Section 10A-4-3.02 - Death or disqualification of shareholder(a) Upon the death of a stockholder of a domestic professional corporation, or if a stockholder of a domestic professional corporation becomes a disqualified person, or if stock of a domestic professional corporation is transferred by operation of law or court decree to a disqualified person, the stock owned by the deceased stockholder or the disqualified person may be transferred to a qualified person and, if not so transferred, shall be purchased or redeemed by the domestic professional corporation to the extent of funds which may be legally made available for the purchase.(b) If the price for the stock is not fixed by the governing documents of the domestic professional corporation or by private agreement, the domestic professional corporation, within six months after the death or 30 days after the disqualification or transfer, as the case may be, shall make a written offer to pay for the stock at a specified price deemed by the domestic professional corporation to be the fair value thereof as of the date of the death, disqualification, or transfer. The offer shall be given to the executor or administrator of the estate of a deceased stockholder or to the disqualified person or transferee and shall be accompanied by a balance sheet of the domestic professional corporation, as of the latest available date and not more than 12 months prior to the making of the offer, and a profit and loss statement of the domestic professional corporation for the 12 months' period ended on the date of the balance sheet.(c) If within 30 days after the date of the written offer from the domestic professional corporation the fair value of the stock is agreed upon between the disqualified person and the domestic professional corporation, payment therefor shall be made within 90 days, or other period as the parties may fix by agreement, after the date of the offer, upon surrender of the certificate or certificates representing the stock. Upon payment of the agreed value the disqualified persons shall cease to have any interest in the stock.(d) If within 30 days from the date of the written offer from the domestic professional corporation, the disqualified person and the domestic professional corporation do not so agree, then either party may commence a civil action in the designated court, and if none, in the circuit court for the county in which the domestic professional corporation's principal office is located in this state, and if none in this state, in the circuit court for the county in which the domestic professional corporation's most recent registered office is located requesting that the fair value of the stock be found and determined. The disqualified person, wherever residing, shall be made a party to the proceeding as an action against the disqualified person's stock quasi in rem. Service shall be made in accordance with the rules of civil procedure. The disqualified person shall be entitled to judgment against the domestic professional corporation for the amount of the fair value of the disqualified person's stock as of the date of death, disqualification, or transfer upon surrender to the domestic professional corporation of the certificate or certificates representing the stock. The court may, in its discretion, order that the judgment be paid in installments and with interest and on terms as the court may determine. The court may, if it so elects, appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers shall have the power and authority as shall be specified in the order of their appointment or an amendment thereof.(e) The judgment shall include an allowance for interest at the rate the court finds to be fair and equitable in all the circumstances, from the date of death, disqualification, or transfer.(f) The costs and expenses of any proceeding shall be determined by the court and shall be assessed against the domestic professional corporation, but all or any part of the costs and expenses may be apportioned and assessed as the court may deem equitable against the disqualified person if the court shall find that the action of the disqualified person in failing to accept the offer was arbitrary or vexatious or not in good faith. The expenses shall include reasonable compensation for and reasonable expenses of the appraisers and a reasonable attorney's fee but shall exclude the fees and expenses of counsel for and of experts employed by any party; but if the fair value of the stock as determined materially exceeds the amount which the domestic professional corporation offered to pay therefor, or if no offer was made, the court in its discretion may award to the disqualified person the sum the court determines to be reasonable compensation to any expert or experts employed by the disqualified person in the proceeding.(g) If a purchase, redemption, or transfer of the stock of a deceased stockholder or disqualified person or of a transferee who is a disqualified person is not completed within 12 months after the death of the deceased stockholder or 12 months after the disqualification or transfer, as the case may be, the domestic professional corporation shall forthwith cancel the stock on its books and the disqualified person shall have no further interest as a stockholder in the domestic professional corporation other than the disqualified person's right to payment for the stock under this section.(h)(1) A professional corporation may acquire its own stock, and, the stock so acquired shall constitute authorized but unissued stock, provided however:(A) the certificate of incorporation may provide that the acquired stock shall constitute authorized, issued, but not outstanding stock;(B) the certificate of incorporation may prohibit the reissue of the acquired stock, in which case, the number of authorized shares of stock is reduced by the number of shares of stock acquired; or(C) if the certificate incorporation does not (i) provide that the acquired stock shall constitute authorized but unissued stock, (ii) prohibit the reissuance of the acquired stock, or (iii) provide that the acquired stock shall constitute authorized, issued, but not outstanding stock, then the board of directors may determine, at or prior to the time of the acquisition, that the acquired stock will constitute authorized, issued, but not outstanding stock.(2) If the board of directors determines that any acquired stock was to be authorized, issued, but not outstanding in accordance with subsection (h)(1)(C), then the board of directors may thereafter determine that the acquired stock shall be converted to stock that is authorized but not issued. (i) This section shall not be deemed to require the purchase of stock of a disqualified person where the period of the disqualification is for less than 12 months from the date of disqualification or transfer.(j) Any provision regarding purchase, redemption, or transfer of stock of a domestic professional corporation contained in the certificate of incorporation, bylaws, or any private agreement shall be specifically enforceable in the courts of this state.(k) Nothing herein contained shall prevent or relieve a domestic professional corporation from paying pension benefits or other deferred compensation for services rendered to or on behalf of a former stockholder as otherwise permitted by law.(l) A domestic professional corporation may purchase its own stock from a disqualified person without regard to the availability of capital or surplus for the purchase; however, no purchase of or payment for the stock shall be made at a time when the domestic professional corporation is insolvent or when the purchase or payment would make it insolvent.(m) The foregoing provisions of this section shall not apply to a domestic nonprofit professional corporation. Any member of a corporation who becomes a disqualified person must cease being a member not more than 12 months after the date of disqualification if he or she is then a disqualified person.Ala. Code § 10A-4-3.02 (1975)
Amended by Act 2024-413,§ 1, eff. 8/1/2024.Amended by Act 2020-73,§ 10, eff. 1/1/2021.Acts 1983, No. 83-514, p. 763, §10; Acts 1988, 1st Ex. Sess., No. 88-905, p. 474, §1; §10-4-389; amended and renumbered by Act 2009-513, p. 967, § 205.