§ 10A-3A-11.20 — Grounds for Judicial Dissolution

Alabama § 10A-3A-11.20

• Jurisdiction: Alabama
• Title 10A: Alabama Business and Nonprofit Entities Code
• Ch. 3A: Alabama Nonprofit Corporation Law
• Art. 11: Dissolution
• Div. B: Judicial Dissolution

Text

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.

Legislative History

(Act 2023-503, §1.)