Ala. Code § 10A-3A-8.61: Acts or Transactions Involving a Membership Nonprofit Corporation.

(a) An act or transaction effected or proposed to be effected by a membership nonprofit corporation (or by an entity controlled by the membership nonprofit corporation) may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director or officer of the membership nonprofit corporation, on the grounds that the director or officer has an interest respecting the act or transaction, if the act or transaction is not a conflicting interest transaction.

(b) A conflicting interest transaction may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director or officer of the membership nonprofit corporation, in a proceeding by a member, on the grounds that the director or officer has an interest respecting the conflicting interest transaction, if:

(1) the directors’ action respecting the act or transaction was taken in compliance with subsection (c) at any time; or

(2) the members’ action respecting the act or transaction was taken in compliance with subsection (d) at any time; or

(3) the act or transaction is at the relevant time fair to the membership nonprofit corporation.

(c)(1) Directors’ action respecting a conflicting interest transaction is effective for purposes of subsection (b)(1) if the conflicting interest transaction has been authorized, after required disclosure by the conflicted director or officer of information not already known by the qualified directors, or after modified disclosure in compliance with subsection (c)(2), by (A) the affirmative vote of a majority (but no fewer than two) of the qualified directors who voted on the conflicting interest transaction or (B) the affirmative vote of a majority of the members of a board committee that is composed of only qualified directors (but no fewer than two). Directors’ action respecting a conflicting interest transaction is effective even though the conflicted director or officer is present at or participates in the meeting of the board or committee which authorizes the act or transaction or was involved in the initiation, negotiation, or approval of the act or transaction.

(2) Notwithstanding subsection (c)(1), when a transaction is a conflicting interest transaction only because a related person described in clause (v) or (vi) of the definition of “related person” in Section 10A-3A-2.02 is a party to or has a material financial interest in the conflicting interest transaction, the conflicted director or officer is not obligated to make required disclosure to the extent that the director or officer reasonably believes that doing so would violate a duty imposed under law, a legally enforceable obligation of confidentiality, or a professional ethics rule, provided that the conflicted director or officer discloses to the qualified directors voting on the conflicting interest transaction:

(i) all information required to be disclosed that is not so violative;

(ii) the existence and nature of the director’s or officer’s conflicting interest; and

(iii) the nature of the conflicted director’s or officer’s duty not to disclose the confidential information.

(3) A majority (but no fewer than two) of all the qualified directors on the board of directors, or on the board committee, constitutes a quorum for purposes of action that complies with this section.

(4) Where directors’ action under this subsection (c) does not satisfy a quorum or voting requirement applicable to the authorization of the conflicting interest transaction by reason of the certificate of incorporation, bylaws, or another provision of this chapter, independent action to satisfy those authorization requirements shall be taken by the board of directors or a board committee, in which action directors who are not qualified directors may participate.

(5) Where directors’ action under this subsection (c) is taken without a meeting in accordance with Section 10A-3A-8.21, the action is effective even though a conflicted director signs a consent to that action.

(d)(1) Members’ action respecting a conflicting interest transaction is effective for purposes of subsection (b)(2) if a majority of the votes cast by the holders of all qualified membership interests are in favor of the conflicting interest transaction after (i) notice to members describing the action to be taken respecting the conflicting interest transaction; (ii) provision to the membership nonprofit corporation of the information referred to in subsection (d)(2); and (iii) communication to the members entitled to vote on the conflicting interest transaction of the information that is the subject of required disclosure, to the extent the information is not already known by them. In the case of members’ action at a meeting, the members entitled to vote shall be determined as of the record date for notice of the meeting.

(2) A director or officer who has a conflicting interest respecting the conflicting interest transaction shall, before the members’ vote, inform the secretary or other officer or agent of the membership nonprofit corporation authorized to tabulate votes, in writing, of the number of membership interests that the director or officer knows are not qualified membership interests under subsection (d)(3), and the identity of the holders of those membership interests.

(3) For purposes of this section: (i) “holder” means and “held by” refers to membership interests held by a member; and (ii) “qualified membership interests” means all membership interests entitled to be voted with respect to the conflicting interest transaction except for membership interests that the secretary or other officer or agent of the membership nonprofit corporation authorized to tabulate votes either knows, or under subsection (d)(2) is notified, are held by (A) a director or officer who has a conflicting interest respecting the conflicting interest transaction or (B) a related person of the director or officer (excluding a person described in clause (vi) of the definition of “related person” in Section 10A-3A-2.02).

(4) A majority of the votes entitled to be cast by the holders of all qualified membership interests constitutes a quorum for purposes of compliance with this section. Members’ action that otherwise complies with this section is not affected by the presence of holders, or by the voting, of membership interests that are not qualified membership interests.

(5) If a members’ vote does not comply with subsection (d)(1) solely because of a director’s or officer’s failure to comply with subsection (d)(2), and if the director or officer establishes that the failure was not intended to influence and did not in fact determine the outcome of the vote, then the action by the members respecting the conflicting interest transaction shall be given effect.

(6) Where members’ action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the conflicting interest transaction by reason of the certificate of incorporation, the bylaws, or another provision of this chapter, independent action to satisfy those authorization requirements shall be taken by the members, in which action membership interests that are not qualified membership interests may participate.

(7) Where members’ action under this subsection (d) is taken without a meeting in accordance with Section 10A-3A-7.04, the action is effective even though members holding membership interests that are not qualified membership interests sign a consent to that action.

(e) Notwithstanding subsections (c) and (d), if a controlling person has the power and authority to approve the conflicting interest transaction pursuant to a provision in the certificate of incorporation permitted by Section 10A-3A-8.01, the conflicting interest transaction shall be approved by that controlling person.

(f) An act or transaction effected or proposed to be effected by a membership nonprofit corporation (or by an entity controlled by the membership nonprofit corporation) may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a controlling person or a member of a control group of the membership nonprofit corporation, on the grounds that the controlling person or member of a control group has an interest respecting the act or transaction, if the act or transaction is not a controlling person transaction.

(g) A controlling person transaction may not be the subject of equitable relief, or give rise to an award of damages or other sanctions, against a director or officer of the membership nonprofit corporation or any controlling person or member of a control group, by reason of a claim based on a breach of duty by a director, officer, controlling person, or member of a control group, if:

(1) the controlling person transaction is approved in accordance with the provisions of the certificate of incorporation, bylaws, rules, regulations, policies, or agreements among the members and the membership nonprofit corporation; or

(2) the controlling person transaction is at the relevant time fair to the membership nonprofit corporation.