As it heels, the moment of inertia of the vessel's waterplane (a plane intersecting the hull at the water's surface) increases, which increases the vessel's BM (distance from the centre of Buoyancy to the Metacenter).
At some angle of heel (say 10°), KM will increase sufficiently equal to KG (distance from the keel to the centre of gravity), thus making GM of vessel equal to zero.
Angle of list is caused by unequal loading on either side of centre line of vessel.
Although a vessel at angle of loll does display features of stable equilibrium, this is a dangerous situation and rapid remedial action is required to prevent the vessel from capsizing.
[1][2][3][4] It is often caused by the influence of a large free surface or the loss of stability due to damaged compartments.