Alabama Constitution Section 229 Corporate Powers, Charter Laws, and Franchise Tax Exemptions
Here is the full text and explanation for Section 229 of the Alabama Constitution:
Alabama Constitution – Section 229
Corporate Powers, Charter Laws, and Franchise Tax Exemptions
“No corporation shall engage in any business other than that expressly authorized in its charter or by general law; nor shall it take or hold any real estate except such as may be necessary and proper for its legitimate business. All existing charters or grants of special or exclusive privileges under which a bona fide organization shall not have taken place and business commenced in good faith at the time of the ratification of this Constitution shall thereafter have no validity. The legislature shall provide by general laws for the formation, organization, and regulation of corporations, and shall not directly grant any charter to any individual or private corporation. All corporations shall be subject to such regulations, limitations, and restrictions as may be provided by law. The legislature shall pass no law granting to any individual or set of individuals rights, privileges, or immunities not granted to all citizens of the state. It shall pass no law exempting any corporation, company, association, or individual from the payment of any franchise or other tax upon their business.”
Explanation:
Section 229 sets out key restrictions and requirements for corporations in Alabama:
🔒 Business Activity Limits:
Corporations may only engage in the business specifically authorized in their charter or by general law.
They can only own real estate that is necessary for their business activities.
⛔ Invalid Charters:
Any corporate charters or special privilege grants that were not actively used (i.e., no real organization or business) before the Constitution was ratified are rendered invalid.
🏛️ General Law Required for Corporations:
The legislature must use general laws to form and regulate corporations.
It cannot grant charters directly to individuals or specific private corporations.
⚖️ Equal Treatment:
The legislature cannot grant special rights or immunities to individuals or corporations that are not equally available to all citizens.
💰 No Tax Exemptions:
No corporation, person, or association can be exempt from franchise taxes or other business-related taxes by special law.
Purpose:
This section ensures:
Uniform corporate regulation (no special deals or charters),
Fair tax policy (everyone pays business taxes),
Prevention of monopolies or elite privileges, and
State oversight through general laws, not special acts.
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