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Alabama · Through Act 2026-611

Ala. Code § 10A-3A-8.32: Directors’ Liability for Unlawful Distributions.

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Where this section sits in the code
  1. Title 10A Alabama Business and Nonprofit Entities Code.
  2. Chapter 3A Alabama Nonprofit Corporation Law.
  3. Article 8 Directors and Officers.
  4. Division C Directors.

(a) A director who votes for or assents to a distribution in excess of what may be authorized and made pursuant to Section 10A-3A-6.40 or Section 10A-3A-11.07 is personally liable to the nonprofit corporation for the amount of the distribution that exceeds what could have been distributed without violating Section 10A-3A-6.40 or Section 10A-3A-11.07 if the party asserting liability establishes that when taking the action the director did not comply with Section 10A-3A-8.30.

(b) A director held liable under subsection (a) for an unlawful distribution is entitled to:

(1) contribution from every other director who could be held liable under subsection (a) for the unlawful distribution; and

(2) recoupment from each person of the pro-rata portion of the amount of the unlawful distribution the person received, whether or not the person knew the distribution was made in violation of Section 10A-3A-6.40 or Section 10A-3A-11.07.

(c) A proceeding to enforce:

(1) the liability of a director under subsection (a) is barred unless it is commenced within two years after the date on which the distribution was made; or

(2) contribution or recoupment under subsection (b) is barred unless it is commenced within one year after the liability of the claimant has been finally adjudicated under subsection (a).

Collected 2026-09-03T14:01:54Z. Source file · JSON

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