Alabama law sets rules for organization records and conflicts of interest

Owners and members may ask a court to order access to an organization’s records. The rules cover owners and members of certain businesses and nonprofits, along with members of limited liability companies and partners. Former owners or members may inspect only records from their time in the organization, where the rules allow it. Requests must meet the applicable notice, good-faith, and proper-purpose rules. Organizations may redact unrelated information and protect some confidential records; a court may set limits on how records are used or shared. Written notice is required in advance, with the notice period depending on the organization and records requested. Courts must handle certain review requests on an expedited basis.

The law sets out procedures for approving transactions involving directors, officers, or people who control an organization. The procedures cover business corporations and membership and nonmembership nonprofit corporations. Depending on the organization and transaction, protection from a legal claim may depend on disclosure and approval by qualified directors or members, or on the transaction being fair to the organization. Some transactions involving controlling people have separate approval rules. The procedures apply when an organization considers or approves a covered transaction.

A person may not bring or continue a case on behalf of a nonprofit corporation to enforce the nonprofit’s rights. The provision applies to nonprofit corporations. This applies to cases brought on behalf of a nonprofit to enforce the nonprofit’s rights. The act takes effect August 1, 2026. It does not apply to civil actions or proceedings completed or pending on or before that date.

A registered agent must keep a business office at the entity’s registered office and may not do its work solely through a virtual office or mail forwarding. The requirements cover filing entities, registered foreign filing entities, and certain general partnerships with an active filing on record. A registered office must be a street address in Alabama where the agent can be personally served; it cannot be only a mailbox or telephone-answering service. The act takes effect August 1, 2026.