SB427 Alabama 2019 Session

Summary

Primary Sponsor

Cam Ward

Republican

Session

Regular Session 2019

Title

Business entity law, authorizing the creation of benefit corporations, Secs. 10A-12-1.01, 10A-12-1.02, 10A-12-1.03, 10A-12-2.01, 10A-12-2.02, 10A-12-2.03, 10A-12-3.01, 10A-12-3.02, 10A-12-3.03, 10A-12-4.01, 10A-12-4.02, 10A-12-5.01 added; Sec. 10A-1-1.08 am'd.

Summary

The bill would create a new Alabama Benefit Entities Law that allows the formation of benefit corporations and benefit LLCs with new governance, reporting, and incentives.

What This Bill Does

It creates Chapter 12 of Title 10A to allow benefit corporations and benefit LLCs and aligns their governance with existing corporate and LLC laws where not inconsistent. It requires organizing documents to declare pursuing general or specific public benefits and, for specific benefits, the intended beneficiaries. It designates a designated benefit manager who must approve major actions (amendments, dissolution, conversion, merger); if the manager does not approve, two-thirds of all owners must approve. It imposes annual reporting due by April 1 with activities, unaudited financials, third-party standards, and evaluations, and it provides enforcement tools, potential revocation for failure to report, and a reinstatement process with a fee; it also extends certain business incentives to benefit entities.

Who It Affects

• Domestic and foreign benefit corporations and benefit LLCs, as new entity types formed under Alabama law, with governance and reporting requirements.
• Officers, directors, and designated benefit managers of these entities, who have duties, voting responsibilities, and potential liability under enforcement provisions.
• Owners of these benefit entities, who participate in certain votes and may be involved in enforcement actions.
• The Alabama Secretary of State, which would maintain a public database of annual reports, enforce revocation for noncompliance, and administer reinstatement and fees.
• Beneficiaries of a specified public benefit stated in an entity’s organizing document, who may bring benefit enforcement actions.
• The general public, who would be able to access annual reports (with redacted financial data) and be affected by the entities’ public-benefit activities.

Key Provisions

• Creates Chapter 12 to Title 10A (Alabama Benefit Entities Law) allowing benefit corporations and benefit LLCs.
• Benefit entities must state in their organizing documents whether they pursue general public benefit, specific public benefit, or both, and identify intended beneficiaries if pursuing a specific benefit.
• Designates one designated benefit manager for each benefit entity; sets eligibility restrictions for the designated manager to prevent conflicts of interest; major actions require the manager’s affirmative vote, or two-thirds owner approval if the manager does not vote affirmatively.
• Requires annual reports by April 1 with name, activities, unaudited financials, third-party standard, and application; reports are published to the Secretary of State and to owners, with redactions for financial data.
• Provides enforcement mechanisms for failures to pursue stated benefits or for managers’ misconduct; allows revocation of benefit status for noncompliance and a reinstatement process with a $500 fee and required filings.
• Extends certain Alabama Title 40 incentives (industrial/research, etc.) to benefit entities.
• Amends Section 10A-1-1.08 to recognize Chapter 12 as the Alabama Benefit Entities Law.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Business Entities