Amendment 9–Article XII Article XII of the Alabama Constitution deals with the governance of corporations. The article is divided into three sections: Municipal Corporations, Private Corporations and Railroads and Canals. The municipal corporations portions of the article are unaffected by the proposed revisions. The portions of the current Article XII which relate to private corporations and railroads and canals are perfect examples of the antiquated and outdated provisions of the constitution. They provide a glimpse of a time when the corporation was the only type of statutory entity and corporate regulation was predominately the governance of railroads. The current Article includes antitrust provisions which predate federal antitrust laws, deal with the use of telegraph lines and one of the sections became moot by its own terms 12 months after ratification. In today’s Alabama, there are a dozen statutory entity types. The revised Article XII would ensure that the governance of these 12 entity types would be more uniform. The regulation of these entity types is governed by the Business and Nonprofit Entity Code contained in Title 10A of the Alabama Code. Therefore, there is no longer any need to regulate corporations via the constitution. Many of these provisions are wholly consistent. For example, the requirement that foreign entities register with the secretary of state and maintain a registered agent
is the same. On occasion, however, the constitution dictates a different result than statutory law. One example is Section 232 relating to foreign corporations. Section 232 requires registration. The penalty for failure to do so is that the corporation cannot enforce its contracts. In contrast, non-corporate foreign entities can cure any defect related to registration. This inequity would be fixed by the proposed repeal of Section 232. In total, 11 of the current 18 sections in Article XII would be repealed, including antiquated and irrelevant provisions. Three of the current sections will be amended to update them. Currently, Section 229 provides that charitable entities cannot be taxed on their shares. Because charitable corporations and entities no longer have shares (as they presumably did when the provision was enacted), the proposed amendment removes this antiquated reference. Section 239 would be amended to remove outdated language about the consolidation of telegraph and telephone companies; as such matters are now generally regulated under federal laws. Section 236 relating to corporations’ ability to sue and be sued will be retained by adding it to the end of Section 240. The full text of the proposed amendments to Article XII can be found on the Constitution Revision Commission’s website hosted by the Alabama Law Institute at www.ali.state.al.us. The summary chart below sets forth the disposition of each section in the article.
Section
Short Title
Proposed Disposition
229
Corporate Powers
Amended
230
Cancellation of Corporate Charters
Repealed
231
Forfeiture of Corporate Charters
Repealed
232
Foreign Corporations Doing Business in Alabama
Repealed
233
Business Authorized in Corporate Charters
Repealed
234
Corporate Stock and Bonds
Repealed
235
Eminent Domain
No Change
236
Dues from Private Corporations
Repealed but moved to 240
237
Issuance of Preferred Stock
Repealed
238
Revocation of Corporate Charters
No change
239
Telegraph and Telephone Companies
Amended
240
Corporations Sued Like Natural Persons
Amended to add 236 Text
241
“Corporation” Defined
No change
242
Railroads and Canals
No change
243
Regulation of Railroads
Repealed
244
Free Passes or Discount Tickets
Repealed
245
Rebates or Bonuses
Repealed
246
Future Legislation
Repealed www.alabar.org | THE ALABAMA LAWYER 367