Corporate Director Election and Cumulative-Voting Requirements in Alabama

At a glance

Requirements one by one

Annual elections, consent, and delayed-meeting relief have separate rules

Ala. Code §§ 10A-2A-7.01 through 7.05 require an annual meeting to elect directors unless the election occurs by valid written consent. Ordinary written action uses the meeting-equivalent vote unless the certificate provides otherwise, but a corporation whose certificate authorizes cumulative voting cannot elect directors by less than unanimous consent.

The board or a certificate/bylaw designee may call a special meeting. Alabama supplies no default stockholder-demand percentage; the certificate or bylaws must create the right and specify the percentage, with demands collected within the statutory sixty-day period.

An eligible stockholder may seek a summary meeting order if neither an annual meeting nor substitute consent becomes effective within the earlier of twelve months following the fiscal-year end or fifteen months after the last annual meeting. Signers of a valid special demand may also apply after untimely notice or a meeting not held according to notice. The court may tailor the meeting, electorate, record dates, notice, and quorum.

Nominee qualifications have substantive and timing limits

Ala. Code §§ 10A-2A-8.02 through 8.04 require a natural-person director at least nineteen years old. Alabama residence and stock ownership are unnecessary unless the certificate or bylaws require them.

Certificate/bylaw qualifications for directors and nominees must be reasonable as applied and lawful. They generally may not turn on conduct or opinions in a way that could limit discharge of director duties, although specified sanctions and prior judicial or for-cause removal may qualify. A nomination qualification adopted after a person's nomination does not apply to that nomination; a director qualification adopted after election or appointment does not apply before that term ends.

Each outstanding share ordinarily has one vote. The certificate may assign all or specified seats to one or more classes or series, each a separate voting group for those seats.

Plurality, cumulative voting, and vote-against bylaws do not overlap

Ala. Code §§ 10A-2A-7.21, 10A-2A-7.25, and 10A-2A-7.28 ordinarily elect directors by a plurality of votes cast at a meeting with quorum. Cumulative voting exists only when the certificate creates it. Eligible votes multiply by eligible seats and may be concentrated or distributed.

Cumulation at a meeting requires conspicuous authorization in the meeting notice or accompanying proxy statement, or a holder's notice at least forty- eight hours before the meeting. One notice activates the right for every participating holder in the same voting group.

Ala. Code § 10A-2A-10.22 offers a different bylaw election, but only when the certificate does not prohibit it, change the statutory plurality vote, or authorize cumulation. Holders may vote for or against candidates or abstain. A plurality winner who receives more against than for serves only until the board selects a qualified replacement or ninety days after the result is determined, whichever comes first.

The vote-against bylaw does not apply to a bona fide contested election with more candidates than seats at the statutory cutoff. It therefore is not a majority-vote replacement for a contested plurality election.

Ala. Code §§ 10A-2A-7.29, 10A-2A-8.08, 10A-2A-8.09, and 10A-2A-8.10 separately govern inspectors, stockholder removal, judicial removal, and ordinary vacancies; those procedures do not change the routine election rules above.

Classification is certificate-only and changes the term calendar

Ala. Code §§ 10A-2A-8.05 through 8.06 let the certificate divide directors into two or three near-equal groups. Successor terms are two or three years, respectively. Otherwise terms expire at the next annual meeting.

Ordinary holdover continues until a successor is elected and qualifies or board size decreases, subject to certificate variation and the special vote-against bylaw. The plurality rule supplies no separate last-seat tie-breaker, and the delayed-meeting court remedy supplies an election forum rather than a judicial vote-count result.

What trips people up

The three election systems cannot simply be stacked. Certificate-authorized cumulation blocks the § 10A-2A-10.22 vote-against bylaw, while that bylaw turns off in a bona fide contest and leaves the statutory plurality contest rule in place.

Nominee qualifications are not merely whatever the bylaws say. Alabama imposes reasonableness, lawfulness, subject-matter, and adoption-timing limits, and a director must be at least nineteen.

Statutes and sources

• Alabama Legislature, Article 7 meeting rules
• Alabama Legislature, § 10A-2A-7.28
• Alabama Legislature, § 10A-2A-8.02
• Alabama Legislature, § 10A-2A-10.22