Alabama § 10A-3A-6.40 Distributions

Alabama Statutes

§ 10A-3A-6.40 — Distributions

Alabama § 10A-3A-6.40

JurisdictionAlabama

Title 10AAlabama Business and Nonprofit Entities Code

Ch. 3AAlabama Nonprofit Corporation Law

Art. 6Memberships and Financial Provisions

Div. DFinancial Provisions

This text of Alabama § 10A-3A-6.40 (Distributions) is published on Counsel Stack Legal Research, covering Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Ala. Code § 10A-3A-6.40 (2026).

Text

(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 u

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(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.