SB277 Alabama 2026 Session

Updated Apr 6, 2026

Notable

Summary

Primary Sponsor: Lance BellSenator
Republican
Session: 2026 Regular Session
Title: Unincorporated nonprofit associations; decentralized associations provided for
Summary: SB277 creates a new legal framework in Alabama for decentralized unincorporated nonprofit associations (DUNAs) that are formed by digital communities and governed by members through distributed ledger technology.
What This Bill Does
The bill designates a new Article 2 under Title 10A to recognize DUNAs as separate legal entities, requiring at least 100 members united by mutual consent in digital activity for a common nonprofit purpose. It sets defining terms (such as administrator, digital asset, distributed ledger technology, and smart contract) and allows DUNAs to engage in profit-making activities as long as profits support the nonprofit purpose, with limited distributions to members. It provides rules for governance, property ownership (including real property in Alabama via a recorded statement of authority), liability protections for members, and procedures for dissolution, winding up, and possible merger or conversion. It also covers records access, indemnification and advancement of expenses, and requires an agent for service of process and compliance with court procedures. The act becomes effective October 1, 2026.

Who It Affects
Members of decentralized unincorporated nonprofit associations in Alabama — gain defined voting rights and membership interests, may participate in governance, and are subject to rules on membership changes, suspensions, expulsions, and resignations.
Administrators and the decentralized unincorporated nonprofit association as a legal entity (including property interests, lenders, and service providers) — receive liability protections, may be indemnified and reimbursed for expenses, must follow governance rules, may own property, and can sue or be sued under the entity's name.

Key Provisions
Establishes Article 2: Decentralized Unincorporated Nonprofit Association Law; requires 100+ members joined by mutual consent in digital activity for a common nonprofit purpose.
Defines key terms: Administrator, Digital Asset, Distributed Ledger Technology, Governing Principles, Member, Membership Interest, and Smart Contract.
Allows profits from activities but restricts distributions to members except for specific allowances (compensation, benefits, repurchases) and distributions on winding up.
Authorizes ownership and transfer of real and personal property; requires a Statement of Authority to transfer real property, recorded with the probate court; sets details to include name, Alabama address, authorized transferor, and authorization action.
Creates liability protections: DUNA is a separate legal entity; members are not automatically liable for contracts or torts due to their status.
Provides for litigation and service of process: DUNA may sue/be sued; specifies service methods and venue.
Governing principles may use distributed ledger technology and smart contracts; allows algorithmic consensus and potential modification of consensus mechanisms as allowed by law.
Requires maintenance of records and allows certain restrictions on access; electronic records are generally accessible to members, with confidentiality where appropriate.
Authorizes indemnification, advancement of expenses, and insurance for members/administrators, with conditions.
Dissolution and winding up: process for dissolution, distribution of remaining assets, and duties during winding up; automatic transition to Alabama unincorporated nonprofit association if membership drops below 100 under certain conditions.
Permits mergers or conversions by complying with applicable law and governing principles; act becomes effective October 1, 2026.

AI-generated summary using openai/gpt-5-nano-2025-08-07 on Apr 2, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Businesses & Financial Institutions