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Legislative updates

House Bill 348 (Laws of 2023), effective July 1, 2024, enacts the 2022 amendments to the Uniform Commercial Code, including a new Article 12 on controllable electronic records and amendments to Article 9.

House Bill 267, effective January 1, 2024, substantially revises the Alabama Nonprofit Corporation Act and makes conforming changes throughout the Alabama Business and Nonprofit Entity Code in order to effectuate the changes to the Alabama Nonprofit Corporation Act.

Senate Bill 104, effective June 1, 2022, revises the requirements for a corporation to issue or transfer fractional stock and prohibits a corporation from issuing a certificate representing scrip in bearer form.

Senate Bill 96, effective January 1, 2022, amends the Business and Nonprofit Entities Code to clarify the relationship between the chapters and various sections in Title 10A, to provide that the Secretary of State will assign ID numbers to entities, and to add a provision regarding the name of a reinstated entity. SB 96 also amends the business corporation act regarding notices and communications by electronic communications, circumstances when notices will not be required, and lists of stockholders, and amends the nonprofit corporation law concerning members participating in meetings by remote participation, and electronic communications.

House Bill 165, effective April 19, 2021, allows the Secretary of State to waive the Certificate of Existence fee for business entities under certain circumstances when a state of emergency exists.

House Bill 202, effective January 1, 2021, provides for the formation of new benefit corporations and for existing corporations to elect to become a benefit corporation. Among other things the bill provides that in fulfilling the duties a director shall consider, in addition to the interests of stockholders generally, the separate interests of stakeholders known to be affected by the business of the corporation and that no less than annually, a benefit corporation shall prepare a benefit report addressing the efforts of the corporation during the preceding year to operate in a responsible and sustainable manner, to pursue any public benefit or benefits identified in any public benefit provision, and to consider the interests of stakeholders.

House Bill 250, effective January 1, 2020, enacts a new Alabama Business Corporation Law. Among many other changes, the new law provides for incorporation, amendment, and dissolution filings to be made with the Secretary of State rather than with the county judge of probate. The new law applies to all corporations incorporated on or after January 1, 2020 and pre-existing corporations that elect to be governed by the new law. All corporations will be governed by the new law on January 1, 2021.

Case summaries

Doing Business — Venue
Ex Parte Honda Manufacturing & Development of Alabama, CL-2022-1217, decided March 10, 2023. The Alabama Court of Civil Appeals granted the defendant’s writ of mandamus directing the trial court to transfer venue from Etowah county to Talladega County. The plaintiff asserted venue was proper in Etowah county based on the statute providing that a domestic corporation can be sued in the county where the plaintiff resides if the corporation does business by agent in that county. In this case, the defendant manufactured cars in Talladega county. Its activities in Etowah county consisted of leasing a warehouse to store racks and containers and purchasing parts and services in Etowah. The court noted that a corporation is “doing business” in a county for venue purposes if, with regularity, it performs the functions for which it was created. The corporation’s contacts with Etowah county were merely incidental to the function for which it was created – manufacturing automobiles.

Personal Jurisdiction
Tyler v. Ford Motor Co., Case No. 2:20-CV-584, decided November 17, 2021. The U.S. District Court, Middle District of Alabama, held that it lacked personal jurisdiction over the defendant, a Delaware corporation with its principal place of business in Michigan. The plaintiff failed to show that the defendant’s Alabama activities were related to the cause of action and therefore specific jurisdiction was lacking. The court rejected the plaintiff’s claim that general jurisdiction existed because the corporation consented to jurisdiction by registering to do business in Alabama. The court noted that if the plaintiff’s argument were correct then every nationwide and global corporation registered in Alabama, even if it never in fact conducted business in the state, could be sued in Alabama for any and all claims against it based on events in another state or country. The court also stated that a 1991 decision from the Alabama Supreme Court and a 1917 US Supreme Court decision stating that foreign registration constituted consent were no longer good law.

Stock Purchase Agreement
Patel v. Shah, No. 1180012, decided September 30, 2019. The Alabama Supreme Court held that an oral stock purchase agreement was exempt from the statute of frauds because it was fully performed.

Other notices

December 19, 2019 — Alabama’s Secretary of State issued a release warning the business community of a misleading letter from the “AL Certificate Service” being circulated across the state.

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