SB517 Alabama 2011 Session

Summary

Primary Sponsor

Bobby D. SingletonSenator

Democrat

Session

Regular Session 2011

Title

Limited liability companies, formation of low-profit limited liability companies, definitions, names of companies, dissolution provisions, Secs. 10A-1-5.06, 10A-2-14.20, 10A-5-1.02 am'd.

Summary

SB517 creates and regulates Low-profit Limited Liability Companies (L3Cs) in Alabama, including definitions, naming rules, and dissolution provisions.

What This Bill Does

The bill explicitly allows the formation of Low-profit Limited Liability Companies, defining them by a specific charitable/purpose-driven standard aligned with federal rules. It requires L3Cs to include “Low-profit Limited Liability Company” or the abbreviations L3C, l.3.C., or 13c in their name. It also adds dissolution rules, allowing administrative dissolution if an L3C ceases to meet the defined L3C requirements and fails to amend its name within 60 days, in addition to existing dissolution triggers for corporations. Finally, it amends definitions and governance language to clearly include L3Cs within Alabama's LLC framework.

Who It Affects

• Domestic and foreign LLCs doing business in Alabama that want to form or operate as Low-profit Limited Liability Companies (L3Cs); they must meet the defined purpose requirements and use the specified name format.
• The Alabama Secretary of State and state agencies that administer LLCs and handle dissolution actions; they gain new rules for identifying, regulating, and potentially dissolving L3Cs that do not comply.

Key Provisions

• Amends Sections 10A-1-5.06, 10A-2-14.20, and 10A-5-1.02 to create and regulate Low-profit Limited Liability Companies (L3Cs) within Alabama's LLC framework.
• Requires L3Cs to include in their name either the words 'Low-profit Limited Liability Company' or the abbreviations 'L3C', 'l.3.C.', or '13c' in both domestic and foreign contexts.
• Defines an L3C in 10A-5-1.02 as an LLC that pursues purposes described in 26 U.S.C. 170(c)(2)(B), avoids a primary purpose of income or property appreciation, and does not primarily pursue political or legislative aims as described in 26 U.S.C. 170(c)(2)(D).
• Adds dissolution provisions where the Secretary of State can administratively dissolve an L3C if it stops meeting the L3C conditions and fails within 60 days to file amended articles to conform its name to the required format (alongside existing general dissolution triggers).
• Establishes that the act becomes effective on the first day of the third month after the Governor signs it.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Limited Liability Companies