2009 Alabama Code
Title 10 — CORPORATIONS, PARTNERSHIPS AND ASSOCIATIONS.
Chapter 4 — PARTICULAR CORPORATIONS, ASSOCIATIONS, ETC.
Section 10-4-389 Death or disqualification of shareholder.

Death or disqualification of shareholder.

(a) Upon the death of a shareholder of a domestic professional corporation or if a shareholder of a domestic professional corporation becomes a disqualified person or if shares of a domestic professional corporation are transferred by operation of law or court decree to a disqualified person, the shares of such deceased shareholder or of such 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 such purchase.

(b) If the price for such shares is not fixed by the articles of incorporation or bylaws of the domestic professional corporation or by private agreement, the domestic professional corporation, within six months after such death or 30 days after such disqualification or transfer, as the case may be, shall make a written offer to pay for such shares at a specified price deemed by such domestic professional corporation to be the fair value thereof as of the date of such death, disqualification or transfer. Such offer shall be given to the executor or administrator of the estate of a deceased shareholder or to the disqualified shareholder 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 such offer, and a profit and loss statement of such domestic professional corporation for the 12 months' period ended on the date of such balance sheet.

(c) If within 30 days after the date of such written offer from the domestic professional corporation the fair value of such shares is agreed upon between such disqualified person and the domestic professional corporation, payment therefor shall be made within 90 days, or such other period as the parties may fix by agreement, after the date of such offer, upon surrender of the certificate or certificates representing such shares. Upon payment of the agreed value the disqualified persons shall cease to have any interest in such shares.

(d) If within 30 days from the date of such 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 circuit court in the county in Alabama where the registered office of the domestic professional corporation is located requesting that the fair value of such shares be found and determined. The disqualified person, wherever residing, shall be made a party to the proceeding as an action against his shares 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 his shares as of the date of death, disqualification or transfer upon surrender to the domestic professional corporation of the certificate or certificates representing such shares. The court may, in its discretion, order that the judgment be paid in such installments and with such interest and on such 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 such 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 such rate as the court may find to be fair and equitable in all the circumstances, from the date of death, disqualification or transfer.

(f) The costs and expenses of any such proceeding shall be determined by the court and shall be assessed against the domestic professional corporation, but all or any part of such 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 such disqualified person in failing to accept such offer was arbitrary or vexatious or not in good faith. Such 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 shares 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 such sum as the court may determine 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 shares of a deceased or disqualified shareholder or of a transferee who is a disqualified person is not completed within 12 months after the death of the deceased shareholder or 12 months after the disqualification or transfer, as the case may be, the domestic professional corporation shall forthwith cancel the shares on its books and the disqualified person shall have no further interest as a shareholder in the domestic professional corporation other than his right to payment for such shares under this section.

(h) Shares acquired by a domestic professional corporation pursuant to payment of the agreed value therefor or to payment of the judgment entered therefor, as in this section provided, may be held, cancelled or disposed of by such domestic professional corporation as in the case of other treasury shares.

(i) This section shall not be deemed to require the purchase of shares of a disqualified person where the period of such disqualification is for less than 12 months from the date of disqualification or transfer.

(j) Any provision regarding purchase, redemption or transfer of shares of a domestic professional corporation contained in the articles of incorporation, bylaws or any private agreement shall be specifically enforceable in the courts of Alabama.

(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 shareholder as otherwise permitted by law.

(l) A domestic professional corporation may purchase its own shares from a disqualified person without regard to the availability of capital or surplus for such purchase; however, no purchase of or payment for such shares shall be made at a time when the domestic professional corporation is insolvent or when such purchase or payment would make it insolvent.

(m) The foregoing provisions of this section shall not apply to a domestic not-for-profit professional corporation. Any member of such a corporation who becomes a disqualified person must cease being a member not more than 12 months after the date of disqualification, if he is then a disqualified person.