Act No. 2019-94, the Alabama Business Corporation Law of 2019, was signed into law by Governor Ivey on May 1, 2019. It constitutes a complete restatement of the Alabama Business Corporation Law, with several changes to the existing law, and several new features as well.

The Committee on Corporate Laws of the ABA’s Business Law Section (the “ABA Committee”) published the original Model Business Corporation Act (the “Model Act”) over 60 years ago. Now substantially adopted by a majority of the States, the Model Act has strongly influenced the law governing U.S. corporations. A version of the Model Act has been the foundation for Alabama’s Business Corporation Law for a number of years; however, our statute has not been amended in a significant way since 1994.

Over the last several years, the ABA Committee has prepared a “top to bottom” revision of the Model Act (the “Revised Model Act”), and the Business Entities Committee of the Alabama Law Institute, utilizing the Revised Model Act as its starting point, but also adding certain provisions from the Delaware General Corporation Law, prepared the new Alabama Business Corporation Law of 2019 (to be codified as Chapter 2A of the Alabama Business and Nonprofit Entity Code) as a comprehensive revision of the current law. The law will also contain accompanying commentary, prepared by the ABA Committee and edited by the Business Entities Committee in order to highlight the principal changes to the existing statute.


  • Effective January 1, 2020
  • Applies to all corporations incorporated after that date
  • Applies to all corporations incorporated before that date that elect to be governed by the new law
  • Applies to all corporations on and after January 1, 2021
  • Implements centralized filing of corporate filing instruments with the Secretary of State, which is a step toward making Alabama’s filing system consistent with those of the other 49 States
  • Harmonizes the Business Corporation Law with the provisions of Chapter 1 of the Alabama Business and Nonprofit Entity Code (Alabama Code, Title 10A)

Significant Changes to the Current Law:

  • The denial of preemptive rights to stockholders except to the extent that the certificate of incorporation provides for preemptive rights. This is a reversal of the provision for preemptive rights in the current Business Corporation Law
  • Action may be taken by stockholders by written consent without a meeting if the consents are signed by stockholders having not less than the minimum number of votes that would be required to take action at a meeting. The current Business Corporation Law required unanimous written consent of stockholders
  • The elimination of current restrictions on the power of the board of directors to fix or change the number of directors
  • The elimination of the current requirement that a “classified” or “staggered” board of directors must be comprised of nine or more directors
  • The reduction in the required stockholder vote on approval of a plan of merger or stock exchange or on certain dispositions of a corporation’s assets, from two-thirds to a majority
  • The elimination of stockholder dissenters’ or appraisal rights with respect to certain types of corporations

Significant Additions to the Current Law:

  • The addition of certain procedures providing for the ratification of defective corporate actions, including over-issuances of stock
  • The addition of a provision that authorizes the certificate of incorporation to limit or eliminate the duty of a director or other person to bring a business opportunity to the corporation
  • The addition of a provision that authorizes the certificate of incorporation or bylaws to create an exclusive forum for the adjudication of internal corporate claims
  • The addition of a provision allowing for remote participation at a meeting of stockholders
  • The addition of a new Article 9, providing for the conversion of another organization to a corporation, or a conversion of a corporation to another organization
  • The addition of a provision allowing the board of directors to adopt certain amendments to the certificate of incorporation without stockholder approval

What to do Now:

Directors and stockholders of existing Alabama corporations should consult with counsel to determine if they should “opt in” to the new Alabama Business Corporation Law beginning in 2020. The many new features constitute significant improvements over our current law, such that the new law may well be a viable alternative to incorporating in Delaware.


For more information about the new Alabama Business Corporation Law, please contact W. Clark Goodwin.

This client alert is for information purposes only and should not be construed as legal advice. This information in this client alert is not intended to create and will not constitute as a lawyer-client relationship.


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