HB202 Alabama 2020 Session

Updated Feb 26, 2026

Notable

Summary

Primary Sponsor: Bill Poole
Republican
Session: Regular Session 2020
Title: Business and Nonprofit Entities Code, substantially revised to allow corporations to elect to become benefit corporations, update definitions, allow for electronic filing, and provide standards for filing instruments, numerous sections of Title 10A added, amended, and renumbered
Summary: HB202 lets Alabama businesses elect to become benefit corporations with public-benefit duties, adds annual reporting and strengthened governance standards, and updates filing and nonprofit definitions to modernize the code.
What This Bill Does
It allows corporations to elect to be benefit corporations by including a public benefit provision in their certificate of incorporation. It requires directors to act in a responsible and sustainable manner and to consider the interests of employees, customers, communities, and the environment. It mandates an annual benefit report and establishes stockholder derivative action rights for breaches, while modernizing filing processes, naming rules, and related definitions to support electronic filings and clearer governance.

Who It Affects
Corporations, their boards, officers, and stockholders: may elect to become benefit corporations, must label status on stock certificates, face two-thirds voting thresholds for certain amendments or mergers, and must comply with new duties and reporting.
Employees, customers, communities, and the environment (stakeholders) and the general public: benefit corporation decisions must consider these groups, with annual reporting that increases accountability and potential remedies if public-benefit duties are not fulfilled.

Key Provisions
Allows a corporation to elect to become a benefit corporation by including a public benefit provision in its certificate of incorporation and defines 'Public Benefit' and 'Responsible and Sustainable Manner' (10A-2A-17.01; 10A-2A-17.02).
Requires the public benefit status to be conspicuously noted on stock certificates (10A-2A-17.02).
Imposes director duties to act in a responsible and sustainable manner and to consider stakeholders, with limited liability implications clarified (10A-2A-17.04).
Requires an annual benefit report describing objectives, standards, and assessment, to be delivered to stockholders or posted publicly, with expedited access upon request (10A-2A-17.05).
Gives stockholders the right to pursue derivative actions for violations of benefit duties, subject to ownership thresholds (5% of stock or $5 million in market value) (10A-2A-17.06).
Details voting thresholds for actions affecting a corporation’s status as a benefit corporation, including amendments, mergers, and conversions (two-thirds votes, with class-group considerations) (10A-2A-17.03).
Updates electronic filing systems and related filing requirements across state agencies to support modern filings, including name reservations (electronic name reservation; 10A-1-3.07; 10A-1-3.08; 10A-1-4.07; 10A-1-5.17).
Clarifies transitional provisions and updates definitions to recognize nonprofit officers and certain nonprofit entity structures under the revised code (Sections involving 10A-1-3.32–10A-1-4.02 and nonprofit officer definitions).

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Business and Nonprofit Entities Code