| PRINTER'S NO. 212 |
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. | 304 | Session of 2013 |
INTRODUCED BY GREENLEAF, ALLOWAY, FERLO, BROWNE, PILEGGI AND BREWSTER, JANUARY 24, 2013
REFERRED TO JUDICIARY, JANUARY 24, 2013
AN ACT
1Amending Titles 15 (Corporations and Unincorporated
2Associations) and 54 (Names) of the Pennsylvania Consolidated
3Statutes, in Title 15, making extensive revisions, additions
4and deletions to preliminary material on general provisions;
5to corporation material on general provisions, on
6incorporation, on corporate powers, duties and safeguards, on
7officers, directors and shareholders, on fundamental changes,
8on registered corporations, on insurance corporations, on
9benefit corporations, on foreign business corporations, on
10incorporation and on foreign nonprofit corporations; to
11material on limited liability companies; to material on
12unincorporated associations; and to material on business
13trusts; in Title 54, further providing for general provisions
14and for corporate and other association names; and making
15related repeals.
16The General Assembly of the Commonwealth of Pennsylvania
17hereby enacts as follows:
18Section 1. This act shall be known and may be cited as the
19GAA Amendments Act of 2013.
20Section 2. The definitions of "banking institution,"
21"representative" and "savings association" in section 102 of
22Title 15 of the Pennsylvania Consolidated Statutes are amended
23and the section is amended by adding definitions to read:
24§ 102. Definitions.
1Subject to additional or inconsistent definitions contained
2in subsequent provisions of this title that are applicable to
3specific provisions of this title, the following words and
4phrases when used in this title shall have, unless the context
5clearly indicates otherwise, the meanings given to them in this
6section:
7* * *
8"Banking institution." [A banking institution as defined in
9section 1103 (relating to definitions).] An institution as
10defined in section 102(r) of the act of November 30, 1965
11(P.L.847, No.356), known as the Banking Code of 1965.
12"Bureau." The Bureau of Corporations and Charitable
13Organizations of the department.
14* * *
15"Domestic banking institution." A domestic association which
16is an institution as defined in section 102(r) of the act of
17November 30, 1965 (P.L.847, No.356), known as the Banking Code
18of 1965.
19* * *
20"Domestic insurance corporation." An insurance corporation
21as defined in section 3102 (relating to definitions).
22"Domestic savings association." A domestic corporation for
23profit which is an association as defined in section 102(3) of
24the act of December 14, 1967 (P.L.746, No.345), known as the
25Savings Association Code of 1967.
26* * *
27"Execute." When used with respect to authenticating or
28adopting a filing, document or other record, means "sign."
29* * *
30"Obligation." Includes a note or other form of indebtedness,
1whether secured or unsecured.
2"Officially publish." Publish in two newspapers of general
3circulation in the English language in the county in which the
4registered office of the association is located or, in the case
5of a proposed association, will be located, one of which must be
6the legal newspaper, if any, designated by the rules of court
7for the publication of legal notices. If there is only one
8newspaper of general circulation in the county, advertisement in
9that newspaper is sufficient. If no other frequency is
10specified, the notice must be published one time. See section
11109(a)(2) (relating to name of commercial registered office
12provider in lieu of registered address).
13* * *
14"Record form." Inscribed on a tangible medium or stored in
15an electronic or other medium and retrievable in perceivable
16form.
17"Representative." [A representative as defined in section
181103 (relating to definitions).] When used with respect to an
19association, joint venture, trust or other enterprise, a person
20occupying the position or discharging the functions of a
21director, officer, partner, manager, trustee, fiduciary,
22employee or agent, regardless of the name or title by which the
23person may be designated. The term does not imply that a
24director, as such, is an agent of a corporation.
25"Savings association." [A savings association as defined in
26section 1103.] An association as defined in section 102(3) of
27the act of December 14, 1967 (P.L.746, No.345), known as the
28Savings Association Code of 1967.
29"Sign." With present intent to authenticate or adopt
30information in record form:
1(1) to sign manually or adopt a tangible symbol; or
2(2) to attach to, or logically associate with,
3information in record form, an electronic sound, symbol or
4process.
5* * *
6Section 3. Section 107 of Title 15 is amended to read:
7§ 107. Form of records.
8[Any records] (a) General rule.--Information maintained by a
9corporation or other association in the regular course of its
10business, including shareholder or membership records, books of
11account and minute books, may be kept [on, or be in the form of,
12punch cards, magnetic storage media, photographs,
13microphotographs or any other information storage device if the
14records so kept can be converted into reasonably legible written
15form within a reasonable time] in record form. [Any corporation
16or other association shall so convert any records so kept upon
17the request of any person entitled to inspect the records. Where
18records are kept in this manner, a reasonably legible written
19form produced from the information storage device that
20accurately portrays the record shall be admissible in evidence,
21and shall be accepted for all other purposes, to the same extent
22as an original written record of the same information would have
23been accepted.]
24(b) Meaning of "written."--References in this title to a
25document in writing or to a written provision of an agreement or
26other document shall be deemed to include and be satisfied by a
27document or provision of an agreement or document in record
28form.
29Section 4. Title 15 is amended by adding a section to read:
30§ 111. Relation of title to Electronic Signatures in Global and
1National Commerce Act.
2(a) General rule.--Except as set forth in subsection (b),
3this title modifies, limits and supersedes the Electronic
4Signatures in Global and National Commerce Act (Public Law 106-
5229, 15 U.S.C. § 7001, et seq.).
6(b) Exception.--This title does not do any of the following:
7(1) Modify, limit or supersede section 101(c) of the
8Electronic Signatures in Global and National Commerce Act (15
9U.S.C. § 7001(c)).
10(2) Authorize electronic delivery of a notice described
11in section 103(b) of the Electronic Signatures in Global and
12National Commerce Act (15 U.S.C. § 7003(b)).
13Section 5. Sections 131, 133(a) and (d), 134(a)(3), 135(a)
14(2) and (7), 136(b)(2) and (3), 152, 153(a) and 155(a) and (b)
15of Title 15 are amended to read:
16§ 131. Application of subchapter.
17As used in this subchapter, the term "this title" includes
18Titles 17 (relating to credit unions) and 54 (relating to names)
19and any other provision of law that makes reference to the
20powers and procedures of this subchapter[.] or, to the extent
21not inconsistent with this subchapter, requires a filing in the
22bureau and does not specify some or all of the necessary
23procedures therefor provided in this subchapter.
24§ 133. Powers of Department of State.
25(a) General rule.--The [Department of State shall have]
26department has the power and authority reasonably necessary to
27enable it to administer this subchapter efficiently and to
28perform the functions specified in section 132 (relating to
29functions of Department of State), in 13 Pa.C.S. (relating to
30commercial code) and in 17 Pa.C.S. (relating to credit unions).
1The following shall not be agency regulations for the purposes
2of section 612 of the act of April 9, 1929 (P.L.177, No.175),
3known as The Administrative Code of 1929, the act of October 15,
41980 (P.L.950, No.164), known as the Commonwealth Attorneys Act,
5the act of June 25, 1982 (P.L.633, No.181), known as the
6Regulatory Review Act, or any similar provision of law, but
7shall be subject to the opportunity of public comment
8requirement under section 201 of the act of July 31, 1968 (P.L.
9769, No.240), referred to as the Commonwealth Documents Law:
10(1) Sample filing forms promulgated by the department
11[under subsection (d)].
12(2) Instructions accompanying sample filing forms and
13other explanatory material published in the Pennsylvania Code
14that is intended to substantially track applicable statutory
15provisions relating to the particular filing or to any of the
16functions of the department covered by this subsection, if a
17regulation of the department expressly states that [such]
18those instructions or explanatory materials shall not have
19the force of law.
20(3) Regulations, which the department is hereby
21authorized to promulgate, that:
22(i) Authorize payment of fees and other remittances
23through or by a credit or debit card issuer or other
24financial intermediary.
25(ii) Authorize contracts with credit or debit card
26issuers and other financial intermediaries relating to
27the collection, transmission and payment of fees and
28other remittances.
29[(iii) Adjust the level of fees and other
30remittances as otherwise fixed by law so as to facilitate
1their transmission through or by a credit card issuer or
2other financial intermediary pursuant to such regulations
3without net cost to the department.]
4(iv) Adjust, not more than once per year, the fees
5set forth in section 153(a) (relating to fee schedule)
6and 13 Pa.C.S. § 9525 (relating to fees) for filings
7transmitted to the department electronically.
8(v) Relate to the format or means of delivering
9documents to the department or filing.
10* * *
11(d) [Physical characteristics and copies of documents.--All
12articles and other documents authorized or required to be filed
13in the department under this title shall be in such format as to
14size, shape and other physical characteristics as shall be
15prescribed by regulations promulgated by the department. The
16regulations may require the submission of not to exceed three
17conformed copies of any document in addition to the original and
18any copies thereof otherwise required by law. All formats
19promulgated by the department for use under this title shall
20include a statement of the number of copies required to be filed
21and shall be published in the Pennsylvania Code.]
22* * *
23§ 134. Docketing statement.
24(a) General rule.--The [Department of State] department may,
25but shall not be required to, prescribe by regulation one or
26more official docketing statement forms designed to elicit from
27a person effecting a filing under this title information that
28the department has found to be necessary or desirable in
29connection with the processing of a filing. A form of docketing
30statement prescribed under this subsection:
1* * *
2(3) May be required by the department in connection with
3a filing only if notice of the requirement appears on the
4official format for the filing prescribed [under section
5133(d) (relating to physical characteristics and copies of
6documents)] by the department.
7* * *
8§ 135. Requirements to be met by filed documents.
9(a) General rule.--A document shall be accepted for filing
10by the [Department of State] department if it satisfies the
11following requirements:
12* * *
13(2) The document complies with any regulations
14promulgated by the department [pursuant to section 133(d)
15(relating to physical characteristics and copies of
16documents)] and is accompanied by any applicable statement
17prescribed under section 134.
18* * *
19(7) It is in record form and executed. The department
20shall not examine a document to determine whether the
21document has been [executed] signed by an authorized person
22or by sufficient authorized persons or otherwise is duly
23[executed. A document shall be deemed executed if it contains
24a facsimile signature, so long as the operative portions of
25the document meet any applicable requirements prescribed
26under section 133(d) (relating to physical characteristics
27and copies of documents)] signed.
28* * *
29§ 136. Processing of documents by Department of State.
30* * *
1(b) Immediate certified copy.--
2* * *
3[(2) If the duplicate copy is delivered by hand to the
4office of the department at the seat of government at least
5four hours before the close of business on any day not a
6holiday and relates to a matter other than a label or other
7mark requiring examination under Title 54 (relating to names)
8or the reservation or registration of a name under this title
9and, in the case of a document that creates a new
10association, effects or reflects a change in name or
11qualifies a foreign association to do business in this
12Commonwealth, if the duplicate copy is accompanied by
13evidence that the proposed name has been reserved or
14registered by or on behalf of the applicant, the department
15before the close of business on that day shall either:
16(i) Certify the duplicate copy as required by this
17subsection and make such certified copy available at the
18office of the department to or upon the order of the
19person who delivered it to the department.
20(ii) Make available at the office of the department
21to or upon the order of the person who delivered it to
22the department a brief statement in writing of the
23reasons of the department for refusing to certify such
24duplicate copy.
25See section 153(a)(10) (relating to certification fees).]
26(3) In lieu of comparing the duplicate copy with the
27original signed document as provided in [paragraphs (1) and
28(2)] paragraph (1), the department may make a copy of the
29original signed document at the cost of the person who
30delivered it to the department.
1* * *
2§ 152. Definitions.
3The following words and phrases when used in this subchapter
4shall have the meanings given to them in this section unless the
5context clearly indicates otherwise:
6"Ancillary transaction." Includes:
7(1) preclearance of document[,];
8(2) amendment of articles, charter, certificate or other
9organic document, restatement of articles, charter,
10certificate or other organic document[, change in registered
11or principal office, change in share structure,];
12(3) dissolution, cancellation or termination[,
13reorganization,] of an association;
14(4) withdrawal by foreign association[,];
15(5) withdrawal by a partner[, or];
16(6) any [similar transaction,] transaction similar to
17any item listed in paragraphs (1) through (5); or
18(7) [the deposit in the Department of State] delivery to
19the department for filing in, by or with the [Department of
20State] department or the Secretary of the Commonwealth of any
21articles, statements, proceedings, agreements or any [like]
22similar papers affecting associations under the statutes of
23this Commonwealth[.] for which a specific fee is not set
24forth in section 153 (relating to fee schedule) or other
25applicable statute.
26["Bureau." The Corporation Bureau of the Department of State
27or any successor agency within the department.]
28§ 153. Fee schedule.
29(a) General rule.--The nonrefundable fees of the bureau,
30including fees for the public acts and transactions of the
1Secretary of the Commonwealth administered through the bureau,
2shall be as follows:
3(1) Domestic corporations: |
|
4(i) Articles of incorporation, letters |
$125 |
7(ii) Articles or agreement or similar |
70 |
9(iii) Additional fee for each association |
40 |
11(iv) Additional fee for each new association |
125 |
13(v) Articles of conversion or a similar |
70 |
15(vi) Each ancillary transaction............ | 70 |
16(2) Foreign corporations: |
|
17(i) Certificates of authority or similar |
250 |
19(ii) Amended certificate of authority or |
250 |
21(iii) Domestication......................... | 125 |
22(iv) Statement of merger or consolidation or |
70 |
26(v) Additional fee for each qualified |
40 |
29(vi) Each ancillary transaction............. | 70 |
30(3) Partnerships and limited liability companies: |
|
1(i) Certificate of limited partnership or |
125 | |||||
6(ii) Certificate of merger, consolidation or |
70 | |||||
8(iii) Additional fee for each association |
40 | |||||
10(iv) Additional fee for each new association |
125 | |||||
12(v) Application for registration of foreign |
250 | |||||
15(vi) Certificate of amendment of |
250 | |||||
18(vii) Statement of registration of |
125 | |||||
22(viii) Domestication of foreign limited |
125 | |||||
24(ix) Each ancillary transaction............. | 70 | |||||
25(4) Unincorporated nonprofit associations: |
| |||||
26(i) Statement appointing an agent to receive |
70 | |||||
28(ii) Resignation of appointed agent.......... | 40 | |||||
29(iii) Amendment or cancellation of statement |
70 | |||||
1(5) Business trusts: |
| |||||
2(i) Deed of trust or other initial |
125 |
4(ii) Each ancillary transaction.............. | 70 |
5(6) Fictitious names: |
|
6(i) Registration............................ | 70 |
7(ii) Each ancillary transaction............. | 70 |
8(7) Service of process: |
|
9(i) Each defendant named or served........... | 70 |
10(ii) (Reserved).............................. |
|
11(8) Trademarks, emblems, union labels, |
|
13(i) Trademark registration.................. | 50 |
14(ii) Each ancillary trademark transaction... | 50 |
15(iii) Any other registration under this |
70 |
17(iv) Any other ancillary transaction under |
70 |
19(9) Uniform Commercial Code: As provided in 13 |
|
21(10) Copy fees, including copies furnished under |
|
23(i) Each page of photocopy furnished........ | 3 |
24(ii) (Reserved)............................. |
|
25(11) Certification fees: |
|
26(i) For certifying copies of any document or |
40 | |||||
30(ii) (Reserved)............................. |
| |||||
1(iii) For issuing any other certificate of |
40 | |||||
5(12) Report of record search other than a search |
|
7(i) For preparing and providing a report of |
15 |
10(ii) (Reserved)............................. |
|
11(13) Reservation and registration of names: |
|
12(i) Reservation of association name......... | 70 |
13(ii) Registration of foreign or other |
70 |
15(14) Change of registered office or address: |
|
16(i) Each statement of change of registered |
5 |
18(ii) Each statement or certificate of change |
5 |
20(iii) Each statement of change of address... | 5 |
21(15) Contingent domestication: |
|
22(i) Statement of contingent domestication... | 125 |
23(ii) Each year, or portion of a year, during |
1,500 |
26(16) Expedited service: |
|
27(i) For the processing of any filing under
1hour, an additional fee of....................... |
1,000 |
2(ii) For the processing of any filing under |
300 |
7(iii) For processing of any filing under |
100 |
12* * *
13§ 155. Disposition of funds.
14(a) [Establishment of restricted account.--] Corporation
15Bureau Restricted Account.--The Corporation Bureau Restricted
16Account, established under section 814 of the act of April 9,
171929 (P.L.177, No.175), known as The Administrative Code of
181929, is continued. This account shall receive 30% of the amount
19received by the department under this subchapter except for the
20fees collected under 13 Pa.C.S. § 9525(a)(1)(ii) (relating to
21fees). This account shall receive 5% of the amount received by
22the department under 13 Pa.C.S. § 9525(a)(1)(ii). The balance of
23the amount received by the department under this subchapter
24shall be deposited in the General Fund. Money in the account
25shall be used solely for the operation of the bureau and for its
26modernization as may be required for improved operations of the
27bureau unless a surplus arises after two consecutive years, at
28which time the Secretary of the Commonwealth shall transfer any
29amount in excess of the bureau's budget into the General Fund.
30(b) Expenditures.--The [Department of State] department
1shall submit a budget for the operation or modernization of the
2[Corporation Bureau] bureau to the Governor for approval. Such
3funds as are approved by the Governor are hereby appropriated
4from the Corporation Bureau Restricted Account to the
5[Department of State] department for the operation of the
6bureau.
7* * *
8Section 6. The introductory paragraph and the definitions of
9"act," "banking institution," "corporation for profit,"
10"corporation not-for-profit," "court," "credit union,"
11"department," "distribution," "domestic corporation for profit,"
12"domestic corporation not-for-profit," "foreign corporation for
13profit," "foreign corporation not-for-profit," "insurance
14corporation," "Internal Revenue Code of 1986," "obligation,"
15"officially publish," "representative," "savings association"
16and "voting" in section 1103 of Title 15 are amended and the
17section is amended by adding a subsection to read:
18§ 1103. Definitions.
19(a) General definitions.--Subject to additional definitions
20contained in subsequent provisions of this subpart that are
21applicable to specific provisions of this subpart, the following
22words and phrases when used in this subpart shall have the
23meanings given to them in this section unless the context
24clearly indicates otherwise:
25["Act" or "action." Includes failure to act.]
26* * *
27["Banking institution" or "domestic banking institution." A
28domestic corporation for profit that is an institution as
29defined in the act of November 30, 1965 (P.L.847, No.356), known
30as the Banking Code of 1965.]
1* * *
2["Corporation for profit." A corporation incorporated for a
3purpose or purposes involving pecuniary profit, incidental or
4otherwise, to its shareholders or members.
5"Corporation not-for-profit." A corporation not incorporated
6for a purpose or purposes involving pecuniary profit, incidental
7or otherwise.
8"Court." Subject to any inconsistent general rule prescribed
9by the Supreme Court of Pennsylvania:
10(1) the court of common pleas of the judicial district
11embracing the county where the registered office of the
12corporation is or is to be located; or
13(2) where a corporation results from a merger,
14consolidation, division or other transaction without
15establishing a registered office in this Commonwealth or
16withdraws as a foreign corporation, the court of common pleas
17in which venue would have been laid immediately prior to the
18transaction or withdrawal.
19"Credit union." A credit union as defined in 17 Pa.C.S. §
20102 (relating to application of title).
21"Department." The Department of State of the Commonwealth.]
22* * *
23"Distribution." A direct or indirect transfer of money or
24other property (except its own shares or options, rights or
25warrants to acquire its own shares) or incurrence of
26indebtedness by a corporation to or for the benefit of any or
27all of its shareholders in respect of any of its shares whether
28by dividend or by purchase, redemption or other acquisition of
29its shares or otherwise. Neither the making of, nor payment or
30performance upon, a guaranty or similar arrangement by a
1corporation for the benefit of any or all of its shareholders
2nor a direct or indirect transfer or allocation of assets or
3liabilities effected under Chapter 19 (relating to fundamental
4changes) with the approval of the shareholders shall constitute
5a distribution for the purposes of this subpart.
6["Domestic corporation for profit." A corporation for profit
7incorporated under the laws of this Commonwealth.
8"Domestic corporation not-for-profit." A corporation not-
9for-profit incorporated under the laws of this Commonwealth.]
10* * *
11["Foreign corporation for profit." A corporation for profit
12incorporated under any laws other than those of this
13Commonwealth.
14"Foreign corporation not-for-profit." A corporation not-for-
15profit incorporated under any laws other than those of this
16Commonwealth.]
17* * *
18["Insurance corporation" or "domestic insurance corporation."
19An insurance corporation as defined in section 3102 (relating to
20definitions).
21"Internal Revenue Code of 1986." The Internal Revenue Code
22of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).]
23* * *
24["Obligation." Includes a note or other form of
25indebtedness, whether secured or unsecured.]
26* * *
27["Officially publish." Publish in two newspapers of general
28circulation in the English language in the county in which the
29registered office of the corporation is located, or in the case
30of a proposed corporation is to be located, one of which shall
1be the legal newspaper, if any, designated by the rules of court
2for the publication of legal notices or, if there is no legal
3newspaper, in two newspapers of general circulation in the
4county. When there is but one newspaper of general circulation
5in any county, advertisement in that newspaper shall be
6sufficient. Where no other frequency is specified, the notice
7shall be published one time in the appropriate newspaper or
8newspapers. See section 109(a)(2) (relating to name of
9commercial registered office provider in lieu of registered
10address).]
11* * *
12["Representative." When used with respect to an association,
13joint venture, trust or other enterprise, means a person
14occupying the position or discharging the functions of a
15director, officer, employee or agent thereof, regardless of the
16name or title by which the person may be designated. The term
17does not imply that a director, as such, is an agent of a
18corporation.
19"Savings association" or "domestic savings association." A
20domestic corporation for profit that is an association as
21defined in the act of December 14, 1967 (P.L.746, No.345), known
22as the Savings Association Code of 1967.]
23* * *
24"Voting" or "casting a vote." Includes the giving of
25[written] consent in lieu of voting. The term does not include
26either recording the fact of abstention or failing to vote for a
27candidate or for approval or disapproval of a matter, whether or
28not the person entitled to vote characterizes the conduct as
29voting or casting a vote.
30(b) Index of other definitions.--The following is a
1nonexclusive list of words and phrases which when used in this
2subpart shall have the meanings given to them in section 102
3(relating to definitions):
4"Act" or "action."
5"Banking institution" or "domestic banking institution."
6"Corporation for profit."
7"Corporation not-for-profit."
8"Court."
9"Credit union."
10"Department."
11"Domestic corporation for profit."
12"Domestic corporation not-for-profit."
13"Execute."
14"Foreign corporation for profit."
15"Foreign corporation not-for-profit."
16"Insurance corporation" or "domestic insurance corporation."
17"Internal Revenue Code of 1986."
18"Obligation."
19"Officially publish."
20"Record form."
21"Representative."
22"Savings association" or "domestic savings association."
23"Sign."
24Section 7. Section 1104 of Title 15 is repealed:
25[§ 1104. Other general provisions.
26The following provisions of this title are applicable to
27corporations subject to this subpart:
28Section 101 (relating to short title and application of
29title).
30Section 102 (relating to definitions).
1Section 103 (relating to subordination of title to regulatory
2laws).
3Section 104 (relating to equitable remedies).
4Section 105 (relating to fees).
5Section 106 (relating to effect of filing papers required to
6be filed).
7Section 107 (relating to form of records).
8Section 108 (relating to change in location or status of
9registered office provided by agent).
10Section 109 (relating to name of commercial registered office
11provider in lieu of registered address).
12Section 110 (relating to supplementary general principles of
13law applicable).
14Section 132 (relating to functions of Department of State).
15Section 133 (relating to powers of Department of State).
16Section 134 (relating to docketing statement).
17Section 135 (relating to requirements to be met by filed
18documents).
19Section 136 (relating to processing of documents by
20Department of State).
21Section 137 (relating to court to pass upon rejection of
22documents by Department of State).
23Section 138 (relating to statement of correction).
24Section 139 (relating to tax clearance of certain fundamental
25transactions).
26Section 140 (relating to custody and management of orphan
27corporate and business records).
28Section 152 (relating to definitions).
29Section 153 (relating to fee schedule).
30Section 154 (relating to enforcement and collection).
1Section 155 (relating to disposition of funds).
2Section 162 (relating to contingent domestication of certain
3foreign associations).
4Section 501 (relating to reserved power of General Assembly).
5Section 503 (relating to actions to revoke corporate
6franchises).
7Section 504 (relating to validation of certain defective
8corporations).
9Section 505 (relating to validation of certain defective
10corporate acts).
11Section 506 (relating to scope and duration of certain
12franchises).
13Section 507 (relating to validation of certain share
14authorizations).]
15Section 8. Section 1306 of Title 15 is amended by adding a
16subsection to read:
17§ 1306. Articles of incorporation.
18* * *
19(e) Reference to external facts.--Except for the provisions
20required by subsection (a)(1), (2), (3), (4)(i), (5) and (7),
21any provision of the articles of incorporation may be made
22dependent upon facts ascertainable outside of the articles if
23the manner in which the facts will operate upon the provision is
24set forth in the articles. The facts may include actions or
25events within the control of or determinations made by the
26corporation or a representative of the corporation.
27Section 9. Sections 1504(c) and 1523 of Title 15 are amended
28to read:
29§ 1504. Adoption, amendment and contents of bylaws.
30* * *
1(c) Bylaw provisions in articles.--Where any provision of
2this subpart or any other provision of law refers to a rule as
3set forth in the bylaws of a corporation or in a bylaw adopted
4by the shareholders, the reference shall be construed to include
5and be satisfied by any rule on the same subject as set forth in
6the articles of the corporation.
7* * *
8§ 1523. Pricing and issuance of shares.
9Except as otherwise restricted in the bylaws, shares of a
10business corporation may be issued at a price determined by the
11board of directors[,]; or the board may [set a minimum price or
12establish a formula or method by which the price may be
13determined.] authorize one or more directors or one or more
14officers, acting alone or with the participation of one or more
15directors, to determine, within limits, pursuant to a formula or
16method or subject to relevant criteria specifically prescribed
17by the board:
18(1) the persons that shares will be issued to; and
19(2) the number of shares, price or consideration and
20other terms on which shares will be issued.
21Section 10. Section 1527(a)(3) of Title 15 is amended and
22the section is amended by adding a subsection to read:
23§ 1527. Issuance of fractional shares or scrip.
24(a) General rule.--A business corporation may but shall not
25be required to create and issue fractions of a share, either
26represented by a certificate or uncertificated, which, unless
27otherwise provided in the articles, shall represent proportional
28interests in all the voting rights, preferences, limitations and
29special rights, if any, of full shares. If the corporation
30creates but does not provide for the issuance of fractions of a
1share, it shall:
2* * *
3(3) issue scrip or other evidence of ownership, in
4registered form (either represented by a certificate or
5uncertificated) or in bearer form (represented by a
6certificate), entitling the holder to receive a full share
7upon the surrender of the scrip or other evidence of
8ownership aggregating a full share, or the transfer of
9uncertificated scrip aggregating a full share, but which
10shall not[, unless otherwise provided therein or with respect
11thereto,] entitle the holder to exercise any voting right, to
12receive dividends or to participate in any of the assets of
13the corporation in the event of liquidation.
14* * *
15(c) Limitation.--The articles may not provide that scrip or
16other evidence of ownership entitles the holder to exercise any
17voting right, to receive dividends or to participate in any of
18the assets of the corporation in the event of liquidation.
19Section 11. Section 1528 of Title 15 is amended by adding a
20subsection to read:
21§ 1528. Shares represented by certificates and uncertificated
22shares.
23* * *
24(g) Bearer shares prohibited.--A business corporation may
25not issue share certificates in bearer form. This subsection may
26not be varied by the articles.
27Section 12. Section 1529(b) of Title 15 is amended to read:
28§ 1529. Transfer of securities; restrictions.
29* * *
30(b) Transfer restrictions generally.--A restriction on the
1transfer or registration of transfer of securities of a business
2corporation may be imposed by the bylaws or by an agreement
3among any number of securityholders or among them and the
4corporation. A restriction so imposed shall not be binding with
5respect to securities issued prior to the adoption of the
6restriction unless the holders of the securities are parties to
7the agreement or voted in favor of the restriction. A
8restriction may be amended by the vote or consent, and otherwise
9in the manner, provided in the bylaws or agreement for amending
10the restriction or, in the absence of such a provision, as
11provided for amending the bylaws or agreement generally.
12* * *
13Section 13. Section 1552(b) of Title 15 is redesignated and
14the section is amended by adding subsections to read:
15§ 1552. Power of corporation to acquire its own shares.
16* * *
17(b) Security for acquisition.--In connection with an
18acquisition by a corporation of its shares, the corporation may
19grant a security interest in the acquired shares to secure an
20obligation to pay for the acquisition. A share shall not be
21canceled on the books of the corporation until the obligation of
22the corporation secured by the share is fully paid or
23discharged.
24(c) Application of distribution tests.--A corporation may
25acquire or agree to acquire its shares, even though the
26acquisition would violate section 1551 (relating to
27distributions to shareholders), if payment of all or part of the
28purchase price is deferred until the payment would not violate
29that section.
30[(b)] (d) Cross reference.--See section 1914(c)(2) (relating
1to adoption by board of directors).
2Section 14. Section 1575(a) introductory paragraph of Title
315 is amended to read:
4§ 1575. Notice to demand payment.
5(a) General rule.--If the proposed corporate action is
6approved by the required vote at a meeting of shareholders of a
7business corporation, the corporation shall mail a further
8notice to all dissenters who gave due notice of intention to
9demand payment of the fair value of their shares and who
10refrained from voting in favor of the proposed action. If the
11proposed corporate action is [to be] approved by the
12shareholders by less than unanimous consent without a meeting or
13is taken without [a vote of] the need for approval by the
14shareholders, the corporation shall send to all shareholders who
15are entitled to dissent and demand payment of the fair value of
16their shares a notice of the adoption of the plan or other
17corporate action. In either case, the notice shall:
18* * *
19Section 15. Section 1704(a) and (b) of Title 15 are amended
20and the section is amended by adding subsections to read:
21§ 1704. Place and notice of meetings of shareholders.
22(a) Place.--Meetings of shareholders may be held at such
23geographic location within or without this Commonwealth as may
24be provided in or fixed pursuant to the bylaws. Unless otherwise
25provided in or pursuant to the bylaws, all meetings of the
26shareholders shall be held at the executive office of the
27corporation wherever situated. If a meeting of the shareholders
28is held by means of the Internet or other electronic
29communications technology in a fashion pursuant to which the
30shareholders have the opportunity to read or hear the
1proceedings substantially concurrently with their occurrence,
2vote on matters submitted to the shareholders [and], pose
3questions to the directors, make appropriate motions and comment
4on the business of the meeting, the meeting need not be held at
5a particular geographic location.
6(b) Notice.--[Written notice] Notice in record form of every
7meeting of the shareholders shall be given by, or at the
8direction of, the secretary or other authorized person to each
9shareholder of record entitled to vote at the meeting at least:
10(1) ten days prior to the day named for a meeting that
11will consider a fundamental change under Chapter 19 (relating
12to fundamental changes); or
13(2) five days prior to the day named for the meeting in
14any other case.
15[If the secretary or other authorized person neglects or refuses
16to give notice of a meeting, the person or persons calling the
17meeting may do so.]
18* * *
19(d) Alternative authority.--If the secretary or other
20authorized person neglects or refuses to give notice of a
21meeting, a person calling the meeting may do so.
22(e) Cross reference.--See section 2528 (relating to notice
23of shareholder meetings).
24Section 16. Sections 1705(a), 1727(b), 1756(a)(4) and
251759(a), (c) and (e) of Title 15 are amended to read:
26§ 1705. Waiver of notice.
27(a) [Written waiver] General rule.--Whenever any [written]
28notice is required to be given under the provisions of this
29subpart or the articles or bylaws of any business corporation, a
30waiver thereof [in writing, signed] which is filed with the
1secretary of the corporation in record form signed by the person
2or persons entitled to the notice, whether before or after the
3time stated therein, shall be deemed equivalent to the giving of
4the notice. Neither the business to be transacted at, nor the
5purpose of, a meeting need be specified in the waiver of notice
6of the meeting.
7* * *
8§ 1727. Quorum of and action by directors.
9* * *
10(b) Action by consent.--Unless otherwise restricted in the
11bylaws, any action required or permitted to be [taken] approved
12at a meeting of the directors may be [taken] approved without a
13meeting if[, prior or subsequent to the action,] a consent or
14consents [thereto] to the action in record form are signed,
15before, on or after the effective date of the action, by all of
16the directors in office [is] on the date the first consent is
17signed. The consent or consents must be filed with the
18[secretary of the corporation] minutes of the proceedings of the
19board of directors.
20§ 1756. Quorum.
21(a) General rule.--A meeting of shareholders of a business
22corporation duly called shall not be organized for the
23transaction of business unless a quorum is present. Unless
24otherwise provided in a bylaw adopted by the shareholders:
25* * *
26(4) If a proxy casts a vote or takes other action on
27behalf of a shareholder on any issue other than a procedural
28motion considered at a meeting of shareholders, the
29shareholder shall be deemed to be present during the entire
30meeting for purposes of determining whether a quorum is
1present for consideration of any other issue.
2* * *
3§ 1759. Voting and other action by proxy.
4(a) General rule.--
5(1) Every shareholder entitled to vote at a meeting of
6shareholders or to express consent or dissent to corporate
7action [in writing] without a meeting may authorize another
8person to act for him by proxy.
9(2) The [presence of, or] vote or other action on behalf
10of a shareholder at a meeting of shareholders, or the
11expression of consent or dissent to corporate action [in
12writing], by a proxy of a shareholder shall constitute the
13[presence of, or] vote or action by, or [written] consent or
14dissent of the shareholder for the purposes of this subpart.
15(3) Where two or more proxies of a shareholder are
16present, the corporation shall, unless otherwise expressly
17provided in the proxy, accept as the vote or other action of
18all shares represented thereby the vote cast or other action
19taken by a majority of them and, if a majority of the proxies
20cannot agree whether the shares represented shall be voted or
21upon the manner of voting the shares or taking the other
22action, the voting of the shares or right to take other
23action shall be divided equally among those persons.
24* * *
25(c) Revocation.--A proxy, unless coupled with an interest,
26shall be revocable at will, notwithstanding any other agreement
27or any provision in the proxy to the contrary, but the
28revocation of a proxy shall not be effective until notice
29thereof has been given to the secretary of the corporation or
30its designated agent in writing or by electronic transmission.
1An unrevoked proxy shall not be valid after three years from the
2date of its [execution] signature, authentication or
3transmission unless a longer time is expressly provided therein.
4A proxy shall not be revoked by the death or incapacity of the
5maker unless, before the vote is counted or the authority is
6exercised, [written] notice in record form of the death or
7incapacity is given to the secretary of the corporation or its
8designated agent.
9* * *
10(e) Cross [reference] references.--See [section] sections
111702 (relating to manner of giving notice) and 3135 (relating to
12proxies of members of mutual insurance companies).
13Section 17. Section 1764(a) of Title 15 is amended and the
14section is amended by adding a subsection to read:
15§ 1764. Voting lists.
16(a) General rule.--The officer or agent having charge of the
17transfer books for shares of a business corporation shall make a
18complete list of the shareholders entitled to vote at any
19meeting of shareholders, arranged in alphabetical order, with
20the address of and the number of shares held by each. This
21section does not require the corporation to include electronic
22mail addresses or other electronic contact information on the
23list. The list shall be produced and kept open at the time and
24place of [the] each meeting of shareholders of a nonregistered
25corporation held at a geographic location and shall be subject
26to the inspection of any shareholder during the whole time of
27the meeting for the purposes thereof [except that, if a business
28corporation has 5,000 or more shareholders, in lieu of the
29making of the list the corporation may make the information
30therein available at the meeting by any other means]. See
1section 2529 (relating to voting lists).
2* * *
3(c) Electronic meetings.--If a meeting of shareholders of a
4nonregistered corporation is not held at a geographic location,
5the corporation shall make the list of shareholders required by
6subsection (a) available in a reasonably accessible manner.
7Section 18. Section 1766(a), (b) and (d) of Title 15 are
8amended to read:
9§ 1766. Consent of shareholders in lieu of meeting.
10(a) Unanimous consent.--Unless otherwise restricted in the
11bylaws, any action required or permitted to be taken at a
12meeting of the shareholders or of a class of shareholders of a
13business corporation may be taken without a meeting if[, prior
14or subsequent to the action,] a consent or consents [thereto] to
15the action in record form are signed, before, on or after the
16effective date of the action, by all of the shareholders who
17would be entitled to vote at a meeting for such purpose [shall
18be filed]. The consent or consents must be filed with the
19[secretary of the corporation] minutes of the proceedings of the
20shareholders.
21(b) Partial consent.--If the bylaws so provide, any action
22required or permitted to be taken at a meeting of the
23shareholders or of a class of shareholders may be taken without
24a meeting upon the signed consent of shareholders who would have
25been entitled to cast the minimum number of votes that would be
26necessary to authorize the action at a meeting at which all
27shareholders entitled to vote thereon were present and voting.
28The consents shall be filed in record form with the [secretary
29of the corporation] minutes of the proceedings of the
30shareholders.
1* * *
2(d) Cross [reference] references.--See [section] sections
31702 (relating to manner of giving notice) and 2524 (relating to
4consent of shareholders in lieu of meeting).
5Section 19. Section 1906(d)(3) of Title 15 is amended and
6the section is amended by adding a subsection to read:
7§ 1906. Special treatment of holders of shares of same class or
8series.
9* * *
10(c.1) Determination of groups.--For purposes of applying
11subsections (a)(1) and (b), the determination of which
12shareholders are part of each group receiving special treatment
13shall be made as of the record date for shareholder action on
14the plan.
15(d) Exceptions.--This section shall not apply to:
16* * *
17(3) A plan that contains an express provision that this
18section shall not apply or that fails to contain an express
19provision that this section shall apply. [The shareholders of
20a corporation that proposes a plan to which this section is
21not applicable by reason of this paragraph shall have the
22remedies contemplated by section 1105 (relating to
23restriction on equitable relief).]
24* * *
25Section 20. Title 15 is amended by adding sections to read:
26§ 1907. Purpose of fundamental transactions.
27A transaction under this chapter does not require an
28independent business purpose in order for the transaction to be
29lawful.
30§ 1908. Submission of matters to shareholders.
1A business corporation may agree, in record form, to submit
2an amendment or plan to its shareholders whether or not the
3board of directors determines, at any time after approving the
4matter, that the matter is no longer advisable and recommends
5that the shareholders reject or vote against it, regardless of
6whether the board of directors changes its recommendation. If a
7corporation so agrees to submit a matter to its shareholders,
8the matter is deemed to have been validly adopted by the
9corporation when it has been approved by the shareholders.
10Section 21. Sections 1911(a)(4), 1913, 1922(a)(3), 1923,
111931(a), (b)(2), (d) and (g), 1957(b)(1)(iv), 1973, 1978(b) and
122522 of Title 15 are amended to read:
13§ 1911. Amendment of articles authorized.
14(a) General rule.--A business corporation, in the manner
15provided in this subchapter, may from time to time amend its
16articles for one or more of the following purposes:
17* * *
18(4) To cancel or otherwise affect the right of holders
19of the shares of any class or series to receive dividends
20that have accrued but have not been declared or to otherwise
21effect a reclassification of or otherwise affect the
22substantial rights of the holders of any shares, including,
23without limitation, by providing special treatment of shares
24held by any shareholder or group of shareholders [as
25authorized by, and subject to the provisions of,] consistent
26with section 1906 (relating to special treatment of holders
27of shares of same class or series).
28* * *
29§ 1913. Notice of meeting of shareholders.
30(a) General rule.--[Written notice] Notice in record form of
1the meeting of shareholders of a business corporation that will
2act on the proposed amendment [shall] must be given to each
3shareholder entitled to vote thereon. [There shall be included
4in, or enclosed with, the notice a copy of] The notice must
5include the proposed amendment or a summary of the changes to be
6effected thereby and, if Subchapter D of Chapter 15 (relating to
7dissenters rights) is applicable, [a copy] the text of that
8subchapter.
9(b) Cross [reference] references.--See Subchapter A of
10Chapter 17 (relating to notice and meetings generally) and
11section 2528 (relating to notice of shareholder meetings).
12§ 1922. Plan of merger or consolidation.
13(a) Preparation of plan.--A plan of merger or consolidation,
14as the case may be, shall be prepared, setting forth:
15* * *
16(3) The manner and basis of converting the shares of
17each corporation into shares or other securities or
18obligations of the surviving or new corporation, or of
19canceling some or all of the shares of a corporation, as the
20case may be, and, if any of the shares of any of the
21corporations that are parties to the merger or consolidation
22are not to be canceled or converted solely into shares or
23other securities or obligations of the surviving or new
24corporation, the shares or other securities or obligations of
25any other person or cash, property or rights that the holders
26of such shares are to receive in exchange for, or upon
27conversion of, such shares, and the surrender of any
28certificates evidencing them, which securities or
29obligations, if any, of any other person or cash, property or
30rights may be in addition to or in lieu of the shares or
1other securities or obligations of the surviving or new
2corporation.
3* * *
4§ 1923. Notice of meeting of shareholders.
5(a) General rule.--[Written notice] Notice in record form of
6the meeting of shareholders that will act on the proposed plan
7[shall] must be given to each shareholder of record, whether or
8not entitled to vote thereon, of each domestic business
9corporation that is a party to the merger or consolidation.
10[There shall be included in, or enclosed with, the notice a copy
11of] The notice must include or be accompanied by the proposed
12plan or a summary thereof [and, if]. If Subchapter D of Chapter
1315 (relating to dissenters rights) is applicable to the holders
14of shares of any class or series, [a copy] the text of that
15subchapter and of section 1930 (relating to dissenters rights)
16[shall] must be furnished to the holders of shares of that class
17or series. If the surviving or new corporation will be a
18nonregistered corporation, the notice [shall] must state that a
19copy of its bylaws as they will be in effect immediately
20following the merger or consolidation will be furnished to any
21shareholder on request and without cost.
22(b) Cross references.--See Subchapter A of Chapter 17
23(relating to notice and meetings generally) and [section]
24sections 2512 (relating to dissenters rights procedure) and 2528
25(relating to notice of shareholder meetings).
26§ 1931. Share exchanges.
27(a) General rule.--All the outstanding shares of one or more
28classes or series of a domestic business corporation, designated
29in this section as the exchanging corporation, may, in the
30manner provided in this section, be acquired by any person,
1designated in this section as the acquiring person, through an
2exchange of all the shares pursuant to a plan of exchange. The
3plan of exchange may also provide for the [conversion of any
4other] shares of any other class or series of the exchanging
5corporation to be canceled or converted into shares, other
6securities or obligations of any person or cash, property or
7rights. The procedure authorized by this section shall not be
8deemed to limit the power of any person to acquire all or part
9of the shares or other securities of any class or series of a
10corporation through a voluntary exchange or otherwise by
11agreement with the holders of the shares or other securities.
12(b) Plan of exchange.--A plan of exchange shall be prepared,
13setting forth:
14* * *
15(2) The manner and basis of canceling the shares of the
16exchanging corporation or exchanging or converting the shares
17of the exchanging corporation into shares or other securities
18or obligations of the acquiring person, and, if any of the
19shares of the exchanging corporation are not to be exchanged
20or converted solely into shares or other securities or
21obligations of the acquiring person, the shares or other
22securities or obligations of any other person or cash,
23property or rights that the holders of the shares of the
24exchanging corporation are to receive in exchange for, or
25upon conversion of, the shares and the surrender of any
26certificates evidencing them, which securities or
27obligations, if any, of any other person or cash, property
28and rights may be in addition to or in lieu of the shares or
29other securities or obligations of the acquiring person.
30* * *
1(d) Dissenters rights in share exchanges.--Any holder of
2shares that are to be canceled, exchanged or converted pursuant
3to a plan of exchange who objects to the plan and complies with
4the provisions of Subchapter D of Chapter 15 shall be entitled
5to the rights and remedies of dissenting shareholders therein
6provided, if any. See section 1906(c) (relating to dissenters
7rights upon special treatment).
8* * *
9(g) Effect of plan.--Upon the plan of exchange becoming
10effective, the shares of the exchanging corporation that are,
11under the terms of the plan, to be canceled, converted or
12exchanged shall cease to exist or shall be converted or
13exchanged. The former holders of the shares shall thereafter be
14entitled only to the shares, other securities or obligations or
15cash, property or rights into which they have been converted or
16for which they have been exchanged in accordance with the plan,
17and the acquiring person shall be the holder of the shares of
18the exchanging corporation stated in the plan to be acquired by
19such person. The articles of incorporation of the exchanging
20corporation shall be deemed to be amended to the extent, if any,
21that changes in its articles are stated in the plan of exchange.
22* * *
23§ 1957. Effect of division.
24* * *
25(b) Property rights; allocations of assets and
26liabilities.--
27(1) * * *
28(iv) [To] Except as provided in section 1952(g)
29(relating to proposal and adoption of plan of division),
30to the extent allocations of liabilities are contemplated
1by the plan of division, the liabilities of the dividing
2corporation shall be deemed without further action to be
3allocated to and become the liabilities of the resulting
4corporations on such a manner and basis and with such
5effect as is specified in the plan; and one or more, but
6less than all, of the resulting corporations shall be
7free of the liabilities of the dividing corporation to
8the extent, if any, specified in the plan, if in either
9case:
10(A) no fraud on minority shareholders or
11shareholders without voting rights or violation of
12law shall be effected thereby; and
13(B) the plan does not constitute a fraudulent
14transfer under 12 Pa.C.S. Ch. 51 (relating to
15fraudulent transfers).
16* * *
17§ 1973. Notice of meeting of shareholders.
18(a) General rule.--[Written notice] Notice in record form of
19the meeting of shareholders that will consider the resolution
20recommending dissolution of the business corporation [shall]
21must be given to each shareholder of record entitled to vote
22thereon [and the purpose shall be included]. The purpose of the
23meeting must be stated in the notice [of the meeting].
24(b) Cross [reference] references.--See Subchapter A of
25Chapter 17 (relating to notice and meetings generally) and
26section 2528 (relating to notice of shareholder meetings).
27§ 1978. Winding up of corporation after dissolution.
28* * *
29(b) Standard of care of directors and officers.--The
30dissolution of the corporation shall not subject its directors
1or officers to standards of conduct different from those
2prescribed by or pursuant to Chapter 17 (relating to officers,
3directors and shareholders). Directors of a dissolved
4corporation who have complied with section 1975 (relating to
5predissolution provision for liabilities) or Subchapter H
6(relating to postdissolution provision for liabilities) and
7governing persons of a successor entity who have complied with
8Subchapter H shall not be personally liable to the creditors or
9claimants of the dissolved corporation.
10§ 2522. Adjournment of meetings of shareholders.
11[Any] Except as otherwise provided in the bylaws, any regular
12or special meeting of the shareholders of a registered
13corporation, including one at which directors are to be elected,
14may be adjourned for such period as the shareholders present and
15entitled to vote shall direct.
16Section 22. Title 15 is amended by adding sections to read:
17§ 2528. Notice of shareholder meetings.
18If a registered corporation solicits proxies generally with
19respect to a meeting of its shareholders, the corporation is not
20required to give notice of the meeting to any shareholder to
21whom the corporation is not required to send a proxy statement
22pursuant to the rules of the Securities and Exchange Commission.
23§ 2529. Voting lists.
24A registered corporation is not required to produce or make
25available to its shareholders a list of shareholders in
26connection with any meeting of its shareholders for which a
27judge or judges of election are appointed, but such a list must
28be furnished to the judge or judges of election.
29Section 23. Section 2545(b) of Title 15 is amended and the
30section is amended by adding a subsection to read:
1§ 2545. Notice to shareholders.
2* * *
3(b) Obligations of the corporation.--If the controlling
4person or group so requests, the corporation shall, at the
5option of the corporation and at the expense of the person or
6group, either furnish a list of all such shareholders and their
7postal addresses to the person or group or [mail] provide the
8notice to all such shareholders.
9* * *
10(e) Cross reference.--See section 1702 (relating to manner
11of giving notice).
12Section 24. Sections 3133(a) introductory paragraph and 3135
13of Title 15 are amended to read:
14§ 3133. Notice of meetings of members of mutual insurance
15companies.
16(a) General rule.--Unless otherwise restricted in the
17bylaws, persons authorized or required to give notice of an
18annual meeting of members of a mutual insurance company for the
19election of directors or of a meeting of members of a mutual
20insurance company called for the purpose of considering
21amendment of the articles or bylaws, or both, of the corporation
22may, in lieu of any [written] notice of meeting of members
23required to be given by this subpart, give notice of such
24meeting by causing notice of such meeting to be officially
25published. Such notice shall be published each week for at
26least:
27* * *
28§ 3135. Proxies of members of mutual insurance companies.
29In no event shall a proxy given by a member of a mutual
30insurance company, unless coupled with an interest, be voted on
1or utilized to express consent or dissent to corporate action
2[in writing] after 11 months from the date of execution of the
3proxy.
4Section 24.1. Section 3322(a) and (b) of Title 15 are
5amended and the section is amended by adding a subsection to
6read:
7§ 3322. Benefit director.
8(a) General rule.--
9(1) The board of directors of a benefit corporation
10which is a registered corporation shall include a director
11who:
12(i) shall be designated as the benefit director; and
13(ii) shall have, in addition to all of the powers,
14duties, rights and immunities of the other directors of
15the benefit corporation, the powers, duties, rights and
16immunities provided in this subchapter.
17(2) The board of directors of a benefit corporation
18which is not a registered corporation may include a director
19who:
20(i) shall be designated as the benefit director; and
21(ii) shall have, in addition to all of the powers,
22duties, rights and immunities of the other directors of
23the benefit corporation, the powers, duties, rights and
24immunities provided in this subchapter.
25(b) Election, removal and qualifications.--The benefit
26director shall be elected and may be removed in the manner
27provided under Subchapter C of Chapter 17 (relating to directors
28and officers) [and]. Except as set forth in subsection (e)(2)(i)
29or (g), the benefit director shall be an individual who is
30independent. The benefit director may serve as the benefit
1officer at the same time as serving as the benefit director. The
2articles or bylaws of a benefit corporation may prescribe
3additional qualifications of the benefit director not
4inconsistent with this subsection.
5* * *
6(g) Professional corporations.--The benefit director of a
7professional corporation does not need to be independent.
8Section 24.2. Sections 3325(b)(2)(i) and (iii) and 3331(a)
9(5) of Title 15, added October 24, 2012 (P.L.1228, No.152), are
10amended to read:
11§ 3325. Right of action.
12* * *
13(b) Parties with standing.--A benefit enforcement proceeding
14may be commenced or maintained only:
15* * *
16(2) derivatively by:
17(i) a shareholder that owned at least 2% of the
18total number of shares of a class or series outstanding
19at the time of the act complained of;
20* * *
21(iii) a person or group of persons that owns
22beneficially or of record 5% or more of the equity
23interests in an association of which the benefit
24corporation is a subsidiary at the time of the act
25complained of; or
26* * *
27§ 3331. Annual benefit report.
28(a) Contents.--A benefit corporation must deliver to each
29shareholder an annual benefit report including:
30* * *
1[(5) The name of each person that owns 5% or more of the
2outstanding shares of the benefit corporation either
3beneficially, to the extent known to the benefit corporation
4without independent investigation, or of record.]
5* * *
6Section 24.3. Section 4127(a) introductory paragraph and
7(5), (b) and (d) of Title 15 are amended to read:
8§ 4127. Merger, consolidation or division of qualified foreign
9corporations.
10(a) General rule.--Whenever a qualified foreign business
11corporation is a nonsurviving party to a statutory merger,
12consolidation or division permitted by the laws of the
13jurisdiction under which it is incorporated, the corporation or
14other association surviving the merger, or the new corporation
15or other association resulting from the consolidation or
16division, as the case may be, shall file in the [Department of
17State] department a statement of merger, consolidation or
18division, which shall be executed by the surviving or new
19corporation or other association and shall set forth:
20* * *
21(5) In the case of a merger, consolidation or division
22in which any of the new or resulting associations is a
23corporation, or if the surviving corporation in a merger was
24a nonqualified foreign business corporation prior to the
25merger, the statements on the part of the surviving or each
26new or resulting corporation required by section 4124(a)
27(relating to application for a certificate of authority).
28(b) Effect of filing.--The filing of the statement shall
29operate, as of the effective date of the merger, consolidation
30or division, to cancel the certificate of authority of each
1nonsurviving constituent corporation that was a qualified
2foreign business corporation and to qualify the surviving [or
3new corporation], new or resulting corporations, under this
4subchapter. If the surviving [or new corporation does], new or
5resulting corporations do not desire to continue as [a]
6qualified foreign business [corporation, it] corporations, they
7may thereafter withdraw in the manner provided by section 4129
8(relating to application for termination of authority).
9* * *
10(d) Cross [reference] references.--See [section] sections
11134 (relating to docketing statement) and 135 (relating to
12requirements to be met by filed documents).
13Section 25. The introductory paragraph and the definitions
14of "act," "board of directors," "bylaws," "charitable purposes,"
15"corporation for profit," "corporation not-for-profit," "court,"
16"department," "directors," "domestic corporation for profit,"
17"domestic corporation not-for-profit," "foreign corporation for
18profit," "foreign corporation not-for-profit," "fraternal
19benefit society," "member," "nonprofit corporation,"
20"nonqualified foreign corporation," "other body,"
21"representative," "trust instrument," "unless otherwise
22provided" and "unless otherwise restricted," in section 5103 of
23Title 15 are amended and the section is amended by adding
24definitions and a subsection to read:
25§ 5103. Definitions.
26(a) General definitions.--Subject to additional definitions
27contained in subsequent provisions of this subpart that are
28applicable to specific provisions of this subpart, the following
29words and phrases when used in this subpart shall have the
30meanings given to them in this section unless the context
1clearly indicates otherwise:
2["Act" or "action." Includes failure to act.]
3"Amendment." An amendment of the articles.
4* * *
5"Board of directors" or "board." The group of persons
6[vested with the management of] under the direction of whom the
7business and affairs of the corporation are managed irrespective
8of the name by which [such] the group is designated. The term
9does not include an other body. [The term, when used in any
10provision of this subpart relating to the organization or
11procedures of or the manner of taking action by the board of
12directors, shall be construed to include and refer to any
13executive or other committee of the board. Any provision of this
14subpart relating or referring to action to be taken by the board
15of directors or the procedure required therefor shall be
16satisfied by the taking of corresponding action by a committee
17of the board of directors to the extent authority to take such
18action has been delegated to such committee pursuant to section
195731 (relating to executive and other committees of the board).]
20See section 5731(c) (relating to executive and other committees
21of the board).
22* * *
23"Business corporation." A domestic corporation for profit
24defined in section 1103 (relating to definitions).
25"Bylaws." The code or codes of rules adopted for the
26regulation or management of the business and affairs of the
27corporation irrespective of the name or names by which [such]
28the rules are designated. The term includes provisions of the
29articles as provided by section 5504(c) (relating to adoption,
30amendment and contents of bylaws).
1"Charitable purposes." The relief of poverty, the
2advancement and provision of education, including postsecondary
3education, the advancement of religion, [the promotion of
4health,] the prevention and treatment of disease or injury,
5including mental retardation and mental disorders, governmental
6or municipal purposes, and any other [purposes] purpose the
7accomplishment of which is recognized as important and
8beneficial to the [community] public.
9* * *
10["Corporation for profit." A corporation incorporated for a
11purpose or purposes involving pecuniary profit, incidental or
12otherwise, to its shareholders or members.
13"Corporation not-for-profit." A corporation not incorporated
14for a purpose or purposes involving pecuniary profit, incidental
15or otherwise.
16"Court." Subject to any inconsistent general rule prescribed
17by the Supreme Court of Pennsylvania:
18(1) the court of common pleas of the judicial district
19embracing the county where the registered office of the
20corporation is or is to be located; or
21(2) where a corporation results from a merger,
22consolidation, division or other transaction without
23establishing a registered office in this Commonwealth or
24withdraws as a foreign corporation, the court of common pleas
25in which venue would have been laid immediately prior to the
26transaction or withdrawal.
27"Department." The Department of State of the Commonwealth.]
28"Directors." [Persons] Individuals designated, elected or
29appointed, by that or any other name or title, to act as members
30of the board of directors, and their successors. The term does
1not include a member of an other body, [as such] unless the
2person is also a director. The term, when used in relation to
3any power or duty requiring collective action, shall be
4construed to mean "board of directors."
5* * *
6["Domestic corporation for profit." A corporation for profit
7incorporated under the laws of this Commonwealth.
8"Domestic corporation not-for-profit." A corporation not-
9for-profit incorporated under the laws of this Commonwealth.]
10"Employee." The term does not include a member, director or
11member of an other body, unless the person is also an employee.
12See section 5730 (relating to compensation of directors) as to
13acceptance by a director of duties that make the director also
14an employee.
15* * *
16["Foreign corporation for profit." A corporation for profit
17incorporated under any laws other than those of this
18Commonwealth.
19"Foreign corporation not-for-profit." A corporation not-for-
20profit incorporated under any laws other than those of this
21Commonwealth.]
22"Foreign domiciliary corporation." A foreign nonprofit
23corporation described in section 6102 (relating to foreign
24domiciliary corporations).
25* * *
26"Fraternal benefit society." A domestic corporation not-for-
27profit that is a society as defined in [the act of July 29, 1977
28(P.L.105, No.38) known as the Fraternal Benefit Society Code]
29section 2402 of the act of May 17, 1921 (P.L.682, No.284), known
30as The Insurance Company Law of 1921.
1* * *
2"Member." [One having membership rights in a corporation in
3accordance with the provisions of its bylaws. The term, when
4used in relation to the taking of corporate action includes:
5(1) the proxy of a member, if action by proxy is
6permitted under the bylaws of the corporation; and
7(2) a delegate to any convention or assembly of
8delegates of members established pursuant to any provision of
9this subpart.
10If and to the extent the bylaws confer rights of members upon
11holders of securities evidencing indebtedness or governmental or
12other entities pursuant to any provision of this subpart the
13term shall be construed to include such security holders and
14governmental or other entities. The term shall be construed to
15include "shareholder" if the corporation issues shares of
16stock.] Any of the following:
17(1) A person that has voting rights in a membership
18corporation.
19(2) When used in relation to the taking of corporate
20action by a membership corporation, a delegate to a
21convention or assembly of delegates of members established
22pursuant to any provision of this subpart who has the right
23to vote at the convention or assembly in accordance with the
24rules of the convention or assembly.
25(3) A person that has been given voting rights or other
26membership rights in a membership corporation by a bylaw
27adopted by the members pursuant to section 5770 (relating to
28voting powers and other rights of certain securityholders and
29other entities) or other provision of law, but only to the
30extent of those rights.
1(4) A shareholder of a corporation, if the corporation
2issues shares of stock.
3"Membership corporation." A nonprofit corporation having
4articles of incorporation that do not provide that the
5corporation is to have no members.
6"Nonprofit corporation" or "domestic nonprofit corporation."
7A domestic corporation not-for-profit [which] that is not
8excluded from the scope of this subpart by section 5102
9(relating to application of subpart).
10"Nonqualified foreign corporation" or "nonqualified foreign
11nonprofit corporation." A foreign corporation not-for-profit
12[which] that is not a qualified foreign corporation, as defined
13in this section.
14* * *
15"Other body." A term employed in this subpart to denote a
16person or group, other than the board of directors or a
17committee thereof, who pursuant to authority expressly conferred
18by this subpart may be vested by the bylaws of the corporation
19with powers [which] that, if not vested by the bylaws in [such]
20the person or group, would by this subpart be required to be
21exercised by [either]:
22(1) the [membership of a corporation taken as a whole]
23members;
24(2) a convention or assembly of delegates of members
25established pursuant to any provision of this subpart; or
26(3) the board of directors.
27Except as otherwise provided in this subpart, a corporation may
28establish distinct persons or groups to exercise different
29powers [which] that this subpart authorizes a corporation to
30vest in an other body.
1"Plan." A plan of reclassification, merger, consolidation,
2asset transfer, division or conversion.
3* * *
4["Representative." When used with respect to a corporation,
5partnership, joint venture, trust or other enterprise, means a
6director, officer, employee or agent thereof.]
7"Trust instrument." Any lawful deed of gift, grant, will or
8other document by which the donor, grantor or testator [shall
9give, grant or devise] gives, grants or devises any real or
10personal property or the income [therefrom] from any real or
11personal property in trust for any charitable purpose.
12"Unless otherwise provided" or "except as otherwise
13provided." When used to introduce or modify a rule, the term
14implies that the alternative provisions contemplated may either
15relax or restrict the stated rule.
16"Unless otherwise restricted" or "except as otherwise
17restricted." When used to introduce or modify a rule, the term
18implies that the alternative provisions contemplated may further
19restrict, but may not relax, the stated rule.
20"Voting" or "casting a vote." Includes the giving of consent
21in lieu of voting. Whether or not the person entitled to vote
22characterizes the conduct as voting or casting a vote, the term
23does not include:
24(1) recording the fact of abstention; or
25(2) failing to vote for a candidate or for approval or
26disapproval of a matter.
27"Voting rights." The right of a person in a membership
28corporation, other than in the capacity of a director or member
29of an other body, to vote on the election or removal of
30directors or members of an other body or on approval of an
1amendment of the articles of incorporation, a plan or the
2dissolution of the corporation.
3(b) Index of other definitions.--The following is a
4nonexclusive list of words and phrases which when used in this
5subpart shall have the meanings given to them in section 102
6(relating to definitions):
7"Act" or "action."
8"Corporation for profit."
9"Corporation not-for-profit."
10"Court."
11"Department."
12"Domestic corporation for profit."
13"Domestic corporation not-for-profit."
14"Execute."
15"Foreign corporation for profit."
16"Foreign corporation not-for-profit."
17"Internal Revenue Code of 1986."
18"Obligation."
19"Officially publish."
20"Record form."
21"Representative."
22"Sign."
23Section 26. Sections 5104, 5105, 5106, 5107, 5108, 5109,
245302, 5306(a)(6) introductory paragraph and (11)(ii), 5307,
255308, 5309, 5310, 5331 and 5501 of Title 15 are amended to read:
26[§ 5104. Other general provisions.
27The following provisions of this title are applicable to
28corporations subject to this subpart:
29Section 101 (relating to short title and application of
30title).
1Section 102 (relating to definitions).
2Section 103 (relating to subordination of title to regulatory
3laws).
4Section 104 (relating to equitable remedies).
5Section 105 (relating to fees).
6Section 106 (relating to effect of filing papers required to
7be filed).
8Section 107 (relating to form of records).
9Section 108 (relating to change in location or status of
10registered office provided by agent).
11Section 109 (relating to name of commercial registered office
12provider in lieu of registered address).
13Section 110 (relating to supplementary general principles of
14law applicable).
15Section 132 (relating to functions of Department of State).
16Section 133 (relating to powers of Department of State).
17Section 134 (relating to docketing statement).
18Section 135 (relating to requirements to be met by filed
19documents).
20Section 136 (relating to processing of documents by
21Department of State).
22Section 137 (relating to court to pass upon rejection of
23documents by Department of State).
24Section 138 (relating to statement of correction).
25Section 139 (relating to tax clearance of certain fundamental
26transactions).
27Section 140 (relating to custody and management of orphan
28corporate and business records).
29Section 152 (relating to definitions).
30Section 153 (relating to fee schedule).
1Section 154 (relating to enforcement and collection).
2Section 155 (relating to disposition of funds).
3Section 162 (relating to contingent domestication of certain
4foreign associations).
5Section 501 (relating to reserved power of General Assembly).
6Section 503 (relating to actions to revoke corporate
7franchises).
8Section 504 (relating to validation of certain defective
9corporations).
10Section 505 (relating to validation of certain defective
11corporate acts).
12Section 2552 (relating to definitions) (definitions of
13"affiliate" and "associate").]
14§ 5105. [Saving clause and restriction] Restriction on
15equitable relief.
16[(a) General rule.--Except as otherwise provided in
17subsection (b) of this section, this subpart and its amendments
18shall not impair or affect any act done, offense committed, or
19substantial right accruing, accrued, or acquired, or liability,
20duty, obligation, penalty, judgment or punishment incurred prior
21to the time this subpart or any amendment thereto takes effect,
22but the same may be enjoyed, asserted, enforced, prosecuted, or
23inflicted as fully and to the same extent as if this subpart or
24any amendment thereto had not been enacted.
25(b) Exception.--] A member of a nonprofit corporation shall
26not have any right to claim the right to valuation [of] and
27payment [for] of the fair value of his membership interest or
28shares because of any proposed plan or amendment [of articles]
29authorized under any provision of this subpart, or to obtain, in
30the absence of fraud or fundamental unfairness, an injunction
1against [any such] the plan or amendment.
2§ 5106. [Limited uniform] Uniform application of subpart.
3(a) General rule.--Except as provided in subsection (b),
4this subpart and its amendments are intended to provide uniform
5rules for the [government] governance and regulation of the
6affairs of nonprofit corporations and of their officers,
7directors and members and of members of other bodies, regardless
8of the date or manner of incorporation or qualification, or of
9the issuance of any evidences of membership in or shares
10[thereof] of a nonprofit corporation.
11(b) Exceptions.--
12(1) Unless expressly provided otherwise in any amendment
13to this subpart [any such], the amendment shall take effect
14only prospectively.
15(2) Any existing corporation lawfully using a name[,]
16or, as a part of its name, a word[, which] that could not be
17used as or included in the name of a corporation [hereafter]
18subsequently incorporated or qualified under this subpart[,]
19may continue to use [such] the name[,] or word as part of its
20name[, provided] if the use or inclusion of [such] the word
21or name was lawful when first adopted by the corporation in
22this Commonwealth.
23(3) [Nothing in subsection] Subsection (a) shall not
24adversely affect the rights specifically provided for or
25saved [by the general terms of section 5105 (relating to
26saving clause and restriction on equitable relief)] in this
27subpart, including, without limiting the generality of the
28foregoing, the provisions of section 5952(d) (relating to
29proposal and adoption of plan of division).
30(4) Nothing in this subpart shall be deemed to repeal or
1supersede any provision in section 7 of the act of April 26,
21855 (P.L.328, No.347), entitled "An act relating to
3Corporations and to Estates held for Corporate, Religious and
4Charitable uses."
5§ 5107. Subordination of subpart to canon law.
6If and to the extent canon law or similar principles
7applicable to a corporation incorporated for religious purposes
8[shall set] sets forth provisions relating to the government and
9regulation of the affairs of the corporation [which] that are
10inconsistent with the provisions of this subpart on the same
11subject, the [provisions of] canon law or similar principles
12shall control except to the extent[, and only to the extent,
13required] prohibited by the Constitution of the United States or
14the Constitution of Pennsylvania[, or both].
15§ 5108. Limitation on incorporation.
16[No corporation which might] A corporation that can be
17incorporated under this subpart shall [hereafter] not be
18incorporated except under the provisions of this subpart.
19§ 5109. Execution of documents.
20(a) General rule.--Any document filed in the [Department of
21State] department under this title by a domestic or foreign
22nonprofit corporation [or a foreign corporation not-for-profit]
23subject to this subpart may be executed on behalf of the
24corporation by any one duly authorized officer [thereof] of the
25corporation. The corporate seal may be affixed and attested, but
26the affixation or attestation of the corporate seal shall not be
27necessary for the due execution of any filing by a corporation
28under this title.
29(b) Cross reference.--See section 135 (relating to
30requirements to be met by filed documents).
1[(c) Transitional provision.--This section supersedes any
2contrary provision of this subpart enacted prior to the
3enactment of the act of December 21, 1988 (P.L.1444, No.177),
4known as the General Association Act of 1988.]
5§ 5302. Number and qualifications of incorporators.
6One or more corporations for profit or not-for-profit or
7natural persons of full age may incorporate a nonprofit
8corporation under the provisions of this [article] subpart.
9§ 5306. Articles of incorporation.
10(a) General rule.--Articles of incorporation shall be signed
11by each of the incorporators and shall set forth in the English
12language:
13* * *
14(6) [A] If the corporation is a membership corporation,
15a statement whether the corporation is to be organized upon a
16nonstock basis or a stock share basis, and, if it is to be
17organized on a stock share basis:
18* * *
19(11) Any other provisions that the incorporators may
20choose to insert if:
21* * *
22(ii) such provisions are not inconsistent with this
23subpart and relate to the purpose or purposes of the
24corporation, the management of its business or affairs or
25the rights, powers or duties of its members, security
26holders, directors, members of an other body or officers.
27* * *
28§ 5307. Advertisement.
29The incorporators or the corporation shall officially publish
30a notice of intention to file or of the filing of articles of
1incorporation. The notice may appear prior to or after the day
2the articles of incorporation are filed in the [Department of
3State,] department and shall set forth briefly:
4(1) The name of the proposed corporation.
5(2) A statement that the corporation is to be or has
6been incorporated under the provisions of this [article]
7subpart.
8[(3) A brief summary of the purpose or purposes of the
9corporation.
10(4) A date on or before which the articles will be filed
11in the Department of State or the date the articles were
12filed.]
13§ 5308. Filing of articles.
14(a) General rule.--The articles of incorporation shall be
15[filed in the Department of State] delivered to the department
16for filing.
17(b) Cross [reference] references.--See [section] sections
18134 (relating to docketing statement) and 135 (relating to
19requirements to be met by filed documents).
20§ 5309. Effect of filing of articles of incorporation.
21(a) Corporate existence.--Upon the filing of the articles of
22incorporation in the [Department of State] department or upon
23the effective date specified in the articles of incorporation,
24whichever is later, the corporate existence shall begin.
25(b) Evidence of incorporation.--Subject to the provisions of
26section 503 (relating to actions to revoke corporate
27franchises), the articles of incorporation filed in the
28[Department of State, or approved by the court and] department,
29or recorded in the office of the recorder of deeds under the
30former provisions of law, shall be conclusive evidence of the
1fact that the corporation has been incorporated.
2§ 5310. Organization meeting.
3(a) General rule.--After the [filing of the articles of
4incorporation] corporate existence begins, an organization
5meeting of the initial directors[,] or, if directors are not
6named in the articles, of the [incorporator or] incorporators,
7shall be held, within or without this Commonwealth, for the
8purpose of adopting bylaws, which they shall have authority to
9do at [such] the meeting[,]; of electing directors [to hold
10office as provided in the bylaws], if directors are not named in
11the articles[,]; and [the transaction of such] of transacting
12other business as may come before the meeting. A bylaw adopted
13at [such] the organization meeting of directors or incorporators
14shall be deemed to be a bylaw adopted by the members for the
15purposes of this [article and of] subpart and any other
16provision of law.
17(b) Call of and action at meeting.--The meeting may be held
18at the call of any director or, if directors are not named in
19the articles, of any incorporator, who shall give at least five
20days' [written notice thereof] notice of the meeting to each
21other director or incorporator[, which]. The notice shall set
22forth the time and place of the meeting. For the purposes of
23this section [an], any director or incorporator may act in
24person, by consent or by proxy signed by him or his [attorney in
25fact] attorney-in-fact.
26(c) Death or incapacity of directors or incorporators.--If a
27designated director or an incorporator dies or is for any reason
28unable to act at the meeting, the other or others may act. If
29there is no other designated director or incorporator able to
30act, any person for whom [an] a director or incorporator was
1acting as agent may act or appoint another to act in his stead.
2§ 5331. [Unincorporated] Incorporation of unincorporated
3associations.
4In the case of the incorporation as a nonprofit corporation
5under this [article] subpart of an unincorporated association
6the articles of incorporation shall contain, in addition to the
7provisions [heretofore required in this chapter] required in
8Subchapter A (relating to incorporation generally), a statement
9that the incorporators constitute a majority of the members of
10the committee authorized to incorporate [such] the association
11by the requisite vote required by the organic law of the
12association for the amendment of [such] the organic law.
13§ 5501. Corporate capacity.
14Except as provided in section 103 [of this title] (relating
15to subordination of title to regulatory laws), a nonprofit
16corporation shall have the legal capacity of natural persons to
17act.
18Section 27. Section 5504(b), (c) and (d) of Title 15 are
19amended and the section is amended by adding a subsection to
20read:
21§ 5504. Adoption, amendment and contents of bylaws.
22* * *
23(b) Exception.--Except as provided in section 5310(a)
24(relating to organization meeting), the board of directors or
25other body shall not have the authority to adopt or change a
26bylaw on any subject that is committed expressly to the members
27by any of the provisions of this subpart. See:
28Subsection (d) (relating to amendment of voting provisions).
29Section 5713 (relating to personal liability of directors).
30Section 5721 (relating to board of directors).
1Section 5725(b) (relating to selection of directors).
2Section 5726(a) (relating to removal of directors by the
3members).
4Section 5726(b) (relating to removal of directors by the
5board).
6Section 5729 (relating to voting rights of directors).
7Section 5751(a) (relating to classes and qualifications of
8membership).
9Section 5752(c) (relating to rights of shareholders).
10Section 5754(a) (relating to members grouped in local units).
11Section 5755(a) (relating to regular meetings).
12Section 5756 (relating to quorum).
13Section 5757 (relating to action by members).
14Section 5758 (relating to voting rights of members).
15Section 5759(a) (relating to voting and other action by
16proxy).
17Section [5760(a)] 5762(a) (relating to voting [in nonprofit
18corporation matters] by corporations).
19Section [5762] 5765 (relating to judges of election).
20Section [5766(a)] 5769(a) (relating to termination and
21transfer of membership).
22Section [5767] 5770 (relating to voting powers and other
23rights of certain [security holders] securityholders and other
24entities).
25Section 5975(c) (relating to [winding up and distribution]
26predissolution provision for liabilities).
27(c) Bylaw provisions in articles.--Where any provision of
28this subpart or any other provision of law refers to a rule as
29set forth in the bylaws of a corporation or in a bylaw adopted
30by the members, the reference shall be construed to include and
1be satisfied by any rule on the same subject as set forth in the
2articles of the corporation.
3(d) Amendment of voting provisions.--
4(1) Unless otherwise restricted in a bylaw adopted by
5the members, whenever the bylaws require for the taking of
6any action by the members or a class of members a specific
7number or percentage of votes, the provision of the bylaws
8setting forth that requirement shall not be amended or
9repealed by any lesser number or percentage of votes of the
10members or of the class of members.
11(2) Paragraph (1) shall not apply to a bylaw setting
12forth the right of members to act by unanimous written
13consent as provided in section 5766(a) (relating to consent
14of members in lieu of meeting).
15(e) Cross reference.--See section 6145 (relating to
16applicability of certain safeguards to foreign domiciliary
17corporations).
18Section 28. Section 5509 of Title 15 is amended to read:
19§ 5509. Bylaws and other powers in emergency.
20(a) General rule.--[The] Except as otherwise restricted in
21the bylaws, the board of directors or other body of any
22nonprofit corporation may adopt emergency bylaws, subject to
23repeal or change by action of the members, which shall,
24notwithstanding any different provisions of law or of the
25articles or bylaws, be [operative] effective during any
26emergency resulting from [warlike damage or] an attack on the
27United States [or any], a nuclear [or atomic] disaster or
28another catastrophe as a result of which a quorum of the board
29cannot readily be assembled. The emergency bylaws may make any
30provision that may be [practical and necessary] appropriate for
1the circumstances of the emergency, including [provisions that]:
2(1) [A meeting of the board of directors or other body
3may be called by any officer or director or member of such
4other body in such manner and under such conditions as shall
5be prescribed in the emergency bylaws.] Procedures for
6calling meetings of the board or other body.
7(2) [The director or directors or the member or members
8of such other body in attendance at the meeting, or any other
9number fixed in the emergency bylaws, shall constitute a
10quorum.] Quorum requirements for meetings.
11(3) [The officers or other persons designated on a list
12approved by the board of directors or other body before the
13emergency, all in such order of priority and subject to such
14conditions and for such period of time, not longer than
15reasonably necessary after the termination of the emergency
16as may be provided in the emergency bylaws or in the
17resolution approving the list, shall, to the extent required
18to provide a quorum at any meeting of the board of directors
19or such other body, be deemed directors or members of such
20other body for such meeting.] Procedures for designating
21additional or substitute directors or members of an other
22body.
23(b) Lines of succession; head office.--The board of
24directors or [such] other body, or the officers, if given
25authorization by the board of directors or other body, either
26before or during any [such] emergency, may [provide,]:
27(1) provide, and from time to time modify, lines of
28succession in the event that during [such an] the emergency
29any or all officers or agents of the corporation shall for
30any reason be rendered incapable of discharging their
1duties[, and may,]; and
2(2) effective in the emergency, change the head offices
3or designate several alternative head offices or regional
4offices of the corporation[, or authorize the officers so to
5do].
6(c) Personnel not liable.--[No officer, director, member of
7such other body, or employee acting in accordance with any
8emergency bylaws shall be liable except for wilful misconduct.]
9A representative of the corporation:
10(1) Acting in accordance with any emergency bylaws shall
11not be liable except for willful misconduct.
12(2) Shall not be liable for any action taken by him in
13good faith in an emergency in furtherance of the ordinary
14business affairs of the corporation even though not
15authorized by the emergency or other bylaws then in effect.
16(d) Effect on regular bylaws.--To the extent that they are
17not inconsistent with any emergency bylaws [so] adopted, the
18bylaws of the corporation shall remain in effect during any
19emergency[,] and, upon its termination, the emergency bylaws
20shall cease to be [operative] effective.
21(e) Procedure in absence of emergency bylaws.--Unless
22otherwise provided in emergency bylaws, notice of any meeting of
23the board of directors or [such] an other body during [such] an
24emergency shall be given only to [such of the] those directors
25or members of [such] an other body [as it may be] it is feasible
26to reach at the time and by such means as [may be] are feasible
27at the time, including publication [or], radio or television. To
28the extent required to constitute a quorum at any meeting of the
29board of directors or [such] an other body during [such an] any
30emergency, the officers of the corporation who are present
1shall, unless otherwise provided in emergency bylaws, be deemed,
2in order of rank and within the same rank in order of seniority,
3directors or members of [such] the other body, as the case may
4be, for [such] the meeting.
5Section 29. Section 5511 of Title 15 is reenacted to read:
6§ 5511. Establishment of subordinate units.
7A nonprofit corporation may establish and terminate local
8branches, chapters, councils, clubs, churches, lodges, parishes
9or other subordinate units regardless of their designation, form
10of government, incorporated or unincorporated status or
11relationship to the corporation or other supervising and
12controlling organization of which the corporation is a member or
13with which it is in allegiance and to which it is subordinate.
14Section 30. Sections 5541, 5542, 5543, 5544, 5546, 5547(b),
155548(b) and 5550 of Title 15 are amended to read:
16§ 5541. Capital contributions of members.
17(a) General rule.--A nonprofit corporation organized on a
18nonstock basis may provide in its bylaws that members, upon or
19subsequent to admission, shall make capital contributions. The
20amount shall be specified in, or fixed by the board of directors
21or other body pursuant to authority granted by, the bylaws. The
22requirement of a capital contribution may apply to all members,
23[or] to the members of a single class, or to members of
24different classes in different amounts or proportions.
25(b) Consideration receivable.--[The capital contribution of
26a member shall consist of money or other property, tangible or
27intangible, or labor or services actually received by or
28performed for the corporation or for its benefit or in its
29formation or reorganization, or a combination thereof. In the
30absence of fraud in the transaction, the judgment of the board
1of directors or other body as to the value of the consideration
2received by the corporation shall be conclusive.] The capital
3contribution of a member, unless otherwise provided in the
4bylaws:
5(1) May consist of money, obligations (including an
6obligation of a member), services performed whether or not
7contracted for, contracts for services to be performed,
8memberships in or securities or obligations of the
9corporation or any other tangible or intangible property or
10benefit to the corporation. If a capital contribution is made
11in a form other than money, the value of the contribution
12shall be determined by or in the manner provided by the board
13of directors or other body.
14(2) Shall be provided or paid to or as ordered by the
15corporation.
16(c) Evidence of contribution.--The capital contribution of a
17member shall be recorded on the books of the corporation and may
18be evidenced by a written instrument delivered to the member,
19but [such] the instrument shall not be denominated a "share
20certificate" or by any other word or term implying that the
21instrument is a share certificate subject to section 5752
22(relating to organization on a stock share basis).
23(d) Transferability of interest.--Unless otherwise provided
24in the bylaws, the capital contribution of a member shall not be
25transferable.
26(e) Repayment of contribution.--The capital contribution of
27a member shall not be repaid by the corporation except upon
28dissolution of the corporation or as provided in this [article]
29subpart. A corporation may provide in its bylaws that its
30capital contributions, or some of them, shall be repayable, in
1whole or in part, at the option of the corporation only, [at
2such] in the amount or amounts (not to exceed the amount of the
3capital contribution), within [such] the period or periods[,]
4and on [such] the terms and conditions, not inconsistent with
5this [article] subpart, as are stated in, or fixed by the board
6of directors or other body pursuant to authority granted by, the
7bylaws.
8§ 5542. Subventions.
9(a) General rule.--The bylaws of a nonprofit corporation may
10provide that the corporation shall be authorized by resolution
11of the board of directors or other body to accept subventions
12from members or nonmembers on terms and conditions not
13inconsistent with this [article, and to issue certificates
14therefor] subpart. The resolution of the board or other body may
15provide that [holders of] the maker of a subvention
16[certificates] shall be entitled to a fixed or contingent
17periodic payment out of the corporate assets equal to a
18percentage of the original amount or value of the subvention.
19The rights of [holders of subvention certificates] makers of
20subventions shall at all times be subordinate to the rights of
21creditors of the corporation.
22(b) Consideration receivable.--[A subvention shall consist
23of money or other property, tangible or intangible, actually
24received by the corporation or expended for its benefit or in
25its formation or reorganization, or a combination thereof. In
26the absence of fraud in the transaction, the judgment of the
27board of directors or other body as to the value of the
28consideration received by the corporation shall be conclusive.
29(c) Form of certificate.--Each subvention certificate shall
30be signed by two duly authorized officers of the corporation,
1and may be sealed with the seal of the corporation or a
2facsimile thereof. The signatures of the officers upon a
3certificate may be facsimiles if the certificate is
4countersigned by a transfer agent or registered by a registrar
5other than the corporation itself or its employees. In case any
6officer who has signed or whose facsimile signature has been
7placed upon a certificate shall have ceased to be such officer
8before such certificate is issued, it may be issued by the
9corporation with the same effect as if he were such officer at
10the date of issue. The fact that the corporation is a nonprofit
11corporation shall be noted conspicuously on the face or back of
12each certificate.] Consideration for subventions, unless
13otherwise provided in the bylaws:
14(1) May consist of money, obligations (including an
15obligation of a subventor), services performed whether or not
16contracted for, contracts for services to be performed,
17memberships in or securities or obligations of the
18corporation, or any other tangible or intangible property or
19benefit to the corporation. If subventions are issued for
20other than money, the value of the consideration shall be
21determined by or in the manner provided by the board of
22directors or other body.
23(2) Shall be provided or paid to or as ordered by the
24corporation.
25(c.1) Form of subventions.--Subventions shall be represented
26by certificates or shall be uncertificated subventions. Each
27subvention certificate shall be executed by or on behalf of the
28corporation issuing the subvention in the manner it may
29determine. The fact that the corporation is a nonprofit
30corporation shall be noted conspicuously on the face or back of
1each certificate.
2(d) Transferability of subvention.--[Subvention
3certificates] Subventions shall be nontransferable unless the
4resolution of the board of directors or other body [shall
5provide] provides that they shall be transferable either at will
6or subject to specified restrictions.
7(e) Redemption at option of corporation.--The resolution of
8the board of directors or other body may provide that a
9subvention shall be redeemable, in whole or in part, at the
10option of the corporation at [such] the price or prices (not to
11exceed the original amount or value of the subvention plus any
12periodic payments due or accrued thereon), within [such] the
13period or periods, and on [such] the terms and conditions, not
14inconsistent with this [article] subpart, as are stated in the
15resolution.
16(f) Redemption at option of holders.--The resolution of the
17board of directors or other body may provide that makers or
18holders of all or some [subvention certificates] subventions
19shall have the right to require the corporation after a
20specified period of time to redeem [such certificates] the
21subventions, in whole or in part, at a price or prices that do
22not exceed the original amount or value of the subvention plus
23any periodic payments due or accrued [thereon] on the
24subvention, upon an affirmative showing that the financial
25condition of the corporation will permit the required payment to
26be made without impairment of its operations or injury to its
27creditors. The right to require redemption may in addition be
28conditioned upon the occurrence of a specified event. For the
29purpose of enforcing their rights under this subsection, makers
30or holders of [subvention certificates] subventions shall be
1entitled to inspect the books and records of the corporation.
2(g) Rights of makers or holders on dissolution.--[Holders]
3Makers or holders of [subvention certificates] subventions, upon
4dissolution of the corporation, shall be entitled, after the
5claims of creditors have been satisfied, to repayment of the
6original amount or value of the subvention plus any periodic
7payments due or accrued [thereon] on the subvention, unless a
8lesser sum is specified in the resolution of the board of
9directors or other body concerning [such] the subvention.
10§ 5543. Debt and security interests.
11(a) General rule.--[No corporation shall issue bonds or
12other evidences of indebtedness except for money or other
13property, tangible or intangible, or labor or services actually
14received by or performed for the corporation or for its benefit
15or in its formation or reorganization, or a combination thereof.
16In the absence of fraud in the transaction, the judgment of the
17board of directors or other body as to the value of the
18consideration received by the corporation shall be conclusive.]
19Unless otherwise provided in the bylaws, a nonprofit corporation
20may issue its bonds or other obligations for an amount and form
21of consideration as may be determined by or in the manner
22provided by the board of directors or other body.
23(b) Creation of lien on real or personal property.--The
24board of directors or other body may authorize any mortgage or
25pledge of, or the creation of a security interest in, all or any
26part of the real or personal property of the corporation, or any
27interest [therein. Unless] in the real or personal property. No
28application to or confirmation by a court shall be required and,
29unless otherwise restricted in the bylaws, no vote or consent of
30the members shall be required to make effective [such] the
1action by the board or other body.
2§ 5544. [Fees, dues] Dues and assessments.
3(a) General rule.--A nonprofit corporation may levy dues or
4assessments, or both, on its members, if authority to do so is
5conferred by the bylaws, subject to any limitations [therein]
6contained in the bylaws. [Such] The dues or assessments, or
7both, may be imposed upon all members of the same class either
8alike or in different amounts or proportions, and upon a
9different basis upon different classes of members. Members of
10one or more classes may be made exempt from either dues or
11assessments, or both, in the manner or to the extent provided in
12the bylaws.
13(b) Amount and method of collection.--The amount of the levy
14and method of collection of [such] the dues or assessments, or
15both, may be fixed in the bylaws, or the bylaws may authorize
16the board of directors or other body to fix the amount [thereof]
17of the dues or assessments from time to time, and make them
18payable at [such] the time and by [such] the methods of
19collection as the board of directors or other body may
20prescribe.
21(c) Enforcement of payment.--A nonprofit corporation may
22make bylaws necessary to enforce the collection of [such] dues
23or assessments, including provisions for the termination of
24membership, upon reasonable notice, for nonpayment of [such]
25dues or assessments, and for reinstatement of membership.
26§ 5546. Purchase, sale, mortgage and lease of real property.
27[Except for an industrial development corporation whose
28articles or bylaws otherwise provide, no purchase of real
29property shall be made by a nonprofit corporation and no
30corporation shall sell, mortgage, lease away or otherwise
1dispose of its real property, unless authorized by the vote of
2two-thirds of the members in office of the board of directors or
3other body, except that if there are 21 or more directors or
4members of such other body, the vote of a majority of the
5members in office shall be sufficient. No application to or
6confirmation of any court shall be required and, unless
7otherwise restricted in the bylaws, no vote or consent of the
8members shall be required to make effective such action by the
9board or other body. If the real property is subject to a trust
10the conveyance away shall be free of trust and the trust shall
11be impinged upon the proceeds of such conveyance.] Except as
12otherwise provided in this subpart and unless otherwise provided
13in the bylaws, no application to or confirmation of any court
14shall be required for the purchase by or the sale, lease or
15other disposition of the real or personal property, or any part
16of the real or personal property of a nonprofit corporation,
17and, unless otherwise restricted in section 5930 (relating to
18voluntary transfer of corporate assets) or in the bylaws, no
19vote or consent of the members shall be required to make
20effective such action by the board or other body. If the
21property is subject to a trust, the conveyance away shall be
22free of trust, and the trust shall be impinged upon the proceeds
23of the conveyance.
24§ 5547. Authority to take and hold trust property.
25* * *
26(b) Nondiversion of certain property.--Property committed to
27charitable purposes shall not, by any proceeding under Chapter
2859 (relating to fundamental changes) or otherwise, be diverted
29from the objects to which it was donated, granted or devised,
30unless and until the board of directors or other body obtains
1from the court an order under 20 Pa.C.S. Ch. 77 [Subch. D]
2(relating to [creation, validity, modification and termination
3of trust] trusts) specifying the disposition of the property.
4§ 5548. Investment of trust funds.
5* * *
6(b) Use and management.--Except as otherwise permitted under
720 Pa.C.S. Ch. 77 [Subch. D] (relating to [creation, validity,
8modification and termination of trust] trusts), the board of
9directors or other body shall apply all assets thus received to
10the purposes specified in the trust instrument. The directors or
11other body shall keep accurate accounts of all trust funds,
12separate and apart from the accounts of other assets of the
13corporation.
14* * *
15§ 5550. Devises, bequests and gifts after certain fundamental
16changes.
17A devise, bequest or gift to be effective in the future, in
18trust or otherwise, to or for a nonprofit corporation which has:
19(1) changed its purposes;
20(2) sold, leased away or exchanged all or substantially
21all its property and assets;
22(3) been converted into a business corporation;
23(4) become a party to a consolidation or a division;
24(5) become a party to a merger which it did not survive;
25or
26(6) been dissolved;
27after the execution of the document containing [such] the
28devise, bequest or gift and before the nonprofit corporation
29acquires a vested interest in the devise, bequest or gift shall
30be effective only as a court having jurisdiction over the assets
1may order under [the Estates Act of 1947] 20 Pa.C.S. Ch. 77
2(relating to trusts) or other applicable provisions of law.
3Section 31. Section 5551 of Title 15 is reenacted to read:
4§ 5551. Dividends prohibited; compensation and certain payments
5authorized.
6(a) General rule.--A nonprofit corporation shall not pay
7dividends or distribute any part of its income or profits to its
8members, directors, or officers. Nothing herein contained shall
9prohibit a fraternal benefit society operating under the
10insurance laws of Pennsylvania from paying dividends or refunds
11by whatever name known pursuant to the terms of its insurance
12contracts.
13(b) Reasonable compensation for services.--A nonprofit
14corporation may pay compensation in a reasonable amount to
15members, directors, or officers for services rendered.
16(c) Certain payments authorized.--A nonprofit corporation
17may confer benefits upon members or nonmembers in conformity
18with its purposes, may repay capital contributions, and may
19redeem its subvention certificates or evidences of indebtedness,
20as authorized by this article, except when the corporation is
21currently insolvent or would thereby be made insolvent or
22rendered unable to carry on its corporate purposes, or when the
23fair value of the assets of the corporation remaining after such
24conferring of benefits, payment or redemption would be
25insufficient to meet its liabilities. A nonprofit corporation
26may make distributions of cash or property to members upon
27dissolution or final liquidation as permitted by this article.
28Section 32. Title 15 is amended by adding a section to read:
29§ 5552. (Reserved).
30Section 33. Section 5552 of Title 15 is renumbered to read:
1§ [5552] 5553. Liabilities of members.
2(a) General rule.--A member of a nonprofit corporation shall
3not be liable, solely by reason of being a member, under an
4order of a court or in any other manner for a debt, obligation
5or liability of the corporation of any kind or for the acts of
6any member or representative of the corporation.
7(b) Obligations of member to corporation.--A member shall be
8liable to the corporation only to the extent of any unpaid
9portion of the capital contributions, membership dues or
10assessments which the corporation may have lawfully imposed upon
11him, or for any other indebtedness owed by him to the
12corporation. No action shall be brought by any creditor of the
13corporation to reach and apply any such liability to any debt of
14the corporation until after:
15(1) final judgment has been rendered against the
16corporation in favor of the creditor and execution thereon
17returned unsatisfied;
18(2) a case involving the corporation has been brought
19under 11 U.S.C. Ch. 7 (relating to liquidation) and a
20distribution has been made and the case closed or a notice of
21no assets has been issued; or
22(3) a receiver has been appointed with power to collect
23debts, and the receiver, on demand of a creditor to bring an
24action thereon, has refused to sue for the unpaid amount, or
25the corporation has been dissolved or ceased its activities
26leaving debts unpaid.
27(c) Action by a creditor.--An action by a creditor under
28subsection (b) shall not be brought more than three years after
29the happening of the first to occur of the events listed in
30subsection (b)(1) through (3).
1Section 34. Section 5553 of Title 15 is renumbered and
2amended to read:
3§ [5553] 5554. Annual report of directors or other body.
4(a) Contents.--The board of directors or other body of a
5nonprofit corporation shall present annually to the members a
6report, verified by the president and treasurer or by a majority
7of the directors or members of [such] the other body, showing in
8appropriate detail the following:
9(1) The assets and liabilities, including [the] trust
10funds, of the corporation as of the end of the fiscal year
11immediately preceding the date of the report.
12(2) The principal changes in assets and liabilities,
13including trust funds, during the fiscal year immediately
14preceding the date of the report.
15(3) The revenue or receipts of the corporation, both
16unrestricted and restricted to particular purposes, for the
17fiscal year immediately preceding the date of the report,
18including separate data with respect to each trust fund held
19by or for the corporation.
20(4) The expenses or disbursements of the corporation,
21for both general and restricted purposes, during the fiscal
22year immediately preceding the date of the report, including
23separate data with respect to each trust fund held by or for
24the corporation.
25(5) The number of members of the corporation as of the
26date of the report, together with a statement of increase or
27decrease in [such] their number during the year immediately
28preceding the date of the report, and a statement of the
29place where the names and addresses of the current members
30may be found.
1(b) Place of filing.--The annual report of the board of
2directors or other body shall be filed with the minutes of the
3meetings of members.
4(c) Report in absence of meeting of members.--The board of
5directors or other body of a corporation having no members shall
6direct the president and treasurer to present at the annual
7meeting of the board or [of such] other body a report in
8accordance with subsection (a) [of this section], but omitting
9the requirement of paragraph (5) [thereof]. [Such] The report
10shall be filed with the minutes of the annual meeting of the
11board or [of such] other body.
12(d) Cross reference.--See section 6145 (relating to
13applicability of certain safeguards to foreign domiciliary
14corporations).
15Section 35. Sections 5585, 5586, 5587, 5588, 5589, 5702(a),
165704(a) and (b), 5705(a), 5708, 5722(a), 5723, 5724, 5725, 5726,
175727, 5728(a) and (b), 5729(b) and 5730 of Title 15 are amended
18to read:
19§ 5585. Establishment or use of common trust funds authorized.
20(a) General rule.--Every nonprofit corporation may establish
21and maintain one or more common trust funds, the assets of which
22shall be held, invested and reinvested by the corporation itself
23or by a corporate trustee to which the assets have been
24transferred pursuant to section 5549 (relating to transfer of
25trust or other assets to institutional trustee). Upon the
26payment by the corporate trustee to the nonprofit corporation of
27the net income from [such] the assets, which income may be
28determined under section 5548(c) (relating to investment of
29trust funds) if [such] the election is properly made by the
30board of directors or other body of the corporation, for use and
1application to the several participating interests in [such] the
2common trust fund, the proportionate participation of each
3interest in [such] the net income shall be designated by the
4corporate trustee. The nonprofit corporation may, at any time,
5withdraw the whole or part of any participating interest in
6[such] the common trust fund for distribution by it as provided
7in this subchapter.
8(b) Limitations in trust instrument.--Nothing contained in
9this section shall be construed to authorize the corporation to
10invest assets of a trust or fund in any [such] common trust fund
11contrary to any specific limitation or restriction contained in
12the trust instrument[,] nor to limit or restrict the authority
13conferred upon the corporation with respect to investments by
14[any such] the trust instrument.
15(c) Effect of good faith mistakes.--[No mistakes] Mistakes
16made in good faith[,] and in the exercise of due care and
17prudence[,] in connection with the administration of any [such]
18common trust fund[,] shall not be held to exceed any power
19granted to or violate any duty imposed upon the corporation[,]
20if, promptly after the discovery of the mistake, the corporation
21takes [such] whatever action [as] may be practicable under the
22circumstances to remedy the mistake.
23§ 5586. Restrictions on investments.
24(a) Legal investments.--If the trust instrument [shall limit
25or restrict] limits or restricts the investment of [such] the
26assets to investments of the class authorized by law as legal
27investments, [the] a nonprofit corporation may invest and
28reinvest the assets of the trust or fund in any [such] common
29trust fund maintained by the corporation[, provided] if the
30investments composing [such] the fund consist solely of
1investments of the class authorized by [the Fiduciaries
2Investment Act of 1949] 20 Pa.C.S. Ch. 72 (relating to prudent
3investor rule) to be held by fiduciaries.
4(b) Other than legal investments.--If the trust instrument
5[shall] does not limit or restrict the investment of [such] the
6assets to investments of the class authorized by law as legal
7investments, the corporation may invest and reinvest the assets
8of the trust or fund in any [such] common trust fund maintained
9by the corporation[,] composed of [such] the investments as in
10the honest exercise of the judgment of the directors or other
11body of the corporation they may, after investigation, determine
12to be safe and proper investments.
13§ 5587. Determination of interests.
14A nonprofit corporation shall invest the assets of a trust or
15fund in a common trust fund authorized by this subchapter by
16adding [such] those assets thereto, and by apportioning a
17participation therein to [such] the trust or fund in the
18proportion that the assets of the trust or fund added thereto
19bears to the aggregate value of all the assets of [such] the
20common trust fund at the time of [such] the investment,
21including in [such] those assets the assets of the trust or fund
22so added. The withdrawal of a participation from [such] the
23common trust fund shall be on a basis of its proportionate
24interest in the aggregate value of all the assets of [such] the
25common trust fund at the time of [such] the withdrawal. The
26participating interest of any trust or fund in [such] the common
27trust fund may from time to time be withdrawn, in whole or in
28part, by the corporation. Upon [such withdrawals] a withdrawal,
29the corporation may make distribution in cash, or ratably in
30kind, or partly in cash and partly in kind. Participations in
1[such] the common trust funds shall not be sold by the
2corporation to any other corporation or person, but this
3sentence shall not prevent a corporate trustee designated under
4section 5585 (relating to establishment or use of common trust
5funds authorized) from investing the assets of [such a] the
6common trust fund in any collective investment fund established
7and maintained by it in accordance with law and to which the
8assets comprising [such a] the common trust fund are eligible
9contributions.
10§ 5588. Amortization of premiums on securities held.
11If a bond or other obligation for the payment of money is
12acquired as an investment for any common trust fund at a cost in
13excess of the par or maturity value thereof, the nonprofit
14corporation may, during [(but not beyond)] but not beyond the
15period that [such] the obligation is held as an investment in
16[such] the fund, amortize [such] the excess cost out of the
17income on [such] the obligation, by deducting from each payment
18of income and adding to principal an amount equal to the sum
19obtained by dividing [such] the excess cost by the number of
20periodic payments of income to accrue on [such] the obligation
21from the date of [such] the acquisition until its maturity date.
22§ 5589. Records; ownership of assets.
23The nonprofit corporation shall designate clearly upon its
24records the names of the trusts or funds on behalf of which
25[such] the corporation, as fiduciary or otherwise, owns a
26participation in any common trust fund and the extent of the
27interest of the trust or fund therein. [No such] The trust or
28fund shall not be deemed to have individual ownership of any
29asset in [such] the common trust fund, but shall be deemed to
30have a proportionate undivided interest in the common trust
1fund. The ownership of the individual assets comprising any
2common trust fund shall be solely in the nonprofit corporation
3as fiduciary or otherwise.
4§ 5702. Manner of giving notice.
5(a) General rule.--[Whenever written]
6(1) Any notice [is] required to be given to any person
7under the provisions of this subpart or by the articles or
8bylaws of any nonprofit corporation[, it may] shall be given
9to the person either personally or by sending a copy thereof
10[by]:
11(i) By first class or express mail, postage prepaid,
12[or by telegram (with messenger service specified), telex
13or TWX (with answer back received)] or courier service,
14charges prepaid, [or by facsimile transmission,] to [his]
15the person's postal address [(or to his telex, TWX or
16facsimile number)] appearing on the books of the
17corporation or, in the case of directors or members of an
18other body, supplied by [him] the person to the
19corporation for the purpose of notice. [If the notice is
20sent by mail, telegraph or courier service, it shall be
21deemed to have been given to the person entitled thereto
22when deposited in the United States mail or with a
23telegraph office or courier service for delivery to that
24person or, in the case of telex or TWX, when dispatched.]
25Notice under this subparagraph shall be deemed to have
26been given to the person entitled thereto when deposited
27in the United States mail or with a courier service for
28delivery to that person.
29(ii) By facsimile transmission, e-mail or other
30electronic communication to the person's facsimile number
1or address for e-mail or other electronic communications
2supplied by the person to the corporation for the purpose
3of notice. Notice under this subparagraph shall be deemed
4to have been given to the person entitled thereto when
5sent.
6(2) A notice of meeting shall specify the [place,] day
7[and], hour and geographic location, if any, of the meeting
8and any other information required by any other provision of
9this subpart.
10* * *
11§ 5704. Place and notice of meetings of members.
12(a) Place.--Meetings of members may be held at [such place]
13the geographic location within or without this Commonwealth [as
14may be] provided in or fixed pursuant to the bylaws. Unless
15otherwise provided in or pursuant to the bylaws, all meetings of
16the members shall be held [in this Commonwealth at the
17registered office of the corporation.] at the executive office
18of the corporation wherever situated. If a meeting of members is
19held by means of the Internet or other electronic communications
20technology in a fashion pursuant to which the members have the
21opportunity to read or hear the proceedings substantially
22concurrently with their occurrence, vote on matters submitted to
23the members, pose questions to the directors and members of any
24other body, make appropriate motions and comment on the business
25of the meeting, the meeting need not be held at a particular
26geographic location.
27(b) Notice.--[Written notice] Notice in record form of every
28meeting of the members shall be given by, or at the direction
29of, the secretary or other authorized person to each member of
30record entitled to vote at the meeting at least:
1(1) ten days prior to the day named for a meeting that
2will consider a fundamental change under Chapter 59 (relating
3to fundamental changes); or
4(2) five days prior to the day named for the meeting in
5any other case.
6If the secretary or other authorized person neglects or refuses
7to give notice of a meeting, the person or persons calling the
8meeting may do so.
9* * *
10§ 5705. Waiver of notice.
11(a) [Written waiver] General rule.--Whenever any [written]
12notice is required to be given under the provisions of this
13subpart or the articles or bylaws of any nonprofit corporation,
14a waiver thereof [in writing, signed] that is filed with the
15secretary of the corporation in record form, signed by the
16person or persons entitled to the notice, whether before or
17after the time stated therein, shall be deemed equivalent to the
18giving of the notice. [Except as otherwise required by this
19subsection, neither] Neither the business to be transacted at,
20nor the purpose of, a meeting need be specified in the waiver of
21notice of the meeting.
22* * *
23§ 5708. Use of conference telephone [and similar equipment.] or
24other electronic technology.
25(a) Incorporators, directors and members of an other body.--
26Except as otherwise provided in the bylaws, one or more persons
27may participate in a meeting of the incorporators, the board of
28directors or an other body[, or the members] of a nonprofit
29corporation by means of conference telephone or [similar
30communications equipment] other electronic technology by means
1of which all persons participating in the meeting can hear each
2other. Participation in a meeting pursuant to this section shall
3constitute presence in person at the meeting.
4(b) Members.--Except as otherwise provided in the bylaws,
5the presence or participation, including voting and taking other
6action, at a meeting of members, or the expression of consent or
7dissent to corporate action, by a member by conference telephone
8or other electronic means, including, without limitation, the
9Internet, shall constitute the presence of, or vote or action
10by, or consent or dissent of the member for the purposes of this
11subpart.
12§ 5722. Qualifications of directors.
13(a) General rule.--Each director of a nonprofit corporation
14shall be a natural person of full age, except as provided in
15subsection (b), who, unless otherwise restricted in the bylaws,
16need not be a resident of this Commonwealth or a member of the
17corporation. Except as otherwise provided in this section, the
18qualifications of directors may be prescribed in the bylaws.
19* * *
20§ 5723. Number of directors.
21The board of directors of a nonprofit corporation shall
22consist of one or more members. [Except as otherwise provided in
23this section, the] The number of directors shall be fixed by[,]
24or in the manner provided in[,] the bylaws[; or if]. If not so
25fixed, the number of directors shall be the same as that stated
26in the articles or three if no number is so stated.
27§ 5724. Term of office of directors.
28(a) General rule.--Each director of a nonprofit corporation
29shall hold office until the expiration of the term for which
30[he] the director was selected and until [his] a successor has
1been selected and qualified or until [his] the director's
2earlier death, resignation or removal. Directors, other than
3those selected by virtue of their office or former office in the
4corporation or in any other entity or organization, shall be
5selected for the term of office provided in the bylaws. In the
6absence of a provision fixing the term, it shall be one year.
7(b) Resignations.--Any director may resign at any time upon
8notice in record form to the corporation. The resignation shall
9be effective upon its receipt by the corporation or at a
10subsequent time specified in the notice of resignation.
11(c) Decrease in number.--A decrease in the number of
12directors shall not have the effect of shortening the term of
13any incumbent director.
14(d) Classified board of directors.--Except as otherwise
15provided in the bylaws, if the directors are classified in
16respect of the time for which they shall severally hold office:
17(1) Each class shall be as nearly equal in number as
18possible.
19(2) The term of office of at least one class shall
20expire in each year.
21(3) The members of a class shall not be elected for a
22longer period than four years.
23§ 5725. Selection of directors.
24(a) General rule.--Except as otherwise provided in this
25section, directors of a nonprofit corporation, other than those
26[named in the articles, if any,] constituting the first board of
27directors, shall be elected by the members.
28(b) Other methods.--If a bylaw adopted by the members so
29provides, directors may be elected, appointed, designated or
30otherwise selected by [such] the person or persons or by [such]
1the method or methods as shall be fixed by, or in the manner
2provided in, [such] the bylaw, and the directors may be
3classified as to the members who exercise the power to select
4directors.
5(c) Vacancies.--Except as otherwise provided in the
6bylaws[,]:
7(1) [vacancies] Vacancies in the board of directors,
8including vacancies resulting from an increase in the number
9of directors, [shall] may be filled by a majority of the
10remaining members of the board though less than a quorum, or
11by a sole remaining director, and each person so [elected]
12selected shall be a director to serve for the balance of the
13unexpired term unless otherwise restricted in the bylaws.
14(2) When one or more directors resign from the board
15effective at a future date, the directors then in office,
16including those who have so resigned, shall have power by the
17applicable vote to fill the vacancies, the vote thereon to
18take effect when the resignations become effective.
19(3) In the case of a corporation having a board of
20directors classified in respect of the time for which
21directors shall severally hold office, any director chosen to
22fill a vacancy, including a vacancy resulting from an
23increase in the number of directors, shall hold office until
24the next election of the class for which the director has
25been chosen and until a successor has been selected and
26qualified or until the director's earlier death, resignation
27or removal.
28(d) Alternate directors.--If the bylaws so provide, a person
29or group of persons entitled to elect, appoint, designate or
30otherwise select one or more directors may select [one or more
1alternates] an alternate for each [such] director. In the
2absence of a director from a meeting of the board [one of his
3alternates], the director's alternate may, in the manner and
4upon [such] the notice, if any, as may be provided in the
5bylaws, attend [such] the meeting or execute a consent in record
6form and exercise at the meeting [such of] or in the consent,
7the powers of the absent director as may be specified by, or in
8the manner provided in, the bylaws. When so exercising the
9powers of the absent director, [such] the alternate shall be
10subject in all respects to the provisions of this [article]
11subpart relating to directors.
12(e) Nomination of directors.--Unless otherwise provided in
13the bylaws [provide otherwise], directors shall be nominated by
14a nominating committee or from the floor.
15(f) Cross reference.--See the definition of "member" in
16section 5103 (relating to definitions).
17§ 5726. Removal of directors.
18(a) [By] Removal by the members.--
19(1) Unless otherwise provided in a bylaw adopted by the
20members, the entire board of directors, or a class of the
21board[,] where the board is classified with respect to the
22power to select directors, or any individual director[,] of a
23nonprofit corporation may be removed from office without
24assigning any cause by the vote of members, or a class of
25members, entitled to [cast at least a majority of the votes
26which all members present would be entitled to cast at any
27annual or other regular election of the directors or of such
28class of directors] elect directors, or the class of
29directors. In case the board or [such] a class of the board
30or any one or more directors are so removed, new directors
1may be elected at the same meeting. [If members are entitled
2to vote cumulatively for the board or a class of the board,
3no individual director shall be removed unless the entire
4board or class of the board is removed in case sufficient
5votes are cast against the resolution for his removal, which,
6if cumulatively voted at an annual or other regular election
7of directors, would be sufficient to elect one or more
8directors to the board or to the class.]
9(2) An individual director shall not be removed, unless
10the entire board or class of the board is removed, from the
11board of a corporation in which members are entitled to vote
12cumulatively for the board or a class of the board if
13sufficient votes are cast against the resolution for removal
14of the director which, if cumulatively voted at an annual or
15other regular election of directors, would be sufficient to
16elect one or more directors to the board or to the class.
17(b) [By] Removal by the board.--Unless otherwise provided in
18a bylaw adopted by the members, the board of directors may
19declare vacant the office of a director [if he is declared] who
20has been judicially declared of unsound mind [by an order of
21court or is convicted of felony] or who has been convicted of an
22offense punishable by imprisonment for a term of more than one
23year, or for any other proper cause which the bylaws may
24specify, or if, within 60 days, or [such] other time as the
25bylaws may specify, after notice of [his] selection, [he] a
26director does not accept [such] the office either in writing or
27by attending a meeting of the board of directors[,] and fulfill
28[such] the other requirements of qualification as the bylaws may
29specify.
30(c) [By] Removal by the court.--[The court may, upon
1petition of any member or director, remove from office any
2director in case of fraudulent or dishonest acts, or gross abuse
3of authority or discretion with reference to the corporation, or
4for any other proper cause, and may bar from office any director
5so removed for a period prescribed by the court. The corporation
6shall be made a party to such action.] Upon application of any
7member or director, the court may remove from office any
8director in case of fraudulent or dishonest acts, or gross abuse
9of authority or discretion with reference to the corporation, or
10for any other proper cause, and may bar from office any director
11so removed for a period prescribed by the court. The corporation
12shall be made a party to the action and as a prerequisite to the
13maintenance of an action under this subsection a member shall
14comply with Subchapter G (relating to judicial supervision of
15corporate action).
16(d) Effect of reinstatement.--An act of the board done
17during the period when a director has been suspended or removed
18for cause shall not be impugned or invalidated if the suspension
19or removal is thereafter rescinded by the members or by the
20board or by the final judgment of a court.
21§ 5727. Quorum of and action by directors.
22(a) General rule.--Unless otherwise provided in the bylaws,
23a majority of the directors in office of a nonprofit corporation
24shall be necessary to constitute a quorum for the transaction of
25business, and the acts of a majority of the directors present
26and voting at a meeting at which a quorum is present shall be
27the acts of the board of directors.
28(b) Action by [written] consent.--Unless otherwise
29restricted in the bylaws, any action [which may] required or
30permitted to be [taken] approved at a meeting of the directors
1may be [taken] approved without a meeting[,] if a consent or
2consents [in writing setting forth the action so taken shall be
3signed] to the action in record form are signed, before, on or
4after the effective date of the action, by all of the directors
5in office [and shall be] on the date the last consent is signed.
6The consent or consents must be filed with the secretary of the
7corporation.
8§ 5728. Interested [members,] directors or officers; quorum.
9(a) General rule.--[No] A contract or transaction between a
10nonprofit corporation and one or more of its [members,]
11directors or officers or between a nonprofit corporation and
12[any other corporation, partnership, association, or other
13organization] another domestic or foreign corporation for profit
14or not-for-profit, partnership, joint venture, trust or other
15association in which one or more of its directors or officers
16are directors or officers[,] or have a financial or other
17interest, shall not be void or voidable solely for [such] that
18reason, or solely because the [member,] director or officer is
19present at or participates in the meeting of the board of
20directors [which] that authorizes the contract or transaction,
21or solely because [his or their votes are] the vote of the
22director or officer is counted for [such] that purpose, if:
23(1) the material facts as to the relationship or
24interest and as to the contract or transaction are disclosed
25or are known to the board of directors and the board [in good
26faith] authorizes the contract or transaction by the
27affirmative votes of a majority of the disinterested
28directors even though the disinterested directors are less
29than a quorum;
30(2) the material facts as to [his] the director's or
1officer's relationship or interest and as to the contract or
2transaction are disclosed or are known to the members
3entitled to vote thereon, if any, and the contract or
4transaction is specifically approved in good faith by vote of
5[such] those members; or
6(3) the contract or transaction is fair as to the
7corporation as of the time it is authorized, approved or
8ratified by the board of directors or the members.
9(b) Quorum.--Common or interested directors may be counted
10in determining the presence of a quorum at a meeting of the
11board [which] that authorizes a contract or transaction
12specified in subsection (a) [of this section].
13* * *
14§ 5729. Voting rights of directors.
15* * *
16(b) Multiple and fractional voting.--The requirement of this
17[article] subpart for the presence of or vote or other action by
18a specified percentage of directors shall be satisfied by the
19presence of or vote or other action by directors entitled to
20cast [such] the specified percentage of the votes which all
21directors are entitled to cast.
22§ 5730. Compensation of directors.
23Except as otherwise restricted in the bylaws, the board of
24directors of a nonprofit corporation shall have the authority to
25fix the compensation of directors for their services as [such]
26directors, and a director may be a salaried officer of the
27corporation.
28Section 36. Section 5731 of Title 15 is amended by adding a
29subsection to read:
30§ 5731. Executive and other committees of the board.
1* * *
2(c) Status of committee action.--The term "board of
3directors" or "board," when used in any provision of this
4subpart relating to the organization or procedures of or the
5manner of taking action by the board of directors, shall be
6construed to include and refer to any executive or other
7committee of the board. Any provision of this subpart relating
8or referring to action to be taken by the board of directors or
9the procedure required therefor shall be satisfied by the taking
10of corresponding action by a committee of the board of directors
11to the extent authority to take the action has been delegated to
12the committee under this section.
13Section 37. Sections 5733, 5746(a), 5751, 5752, 5753, 5754,
145755, 5756(a)(1) and (3) and (b), 5757 and 5759 of Title 15 are
15amended to read:
16§ 5733. Removal of officers and agents.
17Unless otherwise provided in the bylaws, any officer or agent
18of a nonprofit corporation may be removed by the board of
19directors or other body [whenever in its judgment the best
20interests of the corporation will be served thereby, but such]
21with or without cause. The removal shall be without prejudice to
22the contract rights, if any, of any person so removed. Election
23or appointment of an officer or agent shall not of itself create
24contract rights.
25§ 5746. Supplementary coverage.
26(a) General rule.--The indemnification and advancement of
27expenses provided by or granted pursuant to the other sections
28of this subchapter shall not be deemed exclusive of any other
29rights to which a person seeking indemnification or advancement
30of expenses may be entitled under any bylaw, agreement, vote of
1members or disinterested directors or otherwise, both as to
2action in [his] an official capacity and as to action in another
3capacity while holding that office. Section 5728 (relating to
4interested [members,] directors or officers; quorum) shall be
5applicable to any bylaw, contract or transaction authorized by
6the directors under this section. A corporation may create a
7fund of any nature, which may, but need not, be under the
8control of a trustee, or otherwise secure or insure in any
9manner its indemnification obligations, whether arising under or
10pursuant to this section or otherwise.
11* * *
12§ 5751. Classes and qualifications of membership.
13(a) General rule.--Membership in a nonprofit corporation
14shall be of [such] the classes, and shall be governed by [such]
15the rules of admission, retention, suspension and expulsion,
16[as] prescribed in bylaws adopted by the members [shall
17prescribe], except that [all such] the rules shall be
18reasonable, germane to the purpose or purposes of the
19corporation[,] and equally enforced as to all members of the
20same class. Unless otherwise provided by a bylaw adopted by the
21members[, there]:
22(1) There shall be one class of members whose voting and
23other rights and interests shall be equal.
24(2) If there is only one class of members, the members
25shall have all the rights of members generally in a nonprofit
26corporation.
27(b) Corporations without voting members.--Where the articles
28provide that the corporation shall have no members, as such, or
29where a nonprofit corporation has under its bylaws or in fact no
30members entitled to vote on a matter, any provision of this
1[article] subpart or any other provision of law requiring notice
2to, the presence of, or the vote, consent or other action by
3members of the corporation in connection with [such] the matter
4shall be satisfied by notice to, the presence of, or the vote,
5consent or other action by the board of directors or other body
6of the corporation.
7(c) Membership status.--Regardless of whether a nonprofit
8corporation designates or refers to a person as a member of the
9corporation, the person is not a member of the corporation for
10purposes of this subpart unless the person satisfies the
11definition of "member" in section 5103(a) (relating to
12definitions).
13§ 5752. Organization on a stock share basis.
14(a) General rule.--A nonprofit corporation may be organized
15upon either a nonstock basis or, if so provided in its articles,
16upon a stock share basis[, as set forth in its articles].
17(b) Form of certificates; uncertificated shares.--The shares
18of nonprofit corporations organized upon a stock share basis
19shall be of [such] the denominations [as] provided in the bylaws
20[shall provide] and shall be represented by share
21certificates[.] unless the articles provide that any or all
22classes and series of shares, or any part thereof, shall be
23uncertificated shares. A provision of the articles providing for
24uncertificated shares shall not apply to shares represented by a
25certificate until the certificate is surrendered to the
26corporation. Except as otherwise expressly provided by law, the
27rights and obligations of the holders of shares represented by
28certificates and the rights and obligations of the holders of
29uncertificated shares of the same class and series shall be
30identical. The fact that the corporation is a nonprofit
1corporation shall be noted conspicuously on the face of each
2certificate. Within a reasonable time after the issuance or
3transfer of uncertificated shares, the corporation shall send to
4the registered owner thereof a written notice stating:
5(1) That the corporation is a nonprofit corporation
6incorporated under the laws of this Commonwealth.
7(2) The name of the registered owner.
8(3) The denomination and class of shares and the
9designation of the series, if any, of the shares issued or
10transferred.
11(c) Rights of shareholders.--Unless otherwise provided in a
12bylaw adopted by the members, each share shall entitle the
13holder thereof to one vote. No dividends shall be directly or
14indirectly paid on [any such] the shares, nor shall the
15shareholders be entitled to any portion of the earnings of
16[such] the corporation derived through increment of value upon
17its property, or otherwise incidentally made, until the
18dissolution of [any such] the corporation.
19(d) Transferability of shares.--Unless otherwise provided in
20the bylaws, [such] the shares shall not be transferable by
21operation of law or otherwise.
22(e) Power to cancel shares.--A nonprofit corporation shall
23have power to exclude from further membership any shareholder
24who fails to comply with the reasonable and lawful bylaws of the
25corporation, and may cancel the shares of any [such] offending
26member without liability for an accounting[,] except as may be
27provided in the bylaws.
28(f) Applicability of the Uniform Commercial Code.--The
29provisions of [Division 8 of Title 13] 13 Pa.C.S. Div. 8
30(relating to investment securities) shall not apply in any
1manner to the shares of a nonprofit corporation.
2(g) Cross reference.--See the definition of "member" in
3section 5103 (relating to definitions).
4§ 5753. Membership certificates.
5A nonprofit corporation organized upon a nonstock basis shall
6not issue shares of stock, but membership in [such] the
7corporation may be evidenced by certificates of membership. The
8fact that the corporation is a nonprofit corporation shall be
9noted conspicuously on the face of each certificate.
10§ 5754. Members grouped in local units.
11(a) General rule.--The bylaws of a nonprofit corporation may
12provide that the members of the corporation shall be grouped in
13incorporated or unincorporated local units formed upon the basis
14of territorial areas, or [such] other basis as may be determined
15in the bylaws, for the purpose of election of delegates or
16representatives to represent the members of [such] the local
17units at any regular or special meetings of [such] the
18corporation. Unless otherwise provided in a bylaw adopted by the
19members, each local unit participating in a representative
20capacity by means of one or more delegates or otherwise at a
21meeting of the corporation shall have a number of votes equal to
22the total membership of the local unit.
23(b) Voting at meetings of delegates.--The requirements of
24this [article] subpart for action by or the consent of a
25specified number or percentage of the members shall be satisfied
26by action by or the consent of [such] that number or percentage
27of votes of delegates or representatives of members selected
28pursuant to this section.
29(c) Calling and holding meetings of delegates.--The
30provisions of this [article] subpart relating to the manner of
1the calling and holding of and the taking of action at meetings
2of members shall be applicable to meetings of delegates or
3representatives of members.
4(d) Incorporation of local units.--A local unit of an
5incorporated or unincorporated parent body [which] that is
6incorporated or organized for a purpose or purposes not
7involving pecuniary profit, incidental or otherwise, to its
8members[,] may be incorporated under this [article] subpart by
9an incorporated parent body or by the members of [such] the
10local unit.
11§ 5755. Time of holding meetings of members.
12(a) Regular meetings.--The bylaws of a nonprofit corporation
13may provide for the number and the time of meetings of members,
14but unless otherwise provided in a bylaw adopted by the members
15at least one meeting of the members of a corporation [which]
16that has members, as such, entitled to vote, shall be held in
17each calendar year for the election of directors[, at such] at
18the time [as shall be] provided in or fixed pursuant to
19authority granted by the bylaws. Failure to hold the annual or
20other regular meeting at the designated time shall not work a
21dissolution of the corporation or affect otherwise valid
22corporate acts. If the annual or other regular meeting [shall
23not be] is not called and held within six months after the
24designated time, any member may call [such] the meeting at any
25time thereafter.
26(b) Special meetings.--Special meetings of the members may
27be called at any time by:
28(1) [by] the board of directors[, or];
29(2) members entitled to cast at least 10% of the votes
30[which] that all members are entitled to cast at the
1particular meeting[, or by such]; or
2(3) other officers or persons as may be provided in the
3bylaws.
4At any time, upon written request of any person who has called a
5special meeting, it shall be the duty of the secretary to fix
6the time of the meeting[,] which, if the meeting is called
7pursuant to a statutory right, shall be held not more than 60
8days after the receipt of the request. If the secretary [shall
9neglect or refuse] neglects or refuses to fix the time of the
10meeting, the person or persons calling the meeting may do so.
11(c) Adjournments.--Adjournments of any regular or special
12meeting may be taken[,] but any meeting at which directors are
13to be elected shall be adjourned only from day to day, or for
14[such] longer periods not exceeding 15 days each, as the members
15present and entitled to [cast at least a majority of the votes
16which all members present and voting are entitled to cast] vote
17shall direct, until [such] the directors have been elected.
18(d) Cross reference.--See section 6145 (relating to
19applicability of certain safeguards to foreign domiciliary
20corporations).
21§ 5756. Quorum.
22(a) General rule.--A meeting of members of a nonprofit
23corporation duly called shall not be organized for the
24transaction of business unless a quorum is present. Unless
25otherwise provided in a bylaw adopted by the members:
26(1) The presence of members entitled to cast at least a
27majority of the votes [which] that all members are entitled
28to cast on [the matters] a particular matter to be acted upon
29at the meeting shall constitute a quorum for the purposes of
30consideration and action on the matter.
1* * *
2(3) If a meeting cannot be organized because a quorum
3has not attended, those present may, except as otherwise
4provided in this [article] subpart, adjourn the meeting to
5[such] a time and place [as] they may determine.
6(b) Exceptions.--Notwithstanding any contrary provision in
7the articles or bylaws, those members entitled to vote who
8attend a meeting of members:
9(1) [In the case of any meeting called for the election
10of directors those who attend the second of such adjourned
11meetings] at which directors are to be elected that has been
12previously adjourned for lack of a quorum, although less than
13a quorum as fixed in this section[,] or in the [articles or]
14bylaws, shall nevertheless constitute a quorum for the
15purpose of election of directors[.];
16(2) [In the case of any meeting called for any other
17purpose those who attend the second of such adjourned
18meetings] that has been previously adjourned for one or more
19periods aggregating at least 15 days because of an absence of
20a quorum, although less than a quorum as fixed in this
21section[,] or in the [articles or] bylaws, shall nevertheless
22constitute a quorum for the purpose of acting upon any
23[resolution or other] matter set forth in the notice of the
24meeting[, if written notice of such second adjourned meeting,
25stating] if the notice states that those members who attend
26the adjourned meeting shall nevertheless constitute a quorum
27for the purpose of acting upon [such resolution or other] the
28matter[, is given to each member of record entitled to vote
29at such second adjourned meeting at least ten days prior to
30the day named for the second adjourned meeting].
1§ 5757. Action by members.
2(a) General rule.--[Except as otherwise provided in this
3article or in a bylaw adopted by the members, the acts at a duly
4organized meeting of members present entitled to cast at least a
5majority of the votes which all members present and voting are
6entitled to cast shall be the acts of the members.
7(b) Increased minimum vote.--Whenever in this article a
8specified number or percentage of votes of members or of a class
9of members is required for the taking of any action, a nonprofit
10corporation may prescribe in a bylaw adopted by the members that
11a higher number or percentage of votes shall be required for
12such action.] Except as otherwise provided in this subpart or in
13a bylaw adopted by the members, whenever any corporate action is
14to be taken by vote of the members of a nonprofit corporation,
15it shall be authorized upon receiving the affirmative vote of a
16majority of the votes cast by the members entitled to vote
17thereon and, if any members are entitled to vote thereon as a
18class, upon receiving the affirmative vote of a majority of the
19votes cast by the members entitled to vote as a class.
20(b) Changes in required vote.--Whenever a provision of this
21subpart requires a specified number or percentage of votes of
22members or of a class of members for the taking of any action, a
23nonprofit corporation may prescribe in a bylaw adopted by the
24members that a higher number or percentage of votes shall be
25required for the action. The number or percentage of members
26necessary to call a special meeting of members or to petition
27for the proposal of an amendment of articles under this subpart
28may not be increased under this subsection. See sections 5504(d)
29(relating to adoption, amendment and contents of bylaws) and
305914(d) (relating to adoption of amendments).
1(c) Expenses.--Unless otherwise restricted in the articles,
2the corporation shall pay the reasonable expenses of
3solicitation of votes, proxies or consents of members by or on
4behalf of the board of directors or its nominees for election to
5the board, including solicitation by professional proxy
6solicitors and otherwise, and may pay the reasonable expenses of
7a solicitation by or on behalf of other persons.
8§ 5759. Voting and other action by proxy.
9(a) General rule.--Voting by members of a nonprofit
10corporation shall be only in person unless a bylaw adopted by
11the members provides for voting by proxy. [The presence of or
12vote or other action at a meeting of members, or the expression
13of consent or dissent to corporate action in writing, by a proxy
14of a member pursuant to such a bylaw shall constitute the
15presence of, or vote or action by, or written consent or dissent
16of such member for the purposes of this article.] Unless
17otherwise restricted by a bylaw adopted by the members:
18(1) The presence of, or vote or other action at a
19meeting of members, or the expression of consent or dissent
20to corporate action, by a proxy of a member pursuant to a
21bylaw shall constitute the presence of, or vote or action by,
22or consent or dissent of the member for the purposes of this
23subpart.
24(2) Where two or more proxies of a member are present,
25the corporation shall, unless otherwise expressly provided in
26the proxy, accept as the vote or other action of all the
27members or shares represented thereby the vote cast or other
28action taken by a majority of them, and, if a majority of the
29proxies cannot agree whether the memberships or shares
30represented shall be voted or upon the manner of voting the
1memberships or shares or taking the other action, the voting
2of the memberships or shares or right to take other action
3shall be divided equally among those persons.
4(b) [Minimum requirements] Execution and filing.--Every
5proxy shall be executed [in writing] or authenticated by the
6member or by [his] the member's duly authorized [attorney in
7fact] attorney-in-fact and filed with or transmitted to the
8secretary of the corporation[.] or its designated agent. A
9member or the member's duly authorized attorney-in-fact may
10execute or authenticate a writing or transmit an electronic
11message authorizing another person to act for the member by
12proxy. A telegram, telex, cablegram, datagram, e-mail, Internet
13communication or other means of electronic transmission from a
14member or attorney-in-fact, or a photographic, facsimile or
15similar reproduction of a writing executed by a member or
16attorney-in-fact:
17(1) may be treated as properly executed or authenticated
18for purposes of this subsection; and
19(2) shall be so treated if it sets forth or utilizes a
20confidential and unique identification number or other mark
21furnished by the corporation to the member for the purposes
22of a particular meeting or transaction.
23(c) Revocation.--A proxy shall be revocable at will,
24notwithstanding any other agreement or any provision in the
25proxy to the contrary, but the revocation of a proxy shall not
26be effective until notice thereof has been given to the
27secretary of the corporation[. No] or its designated agent in
28writing or by electronic transmission. An unrevoked proxy shall
29not be valid after 11 months from the date of its execution,
30authentication or transmission unless a longer time is expressly
1provided therein[, but in no event shall a proxy be voted on
2after three years from the date of its execution]. A proxy shall
3not be revoked by the death or incapacity of the maker unless,
4before the vote is counted or the authority is exercised,
5[written] notice of [such] the death or incapacity is given to
6the secretary of the corporation[.] or its designated agent. See
7section 6145 (relating to applicability of certain safeguards to
8foreign domiciliary corporations).
9Section 38. Title 15 is amended by adding sections to read:
10§ 5760. (Reserved).
11§ 5761. (Reserved).
12Section 39. Sections 5760 and 5761 of Title 15 are
13renumbered and amended to read:
14§ [5760] 5762. Voting by corporations.
15(a) Voting in nonprofit corporation matters.--Unless
16otherwise provided in a bylaw of a nonprofit corporation adopted
17by the members, any other [corporation which is a member of such
18a nonprofit corporation may vote therein by any of its
19officers,] domestic or foreign corporation for profit or not-
20for-profit that is a member of the nonprofit corporation may
21vote by any of its officers or agents, or by proxy appointed by
22any officer or agent, unless some other person, by resolution of
23the board of directors of [such] the other corporation[,] or a
24provision of its articles or bylaws, a copy of which resolution
25or provision certified to be correct by one of its officers
26[shall have] has been filed with the secretary of the nonprofit
27corporation, [shall be] is appointed its general or special
28proxy[,] in which case [such] that person shall be entitled to
29vote [therein] as the proxy.
30(b) Voting by nonprofit corporations.--Shares of or
1memberships in a domestic or foreign corporation for profit or
2not-for-profit other than a nonprofit corporation, standing in
3the name of a shareholder or member [which] that is a nonprofit
4corporation, may be voted by the persons and in the manner
5provided for in the case of nonprofit corporations by subsection
6(a) [of this section] unless the laws of the jurisdiction in
7which the issuer of [any such] the shares or memberships is
8incorporated [shall] require the shares or memberships to be
9voted by some other person or persons or in some other manner[,]
10in which case, to the extent that [such] those laws are
11inconsistent [herewith] with this subsection, this subsection
12shall not apply.
13§ [5761] 5763. Determination of members of record.
14(a) Fixing record date.--Unless otherwise restricted in the
15bylaws, the board of directors of a nonprofit corporation may
16fix a time[, not more than 70 days] prior to the date of any
17meeting of members [or any adjournment thereof,] as a record
18date for the determination of the members entitled to notice of,
19or to vote at, [such] the meeting[. In such case only], which
20time, except in the case of an adjourned meeting, shall not be
21more than 90 days prior to the date of the meeting of members.
22Only members of record on the date [so] fixed shall [so] be so
23entitled notwithstanding any increase or other change in
24membership on the books of the corporation after any record date
25fixed as [aforesaid] provided in this subsection. Unless
26otherwise [restricted] provided in the bylaws, the board of
27directors may similarly fix a record date for the determination
28of members of record for any other purpose. When a determination
29of members of record has been made as provided in this section
30for purposes of a meeting, the determination shall apply to any
1adjournment thereof unless otherwise restricted in the bylaws or
2unless the board fixes a new record date for the adjourned
3meeting.
4(b) Determination when no record date fixed.--Unless
5otherwise [restricted] provided in the bylaws, if [no] a record
6date is not fixed:
7(1) The record date for determining members entitled to
8notice of or to vote at a meeting of members shall be at the
9close of business on the day next preceding the day on which
10notice is given, or, if notice is waived, at the close of
11business on the day [next] immediately preceding the day on
12which the meeting is held.
13(2) The record date for determining members entitled to:
14(i) express consent or dissent to corporate action
15in writing without a meeting, when [no] prior action by
16the board of directors or other body is not necessary[,];
17(ii) call a special meeting of the members; or
18(iii) propose an amendment of the articles;
19shall be the close of business on the day on which the first
20written consent or dissent, request for a special meeting or
21petition proposing an amendment of the articles is
22[expressed] filed with the secretary of the corporation.
23(3) The record date for determining members for any
24other purpose shall be at the close of business on the day on
25which the board of directors or other body adopts the
26resolution relating thereto.
27Section 40. Title 15 is amended by adding a section to read:
28§ 5764. (Reserved).
29Section 41. Sections 5762, 5763, 5764, 5765, 5766 and 5767
30of Title 15 are renumbered and amended to read:
1§ [5762] 5765. Judges of election.
2(a) General rule.--Unless otherwise provided in a bylaw
3adopted by the members:
4(1) In advance of any meeting of members of a nonprofit
5corporation, the board of directors or other body may appoint
6judges of election, who need not be members, to act at [such]
7the meeting or any adjournment thereof. If judges of election
8are not so appointed, the presiding officer of [any such] the
9meeting may, and on the request of any member shall, [make
10such appointment] appoint judges of election at the meeting.
11The number of judges shall be one or three. [No] A person who
12is a candidate for office to be filled at the meeting shall
13not act as a judge.
14(2) In case any person appointed as judge fails to
15appear or fails or refuses to act, the vacancy may be filled
16by appointment made by the board of directors or other body
17in advance of the convening of the meeting, or at the meeting
18by the presiding officer thereof.
19(3) The judges of election shall determine the number of
20members of record and the voting power of each, the members
21present at the meeting, the existence of a quorum, the
22authenticity, validity[,] and effect of proxies, if voting by
23proxy is permitted under the bylaws, receive votes or
24ballots, hear and determine all challenges and questions in
25any way arising in connection with the right to vote, count
26and tabulate all votes, determine the result[,] and [do such]
27perform the acts as may be proper to conduct the election or
28vote with fairness to all members. The judges of election
29shall perform their duties impartially, in good faith, to the
30best of their ability[,] and as expeditiously as is
1practical. If there are three judges of election, the
2decision, act or certificate of a majority shall be effective
3in all respects as the decision, act or certificate of all.
4(4) On request of the presiding officer of the meeting,
5or of any member, the judges shall make a report in writing
6of any challenge or question or matter determined by them,
7and execute a certificate of any fact found by them. Any
8report or certificate made by them shall be prima facie
9evidence of the facts stated therein.
10(b) Cross reference.--See section 6145 (relating to
11applicability of certain safeguards to foreign domiciliary
12corporations).
13§ [5763] 5766. Consent of members in lieu of meeting.
14(a) Unanimous consent.--Unless otherwise restricted in the
15bylaws, any action [which may] required or permitted to be taken
16at a meeting of the members or of a class of members of a
17nonprofit corporation may be taken without a meeting[,] if a
18consent or consents [in writing, setting forth the action so
19taken, shall be signed] to the action in record form are signed,
20before, on or after the effective date of the action, by all of
21the members who would be entitled to vote at a meeting for [such
22purpose and shall be filed] that purpose. The consent or
23consents must be filed with the [secretary of the corporation]
24minutes of the proceedings of the members.
25(b) Partial consent.--If the bylaws so provide, any action
26required or permitted to be taken at a meeting of the members or
27of a class of members may be taken without a meeting upon the
28signed consent of members who would have been entitled to cast
29the minimum number of votes that would be necessary to authorize
30the action at a meeting at which all members entitled to vote
1thereon were present and voting. The consents must be filed in
2record form with the minutes of the proceedings of the members.
3(c) Effectiveness of action by partial consent.--An action
4taken pursuant to subsection (b) shall not become effective
5until after at least ten days' notice of the action has been
6given to each member entitled to vote thereon who has not
7consented thereto.
8§ [5764] 5767. Appointment of custodian of corporation on
9deadlock or other cause.
10(a) General rule.--[The court, upon] Upon application of any
11member, the court may appoint one or more persons to be
12custodians of and for any nonprofit corporation when it [is made
13to appear] appears that:
14(1) [that] at any meeting for the election of directors
15or members of an other body, the members are so divided that
16they have failed to elect successors to [directors] those
17whose terms have expired or would have expired upon the
18qualification of their successors; or
19(2) [that] any of the conditions specified in section
205981 (relating to proceedings upon [petition of member, etc.)
21exists] application of member or director), other than that
22it is beneficial to the interest of the members that the
23corporation be wound up and dissolved, exist with respect to
24the corporation.
25(a.1) Exception.--The court shall not appoint a custodian to
26resolve a deadlock if the members by agreement or otherwise have
27provided for the appointment of a provisional director or member
28of an other body or other means for the resolution of the
29deadlock, but the court shall enforce the remedy so provided, if
30appropriate.
1(b) Power and title of custodian.--A custodian appointed
2under this section shall have all the power and title of a
3receiver appointed under Subchapter G of Chapter 59 (relating to
4involuntary liquidation and dissolution), but the authority of
5the custodian shall be to continue the business of the
6corporation and not to liquidate its affairs and distribute its
7assets[,] except when the court shall otherwise order [and
8except in cases arising under section 5981(1), (2) and (3)
9(relating to proceedings upon petition of member, etc.)].
10(c) Cross reference.--See section 6145 (relating to
11applicability of certain safeguards to foreign domiciliary
12corporations).
13§ [5765] 5768. Reduction of membership below stated number.
14Whenever the membership of a nonprofit corporation having a
15stated number of members [shall be] is reduced below [such] that
16number by death, withdrawal[,] or otherwise, the corporation
17shall not on that account be dissolved, but it shall be lawful
18for the surviving or continuing members to continue the
19corporate existence[,] unless otherwise restricted in the
20bylaws.
21§ [5766] 5769. Termination and transfer of membership.
22(a) General rule.--Membership in a nonprofit corporation
23shall be terminated in the manner provided in a bylaw adopted by
24the members. If [the] membership in any such corporation is
25limited to persons who are members in good standing in another
26corporation, or in any lodge, church, club, society or other
27entity or organization, the bylaws shall in each case define
28[such] the limitations, and may provide that failure on the part
29of [any such] a member to keep himself in good standing in
30[such] the other entity or organization shall be sufficient
1cause for [expelling the member from] terminating the membership
2of the member in the corporation requiring such eligibility.
3(b) Expulsion.--
4(1) [No] A member shall not be expelled from any
5nonprofit corporation without notice, trial and conviction,
6the form of which shall be prescribed by the bylaws.
7(2) Paragraph (1) [of this subsection] shall not apply
8to termination of membership pursuant to section 5544[(c)]
9(relating to [enforcement of payment of fees,] dues and
10assessments).
11(3) See section 6145 (relating to applicability of
12certain safeguards to foreign domiciliary corporations).
13(c) Effect of termination of membership.--Unless otherwise
14provided in the bylaws, the right of a member of a nonprofit
15corporation to vote, and his right, title and interest in or to
16the corporation or its property, shall cease [on the] upon
17termination of [his] membership.
18(d) Transfer of membership.--Unless otherwise provided in
19the bylaws, [no] a member may not transfer his membership or any
20right arising therefrom. The adoption of an amendment to the
21articles or bylaws of a nonprofit corporation that changes the
22identity of some or all of the members or the criteria for
23membership does not constitute a transfer for purposes of this
24subsection.
25§ [5767] 5770. Voting powers and other rights of certain
26securityholders and other entities.
27[Such] The power to vote in respect to the corporate affairs
28and management of a [nonprofit] membership corporation and other
29membership rights as may be provided in a bylaw adopted by the
30members may be conferred upon:
1(1) Registered holders of [securities evidencing
2indebtedness] obligations issued or to be issued by the
3corporation.
4(2) The United States of America, the Commonwealth, a
5state, or any political subdivision [thereof or other] of any
6of the foregoing, or any entity prohibited by law from
7becoming a member of a corporation.
8Section 42. Sections 5791, 5792, 5793, 5911, 5913, 5914,
95921, 5923(a), 5924, 5925, 5926(2) and (4), 5928, 5930, 5951,
105956, 5957(b)(1)(ii) and (iv) and (h)(1) and (3), 5972(b),
115973(a), 5975(c), 5976(a), 5977(a) and 5978(b) of Title 15 are
12amended to read:
13§ 5791. Corporate action subject to subchapter.
14(a) General rule.--This subchapter shall apply to, and the
15term "corporate action" in this subchapter shall mean any of the
16following actions:
17(1) The election, appointment, designation or other
18selection and the suspension, removal or expulsion of
19members, directors, members of an other body or officers of a
20nonprofit corporation.
21(2) The taking of any action on any matter [which] that
22is required under this [article] subpart or under any other
23provision of law to be, or [which] that under the bylaws may
24be, submitted for action to the members, directors, members
25of an other body or officers of a nonprofit corporation.
26(b) Cross reference.--See section 6145 (relating to
27applicability of certain safeguards to foreign domiciliary
28corporations).
29§ 5792. Proceedings prior to corporate action.
30(a) General rule.--Where under applicable law or the bylaws
1of a nonprofit corporation there has been a failure to hold a
2meeting to take corporate action and [such] the failure has
3continued for 30 days after the [date] designated or appropriate
4[therefor] date, the court may summarily order a meeting to be
5held upon the application of any person entitled, either alone
6or in conjunction with other persons similarly seeking relief
7under this section, to call a meeting to consider the corporate
8action in issue.
9(b) Conduct of meeting.--The court may determine the right
10to vote at [such] the meeting of persons claiming [such] that
11right, may appoint a master to hold [such] the meeting under
12such orders and powers as the court [may deem proper,] deems
13proper and may take [such action as may be] any action required
14to give due notice of the meeting and to convene and conduct the
15meeting in the interests of justice.
16(c) Cross reference.--See section 6145 (relating to
17applicability of certain safeguards to foreign domiciliary
18corporations).
19§ 5793. Review of contested corporate action.
20(a) General rule.--Upon [petition] application of any person
21[whose status as, or whose rights or duties as, a member,
22director, member of an other body, officer or otherwise of a
23nonprofit corporation are or may be affected] aggrieved by any
24corporate action, the court may hear and determine the validity
25of [such] the corporate action.
26(b) Powers and procedures.--[The court may make such orders
27in any such case as may be just and proper, with power to] By
28entering an appropriate order, the court may enforce the
29production of any books, papers and records of the corporation
30and other relevant evidence [which] that may relate to the
1issue. The court shall provide for notice of the pendency of the
2proceedings under this section to all persons affected thereby.
3If it is determined that no valid corporate action has been
4taken, the court may order a meeting to be held in accordance
5with section 5792 (relating to proceedings prior to corporate
6action).
7(c) Cross reference.--See section 6145 (relating to
8applicability of certain safeguards to foreign domiciliary
9corporations).
10§ 5911. Amendment of articles authorized.
11(a) General rule.--A nonprofit corporation, in the manner
12[hereinafter] provided in this subchapter, may [from time to
13time] amend its articles for one or more of the following
14purposes:
15(1) To adopt a new name, subject to the restrictions
16[heretofore] provided in this [article] subpart.
17(2) To modify any provision of the articles relating to
18its term of existence.
19(3) To change, add to[,] or diminish its purposes[,] or
20to set forth different or additional purposes.
21(4) To restate the articles in their entirety.
22(5) [In] To make any and as many other [respects]
23changes as desired.
24(b) Exceptions.--[No] An amendment adopted under this
25section shall not amend articles in such a way that as so
26amended they would not be authorized by this [article] subpart
27as original articles of incorporation[,] except that:
28(1) Restated articles shall, subject to section 109
29(relating to name of commercial registered office provider in
30lieu of registered address), state the address of the current
1instead of the initial registered office of the corporation
2in this Commonwealth[,] and need not state the names and
3addresses [of the first directors or] of the incorporators.
4(2) The corporation shall not be required to revise any
5other provision of its articles if [such] the provision is
6valid and operative immediately prior to the filing of [such]
7the amendment in the [Department of State] department.
8§ 5913. Notice of meeting of members.
9[Written notice shall, not less than ten days before the
10meeting of members called for the purpose of considering the
11proposed amendment,] (a) General rule.--Notice in record form
12of the meeting of members of a nonprofit corporation that will
13act on the proposed amendment shall be given to each member of
14record entitled to vote thereon. [There shall be included in, or
15enclosed with, such notice] The notice shall include a copy of
16the proposed amendment or a summary of the changes to be
17effected thereby.
18(b) Cross reference.--See Subchapter A of Chapter 57
19(relating to notice and meetings generally).
20§ 5914. Adoption of amendments.
21(a) General rule.--[The] Unless a bylaw adopted by the
22members or a specific provision of this subpart requires a
23greater vote, a proposed amendment of the articles of a
24nonprofit corporation shall be adopted upon receiving the
25affirmative vote of the members present entitled to cast at
26least a majority of the votes [which] that all members present
27are entitled to cast thereon, and if any class of members is
28entitled to vote thereon as a class, the affirmative vote of the
29members present of such class entitled to cast at least a
30majority of the votes [which] that all members present of such
1class are entitled to cast thereon. Any number of amendments may
2be submitted to the members and voted upon by them at one
3meeting.
4(a.1) Adoption by board of directors or other body.--Unless
5otherwise restricted in the bylaws, an amendment of articles
6shall not require the approval of the members of the corporation
7if:
8(1) the amendment is to provide for perpetual existence;
9(2) to the extent the amendment has not been approved by
10the members, it restates without change all of the operative
11provisions of the articles as theretofore amended or as
12amended thereby; or
13(3) the amendment accomplishes any combination of
14purposes specified in this subsection.
15Whenever a provision of this subpart authorizes the board of
16directors or other body to take any action without the approval
17of the members and provides that a statement, certificate, plan
18or other document relating to such action shall be filed in the
19department and shall operate as an amendment of the articles,
20the board upon taking such action may, in lieu of filing the
21statement, certificate, plan or other document, amend the
22articles under this subsection without the approval of the
23members to reflect the taking of such action. The amendment
24shall be deemed adopted by the corporation when it has been
25adopted by the board of directors or other body in the manner
26provided by subsection (b).
27(b) Adoption in absence of voting members.--If the
28corporation has no members entitled to vote thereon, or no
29members entitled to vote thereon other than persons who also
30constitute the board of directors or other body, the amendment
1shall be deemed adopted by the corporation when it has been
2adopted by the board of directors or other body pursuant to
3section 5912 (relating to proposal of amendments).
4(c) Termination of proposal.--[The resolution or petition
5may contain a provision that at any time prior to the filing of
6articles of amendment in the Department of State the proposal
7may be terminated by the board of directors or other body
8notwithstanding the adoption of the amendment by the
9corporation.] Prior to the time when an amendment becomes
10effective, the amendment may be terminated pursuant to
11provisions for amendment, if any, set forth in the resolution or
12petition. If articles of amendment have been filed in the
13department prior to the termination, a statement under section
145902 (relating to statement of termination) shall be filed in
15the department.
16(d) Amendment of voting provisions.--[Notwithstanding any
17contrary provision of the articles or bylaws,] Unless otherwise
18provided in the articles, whenever the articles [shall] require
19for the taking of any action by the members or a class of
20members a specific number or percentage of votes, the provision
21of the articles setting forth [such] that requirement shall not
22be amended or repealed by any lesser number or percentage of
23votes of the members or of [such] the class of members.
24§ 5921. Merger and consolidation authorized.
25(a) Domestic surviving or new corporation.--Any two or more
26domestic nonprofit corporations, or any two or more foreign
27nonprofit corporations [not-for-profit], or any one or more
28domestic nonprofit corporations[,] and any one or more foreign
29nonprofit corporations [not-for-profit], may, in the manner
30provided in this subchapter, be merged into one of [such] the
1domestic nonprofit corporations, [hereinafter] designated in
2this subchapter as the surviving corporation, or consolidated
3into a new corporation to be formed under this [article, if
4such] subpart, if the foreign corporations [not-for-profit] are
5authorized by the [law or] laws of the jurisdiction under which
6they are incorporated to effect [such] a merger or consolidation
7with a corporation of another jurisdiction.
8(b) Foreign surviving or new corporation.--Any one or more
9domestic nonprofit corporations, and any one or more foreign
10nonprofit corporations [not-for-profit], may, in the manner
11[hereinafter] provided in this subchapter, be merged into one of
12[such foreign corporations not-for-profit, hereinafter] the
13foreign nonprofit corporations, designated in this subchapter as
14the surviving corporation, or consolidated into a new
15corporation to be incorporated under the [law or] laws of the
16jurisdiction under which one of the foreign nonprofit
17corporations [not-for-profit] is incorporated, if the laws of
18[such] that jurisdiction authorize [such] a merger with or
19consolidation into a corporation of another jurisdiction.
20§ 5923. Notice of meeting of members.
21(a) General rule.--[Written notice] Notice in record form of
22the meeting of members that will act on the proposed plan shall
23be given to each member of record, whether or not entitled to
24vote thereon, of each domestic nonprofit corporation that is a
25party to the merger or consolidation. [There shall be included
26in, or enclosed with, the notice] The notice shall include or be
27accompanied by a copy of the proposed plan or a summary thereof.
28The notice shall [state] provide that a copy of the bylaws of
29the surviving or new corporation will be furnished to any member
30on request and without cost.
1* * *
2§ 5924. Adoption of plan.
3(a) General rule.--The plan of merger or consolidation shall
4be adopted upon receiving the affirmative vote of the members
5present entitled to cast at least a majority of the votes
6[which] that all members present are entitled to cast thereon of
7each of the [merging or consolidating] domestic nonprofit
8corporations[,] that is a party to the merger or consolidation
9and, if any class of members is entitled to vote thereon as a
10class, the affirmative vote of the members present of such class
11entitled to cast at least a majority of the votes [which] that
12all members present of such class are entitled to cast thereon.
13(b) Adoption in absence of voting members.--If [the] a
14merging or consolidating corporation has no members entitled to
15vote thereon, or no members entitled to vote thereon other than
16persons who also constitute the board of directors or other
17body, a plan of merger or consolidation shall be deemed adopted
18by the corporation when it has been adopted by the board of
19directors or other body pursuant to section 5922 (relating to
20plan of merger or consolidation).
21(c) Termination of plan.--[Any plan of merger or
22consolidation may contain a provision that at any time prior to
23the filing of articles of merger or consolidation in the
24Department of State the plan may be terminated by the board of
25directors or other body of any corporation which is a party to
26the plan notwithstanding adoption of the plan by all or any of
27the corporations which are parties to the plan.] Prior to the
28time when a merger or consolidation becomes effective, the
29merger or consolidation may be terminated pursuant to provisions
30for termination, if any, set forth in the plan. If articles of
1merger or consolidation have been filed in the department prior
2to the termination, a statement under section 5902 (relating to
3statement of termination) shall be filed in the department.
4§ 5925. Authorization by foreign corporations.
5The plan of merger or consolidation shall be authorized,
6adopted or approved by each foreign nonprofit corporation
7[which] that desires to merge or consolidate[,] in accordance
8with the laws of the jurisdiction in which it is incorporated[.]
9and, in the case of a foreign domiciliary corporation, in
10accordance with the provisions of this subpart to the extent
11provided by section 6145 (relating to applicability of certain
12safeguards to foreign domiciliary corporations).
13§ 5926. Articles of merger or consolidation.
14Upon the adoption of the plan of merger or consolidation by
15the corporations desiring to merge or consolidate, as provided
16in this subchapter, articles of merger or articles of
17consolidation, as the case may be, shall be executed by each
18corporation and shall, subject to section 109 (relating to name
19of commercial registered office provider in lieu of registered
20address), set forth:
21* * *
22(2) The name and address, including street and number,
23if any, of the registered office of each other domestic
24nonprofit corporation and qualified foreign nonprofit
25corporation that is a party to the [plan] merger or
26consolidation.
27* * *
28(4) The manner in which the plan was adopted by each
29domestic corporation and, if one or more foreign corporations
30are parties to the [plan] merger or consolidation, the fact
1that the plan was authorized, adopted or approved, as the
2case may be, by each of the foreign corporations in
3accordance with the laws of the jurisdiction in which it is
4incorporated.
5* * *
6§ 5928. Effective date of merger or consolidation.
7Upon the filing of the articles of merger or the articles of
8consolidation in the [Department of State,] department or upon
9the effective date specified in the plan of merger or
10consolidation, whichever is later, the merger or consolidation
11shall be effective. The merger or consolidation of one or more
12domestic nonprofit corporations into a foreign nonprofit
13corporation shall be effective according to the provisions of
14law of the jurisdiction in which [such] the foreign corporation
15is incorporated, but not until articles of merger or articles of
16consolidation have been adopted and filed, as provided in this
17subchapter.
18§ 5930. Voluntary transfer of corporate assets.
19(a) General rule.--[A nonprofit corporation shall not sell,
20lease away or exchange all, or substantially all, its property
21and assets, with or without good will, unless and until a plan
22of sale, lease or exchange of assets with respect thereto shall
23have been adopted by the corporation in the manner provided in
24this subchapter with respect to the adoption of a plan of
25merger.] A sale, lease, exchange or other disposition of all, or
26substantially all, of the property and assets, with or without
27goodwill, of a nonprofit corporation, if not made pursuant to
28Subchapter D of Chapter 19 (relating to division), may be made
29only pursuant to a plan of asset transfer. The property or
30assets of a direct or indirect subsidiary corporation that is
1controlled by a parent corporation shall also be deemed the
2property or assets of the parent corporation for purposes of
3this subsection. The plan of asset transfer shall set forth the
4terms and consideration of the sale, lease, exchange or other
5disposition or may authorize the board of directors or other
6body to fix any or all of the terms and conditions, including
7the consideration to be received by the corporation. Any of the
8terms of the plan may be made dependent upon facts ascertainable
9outside of the plan if the manner in which the facts will
10operate upon the terms of the plan is set forth in the plan. The
11plan of asset transfer shall be proposed and adopted, and may be
12amended after its adoption and terminated, by a nonprofit
13corporation in the manner provided in this subchapter for the
14proposal, adoption, amendment and termination of a plan of
15merger. A copy or summary of the plan shall be included in, or
16enclosed with, the notice of the meeting at which members will
17act on the plan. In order to make effective any plan [of sale,
18lease or exchange of assets] so adopted, it shall not be
19necessary to file any articles or other document in the
20[Department of State] department, but the corporation shall
21comply with the requirements of section 5547(b) (relating to
22nondiversion of certain property).
23(b) Exceptions.--Subsection (a) [of this section] shall not
24apply to a sale, lease [away or], exchange or other disposition
25of all, or substantially all, the property and assets of a
26nonprofit corporation [when made in connection with the
27dissolution or liquidation of the corporation. Such a
28transaction shall be governed by the provisions of Subchapter F
29(relating to voluntary dissolution and winding up) or Subchapter
30G (relating to involuntary liquidation and dissolution), as the
1case may be.]:
2(1) that directly or indirectly owns all of the
3outstanding shares or other ownership interest of another
4corporation to the other corporation;
5(2) if made in connection with the dissolution or
6liquidation of the corporation, which transaction shall be
7governed by the provisions of Subchapter F (relating to
8voluntary dissolution and winding up) or G of Chapter 19
9(relating to involuntary liquidation and dissolution), as
10appropriate; or
11(3) if made in connection with a transaction pursuant to
12which all the assets sold, leased, exchanged or otherwise
13disposed of are simultaneously leased back to the
14corporation.
15(c) Mortgage.--A mortgage [or pledge], pledge or grant of a
16security interest or dedication of property to the repayment of
17indebtedness, with or without recourse, shall not be deemed a
18sale, lease [or exchange], exchange or other disposition for the
19purposes of this section.
20(d) Restrictions.--[Nothing in this] This section shall not
21be construed to authorize the conversion or exchange of property
22or assets in fraud of corporate creditors or in violation of
23law.
24§ 5951. Division authorized.
25(a) Division of domestic corporation.--Any domestic
26nonprofit corporation may, in the manner provided in this
27subchapter, be divided into two or more domestic nonprofit
28corporations incorporated or to be incorporated under this
29article, or into one or more [such] domestic nonprofit
30corporations and one or more foreign nonprofit corporations
1[not-for-profit] to be incorporated under the laws of another
2jurisdiction or jurisdictions, or into two or more [of such]
3foreign nonprofit corporations [not-for-profit], if the [law or]
4laws of [such] the other jurisdictions [authorized such]
5authorize the division.
6(b) Division of foreign corporation.--Any foreign nonprofit
7corporation [not-for-profit] may, in the manner provided in this
8subchapter, be divided into one or more domestic nonprofit
9corporations to be incorporated under this [article] subpart and
10one or more foreign nonprofit corporations [not-for-profit]
11incorporated or to be incorporated under the laws of another
12jurisdiction or jurisdictions, or into two or more [of such]
13domestic nonprofit corporations, if [such foreign] the foreign
14nonprofit corporation [not-for-profit] is authorized under the
15laws of the jurisdiction under which it is incorporated to
16effect [such] a division.
17(c) Surviving and new corporations.--The corporation
18effecting a division, if it [shall survive] survives the
19division, is [hereinafter] designated in this subchapter as the
20surviving corporation. All corporations originally incorporated
21by a division are [hereinafter] designated in this subchapter as
22new corporations. The surviving corporation, if any, and the new
23corporation or corporations are [hereinafter] collectively
24designated in this subchapter as the resulting corporations.
25§ 5956. Effective date of division.
26Upon the filing of articles of division in the [Department of
27State,] department or upon the effective date specified in the
28plan of division, whichever is later, the division shall become
29effective. The division of a domestic nonprofit corporation into
30one or more foreign nonprofit corporations [not-for-profit] or
1the division of a foreign nonprofit corporation [not-for-profit]
2shall be effective according to the laws of the jurisdictions
3where [such] the foreign corporations are or are to be
4incorporated and, in the case of a foreign domiciliary
5corporation, the provisions of this subpart to the extent
6provided by section 6145 (relating to applicability of certain
7safeguards to foreign domiciliary corporations), but not until
8articles of division have been adopted and filed[,] as provided
9in this subchapter.
10§ 5957. Effect of division.
11* * *
12(b) Property rights; allocations of assets and
13liabilities.--
14(1) Except as otherwise provided by order, if any,
15obtained pursuant to section 5547(b) (relating to
16nondiversion of certain property):
17* * *
18(ii) Upon the division becoming effective, the
19resulting corporations shall each thenceforth be
20responsible as separate and distinct corporations only
21for such liabilities as each corporation may undertake or
22incur in its own name, but shall be liable for the
23liabilities of the dividing corporation in the manner and
24on the basis provided in [paragraphs (4) and (5)]
25subparagraphs (iv) and (v).
26* * *
27(iv) [To] Except as provided in section 5952(f)
28(relating to proposal and adoption of plan of division),
29to the extent allocations of liabilities are contemplated
30by the plan of division, the liabilities of the dividing
1corporation shall be deemed without further action to be
2allocated to and become the liabilities of the resulting
3corporations on such a manner and basis and with such
4effect as is specified in the plan; and one or more, but
5less than all, of the resulting corporations shall be
6free of the liabilities of the dividing corporation to
7the extent, if any, specified in the plan, if in either
8case:
9(A) no fraud on members without voting rights or
10violation of law shall be effected thereby; and
11(B) the plan does not constitute a fraudulent
12transfer under 12 Pa.C.S. Ch. 51 (relating to
13fraudulent transfers).
14* * *
15(h) Conflict of laws.--It is the intent of the General
16Assembly that:
17(1) The effect of a division of a domestic [business]
18nonprofit corporation shall be governed solely by the laws of
19this Commonwealth and any other jurisdiction under the laws
20of which any of the resulting corporations is incorporated.
21* * *
22(3) The validity of any allocations of assets or
23liabilities by a plan of division of a domestic [business]
24nonprofit corporation, regardless of whether [or not] any of
25the new corporations is a foreign [business] nonprofit
26corporation, shall be governed solely by the laws of this
27Commonwealth.
28* * *
29§ 5972. Proposal of voluntary dissolution.
30* * *
1(b) Submission to members.--The board of directors or other
2body or the petitioning members shall direct that the [question
3of] resolution recommending dissolution be submitted to a vote
4of the members of the corporation entitled to vote thereon at a
5regular or special meeting of the members.
6* * *
7§ 5973. Notice of meeting of members.
8(a) General rule.--[Written notice] Notice in record form of
9the meeting of members that will consider the [advisability of
10voluntarily dissolving a] resolution recommending dissolution of
11the nonprofit corporation shall be given to each member of
12record entitled to vote thereon [and the purpose shall be
13included]. The purpose of the meeting shall be stated in the
14notice [of the meeting].
15* * *
16§ 5975. Predissolution provision for liabilities.
17* * *
18(c) Winding up and distribution.--The corporation shall, as
19speedily as possible, proceed to collect all sums due it,
20convert into cash all corporate assets the conversion of which
21into cash is required to discharge its liabilities and, out of
22the assets of the corporation, discharge or make adequate
23provision for the discharge of all liabilities of the
24corporation, according to their respective priorities. Except as
25otherwise provided in a bylaw adopted by the members or in this
26subpart or by any other provision of law, any surplus remaining
27after paying or providing for all liabilities of the corporation
28shall be distributed to the shareholders, if any, pro rata, or
29if there be no shareholders, among the members per capita. See
30section [1972(a)] 5972(a) (relating to proposal of voluntary
1dissolution).
2§ 5976. Judicial supervision of proceedings.
3(a) General rule.--A nonprofit corporation that has elected
4to proceed under section [1975] 5975 (relating to predissolution
5provision for liabilities), at any time during the winding up
6proceedings, may apply to the court to have the proceedings
7continued under the supervision of the court and thereafter the
8proceedings shall continue under the supervision of the court as
9provided in Subchapter G (relating to involuntary liquidation
10and dissolution).
11* * *
12§ 5977. Articles of dissolution.
13(a) General rule.--Articles of dissolution and the
14certificates or statement required by section 139 (relating to
15tax clearance of certain fundamental transactions) shall be
16filed in the [Department of State] department when:
17(1) all liabilities of the nonprofit corporation have
18been discharged, or adequate provision has been made
19therefor, in accordance with section 5975 (relating to
20predissolution provision for liabilities), and all of the
21remaining assets of the corporation have been distributed as
22provided in section 5975 or in case its assets are not
23sufficient to discharge its liabilities, when all the assets
24have been fairly and equitably applied, as far as they will
25go, to the payment of such liabilities; or
26(2) an election to proceed under Subchapter H (relating
27to postdissolution provision for liabilities) has been made.
28[See section 134 (relating to docketing statement).]
29* * *
30§ 5978. Winding up of corporation after dissolution.
1* * *
2(b) Standard of care of directors, members of an other body
3and officers.--The dissolution of the corporation shall not
4subject its directors, members of an other body or officers to
5standards of conduct different from those prescribed by or
6pursuant to Chapter 57 (relating to officers, directors and
7members). Directors and members of an other body of a dissolved
8corporation who have complied with section 5975 (relating to
9predissolution provision for liabilities) or Subchapter H
10(relating to postdissolution provision for liabilities) and
11governing persons of a successor entity who have complied with
12Subchapter H shall not be personally liable to the creditors or
13claimants of the dissolved corporation.
14Section 43. Section 5979(a) of Title 15 is amended and the
15section is amended by adding a subsection to read:
16§ 5979. Survival of remedies and rights after dissolution.
17(a) General rule.--The dissolution of a nonprofit
18corporation, either under this subchapter or under Subchapter G
19(relating to involuntary liquidation and dissolution) or by
20expiration of its period of duration or otherwise, shall not
21eliminate nor impair any remedy available to or against the
22corporation or its directors, members of an other body, officers
23or members for any right or claim existing, or liability
24incurred, prior to the dissolution, if an action thereon is
25brought on behalf of:
26(1) the corporation within the time otherwise limited by
27law; or
28(2) any other person before or within two years after
29the date of the dissolution or within the time otherwise
30limited by this subpart or other provision of law, whichever
1is less. See sections 5987 (relating to proofs of claims),
25993 (relating to acceptance or rejection of matured claims)
3and 5994 (relating to disposition of unmatured claims).
4[The actions or proceedings may be prosecuted against and
5defended by the corporation in its corporate name.]
6* * *
7(e) Conduct of actions.--An action or proceeding may be
8prosecuted against and defended by a dissolved corporation in
9its corporate name.
10Section 44. Title 15 is amended by adding a section to read:
11§ 5980. Dissolution by domestication.
12Whenever a domestic nonprofit corporation has domesticated
13itself under the laws of another jurisdiction by action similar
14to that provided under section 6161 (relating to domestication)
15and has authorized that action by the vote required by this
16subchapter for the approval of a proposal that the corporation
17dissolve voluntarily, the corporation may surrender its charter
18under the laws of this Commonwealth by filing in the department
19articles of dissolution under this subchapter containing the
20statements specified under section 5977(b)(1) through (4)
21(relating to articles of dissolution). If the corporation as
22domesticated in the other jurisdiction qualifies to do business
23in this Commonwealth either prior to or simultaneously with the
24filing of the articles of dissolution under this section, the
25corporation shall not be required to file with the articles of
26dissolution the tax clearance certificates that would otherwise
27be required under section 139 (relating to tax clearance of
28certain fundamental transactions).
29Section 45. Sections 5981, 5982, 5983, 5984, 5986, 5987,
305988, 5992(c)(2), 5997(d) and 6101(c) of Title 15 are amended to
1read:
2§ 5981. Proceedings upon [petition] application of member[,
3etc.] or director.
4[The court may, upon petition] Upon application filed by a
5member or director of a nonprofit corporation, the court may
6entertain proceedings for the involuntary winding up and
7dissolution of the corporation[,] when any of the following [are
8made to appear] occur:
9(1) [That the] The objects of the corporation have
10wholly failed[;], or are entirely abandoned, or [that] their
11accomplishment is impracticable.
12(2) [That the] The acts of the directors, or those in
13control of the corporation, are illegal, oppressive[,] or
14fraudulent[, and that] and it is beneficial to the interests
15of the members that the corporation be wound up and
16dissolved.
17(3) [That the] The corporate assets are being misapplied
18or wasted[, and that] and it is beneficial to the interests
19of the members that the corporation be wound up and
20dissolved.
21(4) [That the] The directors or other body are
22deadlocked in the direction of the management of the
23[corporate] business and affairs of the corporation and the
24members are unable to break the deadlock[, and that] and
25irreparable injury to the corporation is being suffered or is
26threatened by reason thereof. The court shall not appoint a
27receiver or grant other similar relief under this paragraph
28if the members by agreement or otherwise have provided for
29appointment of a provisional director or member of an other
30body or other means for the resolution of a deadlock, but the
1court shall enforce the remedy provided by the members, if
2appropriate.
3§ 5982. Proceedings upon [petition] application of creditor.
4[The court may, upon petition] Upon application filed by a
5creditor of a nonprofit corporation whose claim has either been
6reduced to judgment and an execution thereon returned
7unsatisfied[,] or whose claim is admitted by the corporation,
8the court may entertain proceedings for the involuntary winding
9up and dissolution of the corporation when, in either case, it
10is made to appear that the corporation is unable to [pay its
11debts and obligations] discharge its liabilities in the regular
12course of business, as they mature, or is unable to afford
13reasonable security to those who may deal with it.
14§ 5983. Proceedings upon petition of superior religious
15organization.
16The court may, in the case of any nonprofit corporation
17organized for the support of public worship, upon [petition
18filed by] application of the diocesan convention, presbytery,
19synod, conference, council, or other supervising or controlling
20organization of which the corporation is a member or with which
21it is in allegiance and to which it is subordinate, entertain
22proceedings for the involuntary winding up and dissolution of
23the corporation when it is made to appear that by reason of
24shifting population, withdrawal of membership[,] or any other
25cause whatsoever, the corporation has ceased to support public
26worship within the intent and meaning of its articles[,] and the
27dissolution of the corporation may be effected without prejudice
28to the public welfare and the interests of the members of the
29corporation.
30§ 5984. Appointment of receiver pendente lite and other interim
1powers.
2Upon the filing of [a petition] an application under this
3subchapter, the court [shall have all the ordinary powers of a
4court of equity to] may issue injunctions, [to] appoint a
5receiver [or receivers,] pendente lite[,] with such powers and
6duties as the court from time to time may direct[, to take such
7other proceedings] and proceed as may be requisite to preserve
8the corporate assets wherever situated and carry on the business
9of the corporation until a full hearing can be had.
10§ 5986. Qualifications of receivers.
11A receiver shall in all cases be a [resident of this
12Commonwealth,] natural person of full age or a corporation
13authorized to act as receiver, which corporation, if so
14authorized, may be a domestic corporation for profit or not-for-
15profit or a foreign corporation for profit or not-for-profit
16authorized to do business in this Commonwealth, and shall give
17such bond, if any, as the court may direct, with such sureties,
18if any, as the court may require.
19§ 5987. Proofs of claims.
20(a) General rule.--In a proceeding under this subchapter,
21the court may require all creditors of the nonprofit corporation
22to file with the [prothonotary] office of the clerk of the court
23of common pleas, or with the receiver, in such form as the court
24may prescribe, verified proofs[, under oath,] of their
25respective claims. If the court requires the filing of claims,
26it shall fix a date, which shall not be less than [four months]
27120 days from the date of the order, as the last day for filing
28of claims[,] and shall prescribe the notice that shall be given
29to creditors and claimants of the date so fixed. Prior to or
30after the date so fixed, the court may extend the time for the
1filing of claims. Creditors and claimants [failing to] who do
2not file proofs of claim on or before the date so fixed may be
3barred, by order of court, from participating in the
4distribution of the assets of the corporation.
5(b) Cross reference.--See section 5979 (relating to survival
6of remedies and rights after dissolution).
7§ 5988. Discontinuance of proceedings; reorganization.
8[The proceedings under this subchapter may be discontinued at
9any time during the winding up proceedings, in the following
10manner:
11(1) If the proceedings shall have been instituted by a
12member or director and it is made to appear to the court that
13the deadlock in the corporate affairs has been broken or the
14management or control of the corporation has been changed,
15the court, in its discretion, may dismiss the proceeding and
16direct the receiver to redeliver to the corporation all its
17remaining assets.
18(2) If the proceedings shall have been instituted by a
19creditor and it is made to appear that the debts of the
20corporation have been paid or provided for, and that there
21remain or can be obtained sufficient funds to enable the
22corporation to resume its business, the court, in its
23discretion, may dismiss the proceeding and direct the
24receiver to redeliver to the corporation all its remaining
25assets.
26(3) When a compromise or reorganization of the
27corporation is proposed, whether the proceedings shall have
28been instituted by a member or director or by a creditor, the
29court, upon the summary application of any member, director,
30creditor, or receiver, may order a meeting of the creditors,
1or members to be summoned in such manner as the court may
2direct. If a majority in number, representing 75% in value of
3the creditors or if 75% of the members present in person, or
4if a majority in number, representing 75% in value of any
5class of creditors, or if 75% of the members of any class
6present in person, as the case may be, agree to any
7compromise or reorganization of the corporation, such
8compromise or reorganization, if approved by the court as
9fair and feasible, shall be binding on all creditors or on
10all members, or both, or on the class of creditors or class
11of members, or both, as the case may be, and also on the
12corporation and its receiver, if any.
13(4) If the proceedings shall have been instituted by a
14superior religious organization and it is made to appear that
15appropriate arrangements for the conduct of the affairs of
16the corporation have been made, the court, in its discretion,
17may dismiss the proceedings and direct the receiver to
18redeliver to the corporation its remaining assets.]
19The proceedings under this subchapter may be discontinued at
20any time if it is established that cause for liquidation no
21longer exists, in which event the court shall dismiss the
22proceedings and direct the receiver to redeliver to the
23nonprofit corporation all its remaining property and assets.
24§ 5992. Notice to claimants.
25* * *
26(c) Publication and service of notices.--
27* * *
28(2) Concurrently with or preceding the publication, the
29corporation or successor entity shall send a copy of the
30notice by certified or registered mail, return receipt
1requested, to each:
2(i) known creditor or claimant;
3(ii) holder of a claim described in subsection (b);
4and
5(iii) municipal corporation in which [the registered
6office or principal] a place of business of the
7corporation in this Commonwealth was located at the time
8of filing the articles of dissolution in the department.
9* * *
10§ 5997. Payments and distributions.
11* * *
12[(d) Liability of directors.--Directors or members of an
13other body of a dissolved corporation or governing persons of a
14successor entity that has complied with this section shall not
15be personally liable to the claimants of the dissolved
16corporation.]
17§ 6101. Application of article.
18* * *
19(c) Admitted foreign fraternal benefit society exclusion.--
20This article shall not apply to any foreign corporation not-for-
21profit qualified to do business in this Commonwealth under
22section [603 of the act of July 29, 1977 (P.L.105, No.38) known
23as the Fraternal Benefit Society Code.] 2455 of the act of May
2417, 1921 (P.L.682, No.284), known as The Insurance Company Law
25of 1921.
26Section 46. Title 15 is amended by adding sections to read:
27§ 6102. Foreign domiciliary corporations.
28A foreign nonprofit corporation is a foreign domiciliary
29corporation if it is a corporation:
30(1) which derived more than one-half of its revenues for
1the preceding three fiscal years, or such portion thereof as
2the corporation was in existence, from sources in this
3Commonwealth and was at any time during that period doing
4business in this Commonwealth on the basis of the most
5minimal contacts with this Commonwealth permitted under the
6Constitution of the United States; or
7(2) at least a majority of the bona fide members of
8which are residents of this Commonwealth.
9§ 6103. Acquisition of foreign domiciliary corporation status.
10(a) General rule.--A foreign nonprofit corporation shall
11become a foreign domiciliary corporation under section 6102
12(relating to foreign domiciliary corporations) on the first day
13of the month following the month in which the corporation first
14has knowledge that either test has been met or upon entry of an
15order by any court of competent jurisdiction declaring that
16either test has been met.
17(b) Newly incorporated corporations.--Where the test or
18tests under section 6102 are met at the time of the admission of
19the first members of the corporation and continuously
20thereafter, foreign domiciliary corporation status when
21established shall be retroactive to the incorporation of the
22corporation.
23§ 6104. Termination of foreign domiciliary corporation status.
24A foreign domiciliary corporation shall cease to have that
25status on the first day of the month following the month in
26which the corporation first has knowledge that it no longer
27meets either test under section 6102 (relating to foreign
28domiciliary corporations) or upon entry of an order of any court
29of competent jurisdiction declaring that the corporation no
30longer meets either test.
1Section 47. Sections 6122(b)(3), 6123(b), 6141, 6142, 6143,
26145 and 8911(a)(1) of Title 15 are amended to read:
3§ 6122. Excluded activities.
4* * *
5(b) Exceptions.--The specification of activities in
6subsection (a) does not establish a standard for activities that
7may subject a foreign corporation to:
8* * *
9(3) The provisions of section 6145 (relating to
10applicability of certain safeguards to foreign domiciliary
11corporations).
12§ 6123. Requirements for foreign corporation names.
13* * *
14(b) Exceptions.--
15(1) The provisions of section 5303(b) (relating to
16duplicate use of names) shall not prevent the issuance of a
17certificate of authority to a foreign nonprofit corporation
18setting forth a name that is [confusingly similar to] not
19distinguishable upon the records of the department from the
20name of any other domestic or foreign corporation for profit
21or [corporation] not-for-profit, [or of any domestic or
22foreign limited partnership that has filed a certificate or
23qualified under Chapter 85 (relating to limited partnerships)
24or corresponding provisions of prior law,] or of any
25corporation or other association then registered under 54
26Pa.C.S. Ch. 5 (relating to corporate and other association
27names) or to any name reserved or registered as provided in
28this part, if the foreign nonprofit corporation applying for
29a certificate of authority files in the department [one of
30the following:
1(i) A] a resolution of its board of directors or
2other body adopting a fictitious name for use in
3transacting business in this Commonwealth, which
4fictitious name is [not confusingly similar to]
5distinguishable upon the records of the department from
6the name of the other corporation or other association
7[or to] and from any name reserved or registered as
8provided in this part [and] that is otherwise available
9for use by a domestic nonprofit corporation.
10[(ii) The written consent of the other corporation
11or other association or holder of a reserved or
12registered name to use the same or confusingly similar
13name and one or more words are added to make the name
14applied for distinguishable from the other name.]
15(2) The provisions of section 5303(c) (relating to
16required approvals or conditions) shall not prevent the
17issuance of a certificate of authority to a foreign nonprofit
18corporation setting forth a name that is prohibited by that
19subsection if the foreign nonprofit corporation applying for
20a certificate of authority files in the department a
21resolution of its board of directors or other body adopting a
22fictitious name for use in transacting business in this
23Commonwealth that is available for use by a domestic
24nonprofit corporation.
25§ 6141. Penalty for doing business without certificate of
26authority.
27(a) Right to bring actions suspended.--[No] A nonqualified
28foreign nonprofit corporation doing business in this
29Commonwealth within the meaning of Subchapter B [of this
30chapter] (relating to qualification) shall not be permitted to
1maintain any action or proceeding in any court of this
2Commonwealth until [such] the corporation [shall have] has
3obtained a certificate of authority. [Nor, except] Except as
4provided in subsection (b) [of this section, shall any action],
5an action or proceeding may not be maintained in any court of
6this Commonwealth by any successor or assignee of [such] the
7corporation on any right, claim or demand arising out of the
8doing of business by [such] the corporation in this Commonwealth
9until a certificate of authority [shall have] has been obtained
10by [such] the corporation or by a corporation [which] that has
11acquired all or substantially all of its assets.
12(a.1) Contracts, property and defense against actions
13unaffected.--The failure of a foreign nonprofit corporation to
14obtain a certificate of authority to transact business in this
15Commonwealth shall not impair the validity of any contract or
16act of [such] the corporation [and], shall not prevent [such]
17the corporation from defending any action in any court of this
18Commonwealth and shall not render escheatable any of its real or
19personal property.
20[(b) Title to real property.--The title to any real estate
21situate in this Commonwealth which is derived through any
22nonqualified foreign corporation not authorized under the laws
23of this Commonwealth to hold the same, and which has vested or
24vests in any foreign corporation for profit or not-for-profit
25authorized to hold such real estate or in any citizen or
26citizens of the United States or domestic corporation for profit
27or not-for-profit shall be good and valid and free and clear of
28any right of escheat by the Commonwealth; and the holder thereof
29may convey an estate indefeasible as to any right of escheat
30which the Commonwealth might otherwise have by reason of the
1unauthorized holding and conveyance by such nonqualified foreign
2corporation.]
3§ 6142. General powers and duties of qualified foreign
4corporations.
5(a) General rule.--A qualified foreign nonprofit
6corporation, so long as its certificate of authority [shall] is
7not [be] revoked, shall enjoy the same rights and privileges as
8a domestic nonprofit corporation, but no more, and, except as in
9this [part] subpart otherwise provided, shall be subject to the
10same liabilities, restrictions, duties and penalties now in
11force or hereafter imposed upon domestic nonprofit corporations,
12to the same extent as if it had been incorporated under this
13[part to transact the business set forth in its certificate of
14authority] subpart.
15(b) Agricultural lands.--Interests in agricultural land
16shall be subject to the restrictions of, and escheatable as
17provided by, the act of April 6, 1980 (P.L.102, No.39), referred
18to as the Agricultural Land Acquisition by Aliens Law.
19§ 6143. General powers and duties of nonqualified foreign
20corporations.
21(a) Acquisition of real and personal property.--Every
22nonqualified foreign nonprofit corporation[, the activities of
23which in this Commonwealth do not constitute doing business in
24this Commonwealth for the purposes of Subchapter B of this
25chapter (relating to qualification),] may acquire, hold,
26mortgage, lease and transfer real and personal property in this
27Commonwealth, in the same manner and subject to the same
28limitations as [domestic] a qualified foreign nonprofit
29[corporations] corporation.
30(b) Duties.--[A] Except as provided in section 6141(a)
1(relating to penalty for doing business without certificate of
2authority), a nonqualified foreign nonprofit corporation doing
3business in this Commonwealth within the meaning of Subchapter B
4[of this chapter] (relating to qualification) shall be subject
5to the same liabilities, restrictions, duties and penalties now
6or hereafter imposed upon a qualified foreign nonprofit
7corporation.
8§ 6145. Applicability of certain safeguards to foreign
9domiciliary corporations.
10[(a) Application.--This section shall be applicable to any
11qualified or nonqualified foreign corporation:
12(1) which derived more than one-half of its revenues for
13the preceding three fiscal years, or such portion thereof as
14the corporation was in existence, from sources within this
15Commonwealth and was at any time during such period doing
16business within this Commonwealth on the basis of the most
17minimal contacts with this Commonwealth permitted under the
18Constitution of the United States; or
19(2) at least a majority of the bona fide members of
20which are residents of this Commonwealth.]
21(b) Internal affairs doctrine not applicable.--The General
22Assembly hereby finds and determines that [the] foreign
23domiciliary corporations [to which this section applies]
24substantially affect this Commonwealth. [No court] The courts of
25this Commonwealth shall [hereafter] not dismiss or stay any
26action or proceeding brought by a member[, director, officer or
27agent of such a] or representative of a foreign domiciliary
28corporation, as such, against [such] the corporation or any one
29or more of the members[, directors, officers or agents] or
30representatives thereof, as such, on the ground that [such] the
1corporation is a foreign corporation not-for-profit or that the
2cause of action relates to the internal affairs thereof, but
3every such action shall proceed with like effect as if [such]
4the corporation were a domestic corporation. Except as provided
5in subsection (c) [of this section], the court having
6jurisdiction of the action or proceeding shall apply the law of
7the jurisdiction under which the foreign domiciliary corporation
8was incorporated.
9(c) Minimum safeguards.--The following provisions of this
10subpart shall be applicable to foreign domiciliary corporations
11[to which this section applies], except that nothing in this
12subsection shall require the filing of any document in the
13[Department of State] department as a prerequisite to the
14validity of any corporate action or the doing of any corporate
15action by the foreign domiciliary corporation which is
16impossible under the laws of its domiciliary jurisdiction:
17[(1)] Section 5504(b) (relating to adoption and contents
18of bylaws).
19[(2)] Section 5508 (relating to corporate records;
20inspection by members).
21[(3)] Section [5553] 5554 (relating to annual report of
22directors or other body).
23[(4)] Section 5743 (relating to mandatory
24indemnification).
25[(5)] Section 5755 (relating to time of holding meetings
26of members).
27[(6)] Section 5758(e) (relating to [voting lists] voting
28rights of members).
29[(7)] Section [5759(b) (relating to minimum
30requirements)] 5759(c) (relating to voting and other action
1by proxy).
2[(8)] Section [5762] 5765 (relating to judges of
3election).
4[(9)] Section [5764] 5767 (relating to appointment of
5custodian of corporation on deadlock or other cause).
6[(10)] Section [5766(b)] 5769(b) (relating to
7[expulsion] termination and transfer of membership).
8[(11) Subchapter G of Chapter 57 (relating to judicial
9supervision of corporate action).]
10[(12)] Chapter 59 (relating to fundamental changes).
11For the purposes of this subsection, corporate action shall not
12be deemed to be impossible under the laws of the domiciliary
13jurisdiction of a foreign corporation merely because prohibited
14or restricted by the terms of the articles, certificate of
15incorporation, bylaws or other organic law of the corporation,
16but the court may require the corporation to amend such organic
17law so as to be consistent with the minimum safeguards
18prescribed by this subsection.
19(d) Section exclusive.--[No provision of this article] The
20provisions of this subpart, other than the provisions of this
21section, shall not be construed to regulate the incorporation or
22internal affairs of a foreign corporation not-for-profit.
23§ 8911. Purposes.
24(a) General rule.--Limited liability companies may be
25organized under this chapter for any lawful purpose, except for
26the purpose of [banking or] insurance. Unless otherwise
27restricted in its certificate of organization, every limited
28liability company has as its purpose the engaging in all lawful
29business for which limited liability companies may be organized
30under this chapter. Nothing in this section shall prohibit the
1following:
2(1) A banking institution organized under this chapter
3or a limited liability company organized by one or more
4[banks or a banking organization for the sole purposes of]
5banking institutions, savings associations or credit unions
6from engaging in the marketing and [selling] sale of title
7insurance.
8* * *
9Section 48. Chapter 91 heading of Title 15 is amended to
10read:
11CHAPTER 91
12[UNINCORPORATED ASSOCIATIONS GENERALLY]
13UNINCORPORATED NONPROFIT
14ASSOCIATIONS
15Section 49. Sections 9101, 9102 and 9103 of Title 15 are
16repealed:
17[§ 9101. Customary parliamentary law applicable.
18Except as otherwise provided by statute or by the organic
19documents under which an unincorporated association is
20constituted, each unincorporated association shall be governed
21by customary usages and principles of parliamentary law and
22procedure.
23§ 9102. Funeral and similar benefits.
24Members of unincorporated associations paying periodic or
25funeral benefits shall not be individually liable for the
26payment of periodic or funeral benefits or other similar
27liabilities of the association. The liabilities shall be payable
28only out of the treasury of the association.
29§ 9103. Nontransferable membership interests.
30(a) General rule.--For the purpose of encouraging lawful
1associational activity among agricultural and industrial workers
2through the organization of unincorporated associations for
3mutual benefit insurance, saving or other lawful objects where
4the persons so organizing derive benefits from the preservation
5and continuance of the membership and interest among persons
6engaged in a common calling, labor or enterprise, the
7unincorporated association may provide, in its organic
8documents, that membership in the association or interest in its
9funds or property shall be nontransferable without the consent
10of the association.
11(b) Assignments and pledges.--No attempted assignment,
12transfer or pledge of a membership or interest made in violation
13of a transfer restriction adopted pursuant to subsection (a)
14shall pass any right or interest, legal or equitable, to the
15person to whom it is attempted to be made if the transfer
16restriction is brought to the knowledge of that person.
17(c) Knowledge of nontransferability.--Whenever the interest
18of a member in the funds or property of any unincorporated
19association subject to subsection (a) is evidenced by a
20certificate, an endorsement thereon that the certificate is
21nontransferable shall be conclusive evidence that the person to
22whom any attempted assignment, transfer or pledge of the
23certificate is made has knowledge of the nontransferable
24character of the interest of the member.]
25Section 50. Title 15 is amended by adding sections to read:
26§ 9111. Short title and application of chapter.
27(a) Short title.--This chapter shall be known and may be
28cited as the Pennsylvania Uniform Unincorporated Nonprofit
29Association Law.
30(b) Transitional provisions concerning property.--
1(1) If, before {the Legislative Reference Bureau shall
2insert here the effective date of this section}, an interest
3in property was by the terms of a transfer purportedly
4transferred to a nonprofit association but under the law of
5this Commonwealth the interest did not vest in the nonprofit
6association, or in one or more persons on behalf of the
7nonprofit association under paragraph (2), on {the
8Legislative Reference Bureau shall insert here the effective
9date of this section}, the interest vests in the nonprofit
10association, unless the parties to the transfer have treated
11the transfer as ineffective.
12(2) If, before {the Legislative Reference Bureau shall
13insert here the effective date of this section}, an interest
14in property was by the terms of a transfer purportedly
15transferred to a nonprofit association but the interest was
16vested in one or more persons to hold the interest for the
17nonprofit association, its members or both, on or after {the
18Legislative Reference Bureau shall insert here the effective
19date of this section}, the persons, or their successors in
20interest, may transfer the interest to the nonprofit
21association in its name; or the nonprofit association may
22require that the interest be transferred to it in its name.
23(c) Savings provisions.--
24(1) This chapter supplements the law of this
25Commonwealth that applies to nonprofit associations operating
26in this Commonwealth, but if a conflict exists between this
27chapter and another statute, the other statute applies.
28(2) Nothing in this chapter shall be deemed to repeal or
29supersede any provision in section 7 of the act of April 26,
301855 (P.L.328, No.347), entitled "An act relating to
1Corporations and to Estates held for Corporate, Religious and
2Charitable uses."
3(d) Cross reference.--See section 5331 (relating to
4unincorporated associations).
5§ 9112. Definitions.
6The following words and phrases when used in this chapter
7shall have the meanings given to them in this section unless the
8context clearly indicates otherwise:
9"Established practices." The practices used by a nonprofit
10association without material change during:
11(1) the most recent five years of its existence; or
12(2) if it has existed for less than five years, its
13entire existence.
14"Governing principles." The agreements, whether oral, in
15record form or implied from its established practices, that
16govern the purpose or operation of a nonprofit association and
17the rights and obligations of its members and managers. The term
18includes any amendment or restatement of the agreements
19constituting the governing principles.
20"Manager." A person that is responsible, alone or in concert
21with others, for the management of a nonprofit association.
22"Member." A person that, under the governing principles, may
23participate in the selection of persons authorized to manage the
24affairs of the nonprofit association or in the development of
25policies and activities of the nonprofit association.
26"Nonprofit association." An unincorporated organization
27consisting of two or more members joined together under an
28agreement that is oral, in record form or implied from conduct
29for one or more common, nonprofit purposes. The term does not
30include:
1(1) a trust;
2(2) a marriage, domestic partnership, common law
3domestic relationship, civil union or other domestic living
4arrangement;
5(3) an organization formed under any other statute that
6governs the organization and operation of unincorporated
7associations;
8(4) a joint tenancy, tenancy in common or tenancy by the
9entireties, even if the co-owners share use of the property
10for a nonprofit purpose; or
11(5) a relationship under an agreement in record form
12that expressly provides that the relationship between the
13parties does not create a nonprofit association.
14"Property." Includes:
15(1) real property;
16(2) personal property which is tangible or intangible;
17(3) mixed real and personal property; and
18(4) a right or interest in property.
19"Transfer." Includes:
20(1) an assignment;
21(2) a conveyance;
22(3) a sale;
23(4) a lease;
24(5) an encumbrance, including a mortgage or security
25interest;
26(6) a gift; and
27(7) a transfer by operation of law.
28§ 9113. Governing law.
29(a) Operations.--Except as provided in subsection (b), the
30law of this Commonwealth governs the operation in this
1Commonwealth of a nonprofit association formed or operating in
2this Commonwealth.
3(b) Internal affairs.--Unless the governing principles
4specify a different jurisdiction, the law of the jurisdiction in
5which a nonprofit association has its main place of activities
6governs the internal affairs of the nonprofit association.
7§ 9114. Entity status.
8(a) Legal entity.--A nonprofit association is a legal entity
9distinct from its members and managers.
10(b) Perpetual duration.--A nonprofit association has
11perpetual duration unless the governing principles specify
12otherwise.
13(c) Powers.--A nonprofit association has the same powers as
14an individual to do all things necessary or convenient to carry
15on its purposes.
16(d) Profits.--A nonprofit association may engage in profit-
17making activities, but profits from any activities must be used
18or set aside for the nonprofit purposes of the nonprofit
19association.
20§ 9115. Ownership and transfer of property.
21(a) General rule.--A nonprofit association may acquire, hold
22or transfer, in its name, an interest in property.
23(b) Testamentary and fiduciary dispositions.--A nonprofit
24association may be a beneficiary of a trust or contract, a
25legatee or a devisee.
26§ 9116. Statement of authority as to real property.
27(a) General rule.--An interest in real property held in the
28name of a nonprofit association may be transferred by a person
29authorized to do so in a statement of authority recorded by the
30nonprofit association in the office of the recorder of deeds for
1the county in which a transfer of the property would be
2recorded.
3(b) Contents of statement.--The statement of authority must
4set forth:
5(1) the name of the nonprofit association;
6(2) the address in this Commonwealth, including the
7street and number, if any, of the nonprofit association or,
8if the nonprofit association does not have an address in this
9Commonwealth, its address outside of this Commonwealth;
10(3) that the association is a nonprofit association; and
11(4) the name, title or position of a person authorized
12to transfer an estate or interest in real property held in
13the name of the nonprofit association.
14(c) Execution.--A statement of authority must be executed in
15the same manner as a deed by a person other than the person
16authorized in the statement to transfer the interest.
17(d) Recording fee.--The recorder of deeds may collect a fee
18for recording a statement of authority in the amount authorized
19for recording a transfer of real property, but the mere
20recording of a statement of authority does not constitute a
21transfer of an interest in the real property for the purpose of
22the taxation of real property transfers.
23(e) Changes.--A document amending, revoking or canceling a
24statement of authority or stating that the statement is
25unauthorized or erroneous must meet the requirements for
26executing and recording an original statement.
27(f) Cancellation by operation of law.--Unless canceled
28earlier, a recorded statement of authority and its most recent
29amendment expire five years after the date of the most recent
30recording.
1(g) Effect of filing.--If the record title to real property
2is in the name of a nonprofit association and a statement of
3authority is recorded in the office of the recorder of deeds for
4the county in which a transfer of the property would be
5recorded, the authority of the person named in the statement to
6transfer is conclusive in favor of a person that gives value
7without notice that the person lacks authority.
8§ 9117. Liability.
9(a) Scope.--
10(1) A debt, obligation or other liability of a nonprofit
11association, whether arising in contract, tort or otherwise,
12is solely the debt, obligation or other liability of the
13nonprofit association.
14(2) A member or manager is not personally liable,
15directly or indirectly, by way of contribution or otherwise,
16for a debt, obligation or other liability of the nonprofit
17association solely by reason of being or acting as a member
18or manager.
19(3) This subsection applies regardless of the
20dissolution of the nonprofit association.
21(b) Liability for conduct.--A person's status as a member or
22manager does not prevent or restrict law other than this chapter
23from imposing liability on the person or the nonprofit
24association because of the person's conduct.
25(c) Agents.--A person that makes a contract or incurs an
26obligation on behalf of a nonprofit association after {the
27Legislative Reference Bureau shall insert here the effective
28date of this section} is not liable for performance or breach of
29the contract or other obligation if the fact that the person was
30acting for the nonprofit association was disclosed to, was known
1by or reasonably should have been known by the other party to
2the contract or to the party owed performance.
3(d) Observation of formalities.--The failure of a nonprofit
4association to observe formalities relating to the exercise of
5its powers or the management of its activities and affairs is
6not a ground for imposing liability on a member or manager of
7the nonprofit association for a debt, obligation or other
8liability of the nonprofit association.
9§ 9118. Assertion and defense of claims.
10(a) General rule.--A nonprofit association may sue or be
11sued in its own name.
12(b) Permissible claims.--A member or manager may assert a
13claim the member or manager has against the nonprofit
14association. A nonprofit association may assert a claim it has
15against a member or manager.
16(c) Representational status.--A nonprofit association may
17assert a claim in its name on behalf of its members if one or
18more members of the nonprofit association have standing to
19assert a claim in their own right, the interests the nonprofit
20association seeks to protect are germane to its purposes and
21neither the claim asserted nor the relief requested requires the
22participation of a member.
23§ 9119. Effect of judgment or order.
24A judgment or order against a nonprofit association is not by
25itself a judgment or order against a member or manager.
26§ 9120. Appointment of agent to receive service of process.
27(a) Statement.--A nonprofit association may deliver to the
28department for filing a statement appointing an agent to receive
29service of process.
30(b) Contents.--A statement appointing an agent to receive
1service of process must state:
2(1) the name of the nonprofit association;
3(2) the address, if any, in this Commonwealth; and
4(3) the name of the person in this Commonwealth
5authorized to receive service of process and the person's
6address, including street and number, in this Commonwealth.
7(c) Signature and effect.--
8(1) A statement appointing an agent to receive service
9of process must be signed by:
10(i) a person authorized to manage the affairs of the
11nonprofit association; and
12(ii) the person appointed as the agent.
13(2) The signing of the statement is an affirmation:
14(i) by the person authorized to manage the affairs
15of the nonprofit association that the person has that
16authority; and
17(ii) by the person appointed as agent that the
18person consents to act as agent.
19(d) Amendment or cancellation.--An amendment to or
20cancellation of a statement appointing an agent to receive
21service of process must meet the requirements for signature of
22an original statement. An agent may resign by delivering a
23resignation to the department for filing and giving notice to
24the nonprofit association.
25(e) Rejection of statement.--A statement appointing an agent
26to receive service of process may not be rejected for filing
27because the name of the nonprofit association signing the
28statement is not distinguishable on the records of the
29department from the name of another association appearing in
30those records. The filing of such a statement does not make the
1name of the nonprofit association signing the statement
2unavailable for use by another association.
3(f) Effectiveness.--A statement appointing an agent to
4receive service of process:
5(1) takes effect on filing by the department; and
6(2) is effective for five years after the date of filing
7unless canceled or terminated earlier.
8(g) Duty of agent.--The only duty under this chapter of an
9agent to receive service of process is to forward to the
10nonprofit association at the address most recently supplied to
11the agent by the nonprofit association any process, notice or
12demand pertaining to the nonprofit association which is served
13or received by the agent.
14(h) Cross references.--See section 135 (relating to
15requirements to be met by filed documents).
16§ 9121. Action or proceeding not abated by change of members or
17managers.
18An action or proceeding against a nonprofit association does
19not abate merely because of a change in its members or managers.
20§ 9122. Member not agent.
21A member is not an agent of the nonprofit association solely
22by reason of being a member.
23§ 9123. Approval by members.
24(a) General rule.--Except as provided in the governing
25principles, a nonprofit association must have the approval of
26its members to:
27(1) admit, suspend, dismiss or expel a member;
28(2) select or dismiss a manager;
29(3) adopt, amend or repeal the governing principles;
30(4) transfer all, or substantially all, of the property
1of the nonprofit association, with or without its goodwill,
2outside the ordinary course of its activities;
3(5) dissolve under section 9134 (relating to
4dissolution);
5(6) undertake any other act outside the ordinary course
6of the activities of the nonprofit association; or
7(7) determine the policy and purposes of the nonprofit
8association.
9(b) Other actions.--A nonprofit association must have the
10approval of the members to do any other act or exercise a right
11that the governing principles require to be approved by members.
12§ 9124. Action by members.
13(a) General rule.--Except as provided in the governing
14principles:
15(1) approval of a matter by the members requires the
16affirmative vote of at least a majority of the votes cast at
17a meeting of members; and
18(2) each member is entitled to one vote on each matter
19that is submitted for approval by the members.
20(b) Procedural matters.--The governing principles may
21provide for the:
22(1) calling, location and timing of member meetings;
23(2) notice and quorum requirements for member meetings;
24(3) conduct of member meetings;
25(4) taking of action by the members by consent without a
26meeting or by ballot;
27(5) participation by members in a meeting of the members
28by telephone or other means of electronic communication; and
29(6) taking of action by members by proxy.
30(c) Absence of governing principles.--If the governing
1principles do not provide for a matter described in subsection
2(b), customary usages and principles of parliamentary law and
3procedure apply.
4§ 9125. Duties of member.
5(a) No fiduciary duties generally.--A member does not have a
6fiduciary duty to a nonprofit association or to another member
7solely by being a member.
8(b) Discharge of duties and exercise of rights.--A member
9shall, consistent with the governing principles and the
10contractual obligation of good faith and fair dealing:
11(1) discharge duties under the governing principles to
12the nonprofit association and the other members; and
13(2) exercise any rights under the governing principles
14and this chapter.
15§ 9126. Membership.
16(a) Admission, suspension, dismissal and expulsion of
17member.--
18(1) A person becomes a member and may be suspended,
19dismissed or expelled in accordance with the governing
20principles. If there are no applicable governing principles,
21a person may become a member or be suspended, dismissed or
22expelled only with the approval of the members. A person may
23not be admitted as a member without the person's consent.
24(2) Except as provided in the governing principles, the
25suspension, dismissal or expulsion of a member does not
26relieve the member from any unpaid capital contribution,
27dues, assessments, fees or other obligation incurred or
28commitment made by the member before the suspension,
29dismissal or expulsion.
30(b) Resignation of member.--
1(1) A member may resign as a member in accordance with
2the governing principles. In the absence of applicable
3governing principles, a member may resign at any time.
4(2) Except as provided in the governing principles,
5resignation of a member does not relieve the member from any
6unpaid capital contribution, dues, assessments, fees or other
7obligation incurred or commitment made by the member before
8resignation.
9§ 9127. Member's interest not transferable.
10(a) General rule.--Except as set forth in subsection (b) or
11the governing principles, a member's interest or any right under
12the governing principles is not transferable.
13(b) Certain nonprofit associations formed prior to effective
14date.--
15(1) This subsection applies to a nonprofit association:
16(i) which was formed before {the Legislative
17Reference Bureau shall insert here the effective date of
18this section};
19(ii) which was formed for the purpose of encouraging
20lawful associational activity among agricultural and
21industrial workers through the organization of a
22nonprofit association for mutual benefit insurance,
23saving or other lawful objects; and
24(iii) in which the persons that organized the
25nonprofit association derive benefits from the
26preservation and continuance of the membership and
27interest among persons engaged in a common calling, labor
28or enterprise.
29(2) For a nonprofit association subject to paragraph
30(1), the following apply:
1(i) Except as set forth in subparagraph (ii), a
2member's interest or any right under the governing
3principles is transferable.
4(ii) A member's interest or any right under the
5governing principles is nontransferable if the governing
6principles so provide.
7(c) Assignments and pledges.--No legal or equitable right or
8interest shall pass as a result of an attempted transfer in
9violation of:
10(1) subsection (a); or
11(2) a transfer restriction under subsection (b)(2)(ii).
12(d) Knowledge of nontransferability.--Whenever the interest
13of a member in a nonprofit association is evidenced by a
14certificate, an endorsement on the certificate that the
15certificate is nontransferable shall be conclusive evidence that
16the person to whom any attempted transfer of the certificate is
17made has knowledge of the nontransferable character of the
18interest of the member.
19§ 9128. Selection and management rights of managers.
20Except as provided in this chapter or the governing
21principles:
22(1) if there is no manager selected and serving, all
23members are managers;
24(2) only the members may select a manager;
25(3) a manager may be a member or a nonmember;
26(4) each manager has equal rights in the management and
27conduct of the activities of the nonprofit association;
28(5) all matters relating to the activities of the
29nonprofit association are decided by its managers except for
30matters reserved for approval by the members in section 9123
1(relating to approval by members); and
2(6) a difference among the managers is decided by a
3majority of the managers.
4§ 9129. Duties of managers.
5(a) Duty of care.--
6(1) A manager shall manage the nonprofit association:
7(i) in good faith;
8(ii) in a manner the manager reasonably believes to
9be in the best interests of the nonprofit association;
10and
11(iii) with such care, including reasonable inquiry,
12as a prudent person would reasonably exercise in a
13similar position and under similar circumstances.
14(2) A manager may rely in good faith on any opinion,
15report, statement or other information provided by another
16person that the manager reasonably believes is a competent
17and reliable source for the information.
18(b) Conflicts of interest.---
19(1) A manager owes a fiduciary duty of loyalty to the
20nonprofit association with respect to the responsibilities of
21the manager.
22(2) After full disclosure of all material facts, a
23specific act or transaction that would otherwise violate the
24duty of loyalty by a manager may be authorized or ratified by
25a majority of the members that are not interested directly or
26indirectly in the act or transaction.
27(c) Presumption.--A manager that makes a judgment in good
28faith satisfies the duties specified in subsection (a) if the
29manager:
30(1) is not interested, directly or indirectly, in the
1subject of the judgment and is otherwise able to exercise
2independent judgment;
3(2) is informed with respect to the subject of the
4judgment to the extent the manager reasonably believes to be
5appropriate under the circumstances; and
6(3) believes that the judgment is in, or not opposed to,
7the best interests of the nonprofit association.
8(d) Limitation of liability.--
9(1) Except as set forth in paragraph (2), the governing
10principles in record form may provide that a manager shall
11not be personally liable, as a manager, for monetary damages
12for any action taken unless:
13(i) the manager has breached or failed to perform
14the manager's duties under this chapter; and
15(ii) the breach or failure to perform constitutes
16self-dealing, willful misconduct or recklessness.
17(2) Paragraph (1) shall not apply to:
18(i) the responsibility or liability of a manager
19under a criminal statute; or
20(ii) the liability of the manager for the payment of
21taxes under Federal, State or local law.
22§ 9130. Action by managers.
23(a) General rule.--Except as provided in the governing
24principles:
25(1) approval of a matter by the managers requires the
26affirmative vote of at least a majority of the votes cast at
27a meeting of managers; and
28(2) each manager is entitled to one vote on each matter
29that is submitted for approval by the managers.
30(b) Procedural matters.--The governing principles may
1provide for the:
2(1) delegation to a manager of authority to act without
3a meeting of the managers;
4(2) creation and authority of committees of the
5managers;
6(3) calling, location and timing of meetings of the
7managers or a committee of the managers;
8(4) notice and quorum requirements for meetings of the
9managers or a committee of the managers;
10(5) conduct of meetings of the managers or a committee
11of the managers;
12(6) taking of action by the managers or a committee of
13the managers by consent without a meeting or by ballot;
14(7) participation by managers in a meeting of the
15managers or a committee of the managers by telephone or other
16means of electronic communication; and
17(8) taking of action by a manager by proxy.
18(c) Absence of governing principles.--If the governing
19principles do not provide for a matter described in subsection
20(b), customary usages and principles of parliamentary law and
21procedure apply.
22§ 9131. Right of member or manager to information.
23(a) Inspection.--On reasonable notice, a member or manager
24of a nonprofit association may inspect and copy, at a reasonable
25time and location specified by the nonprofit association, any
26record maintained by the nonprofit association regarding its
27activities, financial condition and other circumstances, to the
28extent the information is material to the rights and duties of
29the member or manager under the governing principles.
30(b) Restrictions.--A nonprofit association may impose
1reasonable restrictions on access to and use of information to
2be furnished under this section, including designating the
3information confidential and imposing on the recipient
4obligations of nondisclosure and safeguarding.
5(c) Costs.--A nonprofit association may charge a person that
6makes a demand under this section reasonable copying costs.
7(d) Former member or manager.--A former member or manager is
8entitled to information to which the member or manager was
9entitled while a member or manager if:
10(1) the information pertains to the period during which
11the person was a member or manager;
12(2) the former member or manager seeks the information
13in good faith; and
14(3) the former member or manager satisfies subsections
15(a), (b) and (c).
16§ 9132. Distributions prohibited; compensation and other
17permitted payments.
18(a) General rule.--Except as provided in subsection (b), a
19nonprofit association may not pay dividends or make
20distributions to a member or manager.
21(b) Permitted payments.--A nonprofit association may:
22(1) pay reasonable compensation or reimburse reasonable
23expenses to a member or manager for services rendered;
24(2) confer benefits on or make contributions to a member
25or manager in conformity with its nonprofit purposes;
26(3) repurchase a membership and repay a capital
27contribution made by a member to the extent authorized by its
28governing principles;
29(4) repay indebtedness to a member or manager; and
30(5) make distributions of property to members upon
1winding up and termination to the extent permitted by section
29135 (relating to winding up).
3§ 9133. Reimbursement, indemnification and advancement of
4expenses.
5(a) Reimbursement.--Except as provided in the governing
6principles, a nonprofit association shall reimburse a member or
7manager for authorized expenses reasonably incurred in the
8course of the activities of the member or manager on behalf of
9the nonprofit association.
10(b) Indemnification and advancement of expenses.--
11(1) A nonprofit association is subject to Ch. 57 Subch.
12D (relating to indemnification).
13(2) For purposes of applying Ch. 57 Subch. D, references
14to the "articles" or "bylaws," "directors" and "members"
15shall mean the "governing principles," "managers" and
16"members," respectively.
17§ 9134. Dissolution.
18(a) General rule.--A nonprofit association may be dissolved
19as follows:
20(1) if the governing principles provide a time or method
21for dissolution, at that time or by that method;
22(2) if the governing principles do not provide a time or
23method for dissolution, upon approval by the members;
24(3) if no member can be located and the operations of
25the nonprofit association have been discontinued for at least
26three years, by:
27(i) the managers; or
28(ii) if the nonprofit association has no current
29manager, its last manager;
30(4) by court order; or
1(5) under law other than this chapter.
2(b) Continuation during winding up.--After dissolution, a
3nonprofit association continues in existence until its
4activities have been wound up under section 9135 (relating to
5winding up).
6§ 9135. Winding up.
7Winding up of a nonprofit association must proceed in
8accordance with the following rules:
9(1) All known debts and liabilities shall be paid or
10adequately provided for.
11(2) Any property subject to a condition requiring return
12to the person designated by the donor shall be transferred to
13that person.
14(3) Any property subject to a trust shall be distributed
15in accordance with the trust agreement.
16(4) Any property committed to a charitable purpose shall
17be distributed in accordance with that purpose unless the
18nonprofit obtains a court order under 20 Pa.C.S. Ch. 77
19(relating to trusts) specifying the disposition of the
20property.
21(5) Any remaining property shall be distributed as
22follows:
23(i) Distribution shall be made:
24(A) in accordance with the governing principles
25of the nonprofit association; or
26(B) in the absence of applicable governing
27principles, to the members of the nonprofit
28association:
29(I) per capita; or
30(II) as the members direct.
1(ii) If subparagraph (i) does not apply,
2distribution shall be made under Article XIII.1 of the
3act of April 9, 1929 (P.L.343, No.176), known as The
4Fiscal Code.
5§ 9136. Subordination of chapter to canon law.
6If and to the extent canon law or similar principles
7applicable to a nonprofit association organized for religious
8purposes sets forth provisions relating to the government and
9regulation of the affairs of the nonprofit association that are
10inconsistent with the provisions of this chapter on the same
11subject, the provisions of canon law or similar principles shall
12control except to the extent prohibited by the Constitution of
13the United States or the Constitution of Pennsylvania.
14Section 51. Section 9503(e) of Title 15 is amended and the
15section is amended by adding a subsection to read:
16§ 9503. Documentation of trust.
17* * *
18(d.1) Bearer certificates prohibited.--A business trust may
19not issue a certificate of beneficial interest in bearer form.
20This subsection may not be varied by the instrument or other
21documentation of the business trust.
22(e) Cross [reference] references.--See [section] sections
23134 (relating to docketing statement) and 135 (relating to
24requirements to be met by filed documents).
25Section 52. The definition of "domestic corporation not-for-
26profit" in section 101 of Title 54 is amended to read:
27§ 101. Definitions.
28Subject to additional definitions contained in subsequent
29provisions of this title which are applicable to specific
30provisions of this title, the following words and phrases when
1used in this title shall have, unless the context clearly
2indicates otherwise, the meanings given to them in this section:
3* * *
4"Domestic corporation not-for-profit." A domestic
5corporation [not-for-profit as defined in 15 Pa.C.S. § 1103
6(relating to definitions).] not incorporated for a purpose or
7purposes involving pecuniary profit, incidental or otherwise.
8* * *
9Section 53. Section 501(a)(5) and (7) of Title 54 are
10amended to read:
11§ 501. Register established.
12(a) General rule.--A register is established by this chapter
13which shall consist of such of the following names as are not
14deleted therefrom by operation of section 504 (relating to
15effect of failure to make filings) or 506 (relating to voluntary
16termination of registration by corporations and other
17associations):
18* * *
19(5) In the case of a business trust which exists subject
20to 15 Pa.C.S. Ch. 95 (relating to business trusts), the name
21of the trust as set forth in the:
22(i) instrument filed in the department under 15
23Pa.C.S. § 9503 (relating to documentation of trust); or
24(ii) application for registration filed under 15
25Pa.C.S. § 9507 (relating to foreign business trusts).
26* * *
27[(7) In the case of a business trust which exists
28subject to 15 Pa.C.S. Ch. 95 (relating to business trusts),
29the name of the trust as set forth in the instrument filed in
30the department under 15 Pa.C.S. § 9503 (relating to
1documentation of trust), or in the application for
2registration filed pursuant to 15 Pa.C.S. § 9507 (relating to
3foreign business trusts).]
4* * *
5Section 54. Repeals are as follows:
6(1) The General Assembly declares as follows:
7(i) The repeal under paragraph (2)(i) is necessary
8because the material is supplied by 15 Pa.C.S. § 1511.
9(ii) The repeal under paragraph (2)(ii) is necessary
10to effectuate the amendment of 15 Pa.C.S. §§ 153(a) and
11155(a).
12(iii) The repeal under paragraph (2)(iii) is
13necessary because the material is supplied by 40 Pa.C.S.
14§ 6322(f).
15(iv) The repeal under paragraph (2)(iv) is necessary
16because the material is supplied by 40 Pa.C.S. § 6301.
17(v) The repeal under paragraph (2)(v) is necessary
18because the material is supplied by 15 Pa.C.S. § 1106(b)
19(2).
20(vi) The repeal under paragraph (2)(vi) is necessary
21because the material is supplied by 40 Pa.C.S. § 6322(f).
22(vii) The repeal under paragraph (2)(vii) is
23necessary because the material is supplied by 1 Pa.C.S. §
241978.
25(2) The following acts and parts of acts are repealed:
26(i) Act of April 27, 1855 (P.L.365, No.383),
27entitled "An act extending the right of Trial by Jury to
28certain cases."
29(ii) Sections 618-A(2) and 814 of the act of April
309, 1929 (P.L.177, No.175), known as The Administrative
1Code of 1929.
2(iii) Act of April 18, 1949 (P.L.583, No.123),
3entitled "An act to further amend the act, approved the
4fifth day of May, one thousand nine hundred thirty-three
5(Pamphlet Laws 289), entitled 'An act relating to
6nonprofit corporations; defining and providing for the
7organization, merger, consolidation, and dissolution of
8such corporations; conferring certain rights, powers,
9duties, and immunities upon them and their officers and
10members; prescribing the conditions on which such
11corporations may exercise their powers; providing for the
12inclusion of certain existing corporations of the first
13class within the provisions of this act; prescribing the
14terms and conditions upon which foreign nonprofit
15corporations may be admitted or may continue to do
16business within the Commonwealth; conferring powers and
17imposing duties on the courts of common pleas,
18prothonotaries of such courts, recorders of deeds, and
19certain State departments, commissions, and officers;
20authorizing certain local public officers and State
21departments to collect fees for services required to be
22rendered by this act; imposing penalties; and repealing
23certain acts and parts of acts relating to corporations,'
24by making further provisions relating to nonprofit
25medical service corporations; by extending the provisions
26of said act relating to the furnishing of medical
27services by nonprofit medical service corporations so as
28to include the furnishing of osteopathic services by
29doctors of osteopathy to subscribers and their
30dependents, and by providing that the articles of
1incorporation of existing nonprofit medical service
2corporations are amended by the provisions of this act so
3as to authorize the furnishing of such osteopathic
4services by doctors of osteopathy."
5(iv) Act of December 9, 1955 (P.L.818, No.238),
6entitled "An act amending the act of May five, one
7thousand nine hundred thirty-three (Pamphlet Laws 289),
8entitled 'An act relating to nonprofit corporations;
9defining and providing for the organization, merger,
10consolidation, and dissolution of such corporations;
11conferring certain rights, powers, duties, and immunities
12upon them and their officers and members; prescribing the
13conditions on which such corporations may exercise their
14powers; providing for the inclusion of certain existing
15corporations of the first class within the provisions of
16this act; prescribing the terms and conditions upon which
17foreign nonprofit corporations may be admitted or may
18continue to do business within the Commonwealth;
19conferring powers and imposing duties on the courts of
20common pleas, prothonotaries of such courts, recorders of
21deeds, and certain State departments, commissions, and
22officers; authorizing certain local public officers and
23State departments to collect fees for services required
24to be rendered by this act; imposing penalties; and
25repealing certain acts and parts of acts relating to
26corporations,' providing for the incorporation and
27regulation of nonprofit dental service corporations
28furnishing dental services only to certain subscribers
29and their dependents."
30(v) Act of September 30, 1965 (P.L.570, No.294),
1entitled "An act amending the act of May 5, 1933 (P.L.
2289), entitled 'An act relating to nonprofit
3corporations; defining and providing for the
4organization, merger, consolidation, and dissolution of
5such corporations; conferring certain rights, powers,
6duties, and immunities upon them and their officers and
7members; prescribing the conditions on which such
8corporations may exercise their powers; providing for the
9inclusion of certain existing corporations of the first
10class within the provisions of this act; prescribing the
11terms and conditions upon which foreign nonprofit
12corporations may be admitted or may continue to do
13business within the Commonwealth; conferring powers and
14imposing duties on the courts of common pleas,
15prothonotaries of such courts, recorders of deeds, and
16certain State departments, commissions, and officers;
17authorizing certain local public officers and State
18departments to collect fees for services required to be
19rendered by this act; imposing penalties; and repealing
20certain acts and parts of acts relating to corporations,'
21requiring approval by the State Registration Board for
22Professional Engineers prior to the use of certain words
23in corporate names."
24(vi) Act of December 27, 1965 (P.L.1250, No.507),
25entitled "An act amending the act of May 5, 1933 (P.L.
26289), entitled 'An act relating to nonprofit
27corporations; defining and providing for the
28organization, merger, consolidation, and dissolution of
29such corporations; conferring certain rights, powers,
30duties, and immunities upon them and their officers and
1members; prescribing the conditions on which such
2corporations may exercise their powers; providing for the
3inclusion of certain existing corporations of the first
4class within the provisions of this act; prescribing the
5terms and conditions upon which foreign nonprofit
6corporations may be admitted or may continue to do
7business within the Commonwealth; conferring powers and
8imposing duties on the courts of common pleas,
9prothonotaries of such courts, recorders of deeds, and
10certain State departments, commissions, and officers;
11authorizing certain local public officers and State
12departments to collect fees for services required to be
13rendered by this act; imposing penalties; and repealing
14certain acts and parts of acts relating to corporations,'
15making further provisions relating to nonprofit medical,
16dental and osteopathic service corporations; extending
17the provisions of said act relating to the furnishing of
18medical, dental and osteopathic services by nonprofit
19medical, dental and osteopathic service corporations so
20as to include the furnishing of optometric services to
21subscribers and their dependents, and providing that the
22articles of incorporation of existing nonprofit medical,
23dental and osteopathic service corporations are amended
24by the provisions of this act so as to authorize the
25furnishing of optometric services by doctors of
26optometry."
27(vii) Section 2 of the act of November 15, 1972
28(P.L.1063, No.271), entitled "An act amending the act of
29November 25, 1970 (No.230), entitled 'An act codifying
30and compiling a part of the law of the Commonwealth,'
1adding provisions relating to burial grounds,
2corporations, including corporations not-for-profit,
3educational institutions, private police, certain
4charitable or eleemosynary institutions, certain
5nonprofit insurers, service of process on certain
6nonresident persons, names, prescribing penalties and
7making repeals."
8Section 55. When the Department of State is ready to provide
9expedited services under the addition of 15 Pa.C.S. § 153(a)
10(16), it shall transmit notice of that fact to the Legislative
11Reference Bureau for publication as a notice in the Pennsylvania
12Bulletin.
13Section 56. Notwithstanding 1 Pa.C.S. § 1957, it is declared
14to be the intent of the former act of December 21, 1988
15(P.L.1444, No.177), known as the General Association Act of
161988, the act of December 19, 1990 (P.L.834, No.198), known as
17the GAA Amendments Act of 1990, the act of December 18, 1992
18(P.L.1333, No.169), known as the GAA Amendments Act of 1992, the
19act of June 22, 2001 (P.L.418, No.34), known as the GAA
20Amendments Act of 2001, and this act cumulatively to restore all
21provisions of 15 Pa.C.S. added by the act of November 15, 1972
22(P.L.1063, No.271), entitled "An act amending the act of
23November 25, 1970 (No.230), entitled 'An act codifying and
24compiling a part of the law of the Commonwealth,' adding
25provisions relating to burial grounds, corporations, including
26corporations not-for-profit, educational institutions, private
27police, certain charitable or eleemosynary institutions, certain
28nonprofit insurers, service of process on certain nonresident
29persons, names, prescribing penalties and making repeals," to
30their status prior to the partial repeal effected by section 905
1of the former act of July 29, 1977 (P.L.105, No.38), known as
2the Fraternal Benefit Society Code, except as otherwise
3expressly provided by such provisions as reenacted and amended
4by the former General Association Act of 1988, the GAA
5Amendments Act of 1990, the GAA Amendments Act of 1992, the GAA
6Amendments Act of 2001, and this act.
7Section 57. Section 56 of this act shall apply retroactively
8to January 30, 1978.
9Section 58. This act shall take effect as follows:
10(1) The following provisions shall take effect
11immediately:
12(i) Section 55 of this act.
13(ii) This section.
14(2) The addition of 15 Pa.C.S. § 153(a)(16) shall take
15effect upon publication of the notice under section 55 of
16this act.
17(3) The remainder of this act shall take effect in 60
18days.