Disposition of Assets.

Ala. Code tit. 10A, ch. 2A, art. 12

in effect

Ala. Code § 10A-2A-12.01 Disposition of Assets Not Requiring Stockholder Approval.

10A-2A-12.01. Disposition of Assets Not Requiring Stockholder Approval. (a) No approval of the stockholders is required, unless the certificate of incorporation otherwise provides: (1) to sell, lease, exchange, or otherwise dispose of any or all of the corporation’s assets in the usual and regular course of business; (2) to mortgage, pledge, dedicate to the repayment of indebtedness (whether with or without recourse), or otherwise encumber any or all of the corporation’s assets, regardless of whether in the usual and regular course of business; (3) to transfer any or all of the corporation’s assets to one or more corporations, foreign corporations, or other entities all of the stock or interests of which are owned by the corporation; or (4) to distribute assets pro rata to the holders of one or more classes or series of the corporation’s stock. (b) Without limiting the rights of a secured party under applicable law, no approval by stockholders shall be required by Section 10A-2A-12.02 for a sale, lease, exchange, or other disposition of any of the 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 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 corporation or to its stockholders 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 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 corporation and any other necessary parties to enjoin the sale, lease, exchange, or other disposition of the 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 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 stockholders for a sale, lease, exchange, or other disposition of the corporation’s assets shall not apply to a transaction permitted by subsection (b) unless that provision expressly so requires. (Act 2019-94, §1; Act 2024-413, §1.)

Ala. Code § 10A-2A-12.02 Stockholder Approval of Certain Dispositions.

10A-2A-12.02. Stockholder Approval of Certain Dispositions. (a) A sale, lease, exchange, or other disposition of assets, other than a disposition described in Section 10A-2A-12.01, requires approval of the corporation’s stockholders if the disposition would leave the corporation without a significant continuing business activity. A corporation will conclusively be deemed to have retained a significant continuing business activity if it retains a business activity that represented, for the 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 stockholders under subsection (a) the board of directors shall first adopt a resolution authorizing the disposition. The disposition shall then be approved by the stockholders. In submitting the disposition to the stockholders for approval, the board of directors shall recommend that the stockholders approve the disposition, unless (i) the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make a recommendation, or (ii) Section 10A-2A-8.26 applies. If either (i) or (ii) applies, the board of directors shall inform the stockholders of the basis for its so proceeding. (c) The board of directors may set conditions for the approval by the stockholders of a disposition or the effectiveness of the disposition. (d) If a disposition is required to be approved by the stockholders under subsection (a), and if the approval is to be given at a meeting, the corporation shall notify each stockholder, regardless of whether entitled to vote, of the meeting of stockholders 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 corporation. (e) Unless the certificate of incorporation 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 stockholders shall require the approval of the stockholders 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 stockholders under this Article 12, and at any time before the disposition has been consummated, it may be abandoned by the corporation without action by the stockholders, subject to any contractual rights of other parties to the disposition. (g) A disposition of assets in the course of dissolution under Article 14 is not governed by this section. (h) For purposes of this section only, the property and assets of the corporation include the property and assets of any subsidiary of the corporation. As used in this subsection, “subsidiary” means any entity wholly owned and controlled, directly or indirectly, by the corporation and includes, without limitation, corporations, partnerships, limited partnerships, limited liability partnerships, limited liability companies, and/or statutory trusts. (Act 2019-94, §1; Act 2023-503, §3.)

Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026