred to as a plan of merger, an agreement of merger, a merger agreement, a plan and agreement of merger, an agreement and plan of merger, or otherwise, means a writing described in Section 10A-3A-12.02 and includes any agreement, instrument, or other document referenced therein or associated therewith that sets forth the terms and conditions of the merger.
(7) SURVIVING ORGANIZATION means an organization into which one or more other organizations are merged under this article, whether the organization pre-existed the merger or was created pursuant to the merger.
(Act 2023-503, §1; Act 2025-281, §3.)
(a) A nonprofit corporation may merge with one or more other constituent organizations pursuant to this article, and a plan of merger, if:
(1) the governing statute of each of the other organizations authorizes the merger;
(2) the merger is not prohibited by the law of a jurisdiction that enacted any of those governing statutes; and
(3) each of the other organizations complies with its governing statute in effecting the merger.
(b) A plan of merger must be in writing and must include:
(1) the name, type of organization, and mailing address of the principal office of each constituent organization, the jurisdiction of the governing statute of each constituent organization, and the respective unique identifying number or other designation as assigned by the Secretary of State, if any, of each constituent organization;
(2) the name, type of organization, and mailing address of the principal office of the surviving organization, the unique identifying number or other designation as assigned by the Secretary of State, if any, of the surviving organization, the jurisdiction of the governing statute of the surviving organization, and, if the surviving organization is created pursuant to the merger, a statement to that effect;
(3) the terms and conditions of the merger, including the manner and basis for converting the interests in each constituent organization into any combination of money, securities, interests in the surviving organization, and other consideration as allowed by subsection (c);
(4) if the surviving organization is to be created pursuant to the merger, the surviving organization’s organizational documents; and
(5) if the surviving organization is not to be created pursuant to the merger, any amendments to be made by the merger to the surviving organization’s organizational documents.
(c) In connection with a merger, rights, securities, or interests, if any, in a constituent organization may be exchanged for or converted into cash, property, rights, securities, or interests, if any, in the surviving organization, or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property, rights, securities, or interests, if any, in another organization, or may be cancelled.
(d) In addition to the requirements of subsection (b), a plan of merger may contain any other provision not prohibited by law.
(e) Terms of a plan of merger may be made dependent on facts objectively ascertainable outside the plan in accordance with Section 10A-3A-1.04(c)(5).
(f) A plan of merger may be amended only with the consent of each constituent organization, except as provided in the plan. A domestic constituent organization may approve an amendment to a plan:
(1) in the same manner as the plan was approved, if the plan does not provide for the manner in which it may be amended; or
(2) in the manner provided in the plan, except that if the plan has been approved by the interest holders that were entitled to vote on, consent to, or approve of, the plan, then those interest holders are entitled to vote on, consent to, or approve of any amendment of the plan that will change:
(i) the amount or kind of securities, interests, obligations, rights to acquire other interests or securities, cash, or other property to be received under the plan by the interest holders of a constituent organization;
(ii) the certificate of incorporation of any nonprofit corporation, foreign nonprofit corporation, business corporation, or foreign business corporation, or the organizational documents of any other organization, that will be the surviving organization, except for changes permitted by Section 10A-3A-9.03(g) or by comparable provisions of the governing statute of the foreign nonprofit corporation, business corporation, foreign business corporation, or other organization; or
(iii) any of the other terms or conditions of the plan if the change would adversely affect the interest holders in any material respect.
(g) At the time of the approval of the plan of merger in accordance with this chapter, the plan of merger is not required to contain or have attached thereto any disclosure letter, disclosure schedules, or similar documents or instruments contemplated by the plan of merger that modify, supplement, qualify, or make exceptions to representations, warranties, covenants, or conditions contained in the plan of merger.
(Act 2023-503, §1; Act 2025-281, §3.)
In the case of a membership nonprofit corporation that is a constituent organization, the plan of merger shall be adopted in the following manner:
(a) The plan of merger shall first be adopted by the board of directors.
(b) Except as provided in subsection (h), the plan of merger shall then be approved by the members entitled to vote thereon. In submitting the plan of merger to the members for approval, the board of directors shall recommend that the members approve the plan of merger, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make a recommendation, in which case the board of directors shall inform the members of the basis for its so proceeding.
(c) The board of directors may set conditions for the approval of the plan of merger by the members or the effectiveness of the plan of merger.
(d) If the plan of merger is required to be approved by the members, and if the approval is to be given at a meeting, the membership nonprofit corporation shall notify each member who is entitled to vote, of the meeting of the members at which the plan of merger is to be submitted for approval. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the plan of merger and must contain or be accompanied by a copy or summary of the plan of merger. If the membership nonprofit corporation is to be merged into an existing nonprofit corporation; foreign nonprofit corporation, or other organization, the notice must also include or be accompanied by a copy or summary of the certificate of incorporation and bylaws or the organizational documents of that nonprofit corporation, foreign nonprofit corporation, or other organization. If the membership nonprofit corporation is to be merged with a nonprofit corporation, foreign nonprofit corporation, or other organization and a new nonprofit corporation, foreign nonprofit corporation, or organization is to be created pursuant to the merger, the notice must include or be accompanied by a copy or a summary of the certificate of incorporation and bylaws or the organizational documents of the new nonprofit corporation, foreign nonprofit corporation, or other organization.
(e) Unless the certificate of incorporation, or the board of directors acting pursuant to subsection (c), requires a greater vote or a greater quorum, approval of the plan of merger requires the approval of the members entitled to vote at a meeting at which a quorum exists consisting of a majority of the votes entitled to be cast on the plan of merger, and, if any class of membership interests entitled to vote as a separate group on the plan of merger, the approval of each separate voting group at a meeting at which a quorum of the voting group is present consisting of a majority of the votes entitled to be cast on the merger by that voting group.
(f) Subject to subsection (g), separate voting by voting groups is required:
(1) on a plan of merger, by each class of membership interests that:
(i) are to be converted under the plan of merger into securities, interests, obligations, rights to acquire other securities or interests, cash, other property, or any combination of the foregoing; or
(ii) are entitled to vote as a separate group on a provision in the plan of merger that constitutes a proposed amendment to the certificate of incorporation of a surviving nonprofit corporation that requires action by separate voting groups under Section 10A-3A-9.04; and
(2) on a plan of merger, if the voting group is entitled under the certificate of incorporation or bylaws to vote as a voting group to approve a plan of merger, respectively.
(g) The certificate of incorporation may expressly limit or eliminate the separate voting rights provided in subsection (f)(1)(i) and subsection (f)(2) as to any class of membership, except when the plan of merger includes what is or would be in effect an amendment subject to subsection (f)(1)(ii).
(h) Unless the certificate of incorporation otherwise provides, approval by the membership nonprofit corporation’s members of a plan of merger is not required if:
(1) the membership nonprofit corporation will survive the merger;
(2) except for amendments that do not require member approval under Section 10A-3A-9.03(g) or the approval of a person or group of persons under Section 10A-3A-9.30, its certificate of incorporation will not be changed;
(3) except for amendments that do not require member approval under Section 10A-3A-9.22 or the approval of a person or group of persons under Section 10A-3A-9.30, its bylaws will not be changed; and
(4) each member of the membership nonprofit corporation whose membership interest was outstanding immediately before the effective date of the merger will hold the same number of membership interests, with identical preferences, rights, and limitations, immediately after the effective date of the merger.
(i) In addition to the adoption and approval of the plan of merger as required by this section, the plan must also be approved in writing by a person or group of persons, if any, whose approval is required under Section 10A-3A-12.08.
(Act 2023-503, §1.)
In the case of a merger of a nonmembership nonprofit corporation the plan of merger shall be adopted in the following manner:
(a) The plan of merger shall be adopted by the board of directors; and
(b) A plan of merger adopted by the board of directors under this section must also be approved in writing by a person or group of persons, if any, whose approval is required under Section 10A-3A-12.08.
(Act 2023-503, §1.)
(a) After a plan of merger has been adopted and approved as required by this article, then a statement of merger shall be signed by each party to the merger. The statement of merger must set forth:
(1) the name, type of organization, and mailing address of the principal office of each constituent organization, the jurisdiction of the governing statute of each constituent organization, and the respective unique identifying number or other designation as assigned by the Secretary of State, if any, of each constituent organization;
(2) the name, type of organization, and mailing address of the principal office of the surviving organization, the unique identifying number or other designation as assigned by the Secretary of State, if any, of the surviving organization, the jurisdiction of the governing statute of the surviving organization, and, if the surviving organization is created pursuant to the merger, a statement to that effect;
(3) the date the merger is effective under the governing statute of the surviving organization;
(4) if the surviving organization is to be created pursuant to the merger:
(A) if it will be a nonprofit corporation, the nonprofit corporation’s certificate of incorporation; or
(B) if it will be an organization other than a nonprofit corporation, any organizational document that creates the organization that is required to be in a public writing or in the case of a limited liability partnership, its statement of limited liability partnership;
(5) if the surviving organization exists before the merger, any amendments provided for in the plan of merger for the organizational document that created the organization that are in a public writing;
(6) a statement as to each constituent organization that the merger was approved as required by the organization’s governing statute;
(7) if the surviving organization is a foreign organization not authorized to conduct activities and affairs in this state, the street and mailing address of an office for the purposes of Section 10A-3A-12.06(b);
(8) any additional information required by the governing statute of any constituent organization;
(9) if the plan of merger required approval by the members of a membership nonprofit corporation that is a constituent organization, a statement that the plan was duly approved by the members and, if voting by any separate voting group was required, by each separate voting group, in the manner required by this chapter, the certificate of incorporation or bylaws;
(10) if the plan of merger required approval by a person or group of persons as specified in the certificate of incorporation pursuant to Section 10A-3A-12.08, a statement that the plan was duly approved by that person or group of persons;
(11) if the plan of merger did not require approval by the members of a membership nonprofit corporation that is a constituent organization, a statement to that effect; and
(12) a statement that the plan of merger will be furnished by the surviving organization, on request and without cost, to any member or owner of any constituent organization which is a party to the merger.
(b) In addition to the requirements of subsection (a), a statement of merger may contain any other provision not prohibited by law.
(c) The statement of merger shall be delivered to the Secretary of State for filing and, subject to subsection (d), the merger shall take effect at the effective date and time determined in accordance with Article 4 of Chapter 1.
(d) With respect to a merger in which one or more foreign organizations is a constituent organization or a foreign organization created by the merger is the surviving organization, the merger itself shall become effective at the later of:
(1) when all documents required to be filed in foreign jurisdictions to effect the merger have become effective, or
(2) when the statement of merger takes effect.
(e) A statement of merger filed under this section may be combined with any filing required under the governing statute governing any domestic organization involved in the transaction if the combined filing satisfies the requirements of this section, the other governing statute, and Article 4 of Chapter 1.
(f) A certified copy of the statement of merger required to be filed under this section may be filed in the real estate records in the office of the judge of probate in any county in which any constituent organization owned real property, without payment and without collection by the judge of probate of any deed or other transfer tax or fee. The judge of probate, however, shall be entitled to collect the filing fee of five dollars ($5). Any filing shall evidence chain of title, but lack of filing shall not affect the surviving organization’s title to real property.
(g) A statement of conversion is a filing instrument under Chapter 1.
(h) The filing fees for a statement of conversion shall be as set forth in Chapter 1.
(Act 2023-503, §1.)
(a) When a merger becomes effective:
(1) the surviving organization continues or, in the case of a surviving organization created pursuant to the merger, comes into existence;
(2) each constituent organization that merges into the surviving organization ceases to exist as a separate entity;
(3) except as provided in the plan of merger, all property owned by, and every contract right possessed by, each constituent organization that ceases to exist vests in the surviving organization without transfer, reversion, or impairment and the title to any property and contract rights vested by deed or otherwise in the surviving organization shall not revert, be in any way impaired, or be deemed to be a transfer by reason of the merger;
(4) all debts, obligations, and other liabilities of each constituent organization, other than the surviving organization, are debts, obligations, and liabilities of the surviving organization, and neither the rights of creditors, nor any liens upon the property of any constituent organization, shall be impaired by the merger;
(5) an action or proceeding pending by or against any constituent organization continues as if the merger had not occurred and the name of the surviving organization may, but need not be, substituted in any pending proceeding for the name of any constituent organization whose separate existence ceased in the merger;
(6) except as prohibited by law other than this chapter or as provided in the plan of merger, all the rights, privileges, franchises, immunities, powers, and purposes of each constituent organization, other than the surviving organization, vest in the surviving organization;
(7) except as otherwise provided in the plan of merger, the terms and conditions of the plan of merger take effect;
(8) except as otherwise agreed, if a constituent organization that is a nonprofit corporation ceases to exist, the merger does not dissolve the nonprofit corporation;
(9) if the surviving organization is created pursuant to the merger:
(A) if it is a nonprofit corporation, the certificate of incorporation and bylaws become effective; or
(B) if it is an organization other than a nonprofit corporation, the organizational documents that create the organization becomes effective;
(10) if the surviving organization existed before the merger, any amendments provided for in the statement of merger for the organizational documents of that organization become effective;
(11) the membership interests, if any, of each nonprofit corporation or foreign nonprofit corporation that is a constituent organization to the merger, and the interests in an organization that is a constituent organization, that are to be converted in accordance with the terms of the merger into securities, interests, obligations, rights to acquire other securities or interests, cash, other property, or any combination of the foregoing, are converted, and the former holders of membership interests, if any, or interests are entitled only to the rights provided to them by those terms or to any rights they may have under the governing statute governing that constituent organization;
(12) if the surviving organization exists before the merger:
(A) except as provided in the plan of merger, all property and contract rights of the surviving organization remain its property and contract rights without transfer, reversion, or impairment;
(B) the surviving organization remains subject to all its debts, obligations, and other liabilities; and
(C) except as provided by law other than this chapter or the plan of merger, the surviving organization continues to hold all of its rights, privileges, franchises, immunities, powers, and purposes.
(b) A surviving organization that is a foreign organization:
(1) consents to the jurisdiction of this state to enforce any debt, obligation, or other liability owed by a constituent organization, if before the merger the constituent organization was subject to suit in this state on the debt, obligation, or other liability; and
(2) consents that if it fails to designate or maintain a registered agent, or the designated registered agent cannot with reasonable diligence be served, then the service of process on that surviving organization for the purposes of enforcing a debt, obligation, or other liability under this subsection and for enforcing the rights, if any, of members of each nonprofit corporation that is a constituent organization may be made in the same manner and has the same consequences as provided in Section 10A-1-5.35.
(Act 2023-503, §1.)
(a) After a plan of merger has been adopted and approved as required by this Article 12, and before the statement of merger has become effective, the plan may be abandoned by a nonprofit corporation that is a party to the plan without action by its members, if any, or a person or group of persons under Section 10A-3A-12.08, if any, in accordance with any procedures set forth in the plan of merger or, if no procedures are set forth in the plan, in the manner determined by the board of directors.
(b) If a merger is abandoned under subsection (a) after the statement of merger has been delivered to the Secretary of State for filing but before the merger has become effective, a statement of abandonment signed by all the parties that signed the statement of merger shall be delivered to the Secretary of State for filing before the statement of merger becomes effective. The statement shall take effect on filing and the merger shall be deemed abandoned and shall not become effective. The statement of abandonment must contain:
(1) the name of each party to the merger;
(2) the date on which the statement of merger was filed by the Secretary of State; and
(3) a statement that the merger has been abandoned in accordance with this section.
(Act 2023-503, §1.)
(a) The certificate of incorporation of a membership nonprofit corporation may require that a merger under this article or under Article 8 of Chapter 1 be approved in writing by a specified person or group of persons in addition to the board of directors and members.
(b) The certificate of incorporation of a nonmembership nonprofit corporation may require that a merger under this article or under Article 8 of Chapter 1 be approved in writing by a specified person or group of persons in addition to the board of directors.
(c) A requirement in the certificate of incorporation described in subsections (a) or (b) of this section may only be approved by the written approval of the specified person or group of persons.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
As used in this article, unless the context otherwise requires, the following terms mean:
(1) CONVERTED ORGANIZATION means the organization into which a converting organization converts pursuant to this article.
(2) CONVERTING NONPROFIT CORPORATION means a converting organization that is a nonprofit corporation.
(3) CONVERTING ORGANIZATION means an organization that converts into another organization pursuant to this article.
(4) GOVERNING STATUTE of an organization means the statute that governs the organization’s internal affairs.
(5) ORGANIZATION means a general partnership, including a limited liability partnership; limited partnership, including a limited liability limited partnership; limited liability company; business trust; business corporation; nonprofit corporation; professional corporation; or any other person having a governing statute. The term includes domestic and foreign organizations whether or not organized for profit.
(6) ORGANIZATIONAL DOCUMENTS means:
(A) for a general partnership or foreign general partnership, its partnership agreement and if applicable, its registration as a limited liability partnership or a foreign limited liability partnership;
(B) for a limited partnership or foreign limited partnership, its certificate of formation and partnership agreement, or comparable writings as provided in its governing statute;
(C) for a limited liability company or foreign limited liability company, its certificate of formation and limited liability company agreement, or comparable writings as provided in its governing statute;
(D) for a business or statutory trust or foreign business or statutory trust, its agreement of trust and declaration of trust, or comparable writings as provided in its governing statute;
(E) for a business corporation or foreign business corporation, its certificate of incorporation, bylaws, and other agreements among its stockholders that are authorized by its governing statute or comparable writings as provided in its governing statute;
(F) for a nonprofit corporation or foreign nonprofit corporation, its certificate of incorporation, bylaws, and other agreements that are authorized by its governing statute, or comparable writings as provided in its governing statute;
(G) for a professional corporation or foreign professional corporation, its certificate of incorporation, bylaws, and other agreements among its stockholders that are authorized by its governing statute or comparable writings as provided in its governing statute; and
(H) for any other organization, the basic writings that create the organization and determine its internal governance and the relations among the persons that own it, have an interest in it, or are members of it.
(Act 2023-503, §1.)
(a) An organization other than a nonprofit corporation may convert to a nonprofit corporation, and a nonprofit corporation may convert to an organization other than a nonprofit corporation pursuant to this article, and a plan of conversion, if:
(1) the governing statute of the organization that is not a nonprofit corporation authorizes the conversion;
(2) the law of the jurisdiction governing the converting organization and the converted organization does not prohibit the conversion; and
(3) the converting organization and the converted organization each comply with the governing statute and organizational documents applicable to that organization in effecting the conversion.
(b) A plan of conversion must be in writing and must include:
(1) the name, type of organization, and mailing address of the principal office of the converting organization and its unique identifying number or other designation as assigned by the Secretary of State, if any, before conversion;
(2) the name, type of organization, and mailing address of the principal office of the converted organization after conversion;
(3) the terms and conditions of the conversion, including the manner and basis for converting interests, if any, in the converting organization into any combination of money, interests in the converted organization, and other consideration allowed in subsection (c); and
(4) the organizational documents of the converted organization.
(c) In connection with a conversion, rights or securities of or interests, if any, in the converting organization may be exchanged for or converted into cash, property, or rights or securities of or interests, if any, in the converted organization, or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property, rights, securities, or interests, if any, in another organization, or may be cancelled.
(d) In addition to the requirements of subsection (b), a plan of conversion may contain any other provision not prohibited by law.
(e) Terms of a plan of conversion may be made dependent on facts objectively ascertainable outside the plan in accordance with Section 10A-3A-1.04(c).
(f) At the time of the approval of the plan of conversion in accordance with this chapter, the plan of conversion is not required to contain or have attached thereto any disclosure letter, disclosure schedules, or similar documents or instruments contemplated by the plan of conversion that modify, supplement, qualify, or make exceptions to representations, warranties, covenants, or conditions contained in the plan of conversion.
(Act 2023-503, §1; Act 2025-281, §3.)
In the case of a conversion of a membership nonprofit corporation the plan of conversion shall be adopted in the following manner:
(a) The plan of conversion shall first be adopted by the board of directors.
(b) The plan of conversion shall then be approved by the members entitled to vote thereon. In submitting the plan of conversion to the members for their approval, the board of directors must recommend that the members approve the plan of conversion, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make a recommendation, in which case the board of directors shall inform the members of the basis for its so proceeding.
(c) The board of directors may set conditions for the approval of the plan of conversion by the members or the effectiveness of the plan of conversion.
(d) If the approval of the members is to be given at a meeting, the nonprofit corporation shall notify each member entitled to vote of the meeting of members at which the plan of conversion is to be submitted for approval. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the plan of conversion and must contain or be accompanied by a copy or summary of the plan of conversion. The notice must include or be accompanied by a copy of the organizational documents of the converted organization which are to be in writing as they will be in effect immediately after the conversion.
(e) Unless the certificate of incorporation or the board of directors acting pursuant to subsection (c), requires a greater vote or a greater quorum, approval of the plan of conversion requires (i) the approval of the members entitled to vote at a meeting at which a quorum exists consisting of a majority of the votes entitled to be cast on the plan of conversion, and (ii) the approval of each class of members voting as a separate voting group at a meeting at which a quorum of the voting group exists consisting of a majority of the votes entitled to be cast on the plan of conversion by that voting group.
(f) In addition to the adoption and approval of the plan of conversion as required by this section, the plan of conversion must also be approved in writing by a person or group of persons, if any, whose approval is required under Section 10A-3A-13.08.
(Act 2023-503, §1.)
In the case of a conversion of a nonmembership nonprofit corporation the plan of conversion shall be adopted in the following manner:
(a) The plan of conversion shall be adopted by the board of directors; and
(b) A plan of conversion adopted by the board of directors under this section must also be approved in writing by a person or group of persons, if any, whose approval is required under Section 10A-3A-13.08.
(Act 2023-503, §1.)
(a) After a plan of conversion is approved:
(1) if the converting organization is an organization formed under, or its internal affairs are governed by, the laws of this state, the converting organization shall file a statement of conversion in accordance with subsection (c), which statement of conversion must be signed in accordance with Section 10A-1-4.01 and which must include:
(A) the name, type of organization, and mailing address of the principal office of the converting organization, and its unique identifying number or other designation as assigned by the Secretary of State, if any;
(B) a statement that the converting organization has been converted into the converted organization;
(C) the name and type of organization of the converted organization and the jurisdiction of its governing statute;
(D) the street and mailing address of the principal office of the converted organization;
(E) the date the conversion is effective under the governing statute of the converted organization;
(F) a statement that the conversion was approved as required by this chapter;
(G) a statement that the conversion was approved as required by the governing statute of the converted organization;
(H) a statement that a copy of the plan of conversion will be furnished by the converted organization, on request and without cost, to any owner of the converting organization; and
(I) if the converted organization is a foreign organization not authorized to conduct activities and affairs in this state, the street and mailing address of an office for the purposes of Section 10A-3A-13.07(b); and
(2) if the converted organization is a nonprofit corporation, the converting organization shall deliver for filing a certificate of incorporation in accordance with subsection (d), which certificate of incorporation must include, in addition to the information required by Section 10A-3A-2.02:
(A) a statement that the nonprofit corporation was converted from the converting organization;
(B) the name and type of organization of the converting organization, the jurisdiction of the converting organization’s governing statute, and the converting organization’s unique identifying number or other designation as assigned by the Secretary of State, if any; and
(C) a statement that the conversion was approved in a manner that complied with the converting organization’s governing statute.
(b) A conversion becomes effective:
(1) if the converted organization is a nonprofit corporation, when the certificate of incorporation takes effect; and
(2) if the converted organization is not a nonprofit corporation, as provided by the governing statute of the converted organization.
(c) If the converting organization is an organization formed under, or its internal affairs are governed by, the laws of this state, then the converting organization shall deliver for filing the statement of conversion required under subsection (a)(1) to the Secretary of State.
(d) If the converted organization is a nonprofit corporation, then, the converting organization shall deliver for filing the certificate of incorporation required under subsection (a)(2) to the Secretary of State.
(e) If the converting organization is required to deliver for filing a statement of conversion and a certificate of formation or a certificate of incorporation to the Secretary of State, then the converting organization shall deliver for filing the statement of conversion and the certificate of formation or certificate of incorporation to the Secretary of State simultaneously.
(f) If:
(1) the converting organization is a filing entity or a foreign filing entity registered to conduct activities and affairs in this state;
(2) the converted organization will be a filing entity or a foreign filing entity registered to conduct activities and affairs in this state;
(3) the name of the converting organization and the converted organization are to be the same, other than words, phrases, or abbreviations indicating the type of entity; and
(4) the name of the converted organization complies with Division A of Article 5 of Chapter 1 or Section 10A-1-7.07, as the case may be; then notwithstanding Division B of Article 5 of Chapter 1, no name reservation shall be required and the converted organization shall for all purposes of this title be entitled to utilize the name of the converting organization without any further action by the converting organization or the converted organization.
(g) A certified copy of any document required to be filed under this section may be filed in the real estate records in the office of the judge of probate in any county in which the converting organization owned real property, without payment and without collection by the judge of probate of any deed or other transfer tax or fee. The judge of probate shall, however, be entitled to collect a filing fee of five dollars ($5). Any such filing with the judge of probate shall evidence chain of title, but lack of filing shall not affect the converted organization’s title to such real property.
(h) A statement of conversion is a filing instrument under Chapter 1.
(i) The filing fees for a statement of conversion shall be as set forth in Chapter 1.
(Act 2023-503, §1.)
(a) A plan of conversion of a converting organization that is a nonprofit corporation may be amended:
(1) in the same manner as the plan was approved, if the plan does not provide for the manner in which it may be amended; or
(2) in the manner provided in the plan, except that if the plan has been approved by the members that were entitled to vote on, consent to, or approve of the plan, then those members are entitled to vote on, consent to, or approve of any amendment of the plan that will change:
(i) the amount or kind of interests, if any, or other securities, obligations, rights to acquire interests, if any, or other securities, cash, other property, or any combination of the foregoing, to be received by the members, if any, of the converting nonprofit corporation under the plan;
(ii) the organizational documents of the converted organization that will be in effect immediately after the conversion becomes effective, except for changes that do not require approval of the interest holders of the converted organization under its governing statute or organizational documents; or
(iii) any other terms or conditions of the plan, if the change would adversely affect the members in any material respect.
(b) After a plan of conversion has been approved by a converting organization that is a nonprofit corporation in the manner required by this article and before the statement of conversion becomes effective, the plan may be abandoned by the nonprofit corporation without action by its members, if any, or a person or group of persons under Section 10A-3A-13.08, in accordance with any procedures set forth in the plan or, if no procedures are set forth in the plan, in the manner determined by the board of directors.
(c) If a conversion is abandoned after the statement of conversion has been delivered to the Secretary of State for filing and before the statement of conversion becomes effective, a statement of abandonment, signed by the converting organization, must be delivered to the Secretary of State for filing before the statement of conversion becomes effective. The statement of abandonment takes effect on filing, and the conversion is abandoned and does not become effective. The statement of abandonment must contain:
(1) the name of the converting organization;
(2) the date on which the statement of conversion was filed by the Secretary of State; and
(3) a statement that the conversion has been abandoned in accordance with this section.
(Act 2023-503, §1.)
(a) When a conversion takes effect:
(1) all property and contract rights owned by the converting organization remain vested in the converted organization without transfer, reversion, or impairment, and the title to any property vested by deed or otherwise in the converting organization shall not revert or be in any way impaired by reason of the conversion;
(2) all debts, obligations, or other liabilities of the converting organization continue as debts, obligations, or other liabilities of the converted organization and neither the rights of creditors, nor the liens upon the property of the converting organization shall be impaired by the conversion;
(3) an action or proceeding pending by or against the converting organization continues as if the conversion had not occurred and the name of the converted organization may, but need not, be substituted for the name of the converting organization in any pending action or proceeding;
(4) except as prohibited by law other than this chapter, all of the rights, privileges, immunities, powers, and purposes of the converting organization remain vested in the converted organization;
(5) except as otherwise provided in the plan of conversion, the terms and conditions of the plan of conversion take effect;
(6) except as otherwise agreed, for all purposes of the laws of this state, the converting organization shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and the conversion shall not be deemed to constitute a dissolution of the converting organization;
(7) for all purposes of the laws of this state, the rights, privileges, powers, interests in property, debts, liabilities, and duties of the converting organization, shall be the rights, privileges, powers, interests in property, debts, liabilities, and duties of the converted organization, and shall not be deemed as a consequence of the conversion, to have been transferred to the converted organization;
(8) if the converted organization is a nonprofit corporation, for all purposes of the laws of this state, the nonprofit corporation shall be deemed to be the same organization as the converting organization, and the conversion shall constitute a continuation of the existence of the converting organization in the form of a nonprofit corporation;
(9) if the converted organization is a nonprofit corporation, the existence of the nonprofit corporation shall be deemed to have commenced on the date the converting organization commenced its existence in the jurisdiction in which the converting organization was first created, formed, organized, incorporated, or otherwise came into being;
(10) the conversion shall not affect the choice of law applicable to matters arising prior to conversion;
(11) if the Secretary of State has assigned a unique identifying number or other designation to the converting organization and (i) the converted organization is formed pursuant to, or its internal affairs are governed by, the laws of this state, or (ii) the converted organization is, within 30 days after the effective date of the conversion, registered to transact business in this state, then that unique identifying number or other designation shall continue to be assigned to the converted organization; and
(12) the interests, if any, of the converting organization are reclassified into interests or other securities, obligations, rights to acquire interests or other securities, cash, or other property in accordance with the terms of the conversion, and the interest holders, if any, of the converting organization are entitled only to the rights provided to them by those terms and to any rights they may have under the governing statute of the converting organization.
(b) A converted organization that is a foreign entity consents to the jurisdiction of the courts of this state to enforce any debt, obligation, or other liability for which the converting nonprofit corporation, is liable if, before the conversion, the converting nonprofit corporation was subject to suit in this state on the debt, obligation, or other liability. If a converted organization is a foreign entity and fails to designate or maintain a registered agent, or the designated registered agent cannot with reasonable diligence be served, then service of process on that converted organization for the purposes of enforcing a debt, obligation, or other liability under this subsection may be made in the same manner and has the same consequences as provided in Section 10A-1-5.35.
(Act 2023-503, §1.)
(a) The certificate of incorporation of a membership nonprofit corporation may require that a conversion under this article or under Article 8 of Chapter 1 be approved in writing by a specified person or group of persons in addition to the board of directors and members.
(b) The certificate of incorporation of a nonmembership nonprofit corporation may require that a conversion under this article or under Article 8 of Chapter 1 be approved in writing by a specified person or group of persons in addition to the board of directors.
(c) A requirement in the certificate of incorporation described in subsections (a) or (b) of this section may only be approved by the written approval of the specified person or group of persons.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
(a) Before January 1, 2025, this chapter governs only:
(1) a nonprofit corporation incorporated on or after January 1, 2024; and
(2) a nonprofit corporation incorporated before January 1, 2024, which elects, by amending or restating that nonprofit corporation’s certificate of incorporation, to be governed by this chapter.
(b) On and after January 1, 2025, this chapter governs all existing nonprofit corporations incorporated under:
(1) any general or special law of this state providing for the incorporation of nonprofit corporations for a purpose or purposes for which a nonprofit corporation might be incorporated under this chapter, where the power has been reserved to amend, repeal, or modify the law under which the nonprofit corporation was incorporated; and
(2) any predecessor statute hereto.
(c) For purposes of applying this chapter to a nonprofit corporation incorporated before January 1, 2024:
(1) the nonprofit corporation is not required to amend its certificate of incorporation to comply with Section 10A-3A-2.02(a)(5); but once amended or restated, the certificate of incorporation must comply with Section 10A-3A-2.02(a)(5);
(2) if on December 31, 2023, the certificate of incorporation or bylaws of a nonprofit corporation in existence on that date provides members with the right to cumulate their votes for the election of directors, that right to cumulate their votes shall continue unless the certificate of incorporation or bylaws of the nonprofit corporation are amended to deny that right. Notwithstanding the foregoing, no such members may cumulate their votes for the election of directors by utilizing an action by written consent.
(3) the nonprofit corporation’s incorporation document, whether a certificate of incorporation, certificate of formation, charter, or articles of incorporation is deemed to be the nonprofit corporation’s certificate of incorporation;
(4) the nonprofit corporation’s bylaws are deemed to be the nonprofit corporation’s bylaws;
(5) any amendment or restatement of a nonprofit corporation’s certificate of incorporation or bylaws on or after January 1, 2024, shall conform with this chapter; and
(d) No nonprofit corporation may be incorporated after December 31, 2023, pursuant to Sections 10A-3-1.01 to 10A-3-8.02, inclusive.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
(a) Except as provided in subsection (b), the repeal of a statute by 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; or
(4) any proceeding, 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.
(5) the application of Article 16 of Chapter 20 of this Title to any “officer” and “qualified entity” as such terms are defined in Article 16 of Chapter 20 of this Title.
(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.
(Act 2023-503, §1.)
(Act 2023-503, §1.)
(Act 2023-503, §1.)
(Act 2023-503, §1.)
[Effective: 2026-08-01]
A nonprofit corporation governed by this chapter and in existence before August 1, 2026, may elect, on or before December 31, 2026, to amend its certificate of incorporation to state the following: “This nonprofit corporation shall be governed by Chapter 3A of Title 10A, Code of Alabama 1975, as in effect immediately prior to August 1, 2026, and not by any amendments or additions to Chapter 3A of Title 10A, made by Act 2026-495.” The election may be revoked by the nonprofit corporation at any time thereafter by an amendment to the certificate of incorporation which removes that provision from its certificate of incorporation, at which time the nonprofit corporation will be governed by all provisions of this chapter, or any successor law, as in effect as of the date of that amendment, and as amended or replaced thereafter.
(Act 2026-495, §7.)