SB197 Alabama 2025 Session

Updated Feb 23, 2026

Notable

Summary

Primary Sponsor: Sam GivhanSenator
Republican
Session: 2025 Regular Session
Title: Alabama Business and Nonprofit Entity Code revised; makes technical changes and corrects references, and codifies practices relating to electronic filing and name reservations
Summary: SB197 revises Alabama's Business and Nonprofit Entity Code to modernize filings, codify independent legal significance, clarify merger/conversion rules, and expand death/disqualification transfer procedures for professional entities.
What This Bill Does
It makes technical corrections and codifies electronic filing and name reservation practices. It codifies the common law doctrine of independent legal significance, ensuring certain actions remain valid even if other provisions conflict. It clarifies and standardizes approvals and ratification of conversions and mergers, as well as naming of merger agreements, and it allows termination fees and other consequences to be clarified in merger agreements. It creates a simplified transfer/purchase process for transferable interests upon death or disqualification of stockholders in professional corporations, LLCs, partnerships, and limited partnerships, including a fair-value purchase, required offers, timeframes for payment, and court procedures if parties disagree, while protecting creditors' rights via charging orders.

Who It Affects
Stockholders or members of professional corporations, limited liability companies, or partnerships in Alabama, who may have their transferable interests transferred or bought out upon death or disqualification under the bill’s new rules.
Boards of directors, governing bodies, filing officers (Secretary of State), and the entities themselves (corporations, LLCs, partnerships, nonprofits) that file and govern mergers, conversions, and name reservations under the code.

Key Provisions
Technical corrections and codification of electronic filing and name reservation practices for entities.
Codification of the independent legal significance doctrine to keep certain actions valid even if related provisions change.
Clarification and normalization of merger, conversion, and stock exchange approvals, with a ratification option for documents not properly approved and clarified naming conventions for merger agreements.
New, simplified buyout process for transferring transferable interests upon death or disqualification of a stockholder in professional corporations, LLCs, and partnerships, including a fair-value purchase, mandatory offers, balance sheets and income statements, a court process if value is disputed, and cost allocations.
Expansion of death/transfer rules to allow transfer of transferable interests in LLCs, partnerships, and general partnerships, subject to charging orders and creditor rights.
Name continuity provisions allowing the surviving or converted entity to use the name of the other without a separate name reservation under certain conditions, with related filing and notification requirements.
Effective date set for August 1, 2025, with applicability to contracts and filings under the revised code.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Businesses & Financial Institutions