PRIOR PRINTER'S NOS. 1392, 1741 PRINTER'S NO. 2016
No. 1157 Session of 1997
INTRODUCED BY WENGER, HART, GREENLEAF, MADIGAN, SALVATORE, LEMMOND, O'PAKE, STOUT, RHOADES, WOZNIAK AND THOMPSON, OCTOBER 14, 1997
SENATOR TILGHMAN, APPROPRIATIONS, RE-REPORTED AS AMENDED, JUNE 1, 1998
AN ACT 1 Amending Titles 15 (Corporations and Unincorporated 2 Associations) and 54 (Names) of the Pennsylvania Consolidated 3 Statutes, relating to associations; making revisions, 4 corrections and additions; and making repeals. 5 The General Assembly of the Commonwealth of Pennsylvania 6 hereby enacts as follows: 7 Section 1. Short title. 8 This act shall be known and may be cited as the GAA 9 Amendments Act of (in preparing this act for printing in the 10 Laws of Pennsylvania, the Legislative Reference Bureau shall 11 insert here, in lieu of this statement, the calendar year of 12 enactment of this act). 13 Section 2. Amendment of Title 15. 14 As much of Title 15 as is hereinafter set forth is amended or 15 added to read: 16 § 102. Definitions. 17 Subject to additional or inconsistent definitions contained 18 in subsequent provisions of this title that are applicable to
1 specific provisions of this title, the following words and 2 phrases when used in this title shall have, unless the context 3 clearly indicates otherwise, the meanings given to them in this 4 section: 5 * * * 6 "Limited liability company." A domestic or foreign limited 7 liability company as defined in section 8903 (relating to 8 definitions and index of definitions). 9 "Profession." Includes the performance of any type of 10 personal service to the public that requires as a condition 11 precedent to the performance of the service the obtaining of a 12 license or admission to practice or other legal authorization 13 from the Supreme Court of Pennsylvania or a licensing board or 14 commission under the Bureau of Professional and Occupational 15 Affairs in the Department of State. Except as otherwise 16 expressly provided by law, this definition shall be applicable 17 to this title only and shall not affect the interpretation of 18 any other statute or any local zoning ordinance or other 19 official document heretofore or hereafter enacted or 20 promulgated. 21 "Professional services." Any type of services that may be 22 rendered by a member of a profession within the purview of his 23 profession. 24 * * * 25 § 134. Docketing statement. 26 (a) General rule.--The Department of State may, but shall 27 not be required to, prescribe by regulation one or more official 28 docketing statement forms designed to elicit from a person 29 effecting a filing under this title information that the 30 department has found to be necessary or desirable in connection 19970S1157B2016 - 2 -
1 with the processing of a filing. [A docketing statement 2 submitted with the articles of incorporation or division of a 3 proposed domestic corporation for profit or not-for-profit, the 4 articles of domestication or application for a certificate of 5 authority of a foreign corporation for profit or not-for-profit 6 or the certificate of election of an electing partnership shall 7 set forth, inter alia, the kind or kinds of business in which 8 the association actually intends to engage in this Commonwealth 9 within one year of the submission of the docketing statement. A 10 docketing statement submitted with articles of incorporation, 11 consolidation or division of a domestic corporation not-for- 12 profit or an application for a certificate of authority of a 13 foreign corporation not-for-profit shall set forth with respect 14 to the new corporation or corporations resulting therefrom, 15 inter alia, the statute by or under which it was incorporated, 16 the date of incorporation, the names and residence addresses of 17 its chief executive officer, secretary and treasurer, regardless 18 of the names or titles by which they may be designated, the 19 address of its principal place of business and the amount, if 20 any, of its authorized and issued capital stock.] A form of 21 docketing statement prescribed under this subsection: 22 (1) Shall be published in the Pennsylvania Code. 23 (2) Shall not be integrated into a single document 24 covering the requirements of the filing and its related 25 docketing statement. 26 (3) May be required by the department in connection with 27 a filing only if notice of the requirement appears on the 28 official format for the filing prescribed under section 29 133(d) (relating to physical characteristics and copies of 30 documents). 19970S1157B2016 - 3 -
1 (4) Shall not be required to be submitted on department- 2 furnished forms. 3 (5) Shall not constitute a document filed in, with or by 4 the department for the purposes of this title or any other 5 provision of law except 18 Pa.C.S. § 4904 (relating to 6 unsworn falsification to authorities). 7 (b) Transmission to Department of Revenue.--The department 8 shall note on the docketing statement the fact and date of the 9 filing [of articles of incorporation, consolidation, merger, 10 division, conversion or domestication or certificate of election 11 or issuance of the certificate of authority, as the case may be, 12 upon the docketing statement] to which the docketing statement 13 relates and shall transmit a copy of [it] the docketing 14 statement or the information contained therein to the Department 15 of Revenue. If a docketing statement is not required for a 16 particular filing, the Department of State may transmit a copy 17 of the filing or the information contained therein to the 18 Department of Revenue at no cost to the person effecting the 19 filing. 20 (c) Transmission to other agencies.--If the docketing 21 statement delivered to the Department of State sets forth any 22 kind of business in which a corporation, partnership or other 23 association may not engage without the approval of or a license 24 from any department, board or commission of the Commonwealth, 25 the Department of State shall, upon [the filing of articles of 26 incorporation, consolidation, division or domestication or 27 certificate of election or issuance of the certificate of 28 authority] processing the filing, promptly transmit a copy of 29 the docketing statement or the information contained therein to 30 each such department, board or commission. 19970S1157B2016 - 4 -
1 § 135. Requirements to be met by filed documents. 2 * * * 3 (e) Distinguishable names.--A name shall not be considered 4 distinguishable upon the records of the department from another 5 name for purposes of this title and Title 54 (relating to names) 6 solely because the names differ from each other in any or all of 7 the following respects: 8 (1) the use of punctuation marks; 9 (2) the use of the definite or indefinite article; or 10 (3) the use of any of the following terms to designate 11 the status of an association: "corporation," "company," 12 "incorporated," "limited," "association," "fund," 13 "syndicate," "limited partnership," "limited liability 14 company," "trust" or "business trust" or abbreviations of any 15 of the foregoing terms or words or abbreviations of like 16 import in languages other than English. 17 § 138. Statement of correction. 18 * * * 19 (b) Effect of filing.-- 20 * * * 21 (2) A filing under this section shall not have the 22 effect of causing original articles of incorporation of a 23 corporation or a similar type of document creating any other 24 form of association to be stricken from the records of the 25 department but the articles or other document may be 26 corrected under this section. 27 * * * 28 (d) Cross reference.--See section 135 (relating to 29 requirements to be met by filed documents). 30 § 139. Tax clearance of certain fundamental transactions. 19970S1157B2016 - 5 -
1 [A] (a) General rule.--Except as provided in subsection (c), 2 a domestic association shall not file articles or a certificate 3 of merger or consolidation effecting a merger or consolidation 4 into a nonqualified foreign association or articles or a 5 certificate of dissolution or a statement of revival, a 6 qualified foreign association shall not file an application for 7 termination of authority or similar document in the Department 8 of State and a domestic association shall not file articles or a 9 certificate of division dividing solely into nonqualified 10 foreign associations unless the articles, certificate, 11 application or other document are accompanied by clearance 12 certificates from the Department of Revenue and the Office of 13 Employment Security of the Department of Labor and Industry, 14 evidencing the payment by the association of all taxes and 15 charges due the Commonwealth required by law. 16 (b) Tax clearance in judicial proceedings.--Until the 17 clearance certificates described in subsection (a) have been 18 filed with the court: 19 (1) The court shall not order the dissolution of a 20 domestic business corporation, nonprofit corporation or 21 business trust. 22 (2) The court shall not approve a final distribution of 23 the assets of a domestic general partnership, limited 24 partnership, electing partnership or limited liability 25 company if the court is supervising the winding up of the 26 association. 27 (c) Alternative provisions.--If clearance certificates are 28 filed with the court as required under subsection (b), it shall 29 not be necessary to file the clearance certificates with the 30 Department of State. 19970S1157B2016 - 6 -
1 § 161. Domestication of certain alien associations. 2 * * * 3 (b) Statement of domestication.--The statement of 4 domestication shall be executed by the association and shall set 5 forth in the English language: 6 (1) The name of the association. If the name is in a 7 foreign language, it shall be set forth in Roman letters or 8 characters or Arabic or Roman numerals. If the name is one 9 that is rendered unavailable for use by a corporation by any 10 provision of section 1303(b) or (c) (relating to corporate 11 name), the association shall adopt a new name, in accordance 12 with any procedures for changing the name of the association 13 that are applicable prior to the domestication of the 14 association, and shall set forth the new name in the 15 statement. 16 (2) The name of the jurisdiction under the laws of which 17 and the date on which it was first formed, incorporated or 18 otherwise came into being. 19 (3) The name of the jurisdiction that constituted the 20 seat, siege social or principal place of business or control 21 administration of the association, or any equivalent under 22 applicable law, immediately prior to the filing of the 23 statement. 24 (4) A statement [that upon domestication the association 25 will be a domestic association under the laws of this 26 Commonwealth] of the type of domestic association that the 27 association will be upon domestication. 28 (5) A statement that the filing of the statement of 29 domestication and, if desired, the renunciation of the prior 30 domicile has been authorized (unless its charter or other 19970S1157B2016 - 7 -
1 organic documents require a greater vote) by a majority in 2 interest of the shareholders, members or other proprietors of 3 the association. 4 (6) If the association will be a type of domestic 5 association that is created by a filing in the department, 6 such other provisions as are required to be included in an 7 initial filing to create that type of domestic association, 8 except that it shall not be necessary to set forth the name 9 of the person organizing the association. 10 (7) Any other provision that the association may choose 11 to insert unless this title prohibits the inclusion of such a 12 provision in a filing that creates the type of domestic 13 association that the association will be upon domestication. 14 (c) Execution.--The statement shall be signed on behalf of 15 the association by any authorized person. 16 (d) Effect of domestication.--Upon the filing of the 17 statement of domestication, the association shall be 18 domesticated in this Commonwealth and the association shall 19 thereafter be subject to any applicable provisions of this 20 title[, except Subpart B of Part II (relating to business 21 corporations),] and [to] any other provisions of law applicable 22 to associations existing under the laws of this Commonwealth. If 23 the association will be a type of domestic association that is 24 created by a filing in the department, the statement of 25 domestication shall constitute that filing. The domestication of 26 any association in this Commonwealth pursuant to this section 27 shall not be deemed to affect any obligations or liabilities of 28 the association incurred prior to its domestication. 29 (e) Exclusion.--An association that can be domesticated 30 under [section 4161 (relating to domestication) or 6161 19970S1157B2016 - 8 -
1 (relating to domestication)] any of the following sections shall 2 not be domesticated under this section: 3 Section 4161 (relating to domestication). 4 Section 6161 (relating to domestication). 5 Section 8590 (relating to domestication). 6 Section 8982 (relating to domestication). 7 Section 9501(a)(1)(ii) (relating to application and 8 effect of chapter). 9 (f) Definition.--As used in this section, the term 10 "association," except as restricted by subsection (e), includes 11 any alien incorporated organization, private law corporation 12 (whether or not organized for business purposes), public law 13 corporation, partnership, proprietorship, joint venture, 14 foundation, trust, association or similar organization or entity 15 existing under the laws of any jurisdiction other than this 16 Commonwealth. 17 (g) Cross [reference] references.--See [section] sections 18 134 (relating to docketing statement) and 135 (relating to 19 requirements to be met by filed documents). 20 § 162. Contingent domestication of certain alien associations. 21 * * * 22 (c) Statement of consummation of domestication.--At any time 23 after the filing of a statement of contingent domestication, the 24 association may file in the department a statement of 25 consummation of domestication which shall be executed by the 26 association and shall set forth: 27 (1) The name of the association[. If the name is in a 28 foreign language, it shall be set forth in Roman letters or 29 characters or Arabic or Roman numerals.] as set forth in its 30 statement of contingent domestication. 19970S1157B2016 - 9 -
1 * * * 2 (j) Cross [reference] references.--See [section] sections 3 134 (relating to docketing statement) and 135 (relating to 4 requirements to be met by filed documents). 5 § 1303. Corporate name. 6 * * * 7 (b) Duplicate use of names.--The corporate name shall [not 8 be the same as or confusingly similar to] be distinguishable 9 upon the records of the Department of State from: 10 (1) The name of any other domestic corporation for 11 profit or not-for-profit which is either in existence or for 12 which articles of incorporation have been filed but have not 13 yet become effective, or of any foreign corporation for 14 profit or not-for-profit which is either authorized to do 15 business in this Commonwealth or for which an application for 16 a certificate of authority has been filed but has not yet 17 become effective, [or of any domestic or foreign limited 18 partnership that has filed in the Department of State a 19 certificate or qualified under Chapter 85 (relating to 20 limited partnerships) or under corresponding provisions of 21 prior law,] or the name of any association registered at any 22 time under 54 Pa.C.S. Ch. 5 (relating to corporate and other 23 association names), unless[: (i) where the name is the same 24 or confusingly similar,] the other association: 25 [(A)] (i) has stated that it is about to change 26 its name, or to cease to do business, or is being 27 wound up, or is a foreign association about to 28 withdraw from doing business in this Commonwealth, 29 and the statement and [the] a written consent [of the 30 other association] to the adoption of the name 19970S1157B2016 - 10 -
1 executed by the other association is filed in the 2 Department of State; 3 [(B)] (ii) has filed with the Department of 4 Revenue a certificate of out of existence, or has 5 failed for a period of three successive years to file 6 with the Department of Revenue a report or return 7 required by law and the fact of such failure has been 8 certified by the Department of Revenue to the 9 Department of State; 10 [(C)] (iii) has abandoned its name under the 11 laws of its jurisdiction of incorporation, by 12 amendment, merger, consolidation, division, 13 expiration, dissolution or otherwise, without its 14 name being adopted by a successor in a merger, 15 consolidation, division or otherwise, and an official 16 record of that fact, certified as provided by 42 17 Pa.C.S. § 5328 (relating to proof of official 18 records), is presented by any person to the 19 department; or 20 [(D)] (iv) has had the registration of its name 21 under 54 Pa.C.S. Ch. 5 terminated and, if the 22 termination was effected by operation of 54 Pa.C.S. § 23 504 (relating to effect of failure to make decennial 24 filings), the application for the use of the name is 25 accompanied by a verified statement stating that at 26 least 30 days' written notice of intention to 27 appropriate the name was given to the delinquent 28 association at its [registered office] last known 29 place of business and that, after diligent search by 30 the affiant, the affiant believes the association to 19970S1157B2016 - 11 -
1 be out of existence.[; or 2 (ii) where the name is confusingly similar, the 3 consent of the other association to the adoption of the 4 name is filed in the Department of State. 5 The consent of the association shall be evidenced by a 6 statement to that effect executed by the association.] 7 * * * 8 (C) REQUIRED APPROVALS OR CONDITIONS.-- <-- 9 * * * 10 (2) THE CORPORATE NAME SHALL NOT CONTAIN: 11 * * * 12 (III) THE WORDS "ENGINEER" OR "ENGINEERING" OR 13 "SURVEYOR" OR "SURVEYING" OR ANY OTHER WORD IMPLYING THAT 14 ANY FORM OF THE PRACTICE OF ENGINEERING OR SURVEYING AS 15 DEFINED IN THE ACT OF MAY 23, 1945 (P.L.913, NO.367), 16 KNOWN AS THE [PROFESSIONAL ENGINEERS] ENGINEER, LAND 17 SURVEYOR AND GEOLOGIST REGISTRATION LAW, IS PROVIDED 18 UNLESS AT LEAST ONE OF THE INCORPORATORS OF A PROPOSED 19 CORPORATION OR THE DIRECTORS OF THE EXISTING CORPORATION 20 HAS BEEN PROPERLY REGISTERED WITH THE STATE REGISTRATION 21 BOARD FOR PROFESSIONAL ENGINEERS, LAND SURVEYORS AND 22 GEOLOGISTS IN THE PRACTICE OF ENGINEERING OR SURVEYING 23 AND THERE IS SUBMITTED TO THE DEPARTMENT A CERTIFICATE 24 FROM THE BOARD TO THAT EFFECT. 25 * * * 26 (e) Remedies for violation of section.--The use of a name in 27 violation of this section shall not vitiate or otherwise affect 28 the corporate existence but any court having jurisdiction may 29 enjoin the corporation from using or continuing to use a name in 30 violation of this section, upon the application of: 19970S1157B2016 - 12 -
1 (1) the Attorney General, acting on his own motion or at 2 the instance of any administrative department, board or 3 commission of this Commonwealth; or 4 (2) any person adversely affected.[; 5 may enjoin the corporation from using or continuing to use a 6 name in violation of this section.] 7 (f) Cross references.--See sections 135(e) (relating to 8 distinguishable names) and 1106(b)(2) (relating to uniform 9 application of subpart). 10 § 1304. Required name changes by senior corporations. 11 * * * 12 (b) Enforcement of undertaking to release name.--If a 13 corporation has used a name [the same as or confusingly similar 14 to] that is not distinguishable upon the records of the 15 Department of State from the name of another corporation or 16 other association as permitted by section [1303(b)(1)(i)] 17 1303(b)(1) (relating to duplicate use of names) and the other 18 corporation or other association continues to use its name in 19 this Commonwealth and does not change its name, cease to do 20 business, be wound up or withdraw as it proposed to do in its 21 consent or change its name as required by subsection (a), any 22 court having jurisdiction may enjoin the other corporation or 23 other association from continuing to use its name or a name that 24 is not distinguishable therefrom, upon the application of: 25 (1) the Attorney General, acting on his own motion or at 26 the instance of any administrative department, board or 27 commission of this Commonwealth; or 28 (2) any person adversely affected.[; 29 may enjoin the other corporation or other association from 30 continuing to use its name or a confusingly similar name.] 19970S1157B2016 - 13 -
1 § 1311. Filing of statement of summary of record by certain 2 corporations. 3 (a) General rule.--Where any of the [valid] charter 4 documents of a business corporation are not on file in the 5 Department of State or there is an error in any such document as 6 transferred to the department pursuant to section 140 (relating 7 to custody and management of orphan corporate and business 8 records), and the corporation desires to file any document in 9 the department under any other provision of this subpart or the 10 corporation desires to secure from the department any 11 certificate to the effect that the corporation is a corporation 12 duly incorporated and existing under the laws of this 13 Commonwealth or a certified copy of the articles of the 14 corporation or the corporation desires to correct the text of 15 its charter documents as on file in the department, the 16 corporation shall file in the department a statement of summary 17 of record which shall be executed by the corporation and shall 18 set forth: 19 (1) The name of the corporation and, subject to section 20 109 (relating to name of commercial registered office 21 provider in lieu of registered address), the location, 22 including street and number, if any, of its registered 23 office. 24 (2) The statute by or under which the corporation was 25 incorporated. 26 (3) The name under which, the manner in which and the 27 date on which the corporation was originally incorporated, 28 including the date when and the place where the original 29 articles were recorded. 30 (4) The place or places, including volume and page 19970S1157B2016 - 14 -
1 numbers or their equivalent, where the documents 2 [constituting the currently effective articles are] that are 3 not on file in the department or that require correction in 4 the records of the department were originally filed or 5 recorded, the date or dates of each filing or recording and 6 the correct text of the [currently effective articles.] 7 documents. The information specified in this paragraph may be 8 omitted in a statement of summary of record that is delivered 9 to the department contemporaneously with amended and restated 10 articles of the corporation filed under this subpart. 11 [(5) Each name by which the corporation was known, if 12 any, other than its original name and its current name, and 13 the date or dates on which each change of name of the 14 corporation became effective. 15 (6) In the case of any entity brought within the scope 16 of Chapter 29 (relating to professional corporations) by or 17 pursuant to section 2905 (relating to election of 18 professional associations to become professional 19 corporations), amended and restated articles of incorporation 20 which shall include all of the information required to be set 21 forth in restated articles of a professional corporation. 22 A corporation shall be required to make only one filing under 23 this subsection.] 24 (b) Validation of prior defects in incorporation.--Upon the 25 filing of a statement by a corporation under this section or the 26 transfer to the department of the records relating to a 27 corporation pursuant to section 140, the corporation [named in 28 the statement] shall be deemed to be a validly subsisting 29 corporation to the same extent as if it had been duly 30 incorporated and was existing under this subpart and the 19970S1157B2016 - 15 -
1 department shall so certify regardless of any absence of or 2 defect in the prior proceedings relating to incorporation. 3 (c) Cross [reference] references.--See [section] sections 4 134 (relating to docketing statement), 135 (relating to 5 requirements to be met by filed documents) and 1106(b)(2) 6 (relating to uniform application of subpart). 7 § 1504. Adoption, amendment and contents of bylaws. 8 * * * 9 (d) Amendment of voting provisions.-- 10 (1) Unless otherwise provided in a bylaw adopted by the 11 shareholders, whenever [the bylaws require] a bylaw adopted 12 by the shareholders requires for the taking of any action by 13 the shareholders or a class of shareholders a specific number 14 or percentage of votes, the provision of the bylaws setting 15 forth that requirement shall not be amended or repealed by 16 any lesser number or percentage of votes of the shareholders 17 or of the class of shareholders or only by action of the 18 board of directors. 19 (2) Paragraph (1) shall not apply to a bylaw setting 20 forth the right of shareholders to act by unanimous written 21 consent as provided in section 1766(a) (relating to unanimous 22 consent). 23 § 1505. Persons bound by bylaws. 24 Except as otherwise provided by section 1713 (relating to 25 personal liability of directors) or any similar provision of 26 law, the bylaws of a business corporation shall operate only as 27 regulations among the shareholders, directors and officers of 28 the corporation and shall not affect contracts or other dealings 29 with other persons unless those persons have actual knowledge of 30 the bylaws. 19970S1157B2016 - 16 -
1 § 1508. Corporate records; inspection by shareholders. 2 (a) Required records.--Every business corporation shall keep 3 complete and accurate books and records of account, minutes of 4 the proceedings of the incorporators, shareholders and directors 5 and a share register giving the names and addresses of all 6 shareholders and the number and class of shares held by each. 7 The share register shall be kept at [either] any of the 8 following locations: 9 (1) the registered office of the corporation in this 10 Commonwealth [or at its]; 11 (2) the principal place of business of the corporation 12 wherever situated; 13 (3) any actual business office of the corporation; or 14 [at] 15 (4) the office of [its] the registrar or transfer agent 16 of the corporation. [Any books, minutes or other records may 17 be in written form or any other form capable of being 18 converted into written form within a reasonable time.] 19 (b) Right of inspection by a shareholder.--Every shareholder 20 shall, upon written verified demand stating the purpose thereof, 21 have a right to examine, in person or by agent or attorney, 22 during the usual hours for business for any proper purpose, the 23 share register, books and records of account, and records of the 24 proceedings of the incorporators, shareholders and directors and 25 to make copies or extracts therefrom. A proper purpose shall 26 mean a purpose reasonably related to the interest of the person 27 as a shareholder. In every instance where an attorney or other 28 agent is the person who seeks the right of inspection, the 29 demand shall be accompanied by a verified power of attorney or 30 other writing that authorizes the attorney or other agent to so 19970S1157B2016 - 17 -
1 act on behalf of the shareholder. The demand shall be directed 2 to the corporation: 3 (1) at its registered office in this Commonwealth [or]; 4 (2) at its principal place of business wherever 5 situated; or 6 (3) in care of the person in charge of an actual 7 business office of the corporation. 8 (c) Proceedings for the enforcement of inspection by a 9 shareholder.--If the corporation, or an officer or agent 10 thereof, refuses to permit an inspection sought by a shareholder 11 or attorney or other agent acting for the shareholder pursuant 12 to subsection (b) or does not reply to the demand within five 13 business days after the demand has been made, the shareholder 14 may apply to the court for an order to compel the inspection. 15 The court shall determine whether or not the person seeking 16 inspection is entitled to the inspection sought. The court may 17 summarily order the corporation to permit the shareholder to 18 inspect the share register and the other books and records of 19 the corporation and to make copies or extracts therefrom, or the 20 court may order the corporation to furnish to the shareholder a 21 list of its shareholders as of a specific date on condition that 22 the shareholder first pay to the corporation the reasonable cost 23 of obtaining and furnishing the list and on such other 24 conditions as the court deems appropriate. Where the shareholder 25 seeks to inspect the books and records of the corporation, other 26 than its share register or list of shareholders, he shall first 27 establish: 28 (1) That he has complied with the provisions of this 29 section respecting the form and manner of making demand for 30 inspection of the document. 19970S1157B2016 - 18 -
1 (2) That the inspection he seeks is for a proper 2 purpose. 3 Where the shareholder seeks to inspect the share register or 4 list of shareholders of the corporation and he has complied with 5 the provisions of this section respecting the form and manner of 6 making demand for inspection of the documents, the burden of 7 proof shall be upon the corporation to establish that the 8 inspection he seeks is for an improper purpose. The court may, 9 in its discretion, prescribe any limitations or conditions with 10 reference to the inspection or award such other or further 11 relief as the court deems just and proper. The court may order 12 books, documents and records, pertinent extracts therefrom, or 13 duly authenticated copies thereof, to be brought into this 14 Commonwealth and kept in this Commonwealth upon such terms and 15 conditions as the order may prescribe. 16 (d) Certain provisions of articles ineffective.--This 17 section may not be relaxed by any provision of the articles. 18 (e) Cross [reference] references.--See [section] sections 19 107 (relating to form of records), 1512 (relating to 20 informational rights of a director) and 1763(c) (relating to 21 certification by nominee). 22 § 1512. Informational rights of a director. 23 (a) General rule.--To the extent reasonably related to the 24 performance of the duties of the director, including those 25 arising from service as a member of a committee of the board of 26 directors, a director of a business corporation is entitled: 27 (1) in person or by any attorney or other agent, at any 28 reasonable time, to inspect and copy corporate books, records 29 and documents and, in addition, to inspect, and receive 30 information regarding, the assets, liabilities and operations 19970S1157B2016 - 19 -
1 of the corporation and any subsidiaries of the corporation 2 incorporated or otherwise organized or created under the laws 3 of this Commonwealth that are controlled directly or 4 indirectly by the corporation; and 5 (2) to demand that the corporation exercise whatever 6 rights it may have to obtain information regarding any other 7 subsidiaries of the corporation. 8 (b) Proceedings for enforcement of inspection by a 9 director.--If the corporation, or an officer or agent thereof, 10 refuses to permit an inspection or obtain or provide information 11 sought by a director or attorney or other agent acting for the 12 director pursuant to subsection (a) or does not reply to the 13 request within two business days after the request has been 14 made, the director may apply to the court for an order to compel 15 the inspection or the obtaining or providing of the information. 16 The court shall summarily order the corporation to permit the 17 requested inspection or to obtain the information unless the 18 corporation establishes that the information to be obtained by 19 the exercise of the right is not reasonably related to the 20 performance of the duties of the director or that the director 21 or the attorney or agent of the director is likely to use the 22 information in a manner that would violate the duty of the 23 director to the corporation. The order of the court may contain 24 provisions protecting the corporation from undue burden or 25 expense and prohibiting the director from using the information 26 in a manner that would violate the duty of the director to the 27 corporation. 28 (c) Cross references.--See sections 107 (relating to form of 29 records) and 1508 (relating to corporate records; inspection by 30 shareholders) and 42 Pa.C.S. § 2503(7) (relating to right of 19970S1157B2016 - 20 -
1 participants to receive counsel fees).
2 § 1521. Authorized shares.
3 * * *
4 (b) Provisions specifically authorized.--
5 (1) Without limiting the authority contained in
6 subsection (a), a corporation, when so authorized in its
7 articles, may issue classes or series of shares:
8 (i) Subject to the right or obligation of the
9 corporation to redeem any of the shares for the
10 consideration, if any, fixed by or in the manner provided
11 by the articles for the redemption thereof. Unless
12 otherwise provided in the articles, any shares subject to
13 redemption shall be redeemable only pro rata or by lot or
14 by such other equitable method as may be selected by the
15 corporation. [An amendment of the articles to add or
16 amend a provision permitting the redemption of any shares
17 by a method that is not pro rata nor by lot nor otherwise
18 equitable may be effected only pursuant to section 1906
19 (relating to special treatment of holders of shares of
20 same class or series).]
21 (ii) Entitling the holders thereof to cumulative,
22 noncumulative or partially cumulative dividends.
23 (iii) Having preference over any other shares as to
24 dividends or assets or both.
25 (iv) Convertible into shares of any other class or
26 series, or into obligations of the corporation.
27 (2) Any of the terms of a class or series of shares may
28 be made dependent upon:
29 (i) Facts ascertainable outside of the articles if
30 the manner in which the facts will operate upon the terms
19970S1157B2016 - 21 -
1 of the class or series is set forth in the articles. Such 2 facts may include, without limitation, actions or events 3 within the control of or determinations made by the 4 corporation or a representative of the corporation. 5 * * * 6 (d) Status and rights.--Shares of a business corporation 7 shall be deemed personal property. Except as otherwise provided 8 by the articles or, when so permitted by subsection (c), by one 9 or more bylaws adopted by the shareholders, each share shall be 10 in all respects equal to every other share. See section 11 1906(d)(4) (relating to special treatment of holders of shares 12 of same class or series). 13 § 1526. Liability of [subscribers and] shareholders. 14 [A subscriber to, or holder or owner of, shares of a business 15 corporation shall not be under any liability to the corporation 16 or any creditor thereof with respect to the shares other than 17 the personal obligation of a shareholder who has acquired his 18 shares by subscription to comply with the terms of the 19 subscription.] (a) General rule.--A shareholder of a business 20 corporation shall not be liable, solely by reason of being a 21 shareholder, under an order of a court or in any other manner 22 for a debt, obligation or liability of the corporation of any 23 kind or for the acts of any shareholder or representative of the 24 corporation. 25 (b) Professional relationship unaffected.--Subsection (a) 26 shall not afford the shareholders of a business corporation that 27 is not a professional corporation, but that provides 28 professional services, with greater immunity than is available 29 to the officers, shareholders, employees or agents of a business 30 corporation that is a professional corporation. See section 2925 19970S1157B2016 - 22 -
1 (relating to professional relationship retained). 2 (c) Disciplinary jurisdiction unaffected.--A business 3 corporation providing professional services shall be subject to 4 the applicable rules and regulations adopted by, and all the 5 disciplinary powers of, the court, department, board, commission 6 or other government unit regulating the profession in which the 7 corporation is engaged. The court, department, board or other 8 government unit may require that a corporation include in its 9 articles provisions that conform to any rule or regulation 10 heretofore or hereafter promulgated for the purpose of enforcing 11 the ethics of a profession. This subpart shall not affect or 12 impair the disciplinary powers of the court, department, board, 13 commission or other government unit over licensed persons or any 14 law, rule or regulation pertaining to the standards for 15 professional conduct of licensed persons or to the professional 16 relationship between any licensed person rendering professional 17 services and the person receiving professional services. 18 § 1571. Application and effect of subchapter. 19 (a) General rule.--Except as otherwise provided in 20 subsection (b), any shareholder (as defined in section 1572 21 (relating to definitions)) of a business corporation shall have 22 the right to dissent from, and to obtain payment of the fair 23 value of his shares in the event of, any corporate action, or to 24 otherwise obtain fair value for his shares, only where this part 25 expressly provides that a shareholder shall have the rights and 26 remedies provided in this subchapter. See: 27 Section 1906(c) (relating to dissenters rights upon 28 special treatment). 29 Section 1930 (relating to dissenters rights). 30 Section 1931(d) (relating to dissenters rights in share 19970S1157B2016 - 23 -
1 exchanges). 2 Section 1932(c) (relating to dissenters rights in asset 3 transfers). 4 Section 1952(d) (relating to dissenters rights in 5 division). 6 Section 1962(c) (relating to dissenters rights in 7 conversion). 8 Section 2104(b) (relating to procedure). 9 Section 2324 (relating to corporation option where a 10 restriction on transfer of a security is held invalid). 11 Section 2325(b) (relating to minimum vote requirement). 12 Section 2704(c) (relating to dissenters rights upon 13 election). 14 Section 2705(d) (relating to dissenters rights upon 15 renewal of election). 16 Section 2904(b) (relating to procedure). 17 Section 2907(a) (relating to proceedings to terminate 18 breach of qualifying conditions). 19 Section 7104(b)(3) (relating to procedure). 20 (b) Exceptions.-- 21 (1) Except as otherwise provided in paragraph (2), the 22 holders of the shares of any class or series of shares [that, 23 at] shall not have the right to dissent and obtain payment of 24 the fair value of the shares under this subchapter if, on the 25 record date fixed to determine the shareholders entitled to 26 notice of and to vote at the meeting at which a plan 27 specified in any of section 1930, 1931(d), 1932(c) or 1952(d) 28 is to be voted on, or on the date of the first public 29 announcement that such a plan has been approved by the 30 shareholders by written consent without a meeting, the shares 19970S1157B2016 - 24 -
1 are either: 2 (i) listed on a national securities exchange or 3 designated as a national market system security on an 4 interdealer quotation system by the National Association 5 of Securities Dealers, Inc.; or 6 (ii) held beneficially or of record by more than 7 2,000 [shareholders; 8 shall not have the right to obtain payment of the fair value 9 of any such shares under this subchapter.] persons. 10 (2) Paragraph (1) shall not apply to and dissenters 11 rights shall be available without regard to the exception 12 provided in that paragraph in the case of: 13 (i) [Shares converted by a plan if the shares are 14 not converted solely into shares of the acquiring, 15 surviving, new or other corporation or solely into such 16 shares and money in lieu of fractional shares.] 17 (Repealed.) 18 (ii) Shares of any preferred or special class or 19 series unless the articles, the plan or the terms of the 20 transaction entitle all shareholders of the class or 21 series to vote thereon and require for the adoption of 22 the plan or the effectuation of the transaction the 23 affirmative vote of a majority of the votes cast by all 24 shareholders of the class or series. 25 (iii) Shares entitled to dissenters rights under 26 section 1906(c) (relating to dissenters rights upon 27 special treatment). 28 (3) The shareholders of a corporation that acquires by 29 purchase, lease, exchange or other disposition all or 30 substantially all of the shares, property or assets of 19970S1157B2016 - 25 -
1 another corporation by the issuance of shares, obligations or 2 otherwise, with or without assuming the liabilities of the 3 other corporation and with or without the intervention of 4 another corporation or other person, shall not be entitled to 5 the rights and remedies of dissenting shareholders provided 6 in this subchapter regardless of the fact, if it be the case, 7 that the acquisition was accomplished by the issuance of 8 voting shares of the corporation to be outstanding 9 immediately after the acquisition sufficient to elect a 10 majority or more of the directors of the corporation. 11 * * * 12 (g) Computation of beneficial ownership.--For purposes of 13 subsection (b)(1)(ii), shares that are held beneficially as 14 joint tenants, tenants by the entireties, tenants in common or 15 in trust by two or more persons, as fiduciaries or otherwise, 16 shall be deemed to be held beneficially by one person. 17 [(g)] (h) Cross references.--See sections 1105 (relating to 18 restriction on equitable relief), 1904 (relating to de facto 19 transaction doctrine abolished), 1763(c) (relating to 20 determination of shareholders of record) and 2512 (relating to 21 dissenters rights procedure). 22 § 1572. Definitions. 23 The following words and phrases when used in this subchapter 24 shall have the meanings given to them in this section unless the 25 context clearly indicates otherwise: 26 "Corporation." The issuer of the shares held or owned by the 27 dissenter before the corporate action or the successor by 28 merger, consolidation, division, conversion or otherwise of that 29 issuer. A plan of division may designate which one or more of 30 the resulting corporations is the successor corporation for the 19970S1157B2016 - 26 -
1 purposes of this subchapter. The designated successor 2 corporation or corporations in a division shall have sole 3 responsibility for payments to dissenters and other liabilities 4 under this subchapter except as otherwise provided in the plan 5 of division. 6 "Dissenter." A shareholder [or beneficial owner] who is 7 entitled to and does assert dissenters rights under this 8 subchapter and who has performed every act required up to the 9 time involved for the assertion of those rights. 10 * * * 11 "Shareholder." A shareholder as defined in section 1103 12 (relating to definitions), or an ultimate beneficial owner of 13 shares, including without limitation a holder of depository 14 receipts, where the beneficial interest owned includes an 15 interest in the assets of the corporation upon dissolution. 16 § 1704. Place and notice of meetings of shareholders. 17 (a) Place.--Meetings of shareholders may be held at such 18 place within or without this Commonwealth as may be provided in 19 or fixed pursuant to the bylaws. Unless otherwise provided in or 20 pursuant to the bylaws, all meetings of the shareholders shall 21 be held [in this Commonwealth at the registered office of the 22 corporation] at the executive office of the corporation wherever 23 situated. 24 * * * 25 § 1709. Conduct of shareholders meeting. 26 (a) Presiding officer.--There shall be a presiding officer 27 at every meeting of the shareholders. The presiding officer 28 shall be appointed in the manner provided in the bylaws or, in 29 the absence of such provision, by the board of directors. If the 30 bylaws are silent on the appointment of the presiding officer 19970S1157B2016 - 27 -
1 and the board fails to designate a presiding officer, the 2 president shall be the presiding officer. 3 (b) Authority of the presiding officer.--Except as otherwise 4 provided in the bylaws, the presiding officer shall determine 5 the order of business and shall have the authority to establish 6 rules for the conduct of the meeting. 7 (c) Procedural standard.--Any action by the presiding 8 officer in adopting rules for, and in conducting, a meeting 9 shall be fair to the shareholders. 10 (d) Closing of the polls.--The presiding officer shall 11 announce at the meeting when the polls close for each matter 12 voted upon. If no announcement is made, the polls shall be 13 deemed to have closed upon the final adjournment of the meeting. 14 After the polls close, no ballots, proxies or votes, nor any 15 revocations or changes thereto, may be accepted. 16 § 1729. Voting rights of directors. 17 (a) General rule.--Unless otherwise provided in a bylaw 18 adopted by the shareholders, every director of a business 19 corporation shall be entitled to one vote. Without limiting the 20 generality of the foregoing, a bylaw adopted by the shareholders 21 may provide that a class or other defined group of directors 22 shall have multiple or fractional voting rights, or no right to 23 vote, either generally or under specified circumstances. 24 (b) [Multiple and fractional voting] Application of 25 procedural requirements.--Any requirement of this subpart for 26 the presence of or vote or other action by a specified 27 percentage of directors shall be satisfied by the presence of or 28 vote or other action by directors entitled to cast the specified 29 percentage of the votes that all voting directors in office are 30 entitled to cast. 19970S1157B2016 - 28 -
1 § 1731. Executive and other committees of the board.
2 (a) Establishment and powers.--Unless otherwise restricted
3 in the bylaws:
4 * * *
5 (2) Any committee, to the extent provided in the
6 resolution of the board of directors or in the bylaws, shall
7 have and may exercise all of the powers and authority of the
8 board of directors except that a committee shall not have any
9 power or authority as to the following:
10 (i) The submission to shareholders of any action
11 requiring approval of shareholders under this subpart.
12 (ii) The creation or filling of vacancies in the
13 board of directors.
14 (iii) The adoption, amendment or repeal of the
15 bylaws.
16 (iv) The amendment or repeal of any resolution of
17 the board that by its terms is amendable or repealable
18 only by the board.
19 (v) Action on matters committed by the bylaws or
20 resolution of the board of directors exclusively to
21 another committee of the board.
22 * * *
23 § 1745. Advancing expenses.
24 Expenses (including attorneys' fees) incurred in defending
25 any action or proceeding referred to in this subchapter may be
26 paid by a business corporation in advance of the final
27 disposition of the action or proceeding upon receipt of an
28 undertaking by or on behalf of the representative to repay the
29 amount if it is ultimately determined that he is not entitled to
30 be indemnified by the corporation as authorized in this
19970S1157B2016 - 29 -
1 subchapter or otherwise. Except as otherwise provided in the 2 bylaws, advancement of expenses shall be authorized by the board 3 of directors. Sections 1728 (relating to interested directors or 4 officers; quorum) and 2538 (relating to approval of transactions 5 with interested shareholders) shall not be applicable to the 6 advancement of expenses under this section. 7 § 1748. Application to surviving or new corporations. 8 [For] (a) General rule.--Except as provided in subsection 9 (b), for the purposes of this subchapter, references to "the 10 corporation" include all constituent corporations absorbed in a 11 consolidation, merger or division, as well as the surviving or 12 new corporations surviving or resulting therefrom, so that any 13 person who is or was a representative of the constituent, 14 surviving or new corporation, or is or was serving at the 15 request of the constituent, surviving or new corporation as a 16 representative of another domestic or foreign corporation for 17 profit or not-for-profit, partnership, joint venture, trust or 18 other enterprise, shall stand in the same position under the 19 provisions of this subchapter with respect to the surviving or 20 new corporation as he would if he had served the surviving or 21 new corporation in the same capacity. 22 (b) Divisions.--Notwithstanding subsection (a), the 23 obligations of a dividing corporation to indemnify and advance 24 expenses to its representatives, whether arising under this 25 subchapter or otherwise, may be allocated in a division in the 26 same manner and with the same effect as any other liability of 27 the dividing corporation. 28 § 1756. Quorum. 29 (a) General rule.--A meeting of shareholders of a business 30 corporation duly called shall not be organized for the 19970S1157B2016 - 30 -
1 transaction of business unless a quorum is present. Unless 2 otherwise provided in a bylaw adopted by the shareholders: 3 * * * 4 (4) If a proxy casts a vote on behalf of a shareholder 5 on any issue considered at a meeting of shareholders, the 6 shareholder shall be deemed to be present during the entire 7 meeting for purposes of determining whether a quorum is 8 present for consideration of any other issue. 9 * * * 10 § 1758. Voting rights of shareholders. 11 * * * 12 (b) Procedures for election of directors.--[If the bylaws 13 provide a fair and reasonable procedure for the nomination of 14 candidates for any office, only candidates who have been duly 15 nominated in accordance therewith shall be eligible for 16 election.] Unless otherwise restricted in the bylaws, in 17 elections for directors, voting need not be by ballot unless 18 required by vote of the shareholders before the voting for 19 election of directors begins. The candidates for election as 20 directors receiving the highest number of votes from each class 21 or group of classes, if any, entitled to elect directors 22 separately up to the number of directors to be elected by the 23 class or group of classes shall be elected. If at any meeting of 24 shareholders, directors of more than one class are to be 25 elected, each class of directors shall be elected in a separate 26 election. 27 * * * 28 (e) Advance notice of nominations and other business.--If 29 the bylaws provide a fair and reasonable procedure for the 30 nomination of candidates for election as directors, only 19970S1157B2016 - 31 -
1 candidates who have been duly nominated in accordance therewith 2 shall be eligible for election. If the bylaws impose a fair and 3 reasonable requirement of advance notice of proposals to be made 4 by a shareholder at the annual meeting of the shareholders, only 5 proposals for which advance notice has been properly given may 6 be acted upon at the meeting. 7 § 1759. Voting and other action by proxy. 8 * * * 9 (b) Execution and filing.--Every proxy shall be executed [in 10 writing] or authenticated by the shareholder or by his duly 11 authorized attorney-in-fact and filed with or transmitted to the 12 secretary of the corporation or its designated agent. A 13 shareholder or his duly authorized attorney-in-fact may execute 14 or authenticate a writing or transmit an electronic message 15 authorizing another person to act for him by proxy. A telegram, 16 telex, cablegram, datagram or [similar] other means of 17 electronic transmission from a shareholder or attorney-in-fact, 18 or a photographic, facsimile or similar reproduction of a 19 writing executed by a shareholder or attorney-in-fact: 20 (1) may be treated as properly executed or authenticated 21 for purposes of this subsection; and 22 (2) shall be so treated if it sets forth or utilizes a 23 confidential and unique identification number or other mark 24 furnished by the corporation to the shareholder for the 25 purposes of a particular meeting or transaction. 26 (c) Revocation.--A proxy, unless coupled with an interest, 27 shall be revocable at will, notwithstanding any other agreement 28 or any provision in the proxy to the contrary, but the 29 revocation of a proxy shall not be effective until [written] 30 notice thereof has been given to the secretary of the 19970S1157B2016 - 32 -
1 corporation or its designated agent in writing or by electronic 2 transmission. An unrevoked proxy shall not be valid after three 3 years from the date of its execution, authentication or 4 transmission unless a longer time is expressly provided therein. 5 A proxy shall not be revoked by the death or incapacity of the 6 maker unless, before the vote is counted or the authority is 7 exercised, written notice of the death or incapacity is given to 8 the secretary of the corporation or its designated agent. 9 * * * 10 § 1906. Special treatment of holders of shares of same class or 11 series. 12 (a) General rule.--Except as otherwise restricted in the 13 articles, [an amendment or] a plan may contain a provision 14 classifying the holders of shares of a class or series into one 15 or more separate groups by reference to any facts or 16 circumstances that are not manifestly unreasonable and providing 17 mandatory treatment for shares of the class or series held by 18 particular shareholders or groups of shareholders that differs 19 materially from the treatment accorded other shareholders or 20 groups of shareholders holding shares of the same class or 21 series (including a provision modifying or rescinding rights 22 previously created under this section) if: 23 (1) (i) such provision is specifically authorized by a 24 majority of the votes cast by all shareholders entitled 25 to vote on the [amendment or] plan, as well as by a 26 majority of the votes cast by any class or series of 27 shares any of the shares of which are so classified into 28 groups, whether or not such class or series would 29 otherwise be entitled to vote on the [amendment or] plan; 30 and 19970S1157B2016 - 33 -
1 (ii) the provision voted on specifically enumerates
2 the type and extent of the special treatment authorized;
3 or
4 (2) under all the facts and circumstances, a court of
5 competent jurisdiction finds such special treatment is
6 undertaken in good faith, after reasonable deliberation and
7 is in the best interest of the corporation.
8 (b) Statutory voting rights upon special treatment.--Except
9 as provided in subsection (c), if [an amendment or] a plan
10 contains a provision for special treatment, each group of
11 holders of any outstanding shares of a class or series who are
12 to receive the same special treatment under the [amendment or]
13 plan shall be entitled to vote as a special class in respect to
14 the plan regardless of any limitations stated in the articles or
15 bylaws on the voting rights of any class or series.
16 (c) Dissenters rights upon special treatment.--If any
17 [amendment or] plan contains a provision for special treatment
18 without requiring for the adoption of the [amendment or] plan
19 the statutory class vote required by subsection (b), the holder
20 of any outstanding shares the statutory class voting rights of
21 which are so denied, who objects to the [amendment or] plan and
22 complies with Subchapter D of Chapter 15 (relating to dissenters
23 rights), shall be entitled to the rights and remedies of
24 dissenting shareholders provided in that subchapter.
25 (d) Exceptions.--This section shall not apply to:
26 (1) The creation or issuance of securities, contracts,
27 warrants or other instruments evidencing any shares, option
28 rights, securities having conversion or option rights or
29 obligations authorized by section 2513 (relating to disparate
30 treatment of certain persons).
19970S1157B2016 - 34 -
1 (2) A provision of [an amendment or] a plan that offers 2 to all holders of shares of a class or series the same option 3 to elect certain treatment. 4 (3) [An amendment or] A plan that contains an express 5 provision that this section shall not apply or that fails to 6 contain an express provision that this section shall apply. 7 The shareholders of a corporation that proposes [an amendment 8 or] a plan to which this section is not applicable by reason 9 of this paragraph shall have the remedies contemplated by 10 section 1105 (relating to restriction on equitable relief). 11 (4) A provision of a plan that treats all of the holders 12 of a particular class or series of shares differently from 13 the holders of another class or series. A provision of a plan 14 that treats the holders of a class or series of shares 15 differently from the holders of another class or series of 16 shares shall not constitute a violation of section 1521(d) 17 (relating to authorized shares). 18 (e) Definition.--As used in this section, the term "plan" 19 includes: 20 (1) an amendment of the articles that effects a 21 reclassification of shares, whether or not the amendment is 22 accompanied by a separate plan of reclassification; and 23 (2) a resolution recommending that the corporation 24 dissolve voluntarily adopted under section 1972(a) (relating 25 to proposal of voluntary dissolution). 26 § 1912. Proposal of amendments. 27 * * * 28 (c) Terms of amendment.--The resolution or petition may set 29 forth the manner and basis of reclassifying the shares of the 30 corporation. Any of the terms of a plan of reclassification or 19970S1157B2016 - 35 -
1 other action contained in an amendment may be made dependent 2 upon facts ascertainable outside of the amendment if the manner 3 in which the facts will operate upon the terms of the amendment 4 is set forth in the amendment. Such facts may include, without 5 limitation, actions or events within the control of or 6 determinations made by the corporation or a representative of 7 the corporation. 8 § 1914. Adoption of amendments. 9 * * * 10 (b) Statutory voting rights.--Except as provided in this 11 subpart, the holders of the outstanding shares of a class or 12 series of shares shall be entitled to vote as a class in respect 13 of a proposed amendment regardless of any limitations stated in 14 the articles or bylaws on the voting rights of any class or 15 series if [a proposed] the amendment would: 16 (1) authorize the board of directors to fix and 17 determine the relative rights and preferences, as between 18 series, of any preferred or special class; 19 (2) make any change in the preferences, limitations or 20 special rights (other than preemptive rights or the right to 21 vote cumulatively) of the shares of a class or series adverse 22 to the class or series; 23 (3) authorize a new class or series of shares having a 24 preference as to dividends or assets which is senior to the 25 shares of a class or series; [or] 26 (4) increase the number of authorized shares of any 27 class or series having a preference as to dividends or assets 28 which is senior in any respect to the shares of a class or 29 series; or 30 (5) make the outstanding shares of a class or series 19970S1157B2016 - 36 -
1 redeemable by a method that is not pro rata, by lot or 2 otherwise equitable. 3 [then the holders of the outstanding shares of the class or 4 series shall be entitled to vote as a class in respect to the 5 amendment regardless of any limitations stated in the articles 6 or bylaws on the voting rights of any class or series.] 7 (c) Adoption by board of directors.--Unless otherwise 8 restricted in the articles, an amendment of articles shall not 9 require the approval of the shareholders of the corporation if: 10 (1) shares have not been issued; 11 (2) the amendment is restricted to [any] one or more of 12 the following: 13 (i) changing the corporate name; 14 (ii) providing for perpetual existence; 15 (iii) reflecting a reduction in authorized shares 16 effected by operation of section 1552(a) (relating to 17 power of corporation to acquire its own shares) and, if 18 appropriate, deleting all references to a class or series 19 of shares that is no longer outstanding; [or] 20 (iv) adding or deleting a provision authorized by 21 section 1528(f) (relating to uncertificated shares)[.]; 22 or 23 (v) adding, changing or eliminating the par value of 24 any class or series of shares if the par value of that 25 class or series does not have any substantive effect 26 under the terms of that or any other class or series of 27 shares; 28 (3) (i) the corporation has only one class or series of 29 voting shares outstanding; 30 (ii) the corporation does not have any class or 19970S1157B2016 - 37 -
1 series of shares outstanding that is: 2 (A) convertible into those voting shares; 3 (B) junior in any way to those voting shares; or 4 (C) entitled to participate on any basis in 5 distributions with those voting shares; and 6 (iii) the amendment is effective solely to 7 accomplish one of the following purposes with respect to 8 those voting shares: 9 [(i)] (A) in connection with effectuating a stock 10 dividend of voting shares on the voting shares, to 11 increase the number of authorized shares [to the extent 12 necessary to permit the board of directors to effectuate 13 a stock dividend in the shares of the corporation] of the 14 voting shares in the same proportion that the voting 15 shares to be distributed in the stock dividend increase 16 the issued voting shares; or 17 [(ii) effectuate a] (B) to split the voting shares 18 and, if desired, increase the number of authorized shares 19 of the voting shares or change the par value of [the 20 authorized] the voting shares, or both, in proportion 21 thereto; 22 (4) to the extent the amendment has not been approved by 23 the shareholders, it restates without change all of the 24 operative provisions of the articles as theretofore amended 25 or as amended thereby; or 26 (5) the amendment accomplishes any combination of 27 purposes specified in this subsection. 28 Whenever a provision of this subpart authorizes the board of 29 directors to take any action without the approval of the 30 shareholders and provides that a statement, certificate, plan or 19970S1157B2016 - 38 -
1 other document relating to such action shall be filed in the 2 Department of State and shall operate as an amendment of the 3 articles, the board upon taking such action may, in lieu of 4 filing the statement, certificate, plan or other document, amend 5 the articles under this subsection without the approval of the 6 shareholders to reflect the taking of such action. An amendment 7 of articles under this subsection shall be deemed adopted by the 8 corporation when it has been adopted by the board of directors 9 pursuant to section 1912 (relating to proposal of amendments). 10 * * * 11 (f) Definition.--As used in this section, the term "voting 12 shares" has the meaning specified in section 2552 (relating to 13 definitions). 14 § 1922. Plan of merger or consolidation. 15 (a) Preparation of plan.--A plan of merger or consolidation, 16 as the case may be, shall be prepared, setting forth: 17 * * * 18 (5) Such other provisions as are deemed desirable. 19 [Any of the terms of the plan may be made dependent upon facts 20 ascertainable outside of the plan if the manner in which the 21 facts will operate upon the terms of the plan is set forth in 22 the plan.] 23 (b) Post-adoption amendment.--A plan of merger or 24 consolidation may contain a provision that the boards of 25 directors of the constituent corporations may amend the plan at 26 any time prior to its effective date, except that an amendment 27 made subsequent to the adoption of the plan by the shareholders 28 of any constituent domestic business corporation shall not 29 change: 30 (1) The amount or kind of shares, obligations, cash, 19970S1157B2016 - 39 -
1 property or rights to be received in exchange for or on 2 conversion of all or any of the shares of the constituent 3 domestic business corporation adversely to the holders of 4 those shares. 5 (2) Any [term] provision of the articles of the 6 surviving or new corporation [to be effected by] as it is to 7 be in effect immediately following consummation of the merger 8 or consolidation, except provisions that may be amended 9 without the approval of the shareholders under section 10 1914(c)(2) (relating to adoption of amendments). 11 (3) Any of the other terms and conditions of the plan if 12 the change would adversely affect the holders of any shares 13 of the constituent domestic business corporation. 14 (c) Proposal.--[Every] Except where the approval of the 15 board of directors is unnecessary under this subchapter, every 16 merger or consolidation shall be proposed in the case of each 17 domestic business corporation by the adoption by the board of 18 directors of a resolution approving the plan of merger or 19 consolidation. Except where the approval of the shareholders is 20 unnecessary under this subchapter, the board of directors shall 21 direct that the plan be submitted to a vote of the shareholders 22 entitled to vote thereon at a regular or special meeting of the 23 shareholders. 24 * * * 25 (e) Reference to outside facts.--Any of the terms of a plan 26 of merger or consolidation may be made dependent upon facts 27 ascertainable outside of the plan if the manner in which the 28 facts will operate upon the terms of the plan is set forth in 29 the plan. Such facts may include, without limitation, actions or 30 events within the control of or determinations made by a party 19970S1157B2016 - 40 -
1 to the plan or a representative of a party to the plan. 2 § 1923. Notice of meeting of shareholders. 3 (a) General rule.--Written notice of the meeting of 4 shareholders that will act on the proposed plan shall be given 5 to each shareholder of record, whether or not entitled to vote 6 thereon, of each domestic business corporation that is a party 7 to the merger or consolidation. There shall be included in, or 8 enclosed with, the notice a copy of the proposed plan or a 9 summary thereof and, if Subchapter D of Chapter 15 (relating to 10 dissenters rights) is applicable to the holders of shares of any 11 class or series, a copy of that subchapter and of section 1930 12 (relating to dissenters rights) shall be furnished to the 13 holders of shares of that class or series. The notice shall 14 state that a copy of the bylaws of the surviving or new 15 corporation will be furnished to any shareholder on request and 16 without cost. 17 * * * 18 § 1924. Adoption of plan. 19 * * * 20 (b) Adoption by board of directors.-- 21 (1) Unless otherwise required by its bylaws, a plan of 22 merger or consolidation shall not require the approval of the 23 shareholders of a constituent domestic business corporation 24 if: 25 * * * 26 (ii) immediately prior to the adoption of the plan 27 and at all times thereafter prior to its effective date, 28 another corporation that is a party to the [merger or 29 consolidation] plan owns directly or indirectly 80% or 30 more of the outstanding shares of each class of the 19970S1157B2016 - 41 -
1 constituent corporation; or 2 * * * 3 (3) If a merger or consolidation of a subsidiary 4 corporation with a parent corporation is effected pursuant to 5 paragraph (1)(ii), the plan of merger or consolidation shall 6 be deemed adopted by the subsidiary corporation when it has 7 been adopted by the board of the parent corporation and 8 neither approval of the plan by the board of directors of the 9 subsidiary corporation nor execution of articles of merger or 10 consolidation by the subsidiary corporation shall [not] be 11 necessary. 12 (4) (i) Unless other required by its bylaws, a plan of 13 merger or consolidation providing for the merger or 14 consolidation of a domestic business corporation 15 (referred to in this paragraph as the "constituent 16 corporation") with or into a single indirect wholly owned 17 subsidiary (referred to in this paragraph as the 18 "subsidiary corporation") of the constituent corporation 19 shall not require the approval of the shareholders of 20 either the constituent corporation or the subsidiary 21 corporation if all of the provisions of this paragraph 22 are satisfied. 23 (ii) A merger or consolidation under this paragraph 24 shall satisfy the following conditions: 25 (A) The constituent corporation and the 26 subsidiary corporation are the only parties to the 27 merger or consolidation, other than the resulting 28 corporation, if any, in a consolidation (the 29 corporation that survives or results from the merger 30 or consolidation is referred to in this paragraph as 19970S1157B2016 - 42 -
1 the "resulting subsidiary"). 2 (B) Each share or fraction of a share of the 3 capital stock of the constituent corporation 4 outstanding immediately prior to the effective time 5 of the merger or consolidation is converted in the 6 merger or consolidation into a share or equal 7 fraction of a share of capital stock of a holding 8 company having the same designations, rights, powers 9 and preferences and the qualifications, limitations 10 and restrictions as the share of stock of the 11 constituent corporation being converted in the merger 12 or consolidation. 13 (C) The holding company and the resulting 14 subsidiary are each domestic business corporations. 15 (D) Immediately following the effective time of 16 the merger or consolidation, the articles of 17 incorporation and bylaws of the holding company are 18 identical to the articles of incorporation and bylaws 19 of the constituent corporation immediately before the 20 effective time of the merger or consolidation, except 21 for changes that could be made without shareholder 22 approval under section 1914(c) (relating to adoption 23 by board of directors). 24 (E) Immediately following the effective time of 25 the merger or consolidation, the resulting subsidiary 26 is a direct or indirect wholly owned subsidiary of 27 the holding company. 28 (F) The directors of the constituent corporation 29 become or remain the directors of the holding company 30 upon the effective time of the merger or 19970S1157B2016 - 43 -
1 consolidation. 2 (G) The board of directors of the constituent 3 corporation has made a good faith determination that 4 the shareholders of the constituent corporation will 5 not recognize gain or loss for United States Federal 6 Income Tax purposes. 7 (iii) As used in this paragraph only, the term 8 "holding company" means a corporation that, from its 9 incorporation until consummation of the merger or 10 consolidation governed by this paragraph, was at all 11 times a direct wholly owned subsidiary of the constituent 12 corporation and whose capital stock is issued in the 13 merger or consolidation. 14 (iv) If the holding company is a registered 15 corporation, the shares of the holding company issued in 16 connection with the merger or consolidation shall be 17 deemed to have been acquired at the time that the shares 18 of the constituent corporation converted in the merger or 19 consolidation were acquired. 20 (5) A plan of merger or consolidation adopted by the 21 board of directors under this subsection without the approval 22 of the shareholders shall not, by itself, create or impair 23 any rights or obligations on the part of any person under 24 section 2538 (relating to approval of transactions with 25 interested shareholders) or under Subchapters E (relating to 26 control transactions), F (relating to business combinations), 27 G (relating to control-share acquisitions), H (relating to 28 disgorgement by certain controlling shareholders following 29 attempts to acquire control), I (relating to severance 30 compensation for employees terminated following certain 19970S1157B2016 - 44 -
1 control-share acquisitions) and J (relating to business 2 combination transactions - labor contracts) of Chapter 25, 3 nor shall it change the standard of care applicable to the 4 directors under Subchapter B of Chapter 17 (relating to 5 fiduciary duty). 6 * * * 7 § 1929. Effect of merger or consolidation. 8 * * * 9 (b) Property rights.--All the property, real, personal and 10 mixed, and franchises of each of the corporations parties to the 11 merger or consolidation, and all debts due on whatever account 12 to any of them, including subscriptions for shares and other 13 choses in action belonging to any of them, shall be deemed to be 14 [transferred to and] vested in and shall belong to the surviving 15 or new corporation, as the case may be, without further action, 16 and the title to any real estate, or any interest therein, 17 vested in any of the corporations shall not revert or be in any 18 way impaired by reason of the merger or consolidation. The 19 surviving or new corporation shall thenceforth be responsible 20 for all the liabilities of each of the corporations so merged or 21 consolidated. Liens upon the property of the merging or 22 consolidating corporations shall not be impaired by the merger 23 or consolidation and any claim existing or action or proceeding 24 pending by or against any of the corporations may be prosecuted 25 to judgment as if the merger or consolidation had not taken 26 place or the surviving or new corporation may be proceeded 27 against or substituted in its place. 28 * * * 29 § 1930. Dissenters rights. 30 * * * 19970S1157B2016 - 45 -
1 (b) Plans adopted by directors only.--Except as otherwise 2 provided pursuant to section 1571(c) (relating to grant of 3 optional dissenters rights), Subchapter D of Chapter 15 shall 4 not apply to any of the shares of a corporation that is a party 5 to a merger or consolidation pursuant to section 1924(b)(1)(i) 6 or (4) (relating to adoption by board of directors). 7 * * * 8 § 1931. Share exchanges. 9 (a) General rule.--All the outstanding shares of one or more 10 classes or series of a domestic business corporation, designated 11 in this section as the exchanging corporation, may, in the 12 manner provided in this section, be acquired by any person, 13 designated in this section as the acquiring person, through an 14 exchange of all the shares pursuant to a plan of exchange. The 15 plan of exchange may also provide for the conversion of any 16 other shares of the exchanging corporation into shares, other 17 securities or obligations of any person or cash, property or 18 rights. The procedure authorized by this section shall not be 19 deemed to limit the power of any person to acquire all or part 20 of the shares or other securities of any class or series of a 21 corporation through a voluntary exchange or otherwise by 22 agreement with the holders of the shares or other securities. 23 (b) Plan of exchange.--A plan of exchange shall be prepared, 24 setting forth: 25 (1) The terms and conditions of the exchange. 26 (2) The manner and basis of exchanging or converting the 27 shares of the exchanging corporation into shares or other 28 securities or obligations of the acquiring person, and, if 29 any of the shares of the exchanging corporation are not to be 30 exchanged or converted solely into shares or other securities 19970S1157B2016 - 46 -
1 or obligations of the acquiring person, the shares or other 2 securities or obligations of any other person or cash, 3 property or rights that the holders of the shares of the 4 exchanging corporation are to receive in exchange for, or 5 upon conversion of, the shares and the surrender of any 6 certificates evidencing them, which securities or 7 obligations, if any, of any other person or cash, property 8 and rights may be in addition to or in lieu of the shares or 9 other securities or obligations of the acquiring person. 10 (3) Any changes desired to be made in the articles of 11 the exchanging corporation, which may include a restatement 12 of the articles. 13 (4) Any provisions desired providing special treatment 14 of shares held by any shareholder or group of shareholders as 15 authorized by, and subject to the provisions of, section 1906 16 (relating to special treatment of holders of shares of same 17 class or series). Notwithstanding subsection (a), a plan that 18 provides special treatment may affect less than all of the 19 outstanding shares of a class or series. 20 (5) Such other provisions as are deemed desirable. 21 [Any of the terms of the plan may be made dependent upon facts 22 ascertainable outside of the plan if the manner in which the 23 facts will operate upon the terms of the plan is set forth in 24 the plan.] 25 (c) Proposal and adoption.--The plan of exchange shall be 26 proposed and adopted and may be amended after its adoption and 27 terminated by the exchanging corporation in the manner provided 28 by this subchapter for the proposal, adoption, amendment and 29 termination of a plan of merger except section 1924(b) (relating 30 to adoption by board of directors). There shall be included in, 19970S1157B2016 - 47 -
1 or enclosed with, the notice of the meeting of shareholders to 2 act on the plan a copy or a summary of the plan and, if 3 Subchapter D of Chapter 15 (relating to dissenters rights) is 4 applicable, a copy of the subchapter and of subsection (d). The 5 holders of any class of shares to be [acquired] exchanged or 6 converted pursuant to the plan of exchange shall be entitled to 7 vote as a class on the plan if they would have been entitled to 8 vote on a plan of merger that affects the class in substantially 9 the same manner as the plan of exchange. 10 (d) Dissenters rights in share exchanges.--Any holder of 11 shares that are to be [acquired] exchanged or converted pursuant 12 to a plan of exchange who objects to the plan and complies with 13 the provisions of Subchapter D of Chapter 15 shall be entitled 14 to the rights and remedies of dissenting shareholders therein 15 provided, if any. See section 1906(c) (relating to dissenter 16 rights upon special treatment). 17 (e) Articles of exchange.--Upon adoption of a plan of 18 exchange, as provided in this section, articles of exchange 19 shall be executed by the exchanging corporation and shall set 20 forth: 21 (1) The name and, subject to section 109 (relating to 22 name of commercial registered office provider in lieu of 23 registered address), the location of the registered office, 24 including street and number, if any, of the exchanging 25 corporation. 26 (2) If the plan is to be effective on a specified date, 27 the hour, if any, and the month, day and year of the 28 effective date. 29 (3) The manner in which the plan was adopted by the 30 exchanging corporation. 19970S1157B2016 - 48 -
1 (4) Except as provided in section 1901 (relating to 2 omission of certain provisions from filed plans), the plan of 3 exchange. 4 The articles of exchange shall be filed in the Department of 5 State. See [section] sections 134 (relating to docketing 6 statement) and 135 (relating to requirements to be met by filed 7 documents. 8 * * * 9 (i) Reference to outside facts.--Any of the terms of a plan 10 of exchange may be made dependent upon facts ascertainable 11 outside of the plan if the manner in which the facts will 12 operate upon the terms of the plan is set forth in the plan. 13 Such facts may include, without limitation, actions or events 14 within the control of or determinations made by a party to the 15 plan or a representative of a party to the plan. 16 § 1932. Voluntary transfer of corporate assets. 17 * * * 18 (b) Shareholder approval required.-- 19 (1) A sale, lease, exchange or other disposition of all, 20 or substantially all, the property and assets, with or 21 without the goodwill, of a business corporation, if not made 22 pursuant to subsection (a) or (d) or to section 1551 23 (relating to distributions to shareholders) or Subchapter D 24 (relating to division), may be made only pursuant to a plan 25 of asset transfer[.] in the manner provided in this 26 subsection. A corporation selling, leasing or otherwise 27 disposing of all, or substantially all, its property and 28 assets is referred to in this subsection and in subsection 29 (c) as the "transferring corporation." 30 (2) The property or assets of a direct or indirect 19970S1157B2016 - 49 -
1 subsidiary corporation that is controlled by a parent 2 corporation shall also be deemed the property or assets of 3 the parent corporation for the purposes of this subsection 4 and of subsection (c). A merger or consolidation to which 5 such a subsidiary corporation is a party and in which a third 6 party acquires direct or indirect ownership of the property 7 or assets of the subsidiary corporation constitutes an "other 8 disposition" of the property or assets of the parent 9 corporation within the meaning of that term as used in this 10 section. 11 (3) The plan of asset transfer shall set forth the terms 12 and conditions of the sale, lease, exchange or other 13 disposition or may authorize the board of directors to fix 14 any or all of the terms and conditions, including the 15 consideration to be received by the corporation therefor. The 16 plan may provide for the distribution to the shareholders of 17 some or all of the consideration to be received by the 18 corporation, including provisions for special treatment of 19 shares held by any shareholder or group of shareholders as 20 authorized by, and subject to the provisions of, section 1906 21 (relating to special treatment of holders of shares of same 22 class or series). It shall not be necessary for the person 23 acquiring the property or assets of the transferring 24 corporation to be a party to the plan. Any of the terms of 25 the plan may be made dependent upon facts ascertainable 26 outside of the plan if the manner in which the facts will 27 operate upon the terms of the plan is set forth in the plan. 28 Such facts may include, without limitation, actions or events 29 within the control of or determinations made by the 30 corporation or a representative of the corporation. 19970S1157B2016 - 50 -
1 (4) The plan of asset transfer shall be proposed and 2 adopted, and may be amended after its adoption and 3 terminated, by [a business] the transferring corporation in 4 the manner provided in this subchapter for the proposal, 5 adoption, amendment and termination of a plan of merger, 6 except section 1924(b) (relating to adoption by board of 7 directors). The procedures of this subchapter shall not be 8 applicable to the person acquiring the property or assets of 9 the transferring corporation. There shall be included in, or 10 enclosed with, the notice of the meeting of the shareholders 11 of the transferring corporation to act on the plan a copy or 12 a summary of the plan and, if Subchapter D of Chapter 15 13 (relating to dissenters rights) is applicable, a copy of the 14 subchapter and of subsection (c). 15 (5) In order to make effective the plan of asset 16 transfer so adopted, it shall not be necessary to file any 17 articles or other documents in the Department of State. 18 (c) Dissenters rights in asset transfers.-- 19 (1) If a shareholder of a transferring corporation that 20 adopts a plan of asset transfer objects to the plan and 21 complies with Subchapter D of Chapter 15, the shareholder 22 shall be entitled to the rights and remedies of dissenting 23 shareholders therein provided, if any. 24 (2) Paragraph (1) shall not apply to a sale pursuant to 25 an order of court having jurisdiction in the premises or a 26 sale [for money on terms requiring] pursuant to a plan of 27 asset transfer that requires that all or substantially all of 28 the net proceeds of sale be distributed to the shareholders 29 in accordance with their respective interests within one year 30 after the date of sale or to a liquidating trust. 19970S1157B2016 - 51 -
1 * * * 2 § 1952. Proposal and adoption of plan of division. 3 (a) Preparation of plan.--A plan of division shall be 4 prepared, setting forth: 5 (1) The terms and conditions of the division, including 6 the manner and basis of: 7 (i) The reclassification of the shares of the 8 surviving corporation, if there be one, and, if any of 9 the shares of the dividing corporation are not to be 10 converted solely into shares or other securities or 11 obligations of one or more of the resulting corporations, 12 the shares or other securities or obligations of any 13 other person, or cash, property or rights that the 14 holders of such shares are to receive in exchange for or 15 upon conversion of such shares, and the surrender of any 16 certificates evidencing them, which securities or 17 obligations, if any, of any other person or cash, 18 property or rights may be in addition to or in lieu of 19 shares or other securities or obligations of one or more 20 of the resulting corporations. 21 (ii) The disposition of the shares and other 22 securities or obligations, if any, of the new corporation 23 or corporations resulting from the division. 24 (2) A statement that the dividing corporation will, or 25 will not, survive the division. 26 (3) Any changes desired to be made in the articles of 27 the surviving corporation, if there be one, including a 28 restatement of the articles. 29 (4) The articles of incorporation required by subsection 30 (b). 19970S1157B2016 - 52 -
1 (5) Any provisions desired providing special treatment 2 of shares held by any shareholder or group of shareholders as 3 authorized by, and subject to the provisions of, section 1906 4 (relating to special treatment of holders of shares of same 5 class or series). 6 (6) Such other provisions as are deemed desirable. 7 [Any of the terms of the plan may be made dependent upon facts 8 ascertainable outside of the plan if the manner in which the 9 facts will operate upon the terms of the plan is set forth in 10 the plan.] 11 * * * 12 (g) [Action by] Rights of holders of indebtedness.--[Unless 13 otherwise provided by an indenture or other contract by which 14 the dividing corporation is bound, a plan of division shall not 15 require the approval of the holders of any debt securities or 16 other obligations of the dividing corporation or of any 17 representative of the holders, if the transfer of assets 18 effected by the division, if effected by means of a sale, lease, 19 exchange or other disposition, and any related distribution, 20 would not require the approval of the holders or representatives 21 thereof.] If any debt securities, notes or similar evidences of 22 indebtedness for money borrowed, whether secured or unsecured, 23 indentures or other contracts were issued, incurred or executed 24 by the dividing corporation before (the Legislative Reference 25 Bureau shall insert here the effective date of the amendments of 26 this section) and have not been amended subsequent to that date, 27 the liability of the dividing corporation thereunder shall not 28 be affected by the division nor shall the rights of the obligees 29 thereunder be impaired by the division, and each of the 30 resulting corporations may be proceeded against or substituted 19970S1157B2016 - 53 -
1 in place of the dividing corporation as joint and several 2 obligors on such liability, regardless of any provision of the 3 plan of division apportioning the liabilities of the dividing 4 corporations. 5 * * * 6 (i) Reference to outside facts.--Any of the terms of a plan 7 of division may be made dependent upon facts ascertainable 8 outside of the plan if the manner in which the facts will 9 operate upon the terms of the plan is set forth in the plan. 10 Such facts may include, without limitation, actions or events 11 within the control of or determinations made by the dividing 12 corporation or a representative of the dividing corporation. 13 § 1953. Division without shareholder approval. 14 (a) General rule.--Unless otherwise restricted by its bylaws 15 or required by section 1952(f) (relating to action by holders of 16 preferred or special shares), a plan of division that does not 17 alter the state of incorporation of a business corporation, 18 provide for special treatment nor amend in any respect the 19 provisions of its articles (except amendments which under 20 section 1914(c) (relating to adoption by board of directors) may 21 be made without shareholder action) shall not require the 22 approval of the shareholders of the corporation if: 23 (1) the dividing corporation has only one class of 24 shares outstanding and the shares and other securities, if 25 any, of each corporation resulting from the plan are 26 distributed pro rata to the shareholders of the dividing 27 corporation; 28 (2) the dividing corporation survives the division and 29 all the shares and other securities and obligations, if any, 30 of all new corporations resulting from the plan are owned 19970S1157B2016 - 54 -
1 solely by the surviving corporation; or 2 (3) the [transfers] allocation of assets among the 3 resulting corporations effected by the division, if effected 4 by means of a sale, lease, exchange or other disposition, 5 would not require the approval of shareholders under section 6 1932(b) (relating to shareholder approval required). 7 (b) Limitation.--A plan of division adopted by the board of 8 directors under this section without the approval of the 9 shareholders shall not, by itself, create or impair any rights 10 or obligations on the part of any person under section 2538 11 (relating to approval of transactions with interested 12 shareholders) or under Subchapters E (relating to control 13 transactions), F (relating to business combinations), G 14 (relating to control-share acquisitions), H (relating to 15 disgorgement by certain controlling shareholders following 16 attempts to acquire control), I (relating to severance 17 compensation for employees terminated following certain control- 18 share acquisitions) and J (relating to business combination 19 transactions - labor contracts) of Chapter 25, nor shall it 20 change the standard of care applicable to the directors under 21 Subchapter B of Chapter 17 (relating to fiduciary duty). 22 § 1955. Filing of articles of division. 23 (a) General rule.--The articles of division, and the 24 certificates or statement, if any, required by section 139 25 (relating to tax clearance of certain fundamental transactions) 26 shall be filed in the Department of State. 27 (b) Cross [reference] references.--See [section] sections 28 134 (relating to docketing statement) and 135 (relating to 29 requirements to be met by filed documents). 30 § 1957. Effect of division. 19970S1157B2016 - 55 -
1 * * * 2 (b) Property rights; allocations of assets and 3 liabilities.-- 4 (1) (i) All the property, real, personal and mixed, and 5 franchises of the dividing corporation, and all debts due 6 on whatever account to it, including subscriptions for 7 shares and other choses in action belonging to it, shall 8 (except as otherwise provided in paragraph (2)), to the 9 extent [transfers] allocations of assets are contemplated 10 by the plan of division, be deemed without further action 11 to be [transferred] allocated to and vested in the 12 resulting corporations on such a manner and basis and 13 with such effect as is specified in the plan, or per 14 capita among the resulting corporations, as tenants in 15 common, if no specification is made in the plan, and the 16 title to any real estate, or interest therein, vested in 17 any of the corporations shall not revert or be in any way 18 impaired by reason of the division. 19 (ii) Upon the division becoming effective, the 20 resulting corporations shall each thenceforth be 21 responsible as separate and distinct corporations only 22 for such liabilities as each corporation may undertake or 23 incur in its own name but shall be liable for the 24 liabilities of the dividing corporation in the manner and 25 on the basis provided in subparagraphs (iv) and (v). 26 (iii) Liens upon the property of the dividing 27 corporation shall not be impaired by the division. 28 (iv) [One] To the extent allocations of liabilities 29 are contemplated by the plan of division, the liabilities 30 of the dividing corporation shall be deemed without 19970S1157B2016 - 56 -
1 further action to be allocated to and become the 2 liabilities of the resulting corporations on such a 3 manner and basis and with such effect as is specified in 4 the plan; and one or more, but less than all, of the 5 resulting corporations shall be free of the liabilities 6 of the dividing corporation to the extent, if any, 7 specified in the plan, if in either case: 8 (A) no fraud [of corporate creditors, or of] on 9 minority shareholders or shareholders without voting 10 rights or violation of law shall be effected thereby, 11 and [if applicable provisions of law are complied 12 with.] 13 (B) the plan does not constitute a fraudulent 14 transfer under 12 Pa.C.S. Ch. 51 (relating to 15 fraudulent transfers). 16 (v) If the conditions in subparagraph (iv) for 17 freeing one or more of the resulting corporations from 18 the liabilities of the dividing corporation, or for 19 allocating some or all of the liabilities of the dividing 20 corporation, are not satisfied, the liabilities of the 21 dividing corporation as to which those conditions are not 22 satisfied shall not be affected by the division nor shall 23 the rights of creditors [thereof or of any person dealing 24 with the corporation] thereunder be impaired by the 25 division and any claim existing or action or proceeding 26 pending by or against the corporation with respect to 27 those liabilities may be prosecuted to judgment as if the 28 division had not taken place, or the resulting 29 corporations may be proceeded against or substituted in 30 [its] place of the dividing corporation as joint and 19970S1157B2016 - 57 -
1 several obligors on [such liability] those liabilities, 2 regardless of any provision of the plan of division 3 apportioning the liabilities of the dividing corporation. 4 (vi) The conditions in subparagraph (iv) for freeing 5 one or more of the resulting corporations from the 6 liabilities of the dividing corporation and for 7 allocating some or all of the liabilities of the dividing 8 corporation shall be conclusively deemed to have been 9 satisfied if the plan of division has been approved by 10 the Department of Banking, the Insurance Department or 11 the Pennsylvania Public Utility Commission in a final 12 order issued after (the Legislative Reference Bureau 13 shall insert here the effective date of the amendments of 14 this section) that has become not subject to further 15 appeal. 16 (2) (i) The [transfer] allocation of any fee or 17 freehold interest or leasehold having a remaining term of 18 30 years or more in any tract or parcel of real property 19 situate in this Commonwealth owned by a dividing 20 corporation (including property owned by a foreign 21 business corporation dividing solely under the law of 22 another jurisdiction) to a new corporation resulting from 23 the division shall not be effective until one of the 24 following documents is filed in the office for the 25 recording of deeds of the county, or each of them, in 26 which the tract or parcel is situated: 27 (A) A deed, lease or other instrument of 28 confirmation describing the tract or parcel. 29 (B) A duly executed duplicate original copy of 30 the articles of division. 19970S1157B2016 - 58 -
1 (C) A copy of the articles of division certified 2 by the Department of State. 3 (D) A declaration of acquisition setting forth 4 the value of real estate holdings in such county of 5 the corporation as an acquired company. 6 (ii) The provisions of 75 Pa.C.S. § 1114 (relating 7 to transfer of vehicle by operation of law) shall not be 8 applicable to [a transfer] an allocation of ownership of 9 any motor vehicle, trailer or semitrailer [from a 10 dividing corporation] to a new corporation under this 11 section or under a similar law of any other jurisdiction 12 but any such [transfer] allocation shall be effective 13 only upon compliance with the requirements of 75 Pa.C.S. 14 § 1116 (relating to issuance of new certificate following 15 transfer). 16 (3) It shall not be necessary for a plan of division to 17 list each individual asset or liability of the dividing 18 corporation to be allocated to a new corporation so long as 19 those assets and liabilities are described in a reasonable 20 manner. 21 (4) Each new corporation shall hold any assets and 22 liabilities allocated to it as the successor to the dividing 23 corporation, and those assets and liabilities shall not be 24 deemed to have been assigned to the new corporation in any 25 manner, whether directly or indirectly or by operation of 26 law. 27 * * * 28 (h) Conflict of laws.--It is the intent of the General 29 Assembly that: 30 (1) The effect of a division of a domestic business 19970S1157B2016 - 59 -
1 corporation shall be governed solely by the laws of this 2 Commonwealth and any other jurisdiction under the laws of 3 which any of the resulting corporations is incorporated. 4 (2) The effect of a division on the assets and 5 liabilities of the dividing corporation shall be governed 6 solely by the laws of this Commonwealth and any other 7 jurisdiction under the laws of which any of the resulting 8 corporations is incorporated. 9 (3) The validity of any allocations of assets or 10 liabilities by a plan of division of a domestic business 11 corporation, regardless of whether or not any of the new 12 corporations is a foreign business corporation, shall be 13 governed solely by the laws of this Commonwealth. 14 (4) In addition to the express provisions of this 15 subsection, this subchapter shall otherwise generally be 16 granted the protection of full faith and credit under the 17 Constitution of the United States. 18 § 1962. Proposal and adoption of plan of conversion. 19 (a) Preparation of plan.--A plan of conversion shall be 20 prepared, setting forth: 21 (1) The terms and conditions of the conversion. 22 (2) A restatement of the articles of the resulting 23 corporation, which articles shall comply with the 24 requirements of this part relating to nonprofit corporations. 25 (3) Any provisions desired providing special treatment 26 of shares held by any shareholder or group of shareholders as 27 authorized by, and subject to the provisions of, section 1906 28 (relating to special treatment of holders of shares of same 29 class or series). 30 (4) Such other provisions as are deemed desirable. 19970S1157B2016 - 60 -
1 [Any of the terms of the plan may be made dependent upon facts 2 ascertainable outside of the plan if the manner in which the 3 facts will operate upon the terms of the plan is set forth in 4 the plan.] 5 * * * 6 (d) Reference to outside facts.--Any of the terms of a plan 7 of conversion may be made dependent upon facts ascertainable 8 outside of the plan if the manner in which the facts will 9 operate upon the terms of the plan is set forth in the plan. 10 Such facts may include, without limitation, actions or events 11 within the control of or determinations made by the corporation 12 or a representative of the corporation. 13 § 1972. Proposal of voluntary dissolution. 14 (a) General rule.--Any business corporation that has 15 commenced business may dissolve voluntarily in the manner 16 provided in this subchapter and wind up its affairs in the 17 manner provided in section 1975 (relating to predissolution 18 provision for liabilities) or Subchapter H (relating to 19 postdissolution provision for liabilities). Voluntary 20 dissolution shall be proposed by the adoption by the board of 21 directors of a resolution recommending that the corporation be 22 dissolved voluntarily. The resolution shall contain a statement 23 either that the dissolution shall proceed under section 1975 or 24 that the dissolution shall proceed under Subchapter H. The 25 resolution may set forth provisions for the distribution to 26 shareholders of any surplus remaining after paying or providing 27 for all liabilities of the corporation, including provisions for 28 special treatment of shares held by any shareholder or group of 29 shareholders as authorized by, and subject to the provisions of, 30 section 1906 (relating to special treatment of holders of shares 19970S1157B2016 - 61 -
1 of same class or series). 2 (b) Submission to shareholders.--The board of directors 3 shall direct that the [question of] resolution recommending 4 dissolution be submitted to a vote of the shareholders of the 5 corporation entitled to vote thereon at a regular or special 6 meeting of the shareholders. 7 * * * 8 § 1973. Notice of meeting of shareholders. 9 (a) General rule.--Written notice of the meeting of 10 shareholders that will consider the [advisability of voluntarily 11 dissolving a] resolution recommending dissolution of the 12 business corporation shall be given to each shareholder of 13 record entitled to vote thereon and the purpose shall be 14 included in the notice of the meeting. 15 * * * 16 § 1975. Predissolution provision for liabilities. 17 (a) Powers of board.--The board of directors of a business 18 corporation that has elected to proceed under this section shall 19 have full power to wind up and settle the affairs of [a 20 business] the corporation in accordance with this section prior 21 to filing articles of dissolution in accordance with section 22 1977 (relating to articles of dissolution). 23 (b) Notice to creditors and taxing authorities.--After the 24 approval by the shareholders of the [proposal] resolution 25 recommending that the corporation dissolve voluntarily, the 26 corporation shall immediately cause notice of the winding up 27 proceedings to be officially published and to be mailed by 28 certified or registered mail to each known creditor and claimant 29 and to each municipal corporation in which [its registered 30 office or principal] it has a place of business in this 19970S1157B2016 - 62 -
1 Commonwealth [is located]. 2 (c) Winding up and distribution.--The corporation shall, as 3 speedily as possible, proceed to collect all sums due it, 4 convert into cash all corporate assets the conversion of which 5 into cash is required to discharge its liabilities and, out of 6 the assets of the corporation, discharge or make adequate 7 provision for the discharge of all liabilities of the 8 corporation, according to their respective priorities. Any 9 surplus remaining after paying or providing for all liabilities 10 of the corporation shall be distributed to the shareholders 11 according to their respective rights and preferences. See 12 section 1972(a) (relating to proposal of voluntary dissolution). 13 § 1976. Judicial supervision of proceedings. 14 A business corporation that has elected to proceed under 15 section 1975 (relating to predissolution provision for 16 liabilities), at any time during the winding up proceedings, may 17 apply to the court to have the proceedings continued under the 18 supervision of the court and thereafter the proceedings shall 19 continue under the supervision of the court as provided in 20 Subchapter G (relating to involuntary liquidation and 21 dissolution). 22 § 1977. Articles of dissolution. 23 (a) General rule.--Articles of dissolution and the 24 certificates or statement required by section 139 (relating to 25 tax clearance of certain fundamental transactions) shall be 26 filed in the Department of State when: 27 (1) all liabilities of the business corporation have 28 been discharged, or adequate provision has been made 29 therefor, in accordance with section 1975 (relating to 30 predissolution provision for liabilities), and all of the 19970S1157B2016 - 63 -
1 remaining assets of the corporation have been distributed as 2 provided in section 1975 (or in case its assets are not 3 sufficient to discharge its liabilities, when all the assets 4 have been fairly and equitably applied, as far as they will 5 go, to the payment of such liabilities); or 6 (2) an election to proceed under Subchapter H (relating 7 to postdissolution provision for liabilities) has been made. 8 [See section 134 (relating to docketing statement).] 9 (b) Contents of articles.--The articles of dissolution shall 10 be executed by the corporation and shall set forth: 11 * * * 12 (5) A statement that: 13 (i) [that] all liabilities of the corporation have 14 been discharged or that adequate provision has been made 15 therefor; [or] 16 (ii) [that] the assets of the corporation are not 17 sufficient to discharge its liabilities, and that all the 18 assets of the corporation have been fairly and equitably 19 applied, as far as they will go, to the payment of such 20 liabilities[. An election by]; or 21 (iii) the corporation has elected to proceed under 22 Subchapter H [shall constitute the making of adequate 23 provision for the liabilities of the corporation, 24 including any judgment or decree that may be obtained 25 against the corporation in any pending action or 26 proceeding]. 27 * * * 28 (7) [A] In the case of a corporation that has not 29 elected to proceed under Subchapter H, a statement that no 30 actions or proceedings are pending against the corporation in 19970S1157B2016 - 64 -
1 any court, or that adequate provision has been made for the 2 satisfaction of any judgment or decree that may be obtained 3 against the corporation in each pending action or proceeding. 4 (8) [A] In the case of a corporation that has not 5 elected to proceed under Subchapter H, a statement that 6 notice of the winding-up proceedings of the corporation was 7 mailed by certified or registered mail to each known creditor 8 and claimant and to each municipal corporation in which the 9 [registered office or principal place of business of the] 10 corporation has a place of business in this Commonwealth [is 11 located]. 12 * * * 13 (d) Cross references.--See sections 134 (relating to 14 docketing statement) and 135 (relating to requirements to be met 15 by filed documents). 16 § 1978. Winding up of corporation after dissolution. 17 * * * 18 (b) Standard of care of directors and officers.--The 19 dissolution of the corporation shall not subject its directors 20 or officers to standards of conduct different from those 21 prescribed by or pursuant to Chapter 17 (relating to officers, 22 directors and shareholders). Directors of a dissolved 23 corporation who have complied with section 1975 (relating to 24 predissolution provision for liabilities) or Subchapter H 25 (relating to postdissolution provision for liabilities) shall 26 not be personally liable to the creditors of the dissolved 27 corporation. 28 § 1979. Survival of remedies and rights after dissolution. 29 (a) General rule.--The dissolution of a business 30 corporation, either under this subchapter or under Subchapter G 19970S1157B2016 - 65 -
1 (relating to involuntary liquidation and dissolution) or by 2 expiration of its period of duration or otherwise, shall not 3 eliminate nor impair any remedy available to or against the 4 corporation or its directors, officers or shareholders for any 5 right or claim existing, or liability incurred, prior to the 6 dissolution, if an action or proceeding thereon is brought on 7 behalf of: 8 (1) the corporation within the time otherwise limited by 9 law; or 10 (2) any other person before or within two years after 11 the date of the dissolution or within the time otherwise 12 limited by this subpart or other provision of law, whichever 13 is less. See sections 1987 (relating to proof of claims), 14 1993 (relating to acceptance or rejection of matured claims) 15 and 1994 (relating to disposition of unmatured claims). 16 [The actions or proceedings may be prosecuted against and 17 defended by the corporation in its corporate name.] 18 * * * 19 (e) Conduct of actions.--An action or proceeding may be 20 prosecuted against and defended by a dissolved corporation in 21 its corporate name. 22 § 1980. Dissolution by domestication. 23 Whenever a domestic business corporation has domesticated 24 itself under the laws of another jurisdiction by action similar 25 to that provided by section 4161 (relating to domestication) and 26 has authorized that action by the vote required by this 27 subchapter for the approval of a proposal that the corporation 28 dissolve voluntarily, the corporation may surrender its charter 29 under the laws of this Commonwealth by filing in the Department 30 of State articles of dissolution under this subchapter 19970S1157B2016 - 66 -
1 containing the statement specified by section [1977(a)(1)] 2 1977(b)(1) through (4) (relating to [preparation of articles).] 3 articles of dissolution). If the corporation as domesticated in 4 the other jurisdiction qualifies to do business in this 5 Commonwealth either prior to or simultaneously with the filing 6 of the articles of dissolution under this section, the 7 corporation shall not be required to file with the articles of 8 dissolution the tax clearance certificates that would otherwise 9 be required by section 139 (relating to tax clearance of certain 10 fundamental transactions). 11 § 1989. Articles of involuntary dissolution. 12 (a) General rule.--In a proceeding under this subchapter, 13 the court shall enter an order dissolving the business 14 corporation when the costs and expenses of the proceeding and 15 all liabilities of the corporation have been discharged, and all 16 of its remaining assets have been distributed to its 17 shareholders or, in case its assets are not sufficient to 18 discharge such costs, expenses and liabilities, when all the 19 assets have been applied, as far as they will go, to the payment 20 of such costs, expenses and liabilities. See section 139(b) 21 (relating to tax clearance in judicial proceedings). 22 (b) Filing.--After entry of an order of dissolution, the 23 office of the clerk of the court of common pleas shall prepare 24 and execute articles of dissolution substantially in the form 25 provided by section 1977 (relating to articles of dissolution), 26 attach thereto a certified copy of the order and transmit the 27 articles and attached order to the Department of State. [A 28 certificate or statement provided for by section 139 (relating 29 to tax clearance of certain fundamental transactions) shall not 30 be required, and the] The department shall not charge a fee in 19970S1157B2016 - 67 -
1 connection with the filing of articles of dissolution under this 2 section. See [section] sections 134 (relating to docketing 3 statement) and 135 (relating to requirements to be met by filed 4 documents). 5 * * * 6 § 1991.1. Authority of board of directors. 7 (a) General rule.--The board of directors of a business 8 corporation that has elected to proceed under this subchapter 9 shall have full power to wind up and settle the affairs of the 10 corporation in accordance with this subchapter both prior to and 11 after the filing of articles of dissolution in accordance with 12 section 1977 (relating to articles of dissolution). 13 (b) Winding up.--The corporation shall, as speedily as 14 possible, proceed to comply with the requirements of this 15 subchapter while simultaneously collecting all sums due it and 16 converting into cash all corporate assets, the conversion of 17 which into cash is required to make adequate provision for its 18 liabilities. 19 § 1992. Notice to claimants. 20 * * * 21 (c) Publication and service of notices.-- 22 (1) The notices required by this section shall be 23 officially published at least once a week for two consecutive 24 weeks and, in the case of a corporation having $10,000,000 or 25 more in total assets at the time of its dissolution, at least 26 once in all editions of a daily newspaper with a national 27 circulation. 28 (2) Concurrently with or preceding the publication, the 29 corporation or successor entity shall send a copy of the 30 notice by certified or registered mail, return receipt 19970S1157B2016 - 68 -
1 requested, to each: 2 (i) known creditor or claimant; 3 (ii) holder of a claim described in subsection (b); 4 and 5 (iii) municipal corporation in which [the registered 6 office or principal] a place of business of the 7 corporation in this Commonwealth was located at the time 8 of filing the articles of dissolution in the department. 9 * * * 10 § 1997. Payments and distributions. 11 * * * 12 (b) Disposition.--The claims and liabilities shall be paid 13 in full and any provision for payment shall be made in full if 14 there are sufficient assets. If there are insufficient assets, 15 the claims and liabilities shall be paid or provided for in 16 order of their priority, and, among claims of equal priority, 17 ratably to the extent of funds legally available therefor. Any 18 remaining assets shall be distributed to the shareholders of the 19 corporation according to their respective rights and 20 preferences, except that the distribution shall not be made less 21 than 60 days after the last notice of rejection, if any, was 22 given under section 1993 (relating to acceptance or rejection of 23 matured claims). See section 1972(a) (relating to proposal of 24 voluntary dissolution). 25 * * * 26 [(d) Liability of directors.--Directors of a dissolved 27 corporation or governing persons of a successor entity that has 28 complied with this section shall not be personally liable to the 29 claimants of the dissolved corporation.] 30 § 2902. Definitions and index of definitions. 19970S1157B2016 - 69 -
1 (a) Definitions.--The following words and phrases when used 2 in this chapter shall have the meanings given to them in this 3 section unless the context clearly indicates otherwise: 4 "Disqualified person." [A] The term "disqualified person" as 5 used in this chapter means a licensed person who for any reason 6 is or becomes legally disqualified (temporarily or permanently) 7 to render the same professional services that the particular 8 professional corporation of which he is an officer, director, 9 shareholder or employee is or was rendering. 10 ["Licensed person." Any natural person who is duly licensed 11 or admitted to practice his profession by a court, department, 12 board, commission or other agency of this Commonwealth or 13 another jurisdiction to render a professional service that is or 14 will be rendered by the professional corporation of which he is, 15 or intends to become, an officer, director, shareholder, 16 employee or agent. 17 "Profession." Includes the performance of any type of 18 personal service to the public that requires as a condition 19 precedent to the performance of the service the obtaining of a 20 license or admission to practice or other legal authorization, 21 including all personal services that prior to the enactment of 22 the act of July 9, 1970 (P.L.461, No.160), known as the 23 Professional Corporation Law, could not lawfully be rendered by 24 means of a corporation. By way of example, and without limiting 25 the generality of the foregoing, the term includes for the 26 purposes of this chapter personal services rendered as an 27 architect, chiropractor, dentist, funeral director, osteopath, 28 podiatrist, physician, professional engineer, veterinarian, 29 certified public accountant or surgeon and, except as otherwise 30 prescribed by general rules, an attorney at law. Except as 19970S1157B2016 - 70 -
1 otherwise expressly provided by law, the definition specified in 2 this paragraph shall be applicable to this chapter only and 3 shall not affect the interpretation of any other statute or any 4 local zoning ordinance or other official document heretofore or 5 hereafter enacted or promulgated. 6 "Professional services." Any type of services that may be 7 rendered by the member of any profession within the purview of 8 his profession.] 9 (b) Index of other definitions.--Other definitions applying 10 to this chapter and the sections in which they appear are: 11 "Licensed person." Section 102 (relating to definitions). 12 "Profession." Section 102. 13 "Professional services." Section 102. 14 § 2904. Election of an existing business corporation to become 15 a professional corporation. 16 * * * 17 (b) Procedure.--The amendment shall be adopted in accordance 18 with the requirements of Subchapter B of Chapter 19 (relating to 19 amendment of articles) [except that the amendment must be 20 approved by the unanimous consent of all shareholders of the 21 corporation regardless of any limitations on voting rights 22 stated in the articles or bylaws]. If any shareholder of a 23 business corporation that proposes to amend its articles to 24 become a professional corporation objects to that amendment and 25 complies with the provisions of Subchapter D of Chapter 15 26 (relating to dissenters rights), the shareholder shall be 27 entitled to the rights and remedies of dissenting shareholders 28 therein provided, if any. 29 § 2922. Stated purposes. 30 * * * 19970S1157B2016 - 71 -
1 (b) Additional powers.--A professional corporation may be [a 2 partner in or a shareholder] an equity owner of a partnership 3 [or], limited liability company, corporation or other 4 association engaged in the business of rendering the 5 professional service or services for which the professional 6 corporation was incorporated. 7 § 2923. Issuance and retention of shares. 8 (a) General rule.--Except as otherwise provided by a 9 statute, rule or regulation applicable to a particular 10 profession, all of the ultimate beneficial owners of shares in a 11 professional corporation [may be beneficially owned, directly or 12 indirectly, only by one or more] shall be licensed persons and 13 any issuance or transfer of shares in violation of this 14 restriction shall be void. A shareholder of a professional 15 corporation shall not enter into a voting trust, proxy or any 16 other arrangement vesting another person (other than [another 17 licensed] a person who is qualified to be a direct or indirect 18 shareholder of the same corporation) with the authority to 19 exercise the voting power of any or all of his shares, and any 20 such purported voting trust, proxy or other arrangement shall be 21 void. 22 (b) Ownership by estate.--Unless a lesser period of time is 23 provided in a bylaw [of the corporation] adopted by the 24 shareholders or in a written agreement among the shareholders of 25 the corporation, the estate of a deceased shareholder may 26 continue to hold shares of the professional corporation for a 27 reasonable period of administration of the estate, but the 28 personal representative of the estate shall not by reason of the 29 retention of shares be authorized to participate in any 30 decisions concerning the rendering of professional service. 19970S1157B2016 - 72 -
1 * * * 2 § 3133. Notice of meetings of members of mutual insurance 3 companies. 4 (a) General rule.--Unless otherwise restricted in the 5 bylaws, persons authorized or required to give notice of an 6 annual meeting of members of a mutual insurance company for the 7 election of directors or of a meeting of members of a mutual 8 insurance company called for the purpose of considering [an] 9 amendment of the articles or bylaws, or both, of the corporation 10 may, in lieu of any written notice of meeting of members 11 required to be given by this subpart, give notice of such 12 meeting by causing notice of such meeting to be officially 13 published. Such notice shall be published each week for at 14 least: 15 (1) Three successive weeks, in the case of an annual 16 meeting. 17 (2) Four successive weeks, in the case of a meeting to 18 consider [an] amendment of the articles or bylaws, or both. 19 * * * 20 § 4123. Requirements for foreign corporation names. 21 * * * 22 (b) Exceptions.-- 23 (1) The provisions of section 1303(b) (relating to 24 duplicate use of names) shall not prevent the issuance of a 25 certificate of authority to a foreign business corporation 26 setting forth a name that is [confusingly similar to] not 27 distinguishable upon the records of the department from the 28 name of any other domestic or foreign corporation for profit 29 or corporation not-for-profit, [or of any domestic or foreign 30 limited partnership that has filed a certificate or qualified 19970S1157B2016 - 73 -
1 under Chapter 85 (relating to limited partnerships) or 2 corresponding provisions of prior law,] or of any corporation 3 or other association then registered under 54 Pa.C.S. Ch. 5 4 (relating to corporate and other association names) or to any 5 name reserved or registered as provided in this part, if the 6 foreign business corporation applying for a certificate of 7 authority files in the department [one of the following: 8 (i) A] a resolution of its board of directors 9 adopting a fictitious name for use in transacting 10 business in this Commonwealth, which fictitious name is 11 [not confusingly similar to] distinguishable upon the 12 records of the department from the name of the other 13 corporation or other association or [to] from any name 14 reserved or registered as provided in this part and that 15 is otherwise available for use by a domestic business 16 corporation. 17 [(ii) The written consent of the other corporation 18 or other association or holder of a reserved or 19 registered name to use the same or confusingly similar 20 name and one or more words are added to make the name 21 applied for distinguishable from the other name.] 22 * * * 23 § 4126. Amended certificate of authority. 24 (a) General rule.--After receiving a certificate of 25 authority, a qualified foreign business corporation may, subject 26 to the provisions of this subchapter, change [the name under 27 which it is authorized to transact business in this 28 Commonwealth] or correct any of the information set forth in its 29 application for a certificate of authority or previous filings 30 under this section by filing in the Department of State an 19970S1157B2016 - 74 -
1 application for an amended certificate of authority. The 2 application shall be executed by the corporation and shall 3 state: 4 (1) The name under which the applicant corporation 5 currently holds a certificate of authority to do business in 6 this Commonwealth. 7 [(2) The name of the jurisdiction under the laws of 8 which the corporation is incorporated. 9 (3) The address, including street and number, if any, of 10 its principal office under the laws of the jurisdiction in 11 which it is incorporated. 12 (4)] (2) Subject to section 109 (relating to name of 13 commercial registered office provider in lieu of registered 14 address), the address, including street and number, if any, 15 of its registered office in this Commonwealth.[, which may 16 constitute a change in the address of its registered office. 17 (5) The new name of the corporation and] 18 (3) The information to be changed or corrected. 19 (4) If the application reflects a change in the name of 20 the corporation, the application shall include a statement 21 that either: 22 (i) the change of name reflects a change effected in 23 the jurisdiction of incorporation; or 24 (ii) documents complying with section 4123(b) 25 (relating to exception; name) accompany the application. 26 (b) Issuance of amended certificate of authority.--Upon the 27 filing of the application, the applicant corporation shall be 28 deemed to hold an amended certificate of authority. 29 (c) Cross reference.--See section 134 (relating to docketing 30 statement). 19970S1157B2016 - 75 -
1 § 4146. Provisions applicable to all foreign corporations. 2 The following provisions of this subpart shall, except as 3 otherwise provided in this section, be applicable to every 4 foreign corporation for profit, whether or not required to 5 procure a certificate of authority under this chapter: 6 Section 1503 (relating to defense of ultra vires), as to 7 contracts and conveyances [made in] governed by the laws of 8 this Commonwealth and conveyances affecting real property 9 situated in this Commonwealth. 10 Section 1506 (relating to form of execution of 11 instruments), as to instruments or other documents [made or 12 to be performed in] governed by the laws of this Commonwealth 13 or affecting real property situated in this Commonwealth. 14 Section 1510 (relating to certain specifically authorized 15 debt terms), as to obligations (as defined in the section) 16 [executed or effected in] governed by the laws of this 17 Commonwealth or affecting real property situated in this 18 Commonwealth. 19 * * * 20 § 4161. Domestication. 21 * * * 22 (b) Articles of domestication.--The articles of 23 domestication shall be executed by the corporation and shall set 24 forth in the English language: 25 (1) The name of the corporation. If the name is in a 26 foreign language, it shall be set forth in Roman letters or 27 characters or Arabic or Roman numerals. If the name is one 28 that is rendered unavailable by any provision of section 29 1303(b) or (c) (relating to corporate name), the corporation 30 shall adopt, in accordance with any procedures for changing 19970S1157B2016 - 76 -
1 the name of the corporation that are applicable prior to the 2 domestication of the corporation, and shall set forth in the 3 articles of domestication an available name. 4 * * * 5 (c) Cross [reference] references.--See [section] sections 6 134 (relating to docketing statement) and 135 (relating to 7 requirements to be met by filed documents). 8 § 4162. Effect of domestication. 9 (a) General rule.--As a domestic business corporation, the 10 domesticated corporation shall no longer be a foreign business 11 corporation for the purposes of this subpart and shall [have], 12 instead, be a domestic business corporation with all the powers 13 and privileges and [be subject to] all the duties and 14 limitations granted and imposed upon domestic business 15 corporations. [The property, franchises, debts, liens, estates, 16 taxes, penalties and public accounts due the Commonwealth shall 17 continue to be vested in and imposed upon the corporation to the 18 same extent as if it were the successor by merger of the 19 domesticating corporation with and into a domestic business 20 corporation under Subchapter C of Chapter 19 (relating to 21 merger, consolidation, share exchanges and sale of assets).] In 22 all other respects, the domesticated corporation shall be deemed 23 to be the same corporation as it was prior to the domestication 24 without any change in or effect on its existence. Without 25 limiting the generality of the previous sentence, the 26 domestication shall not be deemed to have affected in any way: 27 (1) the right and title of the corporation in and to its 28 assets, property, franchises, estates and choses in action; 29 (2) the liability of the corporation for its debts, 30 obligations, penalties and public accounts due the 19970S1157B2016 - 77 -
1 Commonwealth; 2 (3) any liens or other encumbrances on the property or 3 assets of the corporation; or 4 (4) any contract, license or other agreement to which 5 the corporation is a party or under which it has any rights 6 or obligations. 7 (b) Reclassification of shares.--The shares of the 8 domesticated corporation shall be unaffected by the 9 domestication except to the extent, if any, reclassified in the 10 articles of domestication. 11 § 5303. Corporate name. 12 * * * 13 (b) Duplicate use of names.--The corporate name shall [not 14 be the same as or confusingly similar to] be distinguishable 15 upon the records of the Department of State from: 16 (1) The name of any other domestic corporation for 17 profit or not-for-profit which is either in existence or for 18 which articles of incorporation have been filed but have not 19 yet become effective, or of any foreign corporation for 20 profit or not-for-profit which is either authorized to do 21 business in this Commonwealth or for which an application for 22 a certificate of authority has been filed but which has not 23 yet become effective, [or of any domestic or foreign limited 24 partnership that has filed in the Department of State a 25 certificate or qualified under Chapter 85 (relating to 26 limited partnerships) or under corresponding provisions of 27 prior law,] or the name of any association registered at any 28 time under 54 Pa.C.S. Ch. 5 (relating to corporate and other 29 association names), unless[: 30 (i) where the name is the same or confusingly 19970S1157B2016 - 78 -
1 similar,] the other association: 2 [(A)] (i) has stated that it is about to change 3 its name, or to cease to do business, or is being 4 wound up, or is a foreign association about to 5 withdraw from doing business in this Commonwealth, 6 and the statement and [the] a written consent [of the 7 other association] to the adoption of the name 8 executed by the other association is filed in the 9 Department of State; 10 [(B)] (ii) has filed with the Department of 11 Revenue a certificate of out of existence, or has 12 failed for a period of three successive years to file 13 with the Department of Revenue a report or return 14 required by law and the fact of such failure has been 15 certified by the Department of Revenue to the 16 Department of State; 17 [(C)] (iii) has abandoned its name under the 18 laws of its jurisdiction of incorporation, by 19 amendment, merger, consolidation, division, 20 expiration, dissolution or otherwise, without its 21 name being adopted by a successor in a merger, 22 consolidation, division or otherwise, and an official 23 record of that fact, certified as provided by 42 24 Pa.C.S. § 5328 (relating to proof of official 25 records), is presented by any person to the 26 department; or 27 [(D)] (iv) has had the registration of its name 28 under 54 Pa.C.S. Ch. 5 terminated and, if the 29 termination was effected by operation of 54 Pa.C.S. § 30 504 (relating to effect of failure to make decennial 19970S1157B2016 - 79 -
1 filings), the application for the use of the name is 2 accompanied by a verified statement stating that at 3 least 30 days' written notice of intention to 4 appropriate the name was given to the delinquent 5 association at its [registered office] last known 6 place of business and that, after diligent search by 7 the affiant, the affiant believes the association to 8 be out of existence.[; or 9 (ii) where the name is confusingly similar, the 10 consent of the other association to the adoption of the 11 name is filed in the Department of State. 12 The consent of the association shall be evidenced by a 13 statement to that effect executed by the association.] 14 * * * 15 (C) REQUIRED APPROVALS OR CONDITIONS.-- <-- 16 * * * 17 (2) THE CORPORATE NAME SHALL NOT CONTAIN: 18 * * * 19 (III) THE WORDS "ENGINEER" OR "ENGINEERING" OR 20 "SURVEYOR" OR "SURVEYING" OR ANY OTHER WORD IMPLYING THAT 21 ANY FORM OF THE PRACTICE OF ENGINEERING OR SURVEYING AS 22 DEFINED IN THE ACT OF MAY 23, 1945 (P.L.913, NO.367), 23 KNOWN AS THE [PROFESSIONAL ENGINEERS] ENGINEER, LAND 24 SURVEYOR AND GEOLOGIST REGISTRATION LAW, IS PROVIDED 25 UNLESS AT LEAST ONE OF THE INCORPORATORS OF A PROPOSED 26 CORPORATION OR THE DIRECTORS OF THE EXISTING CORPORATION 27 HAS BEEN PROPERLY REGISTERED WITH THE STATE REGISTRATION 28 BOARD FOR PROFESSIONAL ENGINEERS, LAND SURVEYORS AND 29 GEOLOGISTS IN THE PRACTICE OF ENGINEERING OR SURVEYING 30 AND THERE IS SUBMITTED TO THE DEPARTMENT A CERTIFICATE 19970S1157B2016 - 80 -
1 FROM THE BOARD TO THAT EFFECT. 2 * * * 3 (e) Remedies for violation of section.--The use of a name in 4 violation of this section shall not vitiate or otherwise affect 5 the corporate existence but any court having jurisdiction may 6 enjoin the corporation from using or continuing to use a name in 7 violation of this section, upon the application of: 8 (1) the Attorney General, acting on his own motion or at 9 the instance of any administrative department, board or 10 commission of this Commonwealth; or 11 (2) any person adversely affected.[; 12 may enjoin the corporation from using or continuing to use a 13 name in violation of this section.] 14 (f) Cross references.--See sections 135(e) (relating to 15 distinguishable names) and 5106(b)(2) (relating to limited 16 uniform application of subpart). 17 § 5304. Required name changes by senior corporations. 18 (a) Adoption of new name upon reactivation.--Where a 19 corporate name is made available on the basis that the 20 corporation or [nonprofit unincorporated] other association 21 [which] that formerly registered [such] the name has failed to 22 file with the Department of Revenue [or in the Department of 23 State] a report or a return required by law or where the 24 corporation or [nonprofit unincorporated] other association has 25 filed with the Department of Revenue a certificate of out of 26 existence, [such] the corporation or other association shall 27 cease to have by virtue of its prior registration any right to 28 the use of [such] the name[, and such]. The corporation or other 29 association, upon withdrawal of the certificate of out of 30 existence or upon the removal of its delinquency in the filing 19970S1157B2016 - 81 -
1 of the required reports or returns, shall make inquiry with the 2 Department of State with regard to the availability of its 3 name[,] and, if [such] the name has been made available to 4 another domestic or foreign corporation for profit or not-for- 5 profit or other association by virtue of [the above] these 6 conditions, shall adopt a new name in accordance with law before 7 resuming its activities. 8 (b) Enforcement of undertaking to release name.--If a 9 corporation has used a name [the same as, or deceptively similar 10 to,] that is not distinguishable upon the records of the 11 Department of State from the name of another corporation or 12 [nonprofit unincorporated] other association as permitted by 13 section 5303(b)(1)[(i)] (relating to duplicate use of names) and 14 the other corporation or [nonprofit unincorporated] other 15 association continues to use its name in this Commonwealth and 16 does not change its name, cease to do business, be wound up, or 17 withdraw as it proposed to do in its consent or change its name 18 as required by subsection (a), any court [of competent] having 19 jurisdiction may enjoin the other corporation or other 20 association from continuing to use its name or a name that is 21 not distinguishable therefrom, upon the application of: 22 (1) the Attorney General, acting on his own motion or at 23 the instance of any administrative department, board or 24 commission of this Commonwealth[,]; or 25 (2) upon the application of any person adversely 26 affected[, may enjoin the other corporation or association 27 from continuing to use its name or a name deceptively similar 28 thereto]. 29 § 5311. Filing of statement of summary of record by certain 30 corporations. 19970S1157B2016 - 82 -
1 (a) General rule.--Where any of the [valid] charter 2 documents of a nonprofit corporation are not on file in the 3 Department of State or there is an error in any such document as 4 transferred to the department pursuant to section 140 (relating 5 to custody and management of orphan corporate and business 6 records), and the corporation desires to file any document in 7 the department under any other provision of this [article] 8 subpart or the corporation desires to secure from the department 9 any certificate to the effect that the corporation is a 10 corporation duly incorporated and existing under the laws of 11 this Commonwealth or a certified copy of the articles of the 12 corporation or the corporation desires to correct the text of 13 its charter documents as on file in the department, the 14 corporation shall file in the department a statement of summary 15 of record which shall be executed by the corporation and shall 16 set forth: 17 (1) The name of the corporation and, subject to section 18 109 (relating to name of commercial registered office 19 provides in lieu of registered address), the location, 20 including street and number, if any, of its registered 21 office. 22 (2) The statute by or under which the corporation was 23 incorporated. 24 (3) The name under which, the manner in which and the 25 date on which the corporation was originally incorporated, 26 including the date when and the place where the original 27 articles were recorded. 28 (4) The place or places, including volume and page 29 numbers or their equivalent, where the documents 30 [constituting the currently effective articles are] that are 19970S1157B2016 - 83 -
1 not on file in the department or that require correction in 2 the records of the department were originally filed or 3 recorded, the date or dates of each [such] filing or 4 recording and the correct text of [such currently effective 5 articles] the documents. The information specified in this 6 paragraph may be omitted in a statement of summary of record 7 that is delivered to the department contemporaneously with 8 amended and restated articles of the corporation filed under 9 this subpart. 10 [(5) Each name by which the corporation was known, if 11 any, other than its original name and its current name, and 12 the date or dates on which each change of name of the 13 corporation became effective. 14 A corporation shall be required to make only one filing under 15 this subsection.] 16 (b) Validation of prior defects in incorporation.--Upon the 17 filing of a statement by a corporation under this section or the 18 transfer to the department of the records relating to a 19 corporation pursuant to section 140, the corporation [named in 20 the statement] shall be deemed to be a validly subsisting 21 corporation to the same extent as if it had been duly 22 incorporated and was existing under this subpart and the 23 department shall so certify regardless of any absence of or 24 defect in the prior proceedings relating to incorporation. 25 (c) Cross [reference] references.--See [section] sections 26 134 (relating to docketing statement), 135 (relating to 27 requirements to be met by filed documents) and 5106(b)(2) 28 (relating to uniform application of subpart). 29 § 5503. Defense of ultra vires. 30 (a) General rule.--[No] A limitation upon the business, 19970S1157B2016 - 84 -
1 [purpose or] purposes[,] or powers of a nonprofit corporation, 2 expressed or implied in its articles or bylaws or implied by 3 law, shall not be asserted in order to defend any action at law 4 or in equity between the corporation and a third person, or 5 between a member and a third person, involving any contract to 6 which the corporation is a party or any right of property or any 7 alleged liability of [whatsoever] whatever nature[; but such], 8 but the limitation may be asserted: 9 (1) In an action by a member against the corporation to 10 enjoin the doing of unauthorized acts or the transaction or 11 continuation of unauthorized business. If the unauthorized 12 acts or business sought to be enjoined are being transacted 13 pursuant to any contract to which the corporation is a party, 14 the court may, if all of the parties to the contract are 15 parties to the action[,] and if it deems [such action] the 16 result to be equitable, set aside and enjoin the performance 17 of [such] the contract, and in so doing shall allow to the 18 corporation, or to the other parties to the contract, as the 19 case may be, such compensation as may be [equitable] 20 appropriate for the loss or damage sustained by any of them 21 from the action of the court in setting aside and enjoining 22 the performance of [such] the contract, but anticipated 23 profits to be derived from the performance of the contract 24 shall not be awarded by the court as a loss or damage 25 sustained. 26 (2) In any action by or in the right of the corporation 27 to procure a judgment in its favor against an incumbent or 28 former officer, director or member of an other body of the 29 corporation for loss or damage due to his unauthorized acts. 30 (3) In a proceeding by the Commonwealth under section 19970S1157B2016 - 85 -
1 503 (relating to actions to revoke corporate franchises)[,] 2 or in a proceeding by the Commonwealth to enjoin the 3 corporation from the doing of unauthorized or unlawful 4 business. 5 (b) Conveyances of property by or to a corporation.--[No] A 6 conveyance or transfer by or to a nonprofit corporation of 7 property, real or personal, of any kind or description, shall 8 not be invalid or fail because in making [such] the conveyance 9 or transfer, or in acquiring the property, real or personal, 10 [the board of directors or other body or any of the officers] 11 any representative of the corporation acting within the scope of 12 the actual or apparent authority given to [them] him by the 13 [board of directors or other body, have] corporation has 14 exceeded any of the purposes or powers of the corporation. 15 (c) [Nonqualified foreign corporations.--The provisions of 16 this section shall extend to contracts and conveyances made by 17 nonqualified foreign corporations in this Commonwealth and to 18 conveyances by nonqualified foreign corporations of real 19 property situated in this Commonwealth.] Cross reference.--See 20 section 6146 (relating to provisions applicable to all foreign 21 corporations). 22 § 5505. Persons bound by bylaws. 23 Except as otherwise provided by section 5713 (relating to 24 personal liability of directors) or any similar provision of 25 law, bylaws of a nonprofit corporation shall operate only as 26 regulations among the members, directors, members of an other 27 body and officers of the corporation, and shall not affect 28 contracts or other dealings with other persons, unless those 29 persons have actual knowledge of the bylaws. 30 § 5506. Form of execution of instruments. 19970S1157B2016 - 86 -
1 (a) General rule.--Any form of execution provided in the 2 articles or bylaws to the contrary notwithstanding, any note, 3 mortgage, evidence of indebtedness, contract[,] or other 4 [instrument in writing] document, or any assignment or 5 endorsement thereof, executed or entered into between any 6 nonprofit corporation and any other person, when signed by one 7 or more officers or agents having actual or apparent authority 8 to sign it, or by the president or vice-president and secretary 9 or assistant secretary or treasurer or assistant treasurer of 10 [such] the corporation, shall be held to have been properly 11 executed for and in behalf of the corporation. 12 (b) Seal unnecessary.--[Except as otherwise required by 13 statute, the] The affixation of the corporate seal shall not be 14 necessary to the valid execution, assignment or endorsement by a 15 corporation of any instrument [in writing] or other document. 16 (c) [Nonqualified foreign corporations.--The provisions of 17 this section shall extend to instruments in writing made or to 18 be performed in this Commonwealth by a nonqualified foreign 19 corporation and to instruments executed by nonqualified foreign 20 corporations affecting real property situated in this 21 Commonwealth.] Cross reference.--See section 6146 (relating to 22 provisions applicable to all foreign corporations). 23 § 5508. Corporate records; inspection by members. 24 (a) Required records.--Every nonprofit corporation shall 25 keep [an original or duplicate record] minutes of the 26 proceedings of the members [and], the directors[,] and [of] any 27 other body [exercising powers or performing duties which under 28 this article may be exercised or performed by such other body, 29 the original or a copy of its bylaws, including all amendments 30 thereto to date, certified by the secretary of the corporation], 19970S1157B2016 - 87 -
1 and [an original or] a [duplicate] membership register, giving 2 the names [of the members, and showing their respective] and 3 addresses of all members and the class and other details of the 4 membership of each. [Every such] The corporation shall also keep 5 appropriate, complete and accurate books or records of account. 6 The records provided for in this subsection shall be kept at 7 [either] any of the following locations: 8 (1) the registered office of the corporation in this 9 Commonwealth [or at its]; 10 (2) the principal place of business wherever 11 situated[.]; or 12 (3) any actual business office of the corporation. 13 (b) Right of inspection by a member.--Every member shall, 14 upon written verified demand [under oath] stating the purpose 15 thereof, have a right to examine, in person or by agent or 16 attorney, during the usual hours for business for any proper 17 purpose, the membership register, books and records of account, 18 and records of the proceedings of the members, directors and 19 [such] any other body, and to make copies or extracts therefrom. 20 A proper purpose shall mean a purpose reasonably related to the 21 interest of [such] the person as a member. In every instance 22 where an attorney or other agent [shall be] is the person who 23 seeks the right [to] of inspection, the demand [under oath] 24 shall be accompanied by a verified power of attorney or [such] 25 other writing [which] that authorizes the attorney or other 26 agent to so act on behalf of the member. The demand [under oath] 27 shall be directed to the corporation: 28 (1) at its registered office in this Commonwealth [or]; 29 (2) at its principal place of business wherever 30 situated[.]; or 19970S1157B2016 - 88 -
1 (3) in care of the person in charge of an actual 2 business office of the corporation. 3 (c) Proceedings for the enforcement of inspection by a 4 member.--If the corporation, or an officer or agent thereof, 5 refuses to permit an inspection sought by a member or attorney 6 or other agent acting for the member pursuant to subsection (b) 7 [of this section] or does not reply to the demand within five 8 business days after the demand has been made, the member may 9 apply to the court for an order to compel [such] the inspection. 10 The court shall determine whether or not the person seeking 11 inspection is entitled to the inspection sought. The court may 12 summarily order the corporation to permit the member to inspect 13 the membership register and the other books and records of the 14 corporation and to make copies or extracts therefrom; or the 15 court may order the corporation to furnish to the member a list 16 of its members as of a specific date on condition that the 17 member first pay to the corporation the reasonable cost of 18 obtaining and furnishing [such] the list and on such other 19 conditions as the court deems appropriate. Where the member 20 seeks to inspect the books and records of the corporation, other 21 than its membership register or list of members, he shall first 22 establish: 23 (1) that he has complied with the provisions of this 24 section respecting the form and manner of making demand for 25 inspection of such document; and 26 (2) that the inspection he seeks is for a proper 27 purpose. 28 Where the member seeks to inspect the membership register or 29 list of members of the corporation and he has complied with the 30 provisions of this section respecting the form and manner of 19970S1157B2016 - 89 -
1 making demand for inspection of [such] the documents, the burden 2 of proof shall be upon the corporation to establish that the 3 inspection he seeks is for an improper purpose. The court may, 4 in its discretion, prescribe any limitations or conditions with 5 reference to the inspection, or award such other or further 6 relief as the court [may deem] deems just and proper. The court 7 may order books, documents and records, pertinent extracts 8 therefrom, or duly authenticated copies thereof, to be brought 9 [within] into this Commonwealth and kept in this Commonwealth 10 upon such terms and conditions as the order may prescribe. 11 (d) Cross references.--See sections 107 (relating to form of 12 records) and 5512 (relating to informational rights of a 13 director). 14 § 5510. [(Reserved).] Certain specifically authorized debt 15 terms. 16 (a) Interest rates.--A nonprofit corporation shall not plead 17 or set up usury, or the taking of more than the lawful rate of 18 interest, or the taking of any finance, service or default 19 charge in excess of any maximum rate therefor provided or 20 prescribed by law, as a defense to any action or proceeding 21 brought against it to recover damages on, or to enforce payment 22 of, or to enforce any other remedy on, any obligation executed 23 or effected by the corporation. 24 (b) Yield maintenance premiums.--A prepayment premium 25 determined by reference to the approximate spread between the 26 yield at issuance, or at the date of amendment of any of the 27 terms, of an obligation of a corporation and the yield at or 28 about such date of an interest rate index of independent 29 significance and contingent upon a change in the ownership of or 30 memberships in the corporation or a default by or other change 19970S1157B2016 - 90 -
1 in the condition or prospects of the corporation or any 2 affiliate of the corporation shall be deemed liquidated damages 3 and shall not constitute a penalty. 4 (c) Definitions.--As used in this section, the following 5 words and phrases shall have the meanings given to them in this 6 subsection: 7 "Affiliate." An affiliate or associate as defined in section 8 2552 (relating to definitions). 9 "Obligation." Includes an installment sale contract. 10 (d) Cross reference.--See section 6146 (relating to 11 provisions applicable to all foreign corporations). 12 § 5512. Informational rights of a director. 13 (a) General rule.--To the extent reasonably related to the 14 performance of the duties of the director, including those 15 arising from service as a member of a committee of the board of 16 directors, a director of a nonprofit corporation is entitled: 17 (1) in person or by any attorney or other agent, at any 18 reasonable time, to inspect and copy corporate books, records 19 and documents and, in addition, to inspect, and receive 20 information regarding, the assets, liabilities and operations 21 of the corporation and any subsidiaries of the corporation 22 incorporated or otherwise organized or created under the laws 23 of this Commonwealth that are controlled directly or 24 indirectly by the corporation; and 25 (2) to demand that the corporation exercise whatever 26 rights it may have to obtain information regarding any other 27 subsidiaries of the corporation. 28 (b) Proceedings for the enforcement of inspection by a 29 director.--If the corporation, or an officer or agent thereof, 30 refuses to permit an inspection or obtain or provide information 19970S1157B2016 - 91 -
1 sought by a director or attorney or other agent acting for the 2 director pursuant to subsection (a) or does not reply to the 3 request within two business days after the request has been 4 made, the director may apply to the court for an order to compel 5 the inspection or the obtaining or providing of the information. 6 The court shall summarily order the corporation to permit the 7 requested inspection or to obtain the information unless the 8 corporation establishes that the information to be obtained by 9 the exercise of the right is not reasonably related to the 10 performance of the duties of the director or that the director 11 or the attorney or agent of the director is likely to use the 12 information in a manner that would violate the duty of the 13 director to the corporation. The order of the court may contain 14 provisions protecting the corporation from undue burden or 15 expense and prohibiting the director from using the information 16 in a manner that would violate the duty of the director to the 17 corporation. 18 (c) Cross references.--See sections 107 (relating to form of 19 records), 5508 (relating to corporate records; inspection by 20 members) and 42 Pa.C.S. § 2503(7) (relating to right of 21 participants to receive counsel fees). 22 § 5545. Income from corporate activities. 23 (a) General rule.--A nonprofit corporation whose lawful 24 activities involve among other things the charging of fees or 25 prices for its services or products, shall have the right to 26 receive [such] that income and, in so doing, may make [an 27 incidental] a profit. All [such incidental] profits shall be 28 applied to the maintenance and operation of the lawful 29 activities of the corporation, or any of its subordinate units 30 or of any not-for-profit association to which it is subordinate, 19970S1157B2016 - 92 -
1 and [in no case] shall otherwise not be divided or distributed 2 in any manner whatsoever among the members, directors, members 3 of an other body or officers of the corporation. [As used in 4 this section the terms fees or prices do not include rates of 5 contribution, fees or dues levied under an insurance certificate 6 issued by a fraternal benefit society, so long as the 7 distribution of profits arising from said fees or prices is 8 limited to the purposes set forth in this section and section 9 5551 (relating to dividends prohibited; compensation and certain 10 payments authorized).] 11 (b) Cross references.--See sections 5511 (relating to 12 establishment of subordinate units) and 5551(relating to 13 dividends prohibited; compensation and certain payments 14 authorized). 15 § 5546. Purchase, sale[, mortgage] and lease of [real] 16 property. 17 [Except for an industrial development corporation whose 18 articles or bylaws otherwise provide, no purchase of real 19 property shall be made by a nonprofit corporation and no 20 corporation shall sell, mortgage, lease away or otherwise 21 dispose of its real property, unless authorized by the vote of 22 two-thirds of the members in office of the board of directors or 23 other body, except that if there are 21 or more directors or 24 members of such other body, the vote of a majority of the 25 members in office shall be sufficient. No application to or 26 confirmation of any court shall be required and, unless 27 otherwise restricted in the bylaws, no vote or consent of the 28 members shall be required to make effective such action by the 29 board or other body. If the real property is subject to a trust 30 the conveyance away shall be free of trust and the trust shall 19970S1157B2016 - 93 -
1 be impinged upon the proceeds of such conveyance.] Except as 2 otherwise provided in this subpart and unless otherwise provided 3 in the bylaws, no application to or confirmation of any court 4 shall be required for the purchase by or the sale, lease or 5 other disposition of the real or personal property, or any part 6 thereof, of a nonprofit corporation, and, unless otherwise 7 restricted in section 5930 (relating to voluntary transfer of 8 corporate assets) or in the bylaws, no vote or consent of the 9 members shall be required to make effective such action by the 10 board or other body. If the property is subject to a trust, the 11 conveyance away shall be free of trust, and the trust shall be 12 impinged upon the proceeds of the conveyance. 13 § 5547. Authority to take and hold trust property. 14 (a) General rule.--Every nonprofit corporation incorporated 15 for a charitable purpose or purposes may take, receive and hold 16 such real and personal property as may be given, devised to[,] 17 or otherwise vested in [such] the corporation, in trust or 18 otherwise, for the purpose or purposes set forth in its 19 articles. 20 (b) Standard of conduct.--The board of directors or other 21 body of the corporation shall, as trustees of [such] trust 22 property, be held to the same degree of responsibility and 23 accountability as if not incorporated, unless: 24 (1) a less degree or a particular degree of 25 responsibility and accountability is prescribed in the trust 26 instrument, or [unless] 27 (2) the board of directors or such other body remain 28 under the control of the members of the corporation or third 29 persons who retain the right to direct, and do direct, the 30 actions of the board or other body as to the use of the trust 19970S1157B2016 - 94 -
1 property from time to time. 2 [(b)] (c) Nondiversion of certain property.--[Property 3 committed to charitable purposes] Trust property shall not, by 4 any proceeding under Chapter 59 (relating to fundamental 5 changes) or otherwise, be diverted from the objects to which it 6 was donated, granted or devised, unless and until the [board of 7 directors or other body] corporation obtains from the court an 8 order under 20 Pa.C.S. Ch. 61 (relating to estates) specifying 9 the disposition of the property. 10 § 5551. Dividends prohibited; compensation and certain payments 11 authorized. 12 (a) General rule.--[A] Except as provided in section 5545 13 (relating to income from corporate activities), a nonprofit 14 corporation shall not pay dividends or distribute any part of 15 its net income or profits to its members, directors, members of 16 an other body or officers. [Nothing herein contained shall 17 prohibit a fraternal benefit society operating under the 18 insurance laws of Pennsylvania from paying dividends or refunds 19 by whatever name known pursuant to the terms of its insurance 20 contracts.] A contribution by a corporation to a not-for-profit 21 association made on or after February 13, 1973, shall not be 22 deemed a dividend or distribution for purposes of this subpart. 23 (b) Reasonable compensation for services.--A [nonprofit] 24 corporation may pay compensation in a reasonable amount to 25 members, directors, members of an other body or officers for 26 services rendered. 27 (c) Certain payments authorized.--A [nonprofit] corporation 28 may confer monetary or other benefits upon members or nonmembers 29 in conformity with its purposes, may repay capital 30 contributions, and may redeem its [subvention certificates or 19970S1157B2016 - 95 -
1 evidences of indebtedness] subventions or obligations, as 2 authorized by this [article, except when the corporation is 3 currently insolvent or would thereby be made insolvent or 4 rendered unable to carry on its corporate purposes, or when the 5 fair value of the assets of the corporation remaining after such 6 conferring of benefits, payment or redemption would be 7 insufficient to meet its liabilities.] subpart unless, after 8 giving effect thereto, the corporation would be unable to pay 9 its debts as they become due in the usual course of its 10 business. A [nonprofit] corporation may make distributions of 11 cash or property to members upon dissolution or final 12 liquidation as permitted by this article. 13 § 5552. Liabilities of members. 14 (a) General rule.--[The members of a nonprofit corporation 15 shall not be personally liable for the debts, liabilities or 16 obligations of the corporation.] A member of a nonprofit 17 corporation shall not be liable, solely by reason of being a 18 member, under an order of a court or in any other manner for a 19 debt, obligation or liability of the corporation of any kind or 20 for the acts of any member or representative of the corporation. 21 (b) Obligations of member to corporation.--A member shall be 22 liable to the corporation only to the extent of any unpaid 23 portion of the capital contributions, membership dues or 24 assessments which the corporation may have lawfully imposed upon 25 him, or for any other indebtedness owed by him to the 26 corporation. No action shall be brought by any creditor of the 27 corporation to reach and apply any such liability to any debt of 28 the corporation until after: 29 (1) final judgment [shall have] has been rendered 30 against the corporation in favor of the creditor and 19970S1157B2016 - 96 -
1 execution thereon returned unsatisfied[, or the corporation 2 shall have been adjudged bankrupt, or]; 3 (2) a case involving the corporation has been brought 4 under 11 U.S.C. Ch. 7 (relating to liquidation) and a 5 distribution has been made and the case closed or a notice of 6 no assets has been issued; or 7 (3) a receiver [shall have] has been appointed with 8 power to collect debts, and [which] the receiver, on demand 9 of a creditor to bring an action thereon, has refused to sue 10 for [such] the unpaid amount, or the corporation [shall have] 11 has been dissolved or ceased its activities leaving debts 12 unpaid. 13 [No such] (c) Action by a creditor.--An action by a creditor 14 under subsection (b) shall not be brought more than three years 15 after the happening of [any one of such events.] the first to 16 occur of the events listed in subsection (b)(1) through (3). 17 § 5709. Conduct of members meeting. 18 (a) Presiding officer.--There shall be a presiding officer 19 at every meeting of the members. The presiding officer shall be 20 appointed in the manner provided in the bylaws or, in the 21 absence of such provision, by the board of directors. If the 22 bylaws are silent on the appointment of the presiding officer 23 and the board fails to designate a presiding officer, the 24 president shall be the presiding officer. 25 (b) Authority of the presiding officer.--Except as otherwise 26 provided in the bylaws, the presiding officer shall determine 27 the order of business and shall have the authority to establish 28 rules for the conduct of the meeting. 29 (c) Procedural standard.--Any action by the presiding 30 officer in adopting rules for, and in conducting, a meeting 19970S1157B2016 - 97 -
1 shall be fair to the members. 2 (d) Closing of the polls.--The presiding officer shall 3 announce at the meeting when the polls close for each matter 4 voted upon. If no announcement is made, the polls shall be 5 deemed to have closed upon the final adjournment of the meeting. 6 After the polls close, no ballots, proxies or votes, nor any 7 revocations or changes thereto, may be accepted. 8 § 5729. Voting rights of directors. 9 (a) General rule.--Unless otherwise provided in a bylaw 10 adopted by the members, every director of a nonprofit 11 corporation shall be entitled to one vote. Without limiting the 12 generality of the foregoing, a bylaw adopted by the members may 13 provide that a class or other defined group of directors shall 14 have multiple or fractional voting rights, or no right to vote, 15 either generally or under specified circumstances. 16 (b) [Multiple and fractional voting.--The requirement of 17 this article] Application of procedural requirements.--Any 18 requirement of this subpart for the presence of or vote or other 19 action by a specified percentage of directors shall be satisfied 20 by the presence of or vote or other action by directors entitled 21 to cast [such] the specified percentage of the votes [which all] 22 that all voting directors in office are entitled to cast. 23 § 5731. Executive and other committees of the board. 24 (a) Establishment and powers.--Unless otherwise restricted 25 in the bylaws: 26 (1) The board of directors may, by resolution adopted by 27 a majority of the directors in office, establish one or more 28 committees to consist of one or more directors of the 29 corporation. 30 (2) Any [such] committee, to the extent provided in the 19970S1157B2016 - 98 -
1 resolution of the board of directors or in the bylaws, shall 2 have and may exercise all of the powers and authority of the 3 board of directors, except that [no such] a committee shall 4 not have any power or authority as to the following: 5 (i) The submission to members of any action 6 requiring approval of members under this [article] 7 subpart. 8 (ii) The creation or filling of vacancies in the 9 board of directors. 10 (iii) The adoption, amendment or repeal of the 11 bylaws. 12 (iv) The amendment or repeal of any resolution of 13 the board that by its terms is amendable or repealable 14 only by the board. 15 (v) Action on matters committed by the bylaws or a 16 resolution of the board of directors exclusively to 17 another committee of the board. 18 [(2)] (3) The board may designate one or more directors 19 as alternate members of any committee, who may replace any 20 absent or disqualified member at any meeting of the 21 committee. In the absence or disqualification of a member of 22 a committee, the member or members thereof present at any 23 meeting and not disqualified from voting, whether or not he 24 or they constitute a quorum, may unanimously appoint another 25 director to act at the meeting in the place of any [such] 26 absent or disqualified member. 27 (b) Term.--Each committee of the board shall serve at the 28 pleasure of the board. 29 § 5745. Advancing expenses. 30 Expenses (including attorneys' fees) incurred in defending 19970S1157B2016 - 99 -
1 any action or proceeding referred to in this subchapter may be 2 paid by a nonprofit corporation in advance of the final 3 disposition of the action or proceeding upon receipt of an 4 undertaking by or on behalf of the representative to repay the 5 amount if it is ultimately determined that he is not entitled to 6 be indemnified by the corporation as authorized in this 7 subchapter or otherwise. Except as otherwise provided in the 8 bylaws, advancement of expenses shall be authorized by the board 9 of directors. Section 5728 (relating to interested members, 10 directors or officers; quorum) shall not be applicable to the 11 advancement of expenses under this section. 12 § 5748. Application to surviving or new corporations. 13 [For] (a) General rule.--Except as provided in subsection 14 (b), for the purposes of this subchapter, references to "the 15 corporation" include all constituent corporations absorbed in a 16 consolidation, merger or division, as well as the surviving or 17 new corporations surviving or resulting therefrom, so that any 18 person who is or was a representative of the constituent, 19 surviving or new corporation, or is or was serving at the 20 request of the constituent, surviving or new corporation as a 21 representative of another domestic or foreign corporation for 22 profit or not-for-profit, partnership, joint venture, trust or 23 other enterprise, shall stand in the same position under the 24 provisions of this subchapter with respect to the surviving or 25 new corporation as he would if he had served the surviving or 26 new corporation in the same capacity. 27 (b) Divisions.--Notwithstanding subsection (a), the 28 obligations of a dividing corporation to indemnify and advance 29 expenses of its representatives, whether arising under this 30 subchapter or otherwise, may be allocated in a division in the 19970S1157B2016 - 100 -
1 same manner and with the same effect as any other liability of 2 the dividing corporation. 3 § 5758. Voting rights of members. 4 (a) General rule.--Unless otherwise provided in a bylaw 5 adopted by the members, every member of a nonprofit corporation 6 shall be entitled to one vote. 7 (b) Procedures.--The manner of voting on any matter, 8 including changes in the articles or bylaws, may be by ballot, 9 mail or any reasonable means provided in a bylaw adopted by the 10 members. If a bylaw adopted by the members provides a fair and 11 reasonable procedure for the nomination of candidates for any 12 office, only candidates who have been duly nominated in 13 accordance therewith shall be eligible for election. Unless 14 otherwise provided in such a bylaw, in elections for directors, 15 voting shall be by ballot, and the candidates receiving the 16 highest number of votes from each class or group of classes, if 17 any, of members entitled to elect directors separately up to the 18 number of directors to be elected by such class or group of 19 classes shall be elected. If at any meeting of members directors 20 of more than one class are to be elected, each class of 21 directors shall be elected in a separate election. 22 (c) Cumulative voting.--[The members of a nonprofit 23 corporation shall have the right to cumulate their votes for the 24 election of directors only if and to the extent a bylaw adopted 25 by the members so provides.] If a bylaw adopted by the members 26 so provides, in each election of directors of a nonprofit 27 corporation every member entitled to vote shall have the right 28 to multiply the number of votes to which he may be entitled by 29 the total number of directors to be elected in the same election 30 by the members or the class of members to which he belongs and 19970S1157B2016 - 101 -
1 he may cast the whole number of his votes for one candidate or 2 he may distribute them among any two or more candidates. 3 (d) Sale of votes.--No member shall sell his vote or issue a 4 proxy for money or anything of value. 5 (e) Voting lists.--Upon request of a member, the books or 6 records of membership shall be produced at any regular or 7 special meeting of the corporation. If at any meeting the right 8 of a person to vote is challenged, the presiding officer shall 9 require [such] the books or records to be produced as evidence 10 of the right of the person challenged to vote, and all persons 11 who appear by [such] the books or records to be members entitled 12 to vote may vote. See section 6145 (relating to applicability of 13 certain safeguards to foreign corporations). 14 § 5782. Actions against directors, members of an other body and 15 officers. 16 (a) General rule.--Except as provided in subsection (b), in 17 any action or proceeding brought to enforce a secondary right on 18 the part of one or more members of a nonprofit corporation 19 against any present or former officer, director or member of an 20 other body of the corporation because the corporation refuses to 21 enforce rights that may properly be asserted by it, each 22 plaintiff must aver and it must be made to appear that each 23 plaintiff was a member of the corporation at the time of the 24 transaction of which he complains. 25 (b) Exception.--Any member who, except for the provisions of 26 subsection (a), would be entitled to maintain the action or 27 proceeding and who does not meet such requirements may, 28 nevertheless in the discretion of the court, be allowed to 29 maintain the action or proceeding on preliminary showing to the 30 court, by application and upon such verified statements and 19970S1157B2016 - 102 -
1 depositions as may be required by the court, that there is a 2 strong prima facie case in favor of the claim asserted on behalf 3 of the corporation and that without the action serious injustice 4 will result. 5 (c) Security for costs.--In any action or proceeding 6 instituted or maintained by less than the smaller of 50 members 7 of any class or 5% of the members of any class of the 8 corporation, the corporation in whose right the action or 9 proceeding is brought shall be entitled at any stage of the 10 proceedings to require the plaintiffs to give security for the 11 reasonable expenses, including attorney fees, that may be 12 incurred by it in connection therewith or for which it may 13 become liable pursuant to section 5743 (relating to mandatory 14 indemnification), but only insofar as relates to actions by or 15 in the right of the corporation, to which security the 16 corporation shall have recourse in such amount as the court 17 determines upon the termination of the action or proceeding. The 18 amount of security may, from time to time, be increased or 19 decreased in the discretion of the court upon showing that the 20 security provided has or may become inadequate or excessive. The 21 security may be denied or limited in the discretion of the court 22 upon preliminary showing to the court, by application and upon 23 such verified statements and depositions as may be required by 24 the court, establishing prima facie that the requirement of full 25 or partial security would impose undue hardship on plaintiffs 26 and serious injustice would result. 27 (d) Cross reference.--See section 6146 (relating to 28 provisions applicable to all foreign corporations). 29 § 5903. Bankruptcy or insolvency proceedings. 30 (a) General rule.--[Whenever] Unless otherwise provided in 19970S1157B2016 - 103 -
1 the bylaws, whenever a nonprofit corporation is insolvent or in 2 financial difficulty, the board of directors may, by resolution 3 and without the consent of the members, authorize and designate 4 the officers of the corporation to execute a deed of assignment 5 for the benefit of creditors, or file a voluntary petition in 6 bankruptcy, or file an answer consenting to the appointment of a 7 receiver upon a complaint in the nature of an equity action 8 filed by creditors or members, or, if insolvent, file an answer 9 to an involuntary petition in bankruptcy admitting the 10 insolvency of the corporation and its willingness to be adjudged 11 a debtor on that ground. 12 (b) Bankruptcy proceedings.--[A] If authorized pursuant to 13 subsection (a), a nonprofit corporation may participate in 14 proceedings under and in the manner provided by Title 11 of the 15 United States Code (relating to bankruptcy) notwithstanding any 16 contrary provision of its articles or bylaws or this subpart, 17 other than [section] sections 103 (relating to subordination of 18 title to regulatory laws) and 5107 (relating to subordination of 19 subpart to canon law). The corporation shall have full power and 20 authority to put into effect and carry out a plan of 21 reorganization or arrangement and the decrees and orders of the 22 court, or judge or referee relative thereto, and may take any 23 proceeding and do any act provided in the plan or arrangement or 24 directed by such decrees and orders, without further action by 25 its directors or members. Such power and authority may be 26 exercised, and such proceedings and acts may be taken, as may be 27 directed by such decrees or orders, by the trustees or receivers 28 of the corporation appointed in the bankruptcy proceedings, or a 29 majority thereof, or, if none be appointed and acting, by 30 designated officers of the corporation, or by a master or other 19970S1157B2016 - 104 -
1 representative appointed by the court or judge or referee, with 2 the effect as if exercised and taken by unanimous action of the 3 directors and members of the corporation. Without limiting the 4 generality or effect of the foregoing, the corporation may: 5 * * * 6 § 5912. Proposal of amendments. 7 (a) General rule.--Every amendment [to] of the articles of a 8 nonprofit corporation shall be proposed [by]: 9 (1) by the adoption by the board of directors or other 10 body of a resolution setting forth the proposed amendment; 11 (2) unless otherwise provided in the articles, by 12 petition of members entitled to cast at least 10% of the 13 votes [which] that all members are entitled to cast thereon, 14 setting forth the proposed amendment, which petition shall be 15 directed to the board of directors and filed with the 16 secretary of the corporation; or 17 (3) by such other method as may be provided in the 18 bylaws. 19 [The] (b) Submission to members.--Except where the approval 20 of the members is unnecessary under this subchapter, the board 21 of directors or other body [or the petitioning members] shall 22 direct that the proposed amendment be submitted to a vote of the 23 members entitled to vote thereon at a regular or special meeting 24 of the members. 25 [(b)] (c) Form of amendment.--[The resolution or petition 26 shall contain the language of the proposed amendment to the 27 articles by providing that the articles shall be amended so as 28 to read as therein set forth in full, or that any provision 29 thereof be amended so as to read as therein set forth in full, 30 or that the matter stated in the resolution or petition be added 19970S1157B2016 - 105 -
1 to or stricken from the articles. The resolution or petition may 2 set forth the manner and basis of reclassifying the shares of 3 the corporation.] The resolution or petition shall contain the 4 language of the proposed amendment of the articles: 5 (1) by setting forth the existing text of the articles 6 or the provision thereof that is proposed to be amended, with 7 brackets around language that is to be deleted and 8 underscoring under language that is to be added; or 9 (2) by providing that the articles shall be amended so 10 as to read as therein set forth in full, or that any 11 provision thereof be amended so as to read as therein set 12 forth in full, or that the matter stated in the resolution or 13 petition be added to or stricken from the articles. 14 (d) Terms of amendment.--The resolution or petition may set 15 forth the manner and basis of reclassifying the memberships in 16 or shares of the corporation. Any of the terms of a plan of 17 reclassification or other action contained in an amendment may 18 be made dependent upon facts ascertainable outside of the 19 amendment if the manner in which the facts will operate upon the 20 terms of the amendment is set forth in the amendment. Such facts 21 may include, without limitation, actions or events within the 22 control of or determinations made by the corporation or a 23 representative of the corporation. 24 § 5922. Plan of merger or consolidation. 25 (a) Preparation of plan.--A plan of merger or consolidation, 26 as the case may be, shall be prepared, setting forth: 27 (1) The terms and conditions of the merger or 28 consolidation. 29 [(2) The mode of carrying the merger or consolidation 30 into effect. 19970S1157B2016 - 106 -
1 (3)] (2) If the surviving or new corporation is or is to 2 be a domestic nonprofit corporation: 3 (i) any changes desired to be made in the articles, 4 which may include a restatement of the articles in the 5 case of a merger; or 6 (ii) in the case of a consolidation, all of the 7 statements required by this [article] subpart to be set 8 forth in restated articles. 9 [(4)] (3) Such other [details and] provisions as are 10 deemed desirable. 11 (b) Post-adoption amendment.--A plan of merger or 12 consolidation may contain a provision that the boards of 13 directors or other bodies of the constituent corporations may 14 amend the plan at any time prior to its effective date, except 15 that an amendment made subsequent to the adoption of the plan by 16 the members of any constituent corporation shall not change: 17 (1) The term of memberships or the amount or kind of 18 securities, obligations, cash, property or rights to be 19 received in exchange for or on conversion of all or any of 20 the memberships in the constituent corporation. 21 (2) Any term of the articles of the surviving or new 22 corporation to be effected by the merger or consolidation. 23 (3) Any of the terms and conditions of the plan if the 24 change would adversely affect the members of the constituent 25 corporation. 26 [(b)] (c) Proposal.--Every merger or consolidation shall be 27 proposed in the case of each domestic nonprofit corporation 28 [by]: 29 (1) by the adoption by the board of directors or other 30 body of a resolution approving the plan of merger or 19970S1157B2016 - 107 -
1 consolidation; 2 (2) unless otherwise provided in the articles, by 3 petition of members entitled to cast at least 10% of the 4 votes [which] that all members are entitled to cast thereon, 5 setting forth the proposed plan of merger or consolidation, 6 which petition shall be directed to the board of directors 7 and filed with the secretary of the corporation; or 8 (3) by such other method as may be provided in the 9 bylaws. 10 [The] (d) Submission to members.--Except where the 11 corporation has no members entitled to vote thereon, the board 12 of directors or other body [or the petitioning members] shall 13 direct that the plan be submitted to a vote of the members 14 entitled to vote thereon at a regular or special meeting of the 15 members. 16 (e) Party to plan or transaction.--A corporation, 17 partnership, business trust or other association that approves a 18 plan in its capacity as a member or creditor of a merging or 19 consolidating corporation, or that furnishes all or a part of 20 the consideration contemplated by a plan, does not thereby 21 become a party to the plan or the merger or consolidation for 22 the purposes of this subchapter. 23 (f) Reference to outside facts.--Any of the terms of a plan 24 of merger or consolidation may be made dependent upon facts 25 ascertainable outside of the plan if the manner in which the 26 facts will operate upon the terms of the plan is set forth in 27 the plan. Such facts may include, without limitation, actions or 28 events within the control of or determinations made by a party 29 to the plan or a representative of a party to the plan. 30 § 5923. Notice of meeting of members. 19970S1157B2016 - 108 -
1 (a) General rule.--Written notice of the meeting of members 2 that will act on the proposed plan shall[, not less than ten 3 days before the meeting of members called for the purpose of 4 considering the proposed plan,] be given to each member of 5 record, whether or not entitled to vote thereon, of each 6 domestic nonprofit corporation that is a party to the merger or 7 consolidation. There shall be included in, or enclosed with, 8 [such] the notice a copy of the proposed plan or a summary 9 thereof. The notice shall state that a copy of the bylaws of the 10 surviving or new corporation will be furnished to any member on 11 request and without cost. 12 (b) Cross reference.--See Subchapter A of Chapter 57 13 (relating to notice and meetings generally). 14 § 5929. Effect of merger or consolidation. 15 (a) Single surviving or new corporation.--Upon the merger or 16 consolidation becoming effective, the several corporations 17 parties to the [plan of] merger or consolidation shall be a 18 single corporation which, in the case of a merger, shall be 19 [that] the corporation designated in the plan of merger as the 20 surviving corporation[,] and, in the case of a consolidation, 21 shall be the new corporation provided for in the plan of 22 consolidation. The separate existence of all corporations 23 parties to the [plan of] merger or consolidation shall cease, 24 except that of the surviving corporation, in the case of a 25 merger. The surviving or new corporation, as the case may be, if 26 it is a domestic nonprofit corporation, shall not thereby 27 acquire authority to engage in any business or exercise any 28 right [which] that a corporation may not be incorporated under 29 this [article] subpart to engage in or exercise. 30 (b) Property rights.--Except as otherwise provided by order, 19970S1157B2016 - 109 -
1 if any, obtained pursuant to section [5547(b)] 5547(c) (relating 2 to nondiversion of certain property), all the property, real, 3 personal[,] and mixed, and franchises of each of the 4 corporations parties to the [plan of] merger or consolidation, 5 and all debts due on whatever account to any of them, including 6 subscriptions for membership and other choses in action 7 belonging to any of them, shall be [taken and] deemed to be 8 [transferred to and] vested in and shall belong to the surviving 9 or new corporation, as the case may be, without further [act or 10 deed] action, and the title to any real estate, or any interest 11 therein, vested in any of the corporations shall not revert or 12 be in any way impaired by reason of the merger or consolidation. 13 The surviving or new corporation shall thenceforth be 14 responsible for all the liabilities [and obligations] of each of 15 the corporations so merged or consolidated. [No liens] Liens 16 upon the property of the merging or consolidating corporations 17 shall not be impaired by [such] the merger or consolidation, and 18 any claim existing or action or proceeding pending by or against 19 any of [such] the corporations may be prosecuted to judgment as 20 if [such] the merger or consolidation had not taken place, or 21 the surviving or new corporation may be proceeded against or 22 substituted in its place. Any devise, gift or grant contained in 23 any will or other instrument, in trust or otherwise, made before 24 or after such merger or consolidation, to or for any of the 25 constituent corporations, shall inure to the surviving or new 26 corporation, as the case may be, subject to compliance with the 27 requirements of section 5550 (relating to devises, bequests and 28 gifts after certain fundamental changes). 29 (c) Taxes.--Any taxes, penalties and public accounts of the 30 Commonwealth, claimed against any of the merging or 19970S1157B2016 - 110 -
1 consolidating corporations, but not settled, assessed or 2 determined prior to [such] the merger or consolidation, shall be 3 settled, assessed or determined against the surviving or new 4 corporation[,] and, together with interest thereon, shall be a 5 lien against the franchises and property, both real and 6 personal, of the surviving or new corporation. 7 (d) Articles of incorporation.--In the case of a merger, the 8 articles of incorporation of the surviving domestic nonprofit 9 corporation, if any, shall be deemed to be amended to the 10 extent, if any, that changes in its articles are stated in the 11 plan of merger[; and in]. In the case of a consolidation into a 12 domestic nonprofit corporation, the statements [which] that are 13 set forth in the plan of consolidation, or articles of 14 incorporation set forth therein, shall be deemed to be the 15 articles of incorporation of the new corporation. 16 § 5952. Proposal and adoption of plan of division. 17 (a) Preparation of plan.--A plan of division shall be 18 prepared, setting forth: 19 (1) The terms and conditions of the division, including 20 the manner and basis of: 21 (i) [the] The reclassification of the membership 22 interests or shares [or obligations] of the surviving 23 corporation, if there be one[; and]. 24 (ii) [the] The disposition of the membership 25 interests or shares [and] or obligations, if any, of the 26 new corporation or corporations resulting from the 27 division. 28 [(2) The mode of carrying the division into effect. 29 (3)] (2) A statement that the dividing nonprofit 30 corporation will, or will not, survive the division. 19970S1157B2016 - 111 -
1 [(4)] (3) Any changes desired to be made in the articles 2 of the surviving corporation, if there be one, including a 3 restatement of the articles. 4 [(5)] (4) The articles of incorporation required by 5 subsection (b) [of this section]. 6 [(6)] (5) Such other [details and] provisions as are 7 deemed desirable. 8 (b) Articles of new corporations.--There shall be included 9 in or annexed to the plan of division: 10 (1) Articles of incorporation, which shall contain all 11 of the statements required by this [article] subpart to be 12 set forth in restated articles, for each of the new domestic 13 nonprofit corporations, if any, resulting from the division. 14 (2) Articles of incorporation, certificates of 15 incorporation[,] or other charter documents for each of the 16 new foreign nonprofit corporations [not-for-profit], if any, 17 resulting from the division. 18 (c) Proposal and adoption.--[The] Except as otherwise 19 provided in section 5953 (relating to division without member 20 approval), the plan of division shall be proposed and adopted, 21 and may be amended after its adoption and terminated, by a 22 domestic nonprofit corporation in the manner provided for the 23 proposal, adoption, amendment and termination of a plan of 24 merger in Subchapter C (relating to merger, consolidation and 25 sale of assets) or, if the dividing corporation is a foreign 26 nonprofit corporation [not-for-profit], in accordance with the 27 laws of the jurisdiction in which it is incorporated[.] and, in 28 the case of a foreign domiciliary corporation, the provisions of 29 this subpart to the extent provided by section 6145 (relating to 30 applicability of certain safeguards to foreign corporations). 19970S1157B2016 - 112 -
1 There shall be included in or enclosed with the notice of the 2 meeting of members that will act on the plan a copy or summary 3 of the plan. 4 (d) Special requirements.--If any provision of the bylaws of 5 a dividing domestic nonprofit corporation adopted before January 6 1, 1972 shall require for the adoption of a plan of merger or 7 consolidation or a plan involving the sale, lease or exchange of 8 all or substantially all of the property and assets of the 9 corporation a specific number or percentage of votes of 10 directors, members, or members of an other body or other special 11 procedures, the plan of division shall not be adopted without 12 such number or percentage of votes or compliance with such other 13 special procedures. 14 (e) Financial status of resulting corporations.--Unless the 15 plan of division provides that the dividing corporation shall 16 survive the division and that all membership interests or shares 17 or obligations, if any, of all new corporations resulting from 18 the plan shall be owned solely by the surviving corporation, no 19 plan of division may be made effective at a time when the 20 dividing corporation is insolvent or when the division would 21 render any of the resulting corporations insolvent. 22 (f) Rights of holders of indebtedness.--If any debt 23 securities, notes or similar evidences of indebtedness for money 24 borrowed, whether secured or unsecured, indentures or other 25 contracts were issued, incurred or executed by the dividing 26 corporation before January 1, 1972, and have not been amended 27 subsequent to that date, the liability of the dividing 28 corporation thereunder shall not be affected by the division nor 29 shall the rights of the obligees thereunder be impaired by the 30 division, and each of the resulting corporations may be 19970S1157B2016 - 113 -
1 proceeded against or substituted in place of the dividing 2 corporation as joint and several obligors on such liability, 3 regardless of any provision of the plan of division apportioning 4 the liabilities of the dividing corporation. 5 (g) Reference to outside facts.--Any of the terms of a plan 6 of division may be made dependent upon facts ascertainable 7 outside of the plan if the manner in which the facts will 8 operate upon the terms of the plan is set forth in the plan. 9 Such facts may include, without limitation, actions or events 10 within the control of or determinations made by the dividing 11 corporation or a representative of the dividing corporation. 12 § 5953. [(Reserved).] Division without member approval. 13 Unless otherwise required by its bylaws or by section 5952 14 (relating to proposal and adoption of plan of division), a plan 15 of division that does not alter the state of incorporation of a 16 nonprofit corporation nor amend in any respect the provisions of 17 its articles, except amendments that under section 5914(b) 18 (relating to adoption in absence of voting members) may be made 19 without member action, shall not require the approval of the 20 members of the corporation if the transfers of assets effected 21 by the division, if effected by means of a sale, lease, exchange 22 or other disposition, would not require the approval of members 23 under section 5930 (relating to voluntary transfer of corporate 24 assets). 25 § 5957. Effect of division. 26 (a) Multiple resulting corporations.--Upon the division 27 becoming effective, the dividing corporation shall be subdivided 28 into the distinct and independent resulting corporations named 29 in the plan of division and, if the dividing corporation is not 30 to survive the division, the existence of the dividing 19970S1157B2016 - 114 -
1 corporation shall cease. The resulting corporations, if they are 2 domestic nonprofit corporations, shall not thereby acquire 3 authority to engage in any business or exercise any right 4 [which] that a corporation may not be incorporated under this 5 [article] subpart to engage in or exercise. Any resulting 6 foreign nonprofit corporation [which] that is stated in the 7 articles of division to be a qualified foreign nonprofit 8 corporation shall be a qualified foreign nonprofit corporation 9 under [this subpart] Article C (relating to foreign nonprofit 10 corporations), and the articles of division shall be deemed to 11 be the application for a certificate of authority and the 12 certificate of authority issued thereon of [such] the 13 corporation. 14 (b) Property rights; allocations of assets and 15 liabilities.-- 16 (1) Except as otherwise provided by order, if any, 17 obtained pursuant to section [5547(b)] 5547(c) (relating to 18 nondiversion of certain property)[, all]: 19 (i) All the property, real, personal[,] and mixed, 20 and franchises of the dividing corporation, and all debts 21 due on whatever account to it, including subscriptions 22 for membership and other choses in action belonging to 23 it, shall, to the extent allocations of assets are 24 contemplated by the plan of division, be [taken and] 25 deemed without further [act or deed] action to be 26 [transferred] allocated to and vested in the resulting 27 corporations on such a manner and basis and with such 28 effect as is specified in the plan [of division], or per 29 capita among the resulting corporations, as tenants in 30 common, if no [such] specification is made in the plan[. 19970S1157B2016 - 115 -
1 The], and the title to any real estate, or interest 2 therein, vested in any of the corporations shall not 3 revert or be in any way impaired by reason of the 4 division. 5 (ii) Upon the division becoming effective, the 6 resulting corporations shall each thenceforth be 7 responsible as separate and distinct corporations only 8 for such liabilities [and obligations] as each 9 corporation may undertake or incur in its own name, but 10 shall be liable [inter se] for the [debts and] 11 liabilities of the dividing corporation in the manner and 12 on the basis [specified in the plan of division. No 13 liens] provided in paragraphs (4) and (5). 14 (iii) Liens upon the property of the dividing 15 corporation shall not be impaired by the division. 16 [One] (iv) To the extent allocations of liabilities 17 are contemplated by the plan of division, the liabilities 18 of the dividing corporation shall be deemed without 19 further action to be allocated to and become the 20 liabilities of the resulting corporations on such a 21 manner and basis and with such effect as is specified in 22 the plan; and one or more, but less than all, of the 23 resulting corporations shall be free of [all] the 24 liabilities [and obligations] of the dividing corporation 25 to the extent, if any, specified in the plan, if in 26 either case: 27 (A) no fraud [of corporate creditors or] on 28 members without voting rights [and if no] or 29 violation of law shall be effected thereby[,]; and 30 [if applicable provisions of law are complied with. 19970S1157B2016 - 116 -
1 Otherwise, the liability] 2 (B) the plan does not constitute a fraudulent 3 transfer under 12 Pa.C.S. Ch. 51 (relating to 4 fraudulent transfers). 5 (v) If the conditions in subparagraph (iv) for 6 freeing one or more of the resulting corporations from 7 the liabilities of the dividing corporation, or for 8 allocating some or all of the liabilities of the dividing 9 corporation, are not satisfied, the liabilities of the 10 dividing corporation[, or of its members, directors, or 11 officers,] as to which those conditions are not satisfied 12 shall not be affected by the division[,] nor shall the 13 rights of [the] creditors [thereof or of any person 14 dealing with such corporation] thereunder be impaired by 15 [such] the division[,] and[, except as otherwise provided 16 in this section,] any claim existing or action or 17 proceeding pending by or against [such] the corporation 18 with respect to those liabilities may be prosecuted to 19 judgment as if [such] the division had not taken place, 20 or the resulting corporations may be proceeded against or 21 substituted in [its] place of the dividing corporation as 22 joint and several obligors on [such liability] those 23 liabilities, regardless of any provision of the plan of 24 division apportioning the [debts and] liabilities of the 25 dividing corporation. 26 (2) It shall not be necessary for a plan of division to 27 list each individual asset or liability of the dividing 28 corporation to be allocated to a new corporation so long as 29 those assets and liabilities are described in a reasonable 30 manner. 19970S1157B2016 - 117 -
1 (3) Each new corporation shall hold any assets and 2 liabilities allocated to it as the successor to the dividing 3 corporation, and those assets and liabilities shall not be 4 deemed to have been assigned to the new corporation in any 5 manner, whether directly or indirectly or by operation of 6 law. 7 (c) Taxes.--Any taxes, penalties and public accounts of the 8 Commonwealth, claimed against the dividing corporation, but not 9 settled, assessed or determined prior to [such] the division, 10 shall be settled, assessed or determined against any of the 11 resulting corporations[,] and, together with interest thereon, 12 shall be a lien against the franchises and property, both real 13 and personal, of all [such] the corporations. [The] Upon the 14 application of the dividing corporation, the Department of 15 Revenue [may, upon the application of the dividing corporation], 16 with the concurrence of the Office of Employment Security of the 17 Department of Labor and Industry, shall release one or more, but 18 less than all, of the resulting corporations from liability and 19 liens for all taxes, penalties and public accounts of the 20 dividing corporation due the Commonwealth [or any other taxing 21 authority] for periods prior to the effective date of the 22 division, if [the Department of Revenue is] those departments 23 are satisfied that the public revenues will be adequately 24 secured. 25 (d) Articles of surviving corporation.--The articles of 26 incorporation of the surviving corporation, if there be one, 27 shall be deemed to be amended to the extent, if any, that 28 changes in its articles are stated in the plan of division. 29 (e) Articles of new corporations.--The statements [which] 30 that are set forth in the plan of division with respect to each 19970S1157B2016 - 118 -
1 new domestic nonprofit corporation and [which] that are required 2 or permitted to be set forth in restated articles of 3 incorporation of corporations incorporated under this [article] 4 subpart, or the articles of incorporation of each new 5 corporation set forth therein, shall be deemed to be the 6 articles of incorporation of each [such] new corporation. 7 (f) Directors and officers.--Unless otherwise provided in 8 the plan, the directors and officers of the dividing corporation 9 shall be the initial directors and officers of each of the 10 resulting corporations. 11 (g) Disposition of memberships.--Unless otherwise provided 12 in the plan, the memberships and other securities or 13 obligations, if any, of each new corporation resulting from the 14 division shall be distributable to: 15 (1) the surviving corporation, if the dividing 16 corporation survives the division; or 17 (2) the members of the dividing corporation pro rata, in 18 any other case. 19 (h) Conflict of laws.--It is the intent of the General 20 Assembly that: 21 (1) The effect of a division of a domestic business 22 corporation shall be governed solely by the laws of this 23 Commonwealth and any other jurisdiction under the laws of 24 which any of the resulting corporations is incorporated. 25 (2) The effect of a division on the assets and 26 liabilities of the dividing corporation shall be governed 27 solely by the laws of this Commonwealth and any other 28 jurisdiction under the laws of which any of the resulting 29 corporations is incorporated. 30 (3) The validity of any allocations of assets or 19970S1157B2016 - 119 -
1 liabilities by a plan of division of a domestic business 2 corporation, regardless of whether or not any of the new 3 corporations is a foreign business corporation, shall be 4 governed solely by the laws of this Commonwealth. 5 (4) In addition to the express provisions of this 6 subsection, this subchapter shall otherwise generally be 7 granted the protection of full faith and credit under the 8 Constitution of the United States. 9 § 5961. Conversion authorized. 10 (a) General rule.--Any nonprofit corporation may, in the 11 manner provided in this subchapter, be converted into a business 12 corporation, [hereinafter] designated in this subchapter as the 13 resulting corporation. 14 (b) Exceptions.-- 15 (1) This subchapter shall not authorize any conversion 16 involving: 17 [(i) A cooperative corporation. 18 (ii)] (i) Beneficial, benevolent, fraternal or 19 fraternal benefit societies having a lodge system and a 20 representative form of government, or transacting any 21 type of insurance whatsoever. 22 [(iii)] (ii) Any corporation [which] that by the 23 laws of this Commonwealth is subject to the supervision 24 of the Department of Banking, the Insurance Department or 25 the Pennsylvania Public Utility Commission, unless the 26 agency expressly approves the transaction in writing. 27 (2) [Paragraph (1) of this subsection] Subsection (a) 28 shall not be construed as repealing any statute [which] that 29 provides a procedure for the conversion of a nonprofit 30 corporation into an insurance corporation. 19970S1157B2016 - 120 -
1 § 5962. Proposal and adoption of plan of conversion. 2 (a) Preparation of plan.--A plan of conversion shall be 3 prepared, setting forth: 4 (1) The terms and conditions of the conversion. 5 [(2) The mode of carrying the conversion into effect. 6 (3)] (2) A restatement of the articles of the resulting 7 corporation, which articles shall comply with the 8 requirements of [Subpart B of Part II (relating to business 9 corporations)] this part relating to business corporations. 10 [(4)] (3) Such other [details and] provisions as are 11 deemed desirable. 12 (b) Proposal and adoption.--The plan of conversion shall be 13 proposed and adopted, and may be amended after its adoption and 14 terminated, by the nonprofit corporation in the manner provided 15 for the proposal, adoption, amendment and termination of a plan 16 of merger in Subchapter C (relating to merger, consolidation and 17 sale of assets). There shall be included in or enclosed with the 18 notice of meeting of members of the nonprofit corporation that 19 will act upon the plan a copy or a summary of the plan. 20 (c) Reference to outside facts.--Any of the terms of a plan 21 of conversion may be made dependent upon facts ascertainable 22 outside of the plan if the manner in which the facts will 23 operate upon the terms of the plan is set forth in the plan. 24 Such facts may include, without limitation, actions or events 25 within the control of or determinations made by the corporation 26 or a representative of the corporation. 27 § 5964. Filing of articles of conversion. 28 (a) General rule.--The articles of conversion shall be filed 29 in the Department of State. 30 (b) Cross [reference.--See section] references.--See 19970S1157B2016 - 121 -
1 sections 134 (relating to docketing statement) and 135 (relating 2 to requirements to be met by filed documents). 3 § 5965. Effective date of conversion. 4 Upon the filing of articles of conversion in the Department 5 of State[,] or upon the effective date specified in the plan of 6 conversion, whichever is later, the conversion shall become 7 effective. 8 § 5966. Effect of conversion. 9 Upon the conversion becoming effective, the converting 10 nonprofit corporation shall be deemed to be a business 11 corporation subject to the provisions of this part relating to 12 business corporations for all purposes, shall cease to be a 13 nonprofit corporation[,] and may thereafter operate for a 14 purpose or purposes resulting in pecuniary profit, incidental or 15 otherwise, to its members or shareholders. [The] Unless the 16 shares of the corporation are to be uncertificated, the 17 corporation shall issue share certificates to each shareholder 18 entitled thereto. The corporation shall remain liable for all 19 existing obligations, public [and] or private, and taxes due the 20 Commonwealth or any other taxing authority for periods prior to 21 the effective date of the conversion, and, as [such] a business 22 corporation, it shall continue to be entitled to all assets 23 theretofore pertaining to it as a nonprofit corporation except 24 as otherwise provided by order, if any, obtained pursuant to 25 section 5547(b) (relating to nondiversion of certain property). 26 § 5975. Predissolution provision for liabilities. 27 (a) Powers of board.--The board of directors or other body 28 of a nonprofit corporation that has elected to proceed under 29 this section shall have full power to wind up and settle the 30 affairs of [a nonprofit] the corporation in accordance with this 19970S1157B2016 - 122 -
1 section prior to filing articles of dissolution in accordance 2 with section 5977 (relating to articles of dissolution). 3 (b) Notice to creditors and taxing authorities.--After the 4 approval by the members or the board of directors or other body 5 pursuant to section 5974(b) (relating to adoption in absence of 6 voting members) that the corporation dissolve voluntarily, the 7 corporation shall immediately cause notice of the winding up 8 proceedings to be officially published and to be mailed by 9 certified or registered mail to each known creditor and claimant 10 and to each municipal corporation in which [its registered 11 office or principal] it has a place of business in this 12 Commonwealth [is located]. 13 (c) Winding up and distribution.--The corporation shall, as 14 speedily as possible, proceed to collect all sums due it, 15 convert into cash all corporate assets the conversion of which 16 into cash is required to discharge its liabilities and, out of 17 the assets of the corporation, discharge or make adequate 18 provision for the discharge of all liabilities of the 19 corporation, according to their respective priorities. Except as 20 otherwise provided in a bylaw adopted by the members or in this 21 subpart or by any other provision of law, any surplus remaining 22 after paying or providing for all liabilities of the corporation 23 shall be distributed to the shareholders, if any, pro rata, or 24 if there be no shareholders, among the members per capita. See 25 section 1972(a) (relating to proposal of voluntary dissolution). 26 § 5976. Judicial supervision of proceedings. 27 (a) General rule.--A nonprofit corporation that has elected 28 to proceed under section 1975 (relating to predissolution 29 provision for liabilities), at any time during the winding up 30 proceedings, may apply to the court to have the proceedings 19970S1157B2016 - 123 -
1 continued under the supervision of the court and thereafter the 2 proceedings shall continue under the supervision of the court as 3 provided in Subchapter G (relating to involuntary liquidation 4 and dissolution). 5 * * * 6 § 5977. Articles of dissolution. 7 * * * 8 (b) Contents of articles.--The articles of dissolution shall 9 be executed by the corporation and shall set forth: 10 * * * 11 (5) A statement that: 12 (i) [that] all liabilities of the corporation have 13 been discharged or that adequate provision has been made 14 therefor; [or] 15 (ii) [that] the assets of the corporation are not 16 sufficient to discharge its liabilities, and that all the 17 assets of the corporation have been fairly and equitably 18 applied, as far as they will go, to the payment of such 19 liabilities[. An election by]; or 20 (iii) the corporation has elected to proceed under 21 Subchapter H [shall constitute the making of adequate 22 provision for the liabilities of the corporation, 23 including any judgment or decree that may be obtained 24 against the corporation in any pending action or 25 proceeding]. 26 * * * 27 (7) [A] In the case of a corporation that has not 28 elected to proceed under Subchapter H, a statement that no 29 actions or proceedings are pending against the corporation in 30 any court, or that adequate provision has been made for the 19970S1157B2016 - 124 -
1 satisfaction of any judgment or decree that may be obtained 2 against the corporation in each pending action or proceeding. 3 (8) [A] In the case of a corporation that has not 4 elected to proceed under Subchapter H, a statement that 5 notice of the winding-up proceedings of the corporation was 6 mailed by certified or registered mail to each known creditor 7 and claimant and to each municipal corporation in which the 8 [registered office or principal place of business of the] 9 corporation has a place of business in this Commonwealth [is 10 located]. 11 * * * 12 (d) Cross references.--See sections 134 (relating to 13 docketing statement) and 135 (relating to requirements to be met 14 by filed documents). 15 § 5989. Articles of involuntary dissolution. 16 (a) General rule.--In a proceeding under this subchapter, 17 the court shall enter an order dissolving the nonprofit 18 corporation when the order, if any, obtained pursuant to section 19 5547(b) (relating to nondiversion of certain property) has been 20 entered and when the costs and expenses of the proceeding, and 21 all liabilities of the corporation have been discharged, and all 22 of its remaining assets have been distributed to the persons 23 entitled thereto, or, in case its assets are not sufficient to 24 discharge such costs, expenses and liabilities, when all the 25 assets have been applied, as far as they will go, to the payment 26 of such costs, expenses and liabilities. See section 139(b) 27 (relating to tax clearance in judicial proceedings). 28 (b) Filing.--After entry of an order of dissolution, the 29 office of the clerk of the court of common pleas shall prepare 30 and execute articles of dissolution substantially in the form 19970S1157B2016 - 125 -
1 provided by section 5977 (relating to articles of dissolution), 2 attach thereto a certified copy of the order and transmit the 3 articles and attached order to the Department of State. [A 4 certificate or statement provided for by section 139 (relating 5 to tax clearance of certain fundamental transactions) shall not 6 be required, and the] The department shall not charge a fee in 7 connection with the filing of articles of dissolution under this 8 section. See [section] sections 134 (relating to docketing 9 statement) and 135 (relating to requirements to be met by filed 10 documents). 11 * * * 12 § 5991.1. Authority of board of directors. 13 (a) General rule.--The board of directors or other body of a 14 nonprofit corporation that has elected to proceed under this 15 subchapter shall have full power to wind up and settle the 16 affairs of the corporation in accordance with this subchapter 17 both prior to and after the filing of articles of dissolution in 18 accordance with section 5977 (relating to articles of 19 dissolution). 20 (b) Winding up.--The corporation shall, as speedily as 21 possible, proceed to comply with the requirements of this 22 subchapter while simultaneously collecting all sums due it and 23 converting into cash all corporate assets, the conversion of 24 which into cash is required to make adequate provision for its 25 liabilities. 26 § 6126. Amended certificate of authority. 27 (a) General rule.--After receiving a certificate of 28 authority, a qualified foreign nonprofit corporation may, 29 subject to the provisions of this subchapter, change [the name 30 under which it is authorized to transact business in this 19970S1157B2016 - 126 -
1 Commonwealth] or correct any of the information set forth in its 2 application for a certificate of authority or previous filings 3 under this section by filing in the Department of State an 4 application for an amended certificate of authority. The 5 application shall be executed by the corporation and shall 6 state: 7 (1) The name under which the applicant corporation 8 currently holds a certificate of authority to do business in 9 this Commonwealth. 10 [(2) The name of the jurisdiction under the laws of 11 which the corporation is incorporated. 12 (3) The address, including street and number, if any, of 13 its principal office under the laws of the jurisdiction in 14 which it is incorporated. 15 (4)] (2) Subject to section 109 (relating to name of 16 commercial registered office provider in lieu of registered 17 address), the address, including street and number, if any, 18 of its registered office in this Commonwealth. [which may 19 constitute a change in the address of its registered office. 20 (5) The new name of the corporation and] 21 (3) The information to be changed or corrected. 22 (4) If the application reflects a change in the name of 23 the corporation, the application shall include a statement 24 that either: 25 (i) the change of name reflects a change effected in 26 the jurisdiction of incorporation; or 27 (ii) documents complying with section 6123(b) 28 (relating to exceptions) accompany the application. 29 (b) Issuance of amended certificate of authority.--Upon the 30 filing of the application, the applicant corporation shall be 19970S1157B2016 - 127 -
1 deemed to hold an amended certificate of authority. 2 (c) Cross reference.--See section 134 (relating to docketing 3 statement). 4 § 6146. Provisions applicable to all foreign corporations. 5 The following provisions of this subpart shall, except as 6 otherwise provided in this section, be applicable to every 7 foreign corporation not-for-profit, whether or not required to 8 procure a certificate of authority under this chapter: 9 Section 5503 (relating to defense of ultra vires), as to 10 contracts and conveyances governed by the laws of this 11 Commonwealth and conveyances affecting real property situated 12 in this Commonwealth. 13 Section 5506 (relating to form of execution of 14 instruments), as to instruments or other documents governed 15 by the laws of this Commonwealth or affecting real property 16 situated in this Commonwealth. 17 Section 5510 (relating to certain specifically authorized 18 debt terms), as to obligations (as defined in the section) 19 governed by the laws of this Commonwealth or affecting real 20 property situated in this Commonwealth. 21 Section 5782 (relating to actions against directors, 22 members of an other body and officers), as to any action or 23 proceeding brought in a court of this Commonwealth. 24 § 8105. Ownership of certain professional partnerships. 25 Except as otherwise provided by statute, rule or regulation 26 applicable to a particular profession, all of the [partners in] 27 ultimate beneficial owners of the partnership interests in a 28 partnership that renders one or more restricted professional 29 services shall be licensed persons. As used in this section, 30 the term "restricted professional services" shall have the 19970S1157B2016 - 128 -
1 meaning specified in section 8903 (relating to definitions and 2 index of definitions). 3 § 8201. Scope. 4 * * * 5 (e) Prohibited termination.--A registration under this 6 subchapter may not be terminated while the partnership is a 7 bankrupt as that term is defined in section 8903 (relating to 8 definitions and index of definitions). See section 8221(f) 9 (relating to annual registration). 10 (f) Alternative procedure.--In lieu of filing a statement of 11 registration as provided in subsection (a), a limited 12 partnership may register as a registered limited liability 13 partnership by including in its certificate of limited 14 partnership, either originally or by amendment, the statements 15 required by subsection (a)(3) and (4). To terminate its 16 registration, a limited partnership that uses the procedure 17 authorized by this subsection shall amend its certificate of 18 limited partnership to delete the statements required by this 19 subsection. 20 (g) Constructive notice.--Filing under this section shall 21 constitute constructive notice that the partnership is a 22 registered limited liability partnership and that the partners 23 are entitled to the protections from liability provided by this 24 subchapter. 25 [(e)] (h) Cross references.--See sections 134 (relating to 26 docketing statement) and 135 (relating to requirements to be met 27 by filed documents). 28 § 8202. Definitions. 29 The following words and phrases when used in this chapter 30 shall have the meanings given to them in this section unless the 19970S1157B2016 - 129 -
1 context clearly indicates otherwise: 2 * * * 3 "Partner." Includes a person who is or was a partner in a 4 registered limited liability partnership at any time while the 5 registration of the partnership under this subchapter is or was 6 in effect. 7 * * * 8 § 8204. Limitation on liability of partners. 9 (a) General rule.--Except as provided in subsection (b), a 10 partner in a registered limited liability partnership shall not 11 be individually liable directly or indirectly, whether by way of 12 indemnification, contribution or otherwise, for debts and 13 obligations of, or chargeable to, the partnership, whether 14 sounding in contract or tort or otherwise, that arise from any 15 negligent or wrongful acts or misconduct committed by another 16 partner or other representative of the partnership while the 17 registration of the partnership under this subchapter is in 18 effect. 19 (b) Exceptions.-- 20 (1) [Subsection (a) shall not apply to any debt or 21 obligation with respect to which the partnership is not in 22 compliance with section 8206(a) (relating to insurance).] 23 (Repealed). 24 * * * 25 (3) Subsection (a) shall not affect in any way: 26 (i) the liability of the partnership itself for all 27 its debts and obligations; [or] 28 (ii) the availability of the entire assets of the 29 partnership to satisfy its debts and obligations; or 30 (iii) any obligation undertaken by a partner in 19970S1157B2016 - 130 -
1 writing to individually indemnify another partner of the 2 partnership or to individually contribute toward a 3 liability of another partner. 4 * * * 5 § 8205. Liability of withdrawing partner. 6 * * * 7 (b) Exceptions.--Subsection (a) shall not affect the 8 liability of a partner: 9 * * * 10 (7) For any obligation undertaken by a partner in 11 writing to individually indemnify another partner of the 12 partnership or to individually contribute toward a liability 13 of another partner. 14 * * * 15 (e) Permissive filing.--Filing under this section is 16 permissive, and failure to make a filing under this section by a 17 partner entitled to do so shall not affect the right of that 18 partner to the limitation on liability provided by section 8204 19 (relating to limitation on liability of partners). 20 (f) Constructive notice.--Filing under this section shall 21 constitute constructive notice that the partner has withdrawn 22 from the partnership and is entitled to the protection from 23 liability provided by this section. 24 (g) Variation of section.--A written provision of the 25 partnership agreement may restrict or condition the application 26 of this section to some or all of the partners of the 27 partnership. 28 (h) Application of section.--A partner in a foreign 29 registered limited liability partnership, regardless of whether 30 or not it has registered to do business in this Commonwealth 19970S1157B2016 - 131 -
1 under section 8211 (relating to foreign registered limited 2 liability partnerships), shall not be entitled to make a filing 3 under this section with regard to that partnership. 4 [(e)] (i) Cross references.--See sections 134 (relating to 5 docketing statement) and 135 (relating to requirements to be met 6 by filed documents). 7 § 8211. Foreign registered limited liability partnerships. 8 (a) Governing law.--Subject to the Constitution of 9 Pennsylvania: 10 (1) The laws of the jurisdiction under which a foreign 11 registered limited liability partnership is organized govern 12 its organization and internal affairs and the liability of 13 its partners, except as provided in subsection (c). 14 (2) A foreign registered limited liability partnership 15 may not be denied registration by reason of any difference 16 between those laws and the laws of this Commonwealth. 17 (b) Registration to do business.--A foreign registered 18 limited liability partnership, regardless of whether or not it 19 is also a foreign limited partnership, shall be subject to 20 Subchapter K of Chapter 85 (relating to foreign limited 21 partnerships) as if it were a foreign limited partnership, 22 except that [the]: 23 (1) Its application for registration shall state that it 24 is a registered limited liability partnership. 25 (2) The name under which [the foreign registered limited 26 liability partnership] it registers and conducts business in 27 this Commonwealth shall comply with the requirements of 28 section 8203 (relating to name). 29 (3) Section 8582(a)(5) and (6) (relating to 30 registration) shall not be applicable to the application for 19970S1157B2016 - 132 -
1 registration of a foreign limited liability partnership that 2 is not a foreign limited partnership. 3 (c) Exception.--The liability of the partners in a foreign 4 registered limited liability partnership shall be governed by 5 the laws of the jurisdiction under which it is organized, except 6 that the partners shall not be entitled to greater protection 7 from liability than is available to the partners in a domestic 8 registered limited liability partnership. 9 § 8221. Annual registration. 10 * * * 11 (e) [Annual fee to be lien] Failure to pay annual fee.-- 12 (1) Failure to [pay the annual registration fee imposed] 13 file the certificate of annual registration required by this 14 section [shall not affect the existence or] for five 15 consecutive years shall result in the automatic termination 16 of the status of the registered limited liability partnership 17 as such[, but the]. In addition, any annual registration fee 18 that is not paid when due shall be a lien in the manner 19 provided in this subsection from the time the annual 20 registration fee is due and payable [upon]. If a certificate 21 of annual registration is not filed within 30 days after the 22 date on which it is due, the department shall assess a 23 penalty of $500 against the partnership, which shall also be 24 a lien in the manner provided in this subsection. The 25 imposition of that penalty shall not be construed to relieve 26 the partnership from liability for any other penalty or 27 interest provided for under other applicable law. 28 (2) If the annual registration fee paid by a registered 29 limited liability partnership is subsequently determined to 30 be less than should have been paid because it was based on an 19970S1157B2016 - 133 -
1 incorrect number of general partners or was otherwise 2 incorrectly computed, that fact shall not affect the 3 existence or status of the registered limited liability 4 partnership as such, but the amount of the additional annual 5 registration fee that should have been paid shall be a lien 6 in the manner provided in this subsection from the time the 7 incorrect payment is discovered by the department. 8 (3) The annual registration fee shall bear simple 9 interest from the date that it becomes due and payable until 10 paid. The interest rate shall be that provided for in section 11 806 of the act of April 9, 1929 (P.L.343, No.176), known as 12 The Fiscal Code, with respect to unpaid taxes. The penalty 13 provided for in paragraph (1) shall not bear interest. The 14 payment of interest shall not relieve the registered limited 15 liability partnership from liability for any other penalty or 16 interest provided for under other applicable law. 17 (4) The lien created by this subsection shall attach to 18 all of the property and proceeds thereof of the registered 19 limited liability partnership in which a security interest 20 can be perfected in whole or in part by filing in the 21 department under 13 Pa.C.S. Div. 9 (relating to secured 22 transactions; sales of accounts, contract rights and chattel 23 paper), whether the property and proceeds are owned by the 24 partnership at the time the annual registration fee or any 25 penalty or interest becomes due and payable or whether the 26 property and proceeds are acquired thereafter. Except as 27 otherwise provided by statute, the lien created by this 28 subsection shall have priority over all other liens, security 29 interests or other charges, except liens for taxes or other 30 charges due the Commonwealth. The lien created by this 19970S1157B2016 - 134 -
1 subsection shall be entered on the records of the department 2 and indexed in the same manner as a financing statement filed 3 under 13 Pa.C.S. Div. 9. At the time an annual registration 4 fee, penalty or interest that has resulted in the creation of 5 a lien under this subsection is paid, the department shall 6 terminate the lien with respect to that annual registration 7 fee, penalty or interest without requiring a separate filing 8 by the partnership for that purpose. 9 (5) If the annual registration fee paid by a registered 10 limited liability partnership is subsequently determined to 11 be more than should have been paid for any reason, no refund 12 of the additional fee shall be made. 13 (6) Termination of the status of a registered limited 14 liability partnership as such, whether voluntarily or 15 involuntarily, shall not release it from the obligation to 16 pay any accrued fees, penalties and interest and shall not 17 release the lien created by this subsection. 18 (f) Exception for bankrupt partnerships.--A partnership that 19 would otherwise be required to pay the annual registration fee 20 set forth in subsection (b) shall not be required to pay that 21 fee with respect to any year during any part of which the 22 partnership is a bankrupt as defined in section 8903 (relating 23 to definitions and index of definitions). The partnership shall, 24 instead, indicate on its certificate of annual registration for 25 that year that it is exempt from payment of the annual 26 registration fee pursuant to this subsection. If the partnership 27 fails to file timely a certificate of annual registration, a 28 lien shall be entered on the records of the department pursuant 29 to subsection (e) which shall not be removed until the 30 partnership files a certificate of annual registration 19970S1157B2016 - 135 -
1 indicating its entitlement to an exemption from payment of the 2 annual registration fee as provided in this subsection. See 3 section 8201(e) (relating to scope). 4 § 8359. Right to wind up affairs. 5 Unless otherwise agreed, the partners who have not wrongfully 6 dissolved the partnership, or the legal representative of the 7 last surviving partner, not bankrupt, has the right to wind up 8 the partnership affairs except that any partner, his legal 9 representative or his assignee, upon cause shown, may obtain 10 winding up by the court. See section 139(b) (relating to tax 11 clearance in judicial proceedings). 12 § 8503. Definitions and index of definitions. 13 (a) Definitions.--The following words and phrases when used 14 in this chapter shall have the meanings given to them in this 15 section unless the context clearly indicates otherwise: 16 "Certificate of limited partnership." The certificate 17 referred to in section 8511 (relating to certificate of limited 18 partnership) and the certificate as amended. The term includes 19 any other statements or certificates permitted or required to be 20 filed in the Department of State by sections 108 (relating to 21 change in location or status of registered office provided by 22 agent) and 138 (relating to statement of correction) or this 23 part. If an amendment of the certificate of limited partnership 24 or a certificate of merger or division made in the manner 25 permitted by this chapter restates the certificate in its 26 entirety or if there is a certificate of consolidation, 27 thenceforth the "certificate of limited partnership" shall not 28 include any prior documents and any certificate issued by the 29 department with respect thereto shall so state. 30 * * * 19970S1157B2016 - 136 -
1 "Court." Subject to any inconsistent general rule prescribed
2 by the Supreme Court of Pennsylvania:
3 (1) the court of common pleas of the judicial district
4 embracing the county where the registered office of the
5 limited partnership is or is to be located; or
6 (2) where a limited partnership results from a merger,
7 consolidation, division or other transaction without
8 establishing a registered office in this Commonwealth or
9 withdraws as a foreign limited partnership, the court of
10 common pleas in which venue would have been laid immediately
11 prior to the transaction or withdrawal.
12 ["Department." The Department of State of the Commonwealth.]
13 * * *
14 "Partnership agreement." Any agreement, written or oral, of
15 the partners as to the affairs of a limited partnership and the
16 conduct of its business. [A written partnership agreement:
17 (1) May provide that a person shall be admitted as a
18 limited partner, or shall become an assignee of a partnership
19 interest or other rights or powers of a limited partner to
20 the extent assigned, and shall become bound by the
21 partnership agreement:
22 (i) if such person (or a representative authorized
23 by such person orally, in writing or by other action such
24 as payment for a partnership interest) executes the
25 partnership agreement or any other writing evidencing the
26 intent of such person to become a limited partner or
27 assignee; or
28 (ii) without such execution, if such person (or a
29 representative authorized by such person orally, in
30 writing or by other action such as payment for a
19970S1157B2016 - 137 -
1 partnership interest) complies with the conditions for 2 becoming a limited partner or assignee as set forth in 3 the partnership agreement or any other writing and 4 requests (orally, in writing or by other action such as 5 payment for a partnership interest) that the records of 6 the limited partnership reflect such admission or 7 assignment. 8 (2) Shall not be unenforceable by reason of its not 9 having been signed by a person being admitted as a limited 10 partner or becoming an assignee as provided in paragraph (1) 11 or by reason of its having been signed by a representative as 12 provided in section 8514(b) (relating to attorney-in-fact). 13 (3) May provide that, whenever a provision of this 14 chapter requires the vote or consent of a specified number or 15 percentage of partners or of a class of partners for the 16 taking of any action, a higher number or percentage of votes 17 or consents shall be required for the action. Except as 18 otherwise provided in the partnership agreement, whenever the 19 partnership agreement requires for the taking of any action 20 by the partners or a class of partners a specific number or 21 percentage of votes or consents, the provision of the 22 partnership agreement setting forth that requirement shall 23 not be amended or repealed by any lesser number or percentage 24 of votes or consents of the partners or the class of 25 partners.] 26 * * * 27 "Relax." When used with respect to a provision of the 28 certificate of limited partnership or partnership agreement, 29 means to provide lesser rights for an affected representative or 30 partner. 19970S1157B2016 - 138 -
1 (b) Index of definitions.--Other definitions applying to 2 this chapter and the sections in which they appear are: 3 "Act" or "action." Section 102. 4 "Department." Section 102. 5 "Licensed person." Section 102. 6 "Professional services." Section 102. 7 § 8510. Indemnification. 8 * * * 9 (b) When indemnification is not to be made.--Indemnification 10 pursuant to subsection (a) shall not be made in any case where 11 the act [or failure to act] giving rise to the claim for 12 indemnification is determined by a court to have constituted 13 willful misconduct or recklessness. The certificate of limited 14 partnership or partnership agreement may not provide for 15 indemnification in the case of willful misconduct or 16 recklessness. 17 * * * 18 (f) Mandatory indemnification.--Without regard to whether 19 indemnification or advancement of expenses is provided under 20 subsections (a) and (d), a limited partnership shall be subject 21 to section 8331(2) (relating to rules determining rights and 22 duties of partners). 23 SUBCHAPTER B 24 FORMATION[; CERTIFICATE OF LIMITED PARTNERSHIP] 25 § 8511. Certificate of limited partnership. 26 (a) General rule.--In order to form a limited partnership, a 27 certificate of limited partnership must be executed and filed in 28 the Department of State. The certificate shall set forth: 29 (1) The name of the limited partnership. 30 (2) Subject to section 109 (relating to name of 19970S1157B2016 - 139 -
1 commercial registered office provider in lieu of registered 2 address), the address, including street and number, if any, 3 of its registered office. 4 (3) The name and business address of each general 5 partner. 6 (4) If a partner's interest in the limited partnership 7 is to be evidenced by a certificate of partnership interest, 8 a statement to that effect. 9 (5) Any other [matters the partners determine to include 10 therein. A provision included in the certificate of limited 11 partnership pursuant to this paragraph shall be deemed to be 12 a provision of the partnership agreement for purposes of any 13 provision of this chapter that refers to a rule as set forth 14 in the partnership agreement.] provision, whether or not 15 specifically authorized by or in contravention of this 16 chapter, that the partners elect to set out in the 17 certificate of limited partnership for the regulation of the 18 internal affairs of the limited partnership, except where a 19 provision of this chapter expressly provides that the 20 certificate of limited partnership shall not relax or 21 contravene any provision on a specified subject. 22 (b) Effective date of formation.--A limited partnership is 23 formed at the time of the filing of the certificate of limited 24 partnership in the department or at any later time specified in 25 the certificate of limited partnership if, in either case, there 26 has been substantial compliance with the requirements of this 27 section or the corresponding provisions of prior law. 28 (c) [Duties of recorders of deeds.--Each recorder of deeds 29 shall continue to keep open for public inspection the record of 30 limited partnership certificates recorded under the statutes 19970S1157B2016 - 140 -
1 supplied by this chapter and by prior law the custody of which 2 has not been transferred to the department pursuant to section 3 140 (relating to custody and management of orphan corporate and 4 business records).] (Repealed). 5 (d) Transitional provision.--A limited partnership formed 6 under prior law shall not be required to set forth in its 7 certificate of limited partnership a registered office or the 8 business address of each general partner until such time as it 9 first amends its certificate of limited partnership under this 10 chapter. 11 (e) Effect of provisions.--A provision of the certificate of 12 limited partnership shall be deemed to be a provision of the 13 partnership agreement for purposes of any provision of this 14 chapter that refers to a rule as set forth in the partnership 15 agreement. 16 [(e)] (f) Cross references.--See sections 134 (relating to 17 docketing statement), 135 (relating to requirements to be met by 18 filed documents) and 8514 (relating to execution of 19 certificates). 20 § 8517. Notice. 21 The fact that a certificate of limited partnership is on file 22 in the Department of State is not notice of any fact other than: 23 (1) that the partnership is a limited partnership and 24 that all partners are limited partners except the persons 25 designated therein as general partners[, but it is not notice 26 of any other fact]; and 27 (2) if it is registered under Chapter 82 (relating to 28 registered limited liability partnerships), that it is also a 29 registered limited liability partnership. 30 § 8519. Filing of certificate of summary of record by limited 19970S1157B2016 - 141 -
1 partnerships formed prior to 1976. 2 (a) General rule.--[Any limited partnership that was not 3 formed under this chapter, has never made any filing under this 4 section or corresponding provisions of prior law and] Where any 5 of the organic documents of a limited partnership are not on 6 file in the Department of State or there is an error in any such 7 document as transferred to the department pursuant to section 8 140 (relating to custody and management of orphan corporate and 9 business records), and the limited partnership desires to file 10 any document in the [Department of State] department under any 11 other provision of this chapter or [that desires] to secure from 12 the department a certified copy of the certificate of limited 13 partnership or to correct the text of its organic documents as 14 on file in the department, the limited partnership shall file in 15 the department a certificate of summary of record which shall 16 set forth: 17 (1) The name of the limited partnership. 18 (2) Subject to section 109 (relating to name of 19 commercial registered office provider in lieu of registered 20 address), the address, including street and number, if any, 21 of its registered office. 22 (3) The statute under which the limited partnership was 23 formed. 24 (4) The name under which, and the date on which, the 25 limited partnership was originally formed, including the date 26 when and the place where the original certificate was 27 recorded. 28 (5) The place or places, including the volume and page 29 numbers or their equivalent, where the documents 30 [constituting the currently effective certificate are] that 19970S1157B2016 - 142 -
1 are not on file in the department or that require correction 2 in the records of the department where originally recorded, 3 the date or dates of each recording and the correct text of 4 the [currently effective certificate] documents. The 5 information specified in this paragraph may be omitted in a 6 certificate of summary of record that is delivered to the 7 department contemporaneously with an amended certificate 8 filed under this chapter that restates the certificate in its 9 entirety. 10 [(6) Each name by which the limited partnership was 11 known, if any, other than its original name and its current 12 name and the date or dates on which each change of name of 13 the partnership became effective.] 14 (b) Cross references.--See sections 134 (relating to 15 docketing statement), 135 (relating to requirements to be met by 16 filed documents) and 8514 (relating to execution of 17 certificates). 18 § 8520. Partnership agreement. 19 (a) Admission of limited partners.--A partnership agreement 20 may provide in writing that a person shall be admitted as a 21 limited partner, or shall become an assignee of a partnership 22 interest or other rights or powers of a limited partner to the 23 extent assigned, and shall become bound by the partnership 24 agreement: 25 (1) if such person (or a representative authorized by 26 such person orally, in writing or by other action such as 27 payment for a partnership interest) executes the partnership 28 agreement or any other writing evidencing the intent of such 29 person to become a limited partner or assignee; or 30 (2) without such execution, if such person (or a 19970S1157B2016 - 143 -
1 representative authorized by such person orally, in writing 2 or by other action such as payment for a partnership 3 interest) complies with the conditions for becoming a limited 4 partner or assignee as set forth in the partnership agreement 5 or any other writing and requests (orally, in writing or by 6 other action such as payment for a partnership interest) that 7 the records of the limited partnership reflect such admission 8 or assignment. 9 (b) Signature by limited partners.--A written partnership 10 agreement shall not be unenforceable by reason of its not having 11 been signed by a person being admitted as a limited partner or 12 becoming an assignee as provided in subsection (a) or by reason 13 of its having been signed by a representative as provided in 14 section 8514(b) (relating to attorney-in-fact). 15 (c) Voting requirements.--A partnership agreement may 16 provide in writing that, whenever a provision of this chapter 17 requires the vote or consent of a specified number or percentage 18 of partners or of a class of partners for the taking of any 19 action, a higher number or percentage of votes or consents shall 20 be required for the action. Except as otherwise provided in the 21 partnership agreement, whenever the partnership agreement 22 requires for the taking of any action by the partners or a class 23 of partners a specific number or percentage of votes or 24 consents, the provision of the partnership agreement setting 25 forth that requirement shall not be amended or repealed by any 26 lesser number or percentage of votes or consents of the partners 27 or the class of partners. 28 (d) Freedom of contract.--A written partnership agreement 29 may contain any provision for the regulation of the internal 30 affairs of the limited partnership agreed to by the partners, 19970S1157B2016 - 144 -
1 whether or not specifically authorized by or in contravention of 2 this chapter, except where this chapter: 3 (1) refers only to a rule as set forth in the 4 certificate of limited partnership; or 5 (2) expressly provides that the partnership agreement 6 shall not relax or contravene any provision on a specified 7 subject. 8 (e) Oral provisions.--A partnership agreement may provide in 9 writing that it cannot be amended or modified except in writing, 10 in which case an oral agreement, amendment or modification shall 11 not be enforceable. 12 (f) Cross reference.--See section 8511(a)(5) (relating to 13 certificate of limited partnership). 14 § 8523. Liability of limited partners to third parties. 15 (a) General rule.--A limited partner is not liable [for the 16 obligations of a limited partnership unless he is also a general 17 partner or, in addition to the exercise of his rights and powers 18 as a limited partner, he participates in the control of the 19 business. However, if the limited partner participates in the 20 control of the business, he is liable only to persons who 21 transact business with the limited partnership reasonably 22 believing, based upon the conduct of the limited partner, that 23 the limited partner is a general partner.], solely by reason of 24 being a limited partner, under an order of a court or in any 25 other manner, for a debt, obligation or liability of the limited 26 partnership of any kind or for the acts of any partner, agent or 27 employee of the limited partnership. 28 (b) [Activities compatible with limited partner status.--A 29 limited partner does not participate in the control of the 30 business within the meaning of subsection (a) solely by doing 19970S1157B2016 - 145 -
1 one or more of the following: 2 (1) Being a contractor for, or an agent or employee of 3 the limited partnership or of a general partner, or being an 4 officer, director, trustee, partner or shareholder of a 5 general partner. 6 (2) Consulting with and advising a general partner with 7 respect to any matter, including, without limitation, the 8 business of the limited partnership. 9 (3) (i) Acting as surety for the limited partnership, 10 or guaranteeing, endorsing or assuming one or more 11 specific obligations of the limited partnership, or a 12 general partner. 13 (ii) Borrowing money from the limited partnership or 14 a general partner. 15 (iii) Lending money to the limited partnership or a 16 general partner. 17 (iv) Providing collateral for the limited 18 partnership or a general partner. 19 (4) Taking any action required or permitted by law to 20 bring, pursue or settle or otherwise terminate a derivative 21 action in the right of the limited partnership. 22 (5) Requesting or attending a meeting of partners. 23 (6) Acting or causing the taking or refraining from the 24 taking of any action, including, without limitation, by 25 proposing, approving, consenting or disapproving, by voting 26 or otherwise, with respect to one or more of the following 27 matters: 28 (i) The dissolution and winding up of the limited 29 partnership, or an election to continue the limited 30 partnership or the business of the limited partnership. 19970S1157B2016 - 146 -
1 (ii) The sale, exchange, lease, mortgage, pledge or 2 other transfer of, or the grant of a security interest 3 in, any asset or assets of the limited partnership. 4 (iii) The incurrence, renewal, refinancing or 5 payment or other discharge of indebtedness by the limited 6 partnership. 7 (iv) A change in the nature of the business. 8 (v) The admission or removal of a general partner. 9 (vi) The admission or removal of a limited partner. 10 (vii) A transaction involving an actual or potential 11 conflict of interest between a general partner and the 12 limited partnership or the limited partners. 13 (viii) An amendment to the partnership agreement or 14 certificate of limited partnership. 15 (ix) The merger or consolidation of the limited 16 partnership. 17 (x) The indemnification of any partner or other 18 person. 19 (xi) Matters related to the business of the limited 20 partnership not otherwise enumerated in this subsection, 21 which the partnership agreement states in writing may be 22 subject to the approval or disapproval of limited 23 partners. 24 (7) Applying for dissolution of the partnership pursuant 25 to section 8572 (relating to judicial dissolution). 26 (8) Winding up the limited partnership pursuant to 27 section 8573 (relating to winding up). 28 (9) In the case of a registered investment company, 29 voting on one or more of the following matters: 30 (i) The approval or termination of investment 19970S1157B2016 - 147 -
1 advisory or underwriting contracts. 2 (ii) The approval of auditors. 3 (iii) Any other matter that by reason of the 4 Investment Company Act of 1940 (54 Stat. 789, 15 U.S.C. § 5 80a-1 et seq.) the general partners consider to be a 6 proper matter for the vote of the holders of voting 7 securities or beneficial interests in the limited 8 partnership. 9 (10) Serving on a committee of the limited partnership 10 or the limited partners. 11 (11) Exercising any right or power permitted to limited 12 partners under this chapter and not specifically enumerated 13 in this subsection. 14 (12) Exercising any other right or power stated in the 15 partnership agreement.] (Repealed). 16 (c) [Enumeration nonexclusive.--The enumeration in 17 subsection (b) does not mean that the possession or exercise of 18 any other powers, or having or acting in other capacities, by a 19 limited partner constitutes participation by him in the control 20 of the business of the limited partnership.] (Repealed). 21 (d) Use of name of limited partner.--A limited partner does 22 not [participate in the control of the business within the 23 meaning of subsection (a)] become liable for the obligations of 24 a limited partnership by reason of the fact that all or any part 25 of the name of the limited partner is included in the name of 26 the limited partnership. 27 (e) [Effect of section.--This section does not create rights 28 or powers of limited partners. Such rights and powers may be 29 created only by the certificate of limited partnership, 30 partnership agreement or any other agreement or other provisions 19970S1157B2016 - 148 -
1 of this chapter.] (Repealed). 2 * * * 3 § 8546. Approval of merger or consolidation. 4 (a) Preparation of plan of merger or consolidation.--A plan 5 of merger or consolidation, as the case may be, shall be 6 prepared, setting forth: 7 * * * 8 (3) The manner and basis of converting the partnership 9 interests of each limited partnership into partnership 10 interests, securities or obligations of the surviving or new 11 limited partnership, as the case may be, and, if any of the 12 partnership interests of any of the limited partnerships that 13 are parties to the [plan] merger or consolidation are not to 14 be converted solely into partnership interests, securities or 15 obligations of the surviving or new limited partnership, the 16 partnership interests, securities or obligations of any other 17 person or cash, property or rights that the holders of such 18 partnership interests are to receive in exchange for, or upon 19 conversion of, such partnership interests, and the surrender 20 of any certificates evidencing them, which securities or 21 obligations, if any, of any other person or cash, property or 22 rights may be in addition to or in lieu of the partnership 23 interests, securities or obligations of the surviving or new 24 limited partnership. 25 (4) Such other provisions as are deemed desirable. 26 [Any of the terms of the plan may be made dependent upon facts 27 ascertainable outside of the plan if the manner in which the 28 facts will operate upon the terms of the plan is set forth in 29 the plan.] 30 (b) Post-adoption amendment of plan of merger or 19970S1157B2016 - 149 -
1 consolidation.--A plan of merger or consolidation may contain a 2 provision that the general partners of the constituent limited 3 partnerships may amend the plan at any time prior to its 4 effective date, except that an amendment made subsequent to any 5 adoption of the plan by the limited partners of any constituent 6 domestic limited partnership shall not change: 7 (1) The amount or kind of partnership interests, 8 obligations, cash, property or rights to be received in 9 exchange for or on conversion of all or any of the 10 partnership interests of the constituent domestic limited 11 partnership adversely to the holders of those partnership 12 interests. 13 (2) Any term of the certificate of limited partnership 14 or partnership agreement of the surviving or new limited 15 partnership [to be effected by] as it is to be in effect 16 immediately following consummation of the merger or 17 consolidation except provisions that may be amended without 18 the approval of the limited partners. 19 (3) Any of the other terms and conditions of the plan if 20 the change would adversely affect the holders of any 21 partnership interests of the constituent domestic limited 22 partnership. 23 * * * 24 (d) Party to plan.--[A limited partnership] An association 25 that approves a plan in its capacity as a partner or creditor of 26 a merging or consolidating limited partnership, or that 27 furnishes all or a part of the consideration contemplated by a 28 plan, does not thereby become a party to the [plan] merger or 29 consolidation for the purposes of this subchapter. 30 (e) Notice of meeting of limited partners.--Notwithstanding 19970S1157B2016 - 150 -
1 any other provision of the partnership agreement, written notice 2 of the meeting of limited partners called for the purpose of 3 considering the proposed plan shall be given to each limited 4 partner of record, whether or not entitled to vote thereon, of 5 each domestic limited partnership that is a party to the [plan] 6 proposed merger or consolidation. There shall be included in, or 7 enclosed with, the notice a copy of the proposed plan or a 8 summary thereof. The provisions of this subsection may not be 9 relaxed by the certificate of limited partnership or partnership 10 agreement. 11 (f) Adoption of plan by limited partners.--The plan of 12 merger or consolidation shall be adopted upon receiving a 13 majority of the votes cast by all limited partners, if any, 14 entitled to vote thereon of each of the domestic limited 15 partnerships that is a party to the [plan] proposed merger or 16 consolidation and, if any class of limited partners is entitled 17 to vote thereon as a class, a majority of the votes cast in each 18 class vote. A proposed plan of merger or consolidation shall not 19 be deemed to have been adopted by the limited partnership unless 20 it has also been approved by the general partners, regardless of 21 the fact that the general partners have directed or suffered the 22 submission of the plan to the limited partners for action. 23 * * * 24 (h) Termination of plan.--Prior to the time when a merger or 25 consolidation becomes effective, the merger or consolidation may 26 be terminated pursuant to provisions therefor, if any, set forth 27 in the plan. If a certificate of merger or consolidation has 28 been filed in the department prior to the termination, a 29 certificate of termination executed by each limited partnership 30 that is a party to the [plan] merger or consolidation, unless 19970S1157B2016 - 151 -
1 the plan permits termination by less than all of the limited 2 partnerships, in which case the certificate shall be executed on 3 behalf of the limited partnership exercising the right to 4 terminate, shall be filed in the department. The certificate of 5 termination shall set forth: 6 (1) A copy of the certificate of merger or consolidation 7 relating to the plan that is terminated. 8 (2) A statement that the plan has been terminated in 9 accordance with the provisions therefor set forth therein. 10 See sections 134 (relating to docketing statement), 135 11 (relating to requirements to be met by filed documents), 138 12 (relating to statement of correction) and 8514 (relating to 13 execution of certificates). 14 * * * 15 (j) Reference to outside facts.--Any of the terms of a plan 16 of merger or consolidation may be made dependent upon facts 17 ascertainable outside of the plan if the manner in which the 18 facts will operate upon the terms of the plan is set forth in 19 the plan. Such facts may include, without limitation, actions or 20 events within the control of or determinations made by a party 21 to the plan or a representative of a party to the plan. 22 § 8553. Voluntary withdrawal of limited partner. 23 (a) General rule.--A limited partner may withdraw from a 24 limited partnership only at the time or upon the happening of 25 events specified in writing in the partnership agreement. [If 26 the partnership agreement does not specify in writing the time 27 or the events upon the happening of which a limited partner may 28 withdraw or a definite time for the dissolution and winding up 29 of the limited partnership, a limited partner may withdraw upon 30 not less than six months' prior written notice to each general 19970S1157B2016 - 152 -
1 partner at his address on the books of the limited partnership.] 2 (b) [Prohibition of withdrawal.--The partnership agreement 3 may provide that a limited partner may not withdraw from the 4 limited partnership or assign a partnership interest in the 5 limited partnership prior to the dissolution and winding up of 6 the limited partnership.] (Repealed). 7 (c) Transitional rule.--This section applies to all limited 8 partnerships formed on or after January 1, 1999. If the 9 partnership agreement of a limited partnership formed before 10 January 1, 1999, did not on December 31, 1998, specify in 11 writing the time or the events upon the happening of which a 12 limited partner could withdraw or a definite time for the 13 dissolution and winding up of the limited partnership, the 14 provisions of this section that were in effect prior to January 15 1, 1999, shall apply until such time, if any, as the partnership 16 agreement is amended in writing after January 1, 1999, to 17 specify: 18 (1) a time or the events upon the happening of which a 19 limited partner may withdraw; 20 (2) a definite time for the dissolution and winding up 21 of the limited partnership; or 22 (3) that this section as effective January 1, 1999, 23 shall apply to the limited partnership. 24 § 8557. [Limitations on distribution.] Distributions and 25 allocation of profits and losses. 26 [A partner may not receive a distribution from a limited 27 partnership to the extent that, after giving effect to the 28 distribution, all liabilities of the limited partnership, other 29 than liabilities to partners on account of their partnership 30 interests and liabilities as to which recourse of creditors is 19970S1157B2016 - 153 -
1 limited to specified property of the limited partnership, exceed 2 the fair value of the partnership assets. The fair value of any 3 property that is subject to a liability as to which recourse of 4 creditors is so limited shall be included in the partnership 5 assets only to the extent that the fair value of the property 6 exceeds that liability.] A limited partnership may from time to 7 time make distributions and allocate the profits and losses of 8 its business to the partners upon the basis stipulated in the 9 partnership agreement or, if not stipulated in the partnership 10 agreement, per capita. The allocation of losses pursuant to this 11 section shall not affect the limitation on liability of limited 12 partners as provided in section 8523 (relating to liability of 13 limited partners to third parties). 14 § 8558. Liability upon return of contribution. 15 * * * 16 (c) Determination of return of contribution.--A partner 17 receives a return of his contribution to the extent that a 18 distribution to him reduces his share of the fair value of the 19 net assets of the limited partnership[, as determined under 20 section 8557 (relating to limitations on distribution),] below 21 the value (as stated or determined in the manner provided in the 22 partnership agreement, if stated or provided for therein) of his 23 contribution (to the extent it has been received by the limited 24 partnership) that has not been distributed to him, and otherwise 25 to the extent of the fair value of the distribution. 26 (d) Fair value of net assets.--For purposes of computing the 27 fair value of the net assets of the limited partnership under 28 subsection (c): 29 (1) liabilities of the limited partnership to partners 30 on account of their partnership interests and liabilities as 19970S1157B2016 - 154 -
1 to which recourse of creditors is limited to specified 2 property of the limited partnership shall not be considered; 3 and 4 (2) the fair value of property that is subject to a 5 liability as to which recourse of creditors is so limited 6 shall be included in the partnership assets only to the 7 extent that the fair value of the property exceeds that 8 liability. 9 § 8571. Nonjudicial dissolution. 10 (a) General rule.--A limited partnership is dissolved and 11 its affairs shall be wound up upon the happening of the first to 12 occur of the following: 13 (1) At the time or upon the happening of events 14 specified in the certificate of limited partnership. 15 (2) At the time or upon the happening of events 16 specified in writing in the partnership agreement. 17 (3) Written consent of all partners. 18 (4) An event of withdrawal of a general partner unless 19 at the time there is at least one other general partner and 20 the written provisions of the partnership agreement permit 21 the business of the limited partnership to be carried on by 22 the remaining general partner and that partner does so. The 23 limited partnership is not dissolved and is not required to 24 be wound up by reason of any event of withdrawal if, within 25 180 days after the withdrawal, [all] a majority in interest, 26 or such greater number as shall be provided in writing in the 27 partnership agreement, of the partners agree in writing to 28 continue the business of the limited partnership or to the 29 appointment of one or more replacement general partners. 30 (5) Entry of an order of judicial dissolution under 19970S1157B2016 - 155 -
1 section 8572 (relating to judicial dissolution). 2 * * * 3 (c) Dissolution by domestication.--Whenever a domestic 4 limited partnership has domesticated itself under the laws of 5 another jurisdiction by action similar to that provided by 6 section 8590 (relating to domestication) and has authorized that 7 action in the manner required by this subchapter for the 8 approval of a proposal that the partnership dissolve 9 voluntarily, the partnership may surrender its certificate of 10 limited partnership under the laws of this Commonwealth by 11 filing in the department a certificate of cancellation under 12 section 8513 (relating to cancellation of certificate). If the 13 partnership, as domesticated in the other jurisdiction, 14 registers to do business in this Commonwealth either prior to or 15 simultaneously with the filing of the certificate of 16 cancellation under this subsection, the partnership shall not be 17 required to file with the certificate of cancellation the tax 18 clearance certificates that would otherwise be required by 19 section 139 (relating to tax clearance of certain fundamental 20 transactions). 21 [(c)] (d) Cross [references] reference.--See [sections 8103 22 (relating to continuation of certain limited partnerships) and] 23 section 8512(b) (relating to events requiring amendment). 24 § 8573. Winding up. 25 Except as otherwise provided in the partnership agreement, 26 the general partners who have not wrongfully dissolved a limited 27 partnership or, if none, the limited partners, or a person 28 approved by the limited partners or, if there is more than one 29 class or group of limited partners, by each class or group of 30 limited partners, in either case by a majority in interest of 19970S1157B2016 - 156 -
1 the limited partners in each class or group, may wind up the 2 affairs of the limited partnership, but the court may wind up 3 the affairs of the limited partnership upon application of any 4 partner, his legal representative or assignee, and in connection 5 therewith, may appoint a liquidating trustee. See section 139(b) 6 (relating to tax clearance in judicial proceedings). 7 § 8577. Proposal and adoption of plan of division. 8 * * * 9 (b) Reference to outside facts.--Any of the terms of the 10 plan may be made dependent upon facts ascertainable outside of 11 the plan if the manner in which the facts will operate upon the 12 terms of the plan is set forth in the plan. Such facts may 13 include, without limitation, actions or events within the 14 control of or determinations made by the dividing limited 15 partnership or a representative of the dividing limited 16 partnership. 17 * * * 18 (e) [Restrictions on certain distributions.--A plan of 19 division may not be made effective if the effect of the plan is 20 to make a distribution to the holders of any class or series of 21 partnership interests of the dividing limited partnership unless 22 the distribution is permitted by section 8557 (relating to 23 limitations on distribution.] (Repealed). 24 (f) [Action by] Rights of holders of indebtedness.--[Unless 25 otherwise provided by an indenture or other contract by which 26 the dividing limited partnership is bound, a plan of division 27 shall not require the approval of the holders of any debt 28 securities or other obligations of the dividing limited 29 partnership or of any representative of the holders if the 30 transfer of assets effected by the division, if effected by 19970S1157B2016 - 157 -
1 means of a sale, lease, exchange or other disposition, and any 2 related distribution would not require the approval of the 3 holders or representatives thereof.] If any such debt 4 securities, notes, similar evidences of indebtedness, indentures 5 or other contracts were issued, incurred or executed by the 6 dividing limited partnership before (the Legislative Reference 7 Bureau shall insert here the effective date of the amendments of 8 this section) and have not been amended subsequent to that date, 9 the liability of the dividing limited partnership thereunder 10 shall not be affected by the division nor shall the rights of 11 the obligees thereunder be impaired by the division, and each of 12 the resulting limited partnerships may be proceeded against or 13 substituted in place of the dividing limited partnership as 14 joint and several obligors on such liability, regardless of any 15 provision of the plan of division apportioning the liabilities 16 of the dividing limited partnership. 17 * * * 18 § 8580. Effect of division. 19 * * * 20 (b) Property rights; allocations of assets and 21 liabilities.-- 22 (1) (i) All the property, real, personal and mixed, of 23 the dividing limited partnership, and all debts due on 24 whatever account to it, including subscriptions for 25 partnership interests or other causes of action belonging 26 to it, shall, except as otherwise provided in paragraph 27 (2), to the extent [transfers] allocations of assets are 28 contemplated by the plan of division, be deemed without 29 further action to be [transferred] allocated to and 30 vested in the resulting limited partnerships on such a 19970S1157B2016 - 158 -
1 manner and basis and with such effect as is specified in 2 the plan, or per capita among the resulting limited 3 partnerships, as tenants in common, if no specification 4 is made in the plan, and the title to any real estate or 5 interest therein vested in any of the limited 6 partnerships shall not revert or be in any way impaired 7 by reason of the division. 8 (ii) Upon the division becoming effective, the 9 resulting limited partnerships shall each thenceforth be 10 responsible as separate and distinct limited partnerships 11 only for such liabilities as each limited partnership may 12 undertake or incur in its own name but shall be liable 13 for the liabilities of the dividing limited partnership 14 in the manner and on the basis provided in subparagraphs 15 (iv) and (v). 16 (iii) Liens upon the property of the dividing 17 limited partnership shall not be impaired by the 18 division. 19 (iv) [One] To the extent allocations of liabilities 20 are contemplated by the plan of division, the liabilities 21 of the dividing limited partnership shall be deemed 22 without further action to be allocated to and become the 23 liabilities of the resulting limited partnerships on such 24 a manner and basis and with such effect as is specified 25 in the plan; and one or more but less than all of the 26 resulting limited partnerships shall be free of the 27 liabilities of the dividing limited partnership to the 28 extent, if any, specified in the plan [if no fraud of 29 creditors or partners or violation of law shall be 30 effected thereby and if all applicable provisions of law 19970S1157B2016 - 159 -
1 are complied with.], if in either case: 2 (A) no fraud of partners or violation of law 3 shall be effected thereby; and 4 (B) the plan does not constitute a fraudulent 5 transfer under 12 Pa.C.S. Ch. 51 (relating to 6 fraudulent transfers). 7 (v) If the conditions in subparagraph (iv) for 8 freeing one or more of the resulting limited partnerships 9 from the liabilities of the dividing limited partnership, 10 or for allocating some or all of the liabilities of the 11 dividing limited partnership, are not satisfied, the 12 liabilities of the dividing limited partnership as to 13 which those conditions are not satisfied shall not be 14 affected by the division nor shall the rights of 15 creditors [thereof] thereunder or of any person dealing 16 with the limited partnership be impaired by the division, 17 and any claim existing or action or proceeding pending by 18 or against the limited partnership with respect to those 19 liabilities may be prosecuted to judgment as if the 20 division had not taken place, or the resulting limited 21 partnerships may be proceeded against or substituted in 22 [its] place of the dividing limited partnership as joint 23 and several obligors on [such liability] those 24 liabilities, regardless of any provision of the plan of 25 division apportioning the liabilities of the dividing 26 limited partnership. 27 (vi) The conditions in subparagraph (iv) for freeing 28 one or more of the resulting limited partnerships from 29 the liabilities of the dividing limited partnership and 30 for allocating some or all of the liabilities of the 19970S1157B2016 - 160 -
1 dividing limited partnership shall be conclusively deemed 2 to have been satisfied if the plan of division has been 3 approved by the Pennsylvania Public Utility Commission in 4 a final order issued after (the Legislative Reference 5 Bureau shall insert here the effective date of the 6 amendments of this section) that has become not subject 7 to further appeal. 8 (2) (i) The [transfer] allocation of any fee or 9 freehold interest or leasehold having a remaining term of 10 30 years or more in any tract or parcel of real property 11 situate in this Commonwealth owned by a dividing limited 12 partnership (including property owned by a foreign 13 limited partnership dividing solely under the law of 14 another jurisdiction) to a new limited partnership 15 resulting from the division shall not be effective until 16 one of the following documents is filed in the office for 17 the recording of deeds of the county, or each of them, in 18 which the tract or parcel is situated: 19 (A) A deed, lease or other instrument of 20 confirmation describing the tract or parcel. 21 (B) A duly executed duplicate original copy of 22 the certificate of division. 23 (C) A copy of the certificate of division 24 certified by the Department of State. 25 (D) A declaration of acquisition setting forth 26 the value of real estate holdings in the county of 27 the limited partnership as an acquired company. 28 (ii) The provisions of 75 Pa.C.S. § 1114 (relating 29 to transfer of vehicle by operation of law) shall not be 30 applicable to [a transfer] an allocation of ownership of 19970S1157B2016 - 161 -
1 any motor vehicle, trailer or semitrailer [from a 2 dividing limited partnership] to a new limited 3 partnership under this section or under a similar law of 4 any other jurisdiction, but any such [transfer] 5 allocation shall be effective only upon compliance with 6 the requirements of 75 Pa.C.S. § 1116 (relating to 7 issuance of new certificate following transfer). 8 (3) It shall not be necessary for a plan of division to 9 list each individual asset or liability of the dividing 10 limited partnership to be allocated to a new limited 11 partnership so long as those assets and liabilities are 12 described in a reasonable and customary manner. 13 (4) Each new limited partnership shall hold any assets 14 and liabilities allocated to it as the successor to the 15 dividing limited partnership, and those assets and 16 liabilities shall not be deemed to have been assigned to the 17 new limited partnership in any manner, whether directly or 18 indirectly or by operation of law. 19 * * * 20 (g) Conflict of laws.--It is the intent of the General 21 Assembly that: 22 (1) The effect of a division of a domestic limited 23 partnership shall be governed solely by the laws of this 24 Commonwealth and any other jurisdiction under the laws of 25 which any of the resulting limited partnerships is organized. 26 (2) The effect of a division on the assets and 27 liabilities of the dividing limited partnership shall be 28 governed solely by the laws of this Commonwealth and any 29 other jurisdiction under the laws of which any of the 30 resulting limited partnerships is organized. 19970S1157B2016 - 162 -
1 (3) The validity of any allocations of assets or 2 liabilities by a plan of division of a domestic limited 3 partnership, regardless of whether or not any of the new 4 limited partnerships is a foreign limited partnership, shall 5 be governed solely by the laws of this Commonwealth. 6 (4) In addition to the express provisions of this 7 subsection, this subchapter shall otherwise generally be 8 granted the protection of full faith and credit under the 9 Constitution of the United States. 10 § 8590. Domestication. 11 * * * 12 (b) Certificate of domestication.--The certificate of 13 domestication shall be executed by the limited partnership and 14 shall set forth in the English language: 15 (1) The name of the limited partnership. If the name is 16 in a foreign language, it shall be set forth in Roman letters 17 or characters or Arabic or Roman numerals. If the name is one 18 that is rendered unavailable for use by any provision of 19 section 8505 (relating to name), the limited partnership 20 shall adopt, in accordance with any procedures for changing 21 the name of the limited partnership that are applicable prior 22 to the domestication of the limited partnership, and shall 23 set forth in the certificate of domestication an available 24 name. 25 * * * 26 (c) Effect of domestication.-- 27 (1) As a domestic limited partnership, the domesticated 28 limited partnership shall no longer be a foreign limited 29 partnership for the purposes of this chapter and shall [have] 30 instead be a domestic limited partnership with all the powers 19970S1157B2016 - 163 -
1 and privileges and [be subject to] all the duties and 2 limitations granted and imposed upon domestic limited 3 partnerships. [The property, debts, liens, estates, taxes, 4 penalties and public accounts due the Commonwealth shall 5 continue to be vested in and imposed upon the limited 6 partnership to the same extent as if it were the successor by 7 merger of the domesticating limited partnership with and into 8 a domestic limited partnership under Subchapter F (relating 9 to merger and consolidation).] In all other respects, the 10 domesticated limited partnership shall be deemed to be the 11 same limited partnership as it was prior to the domestication 12 without any change in or affect on its existence. Without 13 limiting the generality of the previous sentence, the 14 domestication shall not be deemed to have dissolved the 15 limited partnership or to have affected in any way: 16 (i) the right and title of the limited partnership 17 in and to its assets, property, franchises, estates and 18 choses in action; 19 (ii) the liability of the limited partnership for 20 its debts, obligations, penalties and public accounts due 21 the Commonwealth; 22 (iii) any liens or other encumbrances on the 23 property or assets of the limited partnership; or 24 (iv) any contract, license or other agreement to 25 which the limited partnership is a party or under which 26 it has any rights or obligations. 27 (2) The partnership interests in the domesticated 28 limited partnership shall be unaffected by the domestication 29 except to the extent, if any, reclassified in the certificate 30 of domestication. 19970S1157B2016 - 164 -
1 § 8903. Definitions and index of definitions. 2 (a) Definitions.--The following words and phrases when used 3 in this chapter shall have the meanings given to them in this 4 section unless the context clearly indicates otherwise: 5 * * * 6 ["Department." The Department of State of the Commonwealth.] 7 * * * 8 "Event of dissociation." An event that causes a person to 9 cease to be a member of a limited liability company. See 10 section [8971(a)(4)] 8971(4) (relating to dissolution). 11 * * * 12 ["Licensed person." A natural person who is duly licensed or 13 admitted to practice his profession by a court, department, 14 board, commission or other agency of this Commonwealth or 15 another jurisdiction to render a professional service that is or 16 will be rendered by the professional company of which he is or 17 intends to become a manager, member, employee or agent.] 18 "Limited liability company," "domestic limited liability 19 company" or "company." An association that is a limited 20 liability company organized and existing under this chapter. 21 * * * 22 "Operating agreement." Any [agreement of the members as to] 23 rules or procedures adopted for the regulation and governance of 24 the affairs of a limited liability company and the conduct of 25 its business. [The operating agreement need not be in writing 26 except where this chapter refers to a written provision of the 27 operating agreement. The operating agreement may contain any 28 provision for the regulation of the internal affairs of the 29 company agreed to by the members, whether or not specifically 30 authorized by or in contravention of this chapter, except where 19970S1157B2016 - 165 -
1 this chapter: 2 (1) refers only to a rule as set forth in the 3 certificate of organization; or 4 (2) expressly provides that the operating agreement 5 shall not relax or contravene any provision on a specified 6 subject. See sections 8913(8) (relating to certificate of 7 organization) and 8915 (relating to modification by 8 agreement).] 9 * * * 10 ["Professional services." The term shall have the meaning 11 specified in section 2902 (relating to definitions).] 12 * * * 13 (b) Index of other definitions.--Other definitions applying 14 to this chapter and the sections in which they appear are: 15 "Act" or "action." Section 102. 16 "Department." Section 102. 17 "Licensed person." Section 102. 18 "Professional services." Section 102. 19 § 8911. PURPOSES. <-- 20 (A) GENERAL RULE.--LIMITED LIABILITY COMPANIES MAY BE 21 ORGANIZED UNDER THIS CHAPTER FOR ANY LAWFUL PURPOSE, EXCEPT FOR 22 THE PURPOSE OF [BANKING OR INSURANCE] CONDUCTING THE BUSINESS OF 23 RECEIVING BANK DEPOSITS OR OF ASSUMING RISKS AS AN INSURER ON 24 POLICIES OF INSURANCE. UNLESS OTHERWISE RESTRICTED IN ITS 25 CERTIFICATE OF ORGANIZATION, EVERY LIMITED LIABILITY COMPANY HAS 26 AS ITS PURPOSE THE ENGAGING IN ALL LAWFUL BUSINESS FOR WHICH 27 LIMITED LIABILITY COMPANIES MAY BE ORGANIZED UNDER THIS CHAPTER. 28 * * * 29 SUBCHAPTER B 30 ORGANIZATION[; CERTIFICATE OF ORGANIZATION] 19970S1157B2016 - 166 -
1 § 8915. Modification by agreement. 2 The provisions of this chapter are intended to permit a 3 limited liability company to qualify for taxation as an entity 4 that is not an association taxable as a corporation under the 5 Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 6 et seq.). Notwithstanding the limitations in [the definition of 7 "operating agreement" in section 8903 (relating to definitions) 8 and the limitations in section] sections 8913(8) (relating to 9 certificate of organization) and 8916(b) (relating to operating 10 agreement), the certificate of organization and operating 11 agreement may effect any change in the form of organization of 12 the company, in addition to or in contravention of the 13 provisions of this chapter, that may be necessary to accomplish 14 that purpose. 15 § 8916. Operating agreement. 16 (a) General rule.--The operating agreement of a limited 17 liability company need not be in writing except where this 18 chapter refers to a written provision of the operating 19 agreement. If a written operating agreement provides that it 20 cannot be amended or modified except in writing, an oral 21 agreement, amendment or modification shall not be enforceable. 22 (b) Freedom of contract.--An operating agreement may contain 23 any provision for the regulation of the internal affairs of a 24 limited liability company adopted by the members, whether or not 25 specifically authorized by or in contravention of this chapter, 26 except where this chapter: 27 (1) refers only to a rule as set forth in the 28 certificate of organization; or 29 (2) expressly provides that the operating agreement 30 shall not relax or contravene any provision on a specified 19970S1157B2016 - 167 -
1 subject. 2 (c) Cross references.--See sections 8913(8) (relating to 3 certificate of organization) and 8915 (relating to modification 4 by agreement). 5 § 8922. Liability of members [and managers]. 6 (a) General rule.--[Neither] Except as provided in 7 subsection (e), the members of a limited liability company [nor 8 the managers of a company managed by one or more managers are] 9 shall not be liable, solely by reason of being a member [or a 10 manager], under an order of a court or in any other manner for a 11 debt, obligation or liability of the company of any kind or for 12 the acts [or omissions] of any [other] member, manager, agent or 13 employee of the company. 14 (b) Professional relationship unaffected.--Subsection (a) 15 shall not afford members [and managers] of a professional 16 company with greater immunity than is available to the officers, 17 shareholders, employees or agents of a professional corporation. 18 See section 2925 (relating to professional relationship 19 retained). 20 * * * 21 (d) Conflict of laws.--The personal liability of a member of 22 a company to any person or in any action or proceeding for the 23 debts, obligations or liabilities of the company or for the acts 24 [or omissions] of other members, managers, employees or agents 25 of the company shall be governed solely and exclusively by this 26 chapter and the laws of this Commonwealth. Whenever a conflict 27 arises between the laws of this Commonwealth and the laws of any 28 other state with regard to the liability of members of a company 29 organized and existing under this chapter for the debts, 30 obligations and liabilities of the company or for the acts [or 19970S1157B2016 - 168 -
1 omissions] of the other members, managers, employees or agents 2 of the company, the laws of this Commonwealth shall govern in 3 determining such liability. 4 (e) Expansion of liability.--The certificate of organization 5 may provide that some or all of the members shall be liable for 6 some or all of the debts, obligations and liabilities of the 7 company to the extent and under the circumstances provided in 8 the certificate. 9 (f) Medical professional liability.--A professional company <-- 10 shall be deemed to be a partnership for purposes of section 811 11 of the act of October 15, 1975 (P.L.390, No.111), known as the 12 Health Care Services Malpractice Act. 13 [(e)] (g) (F) Cross reference.--See section 8904(b) <-- 14 (relating to rules for cases not provided for in this chapter). 15 § 8924. Limited transferability of membership interest. 16 (a) General rule.--The interest of a member in a limited 17 liability company constitutes the personal estate of the member 18 and may be transferred or assigned as provided in writing in the 19 operating agreement. Unless otherwise provided in writing in 20 the operating agreement, if all of the other members of the 21 company other than the member proposing to dispose of his 22 interest do not approve of the proposed transfer or assignment 23 by unanimous vote or written consent, which approval may be 24 unreasonably withheld by any of the other members, the 25 transferee of the interest of the member shall have no right to 26 participate in the management of the business and affairs of the 27 company or to become a member. The transferee shall only be 28 entitled to receive the distributions and the return of 29 contributions to which that member would otherwise be entitled. 30 (b) Certificate of membership interest.--The certificate of 19970S1157B2016 - 169 -
1 organization may provide that a member's interest in a company 2 may be evidenced by a certificate of membership interest issued 3 by the company [and]. If such provision is made for the issuance 4 of certificates of membership interest, the operating agreement 5 may [also] provide for the assignment or transfer of any 6 membership interest represented by such a certificate and make 7 other provisions with respect to such certificates. [See 13 8 Pa.C.S. § 8102 (relating to definitions and index of 9 definitions).] 10 § 8932. Distributions and allocation of profits and losses. 11 A limited liability company may from time to time [divide] 12 make distributions and allocate the profits and losses of its 13 business [and distribute the same] to [and allocate any losses 14 among] the members of the company upon the basis stipulated in 15 the operating agreement or, if not stipulated in the operating 16 agreement, per capita. The allocation of losses pursuant to this 17 section shall not affect the limitation on liability of members 18 as provided in section 8922 (relating to liability of members). 19 § 8942. Voting. 20 * * * 21 (c) Exception.--An amendment of the certificate of 22 organization that: 23 (1) restates without change all of the operative 24 provisions of the certificate of organization as theretofore 25 in effect; 26 (2) changes the name or registered office of the 27 company; or 28 (3) accomplishes any combination of the foregoing 29 purposes; 30 is not an amendment of the certificate of organization for the 19970S1157B2016 - 170 -
1 purposes of subsection (b). Unless otherwise provided in writing 2 in the operating agreement, an amendment described in this 3 subsection may be made by the affirmative vote of a majority of 4 the managers or, in the case of a company that is not managed by 5 one or more managers, of a majority of the members. 6 * * * 7 § 8943. Duties of managers and members. 8 * * * 9 (b) Companies with managers.--If the certificate of 10 organization provides that the company shall be managed by one 11 or more managers: 12 (1) [Unless otherwise provided in writing in the 13 operating agreement, the provisions of Subchapter B of 14 Chapter 17 (relating to officers, directors and 15 shareholders)] Sections 1711 (relating to alternative 16 provisions) through 1717 (relating to limitation on standing) 17 shall be applicable to representatives of the company. A 18 written provision of the operating agreement may increase, 19 but not relax, the duties of representatives of the company 20 to its members under those sections. For purposes of applying 21 the provisions of those sections, references to the "articles 22 of incorporation," "bylaws," "directors" and "shareholders" 23 shall mean the certificate of organization, operating 24 agreement, managers and members, respectively. 25 (2) A member who is not a manager shall have no duties 26 to the company or to the other members solely by reason of 27 acting in his capacity as a member. 28 § 8944. [Classes of members.] Members. 29 (a) General rule.--A limited liability company may have one 30 or more members. 19970S1157B2016 - 171 -
1 (b) Classes of members.--An operating agreement may provide 2 for: 3 (1) classes or groups of members having such relative 4 rights, powers and duties as the operating agreement may 5 provide; 6 (2) the future creation in the manner provided in the 7 operating agreement of additional classes or groups of 8 members having such relative rights, powers and duties as may 9 from time to time be established, including rights, powers 10 and duties senior to existing classes and groups of members; 11 and 12 (3) the taking of an action, including, without 13 limitation, amendment of the certificate of organization or 14 operating agreement or creation of a class or group of 15 interests in the limited liability company that was not 16 previously outstanding, without the vote or approval of any 17 member or class or group of members. 18 [(b)] (c) Class voting.--The operating agreement may grant 19 to all or certain identified members or a specified class or 20 group of members the right to vote (on a per capita or other 21 basis), separately or with all or any class or group of members, 22 upon any matter. 23 § 8945. Indemnification. 24 * * * 25 (f) Mandatory indemnification.--Without regard to whether 26 indemnification or advancement of expenses is provided under 27 subsections (a) and (d), a limited liability company shall be 28 subject to section 8331(2) (relating to rules determining rights 29 and duties of partners) and both the members and the managers, 30 if any, shall be deemed to be general partners for purposes of 19970S1157B2016 - 172 -
1 applying that section. 2 § 8948. [Dissociation of member limited.] Limitation on 3 dissociation or assignment of membership interest. 4 Notwithstanding anything to the contrary set forth in this 5 part, an operating agreement may provide that a member may not 6 voluntarily dissociate from the limited liability company or 7 assign his membership interest prior to the dissolution and 8 winding-up of the company, and an attempt by a member to 9 dissociate voluntarily from the company or to assign his 10 membership interest in violation of the operating agreement 11 shall be ineffective. 12 § 8957. Approval of merger or consolidation. 13 * * * 14 (b) Reference to outside facts.--Any of the terms of the 15 plan may be made dependent upon facts ascertainable outside of 16 the plan if the manner in which the facts will operate upon the 17 terms of the plan is set forth in the plan. Such facts may 18 include, without limitation, actions or events within the 19 control of or determinations made by a party to the plan or a 20 representative of a party to the plan. 21 (c) [Postadoption] Post-adoption amendment of plan of merger 22 or consolidation.--A plan of merger or consolidation may contain 23 a provision that the managers, if any, of the constituent 24 companies may amend the plan at any time prior to its effective 25 date, except that an amendment made subsequent to any adoption 26 of the plan by the members of any constituent domestic company 27 shall not, without the approval of the members, change: 28 (1) The amount or kind of membership interests, 29 obligations, cash, property or rights to be received in 30 exchange for or on conversion of all or any of the membership 19970S1157B2016 - 173 -
1 interests of the constituent domestic company adversely to 2 the holders of those membership interests. 3 (2) Any [term] provision of the certificate of 4 organization or operating agreement of the surviving or new 5 company [to be effected by] as it is to be in effect 6 immediately following consummation of the merger or 7 consolidation except provisions that may be amended without 8 the approval of the members. 9 (3) Any of the other terms and conditions of the plan if 10 the change would adversely affect the holders of any 11 membership interests of the constituent domestic company. 12 * * * 13 (e) Party to plan.--An association that approves a plan in 14 its capacity as a member or creditor of a merging or 15 consolidating company or that furnishes all or a part of the 16 consideration contemplated by a plan does not thereby become a 17 party to the [plan or the] merger or consolidation for the 18 purposes of this subchapter. 19 * * * 20 (i) Termination of plan.--Prior to the time when a merger or 21 consolidation becomes effective, the merger or consolidation may 22 be terminated pursuant to provisions therefor, if any, set forth 23 in the plan. If a certificate of merger or consolidation has 24 been filed in the department prior to the termination, a 25 certificate of termination executed by each company that is a 26 party to the merger or consolidation, unless the plan permits 27 termination by less than all of the companies, in which case the 28 certificate shall be executed on behalf of the company 29 exercising the right to terminate, shall be filed in the 30 department. The certificate of termination shall set forth: 19970S1157B2016 - 174 -
1 (1) A copy of the certificate of merger or consolidation 2 relating to the plan that is terminated. 3 (2) A statement that the plan has been terminated in 4 accordance with the provisions therefor set forth therein. 5 See sections 134 (relating to docketing statement), 135 6 (relating to requirements to be met by filed documents), 138 7 (relating to statement of correction) and 8907 (relating to 8 execution of documents). 9 * * * 10 § 8962. Proposal and adoption of plan of division. 11 * * * 12 (b) Reference to outside facts.--Any of the terms of the 13 plan may be made dependent upon facts ascertainable outside of 14 the plan if the manner in which the facts will operate upon the 15 terms of the plan is set forth in the plan. Such facts may 16 include, without limitation, actions or events within the 17 control of or determinations made by the dividing limited 18 liability company or a representative of the dividing limited 19 liability company. 20 * * * 21 (e) [Action by holders of indebtedness.--Unless otherwise 22 provided by an indenture or other contract by which the dividing 23 limited liability company is bound, a plan of division shall not 24 require the approval of the holders of any debt securities or 25 other obligations of the dividing company or of any 26 representative of the holders if the transfer of assets effected 27 by the division, if effected by means of a sale, lease, exchange 28 or other disposition, and any related distribution would not 29 require the approval of the holders or representatives thereof.] 30 (Repealed). 19970S1157B2016 - 175 -
1 § 8965. Effect of division. 2 * * * 3 (b) Property rights; allocations of assets and 4 liabilities.-- 5 (1) (i) All the property, real, personal and mixed, of 6 the dividing company and all debts due on whatever 7 account to it, including subscriptions for membership 8 interests and other causes of action belonging to it, 9 shall, except as otherwise provided in paragraph (2), to 10 the extent [transfers] allocations of assets are 11 contemplated by the plan of division, be deemed without 12 further action to be [transferred] allocated to and 13 vested in the resulting companies on such a manner and 14 basis and with such effect as is specified in the plan, 15 or per capita among the resulting companies as tenants in 16 common if no specification is made in the plan, and the 17 title to any real estate or interest therein vested in 18 any of the companies shall not revert or be in any way 19 impaired by reason of the division. 20 (ii) Upon the division becoming effective, the 21 resulting companies shall each thenceforth be responsible 22 as separate and distinct companies only for such 23 liabilities as each company may undertake or incur in its 24 own name but shall be liable for the liabilities of the 25 dividing company in the manner and on the basis provided 26 in subparagraphs (iv) and (v). 27 (iii) Liens upon the property of the dividing 28 company shall not be impaired by the division. 29 (iv) [One] To the extent allocations of liabilities 30 are contemplated by the plan of division, the liabilities 19970S1157B2016 - 176 -
1 of the dividing company shall be deemed without further 2 action to be allocated to and become the liabilities of 3 the resulting companies on such a manner and basis and 4 with such effect as is specified in the plan; and one or 5 more, but less than all, of the resulting companies shall 6 be free of the liabilities of the dividing company to the 7 extent, if any, specified in the plan [if no fraud of 8 creditors or members or violation of law shall be 9 effected thereby and if all applicable provisions of law 10 are complied with.], if in either case: 11 (A) no fraud on members or violation of law 12 shall be effected thereby; and 13 (B) the plan does not constitute a fraudulent 14 transfer under 12 Pa.C.S. Ch. 51 (relating to 15 fraudulent transfers). 16 (v) If the conditions in subparagraph (iv) for 17 freeing one or more of the resulting companies from the 18 liabilities of the dividing company, or for allocating 19 some or all of the liabilities of the dividing company, 20 are not satisfied, the liabilities of the dividing 21 company as to which those conditions are not satisfied 22 shall not be affected by the division nor shall the 23 rights of creditors [thereof] thereunder or of any person 24 dealing with the company be impaired by the division, and 25 any claim existing or action or proceeding pending by or 26 against the company with respect to those liabilities may 27 be prosecuted to judgment as if the division had not 28 taken place, or the resulting companies may be proceeded 29 against or substituted in [its] place of the dividing 30 company as joint and several obligors on [such liability] 19970S1157B2016 - 177 -
1 those liabilities, regardless of any provision of the 2 plan of division apportioning the liabilities of the 3 dividing company. 4 (vi) The conditions in subparagraph (iv) for freeing 5 one or more of the resulting companies from the 6 liabilities of the dividing company and for allocating 7 some or all of the liabilities of the dividing company 8 shall be conclusively deemed to have been satisfied if 9 the plan of division has been approved by the 10 Pennsylvania Public Utility Commission in a final order 11 issued after (the Legislative Reference Bureau shall 12 insert here the effective date of the amendments of this 13 section) that has become not subject to further appeal. 14 (2) (i) The [transfer] allocation of any fee or 15 freehold interest or leasehold having a remaining term of 16 30 years or more in any tract or parcel of real property 17 situate in this Commonwealth owned by a dividing company 18 (including property owned by a foreign limited liability 19 company dividing solely under the law of another 20 jurisdiction) to a new company resulting from the 21 division shall not be effective until one of the 22 following documents is filed in the office for the 23 recording of deeds of the county, or each of them, in 24 which the tract or parcel is situated: 25 (A) A deed, lease or other instrument of 26 confirmation describing the tract or parcel. 27 (B) A duly executed duplicate original copy of 28 the certificate of division. 29 (C) A copy of the certificate of division 30 certified by the Department of State. 19970S1157B2016 - 178 -
1 (D) A declaration of acquisition setting forth 2 the value of real estate holdings in such county of 3 the company as an acquired company. 4 (ii) The provisions of 75 Pa.C.S. § 1114 (relating 5 to transfer of vehicle by operation of law) shall not be 6 applicable to [a transfer] an allocation of ownership of 7 any motor vehicle, trailer or semitrailer [from a 8 dividing company] to a new company under this section or 9 under a similar law of any other jurisdiction but any 10 such [transfer] allocation shall be effective only upon 11 compliance with the requirements of 75 Pa.C.S. § 1116 12 (relating to issuance of new certificate following 13 transfer). 14 (3) It shall not be necessary for a plan of division to 15 list each individual asset or liability of the dividing 16 company to be allocated to a new company so long as those 17 assets and liabilities are described in a reasonable and 18 customary manner. 19 (4) Each new company shall hold any assets and 20 liabilities allocated to it as the successor to the dividing 21 company, and those assets and liabilities shall not be deemed 22 to have been assigned to the new company in any manner, 23 whether directly or indirectly or by operation of law. 24 * * * 25 (h) Conflict of laws.--It is the intent of the General 26 Assembly that: 27 (1) The effect of a division of a domestic limited 28 liability company shall be governed by the laws of this 29 Commonwealth and any other jurisdiction under the laws of 30 which any of the resulting companies is organized. 19970S1157B2016 - 179 -
1 (2) The effect of a division on the assets and 2 liabilities of the dividing company shall be governed solely 3 by the laws of this Commonwealth and any other jurisdiction 4 under the laws of which any of the resulting companies is 5 organized. 6 (3) The validity of any allocation of assets or 7 liabilities by a plan of division of a domestic limited 8 liability company, regardless of whether or not any of the 9 new companies is a foreign limited liability company, shall 10 be governed solely by the laws of this Commonwealth. 11 (4) In addition to the express provisions of this 12 subsection, this subchapter shall otherwise generally be 13 granted the protection of full faith and credit under the 14 Constitution of the United States. 15 § 8971. Dissolution. 16 [(a) General rule.--]A limited liability company is 17 dissolved and its affairs shall be wound up upon the happening 18 of the first to occur of the following events: 19 (1) At the time or upon the happening of events 20 specified in the certificate of organization. 21 (2) At the time or upon the happening of events 22 specified in writing in the operating agreement. 23 (3) By the unanimous written agreement or consent of all 24 members. 25 (4) [Upon] Except as otherwise provided in writing in 26 the operating agreement, upon a member becoming a bankrupt or 27 executing an assignment for the benefit of creditors or the 28 death, retirement, insanity, resignation, expulsion or 29 dissolution of a member or the occurrence of any other event 30 that terminates the continued membership of a member in the 19970S1157B2016 - 180 -
1 company unless the business of the company is continued by 2 the vote or consent of [all] a majority in interest, or such 3 greater number as shall be provided in writing in the 4 operating agreement, of the remaining members given within 5 [90] 180 days following such event [or under a right to do so 6 stated in the operating agreement]. 7 (5) Entry of an order of judicial dissolution under 8 section 8972 (relating to judicial dissolution). 9 [(b) Cross reference.--See section 8103 (relating to 10 continuation of certain limited partnerships and limited 11 liability companies).] 12 § 8973. Winding up. 13 * * * 14 (b) Judicial supervision.--The court may wind up the affairs 15 of the company upon application of any member, his legal 16 representative or assignee and, in connection therewith, may 17 appoint a liquidating trustee. See section 139(b) (relating to 18 tax clearance in judicial proceedings). 19 § 8974. Distribution of assets upon dissolution. 20 (a) General rule.--In settling accounts after dissolution, 21 the liabilities of the limited liability company shall be 22 entitled to payment in the following order: 23 (1) Those to creditors, including members or managers 24 who are creditors, in the order of priority as provided by 25 law, in satisfaction of the liabilities of the company, 26 whether by payment or the making of reasonable provision for 27 payment thereof, other than liabilities for distributions to 28 members under section 8932 (relating to distributions and 29 allocation of profits and losses) or 8933 (relating to 30 distributions upon an event of dissociation). 19970S1157B2016 - 181 -
1 (2) Unless otherwise provided in the operating 2 agreement, to members and former members in satisfaction of 3 liabilities for distributions under section 8932 or 8933. 4 (3) Unless otherwise provided in the operating 5 agreement, to members in respect of: 6 (i) Their contributions to capital. 7 (ii) Their share of the profits and other 8 compensation by way of income on their contributions. 9 * * * 10 § 8978. Dissolution by domestication. 11 Whenever a domestic limited liability company has 12 domesticated itself under the laws of another jurisdiction by 13 action similar to that provided by section 8982 (relating to 14 domestication) and has authorized that action by the vote 15 required by this subchapter for the approval of a proposal that 16 the company dissolve voluntarily, the company may surrender its 17 certificate of organization under the laws of this Commonwealth 18 by filing in the Department of State a certificate of 19 dissolution under section 8975 (relating to certificate of 20 dissolution). In lieu of the statements required by section 21 8975(a)(2) through (4), the certificate of dissolution shall set 22 forth a statement that the company has domesticated itself under 23 the laws of another jurisdiction. If the company, as 24 domesticated in the other jurisdiction, registers to do business 25 in this Commonwealth either prior to or simultaneously with the 26 filing of the certificate of dissolution under this section, the 27 company shall not be required to file with the certificate of 28 dissolution the tax clearance certificates that would otherwise 29 be required by section 139 (relating to tax clearance of certain 30 fundamental transactions). 19970S1157B2016 - 182 -
1 § 8982. Domestication. 2 * * * 3 (b) Certificate of domestication.--The certificate of 4 domestication shall be executed by the company and shall set 5 forth in the English language: 6 (1) The name of the company. If the name is in a foreign 7 language, it shall be set forth in Roman letters or 8 characters or Arabic or Roman numerals. If the name is one 9 that is rendered unavailable for use by any provision of 10 section 8905 (relating to name), the company shall adopt, in 11 accordance with any procedures for changing the name of the 12 company that are applicable prior to the domestication of the 13 company, and shall set forth in the certificate of 14 domestication, an available name. 15 * * * 16 (c) Effect of domestication.-- 17 (1) As a domestic limited liability company, the 18 domesticated company shall no longer be a foreign limited 19 liability company for the purposes of this chapter and shall 20 [have] instead be a domestic limited liability company with 21 all the powers and privileges and [be subject to] all the 22 duties and limitations granted and imposed upon domestic 23 limited liability companies. [The property, debts, liens, 24 estates, taxes, penalties and public accounts due the 25 Commonwealth shall continue to be vested in and imposed upon 26 the company to the same extent as if it were the successor by 27 merger of the domesticating company with and into a domestic 28 limited liability company under Subchapter G (relating to 29 mergers and consolidations).] In all other respects, the 30 domesticated limited liability company shall be deemed to be 19970S1157B2016 - 183 -
1 the same limited liability company as it was prior to the 2 domestication without any change in or affect on its 3 existence. Without limiting the generality of the previous 4 sentence, the domestication shall not be deemed to have 5 dissolved the company or to have affected in any way: 6 (i) the right and title of the company in and to its 7 assets, property, franchises, estates and choses in 8 action; 9 (ii) the liability of the company for its debts, 10 obligations, penalties and public accounts due the 11 Commonwealth; 12 (iii) any liens or other encumbrances on the 13 property or assets of the company; or 14 (iv) any contract, license or other agreement to 15 which the company is a party or under which it has any 16 rights or obligations. 17 (2) The [shares of] membership interests in the 18 domesticated company shall be unaffected by the domestication 19 except to the extent, if any, reclassified in the certificate 20 of domestication. 21 § 8996. Restrictions. 22 * * * 23 (b) Ownership and governance of restricted professional 24 companies.--Except as otherwise provided by a statute, rule or 25 regulation applicable to a particular profession, all of the 26 [members] ultimate beneficial owners of membership interests in 27 and all of the managers, if any, of a restricted professional 28 company shall be licensed persons. 29 * * * 30 (d) Application.--For purposes of applying subsection (a): 19970S1157B2016 - 184 -
1 * * * 2 (3) The practice of the restricted professional service 3 of law shall be deemed to include THE FOLLOWING ACTIVITIES <-- 4 WHEN CONDUCTED INCIDENTAL TO THE PRACTICE OF LAW: 5 (i) serving as an attorney-in-fact, guardian, 6 custodian, executor, personal representative, trustee or 7 fiduciary; 8 (ii) serving as a director or trustee of a 9 corporation for profit or not-for-profit, manager of a 10 limited liability company or a similar position with any 11 other form of association; 12 (iii) testifying, teaching, lecturing or writing 13 about any topic related to the law; 14 (iv) serving as a master, receiver, arbitrator or 15 similar official; 16 (v) providing actuarial, insurance, investment, 17 estate and trust administration, tax return preparation, 18 financial and other similar services and advice; AND <-- 19 (vi) conducting intellectual property and other real 20 and personal property title searches and providing other 21 title insurance agency services; and <-- 22 (vii) engaging in any activity incidental to any of 23 the foregoing. 24 § 8998. Annual registration. 25 * * * 26 (f) Annual fee to be lien.-- 27 (1) Failure to [pay the annual registration fee imposed] 28 file the certificate of annual registration required by this 29 section shall not affect the existence or status of the 30 restricted professional company as such, but the annual 19970S1157B2016 - 185 -
1 registration fee that would have been payable shall be a lien 2 in the manner provided in this subsection from the time the 3 annual registration fee is due and payable [upon]. If a 4 certificate of annual registration is not filed within 30 5 days after the date on which it is due, the department shall 6 assess a penalty of $500 against the company, which shall 7 also be a lien in the manner provided in this subsection. The 8 imposition of that penalty shall not be construed to relieve 9 the company from liability for any other penalty or interest 10 provided for under other applicable law. 11 (2) If the annual registration fee paid by a restricted 12 professional company is subsequently determined to be less 13 than should have been paid because it was based on an 14 incorrect number of members or was otherwise incorrectly 15 computed, that fact shall not affect the existence or status 16 of the restricted professional company as such, but the 17 amount of the additional annual registration fee that should 18 have been paid shall be a lien in the manner provided in this 19 subsection from the time the incorrect payment is discovered 20 by the department. 21 (3) The annual registration fee shall bear simple 22 interest from the date that it becomes due and payable until 23 paid. The interest rate shall be that provided for in section 24 806 of the act of April 9, 1929 (P.L.343, No.176), known as 25 The Fiscal Code, with respect to unpaid taxes. The penalty 26 provided for in paragraph (1) shall not bear interest. The 27 payment of interest shall not relieve the restricted 28 professional company from liability for any other penalty or 29 interest provided for under other applicable law. 30 (4) The lien created by this subsection shall attach to 19970S1157B2016 - 186 -
1 all of the property and proceeds thereof of the restricted 2 professional company in which a security interest can be 3 perfected, in whole or in part, by filing in the department 4 under 13 Pa.C.S. Div. 9 (relating to secured transactions; 5 sales of accounts, contract rights and chattel paper), 6 whether the property and proceeds are owned by the company at 7 the time the annual registration fee or any penalty or 8 interest becomes due and payable or whether the property and 9 proceeds are acquired thereafter. Except as otherwise 10 provided by statute, the lien created by this subsection 11 shall have priority over all other liens, security interests 12 or other charges, except liens for taxes or other charges due 13 the Commonwealth. The lien created by this subsection shall 14 be entered on the records of the department and indexed in 15 the same manner as a financing statement filed under 13 16 Pa.C.S. Div. 9. At the time an annual registration fee, 17 penalty or interest that has resulted in the creation of 18 [the] a lien under this subsection is paid, the department 19 shall terminate the lien with respect to that annual 20 registration fee, penalty or interest without requiring a 21 separate filing by the company for that purpose. 22 (5) If the annual registration fee paid by a restricted 23 professional company is subsequently determined to be more 24 than should have been paid for any reason, no refund of the 25 additional fee shall be made. 26 * * * 27 § 9502. Creation, status and termination of business trusts. 28 (a) Creation.--A business trust may be created in real or 29 personal property, or both, with power in the trustee [or a 30 majority of the trustees]: 19970S1157B2016 - 187 -
1 (1) To receive title to, hold, buy, sell, exchange, 2 transfer and convey real and personal property for the use of 3 the business trust. 4 (2) To take, receive, invest or disburse the receipts, 5 earnings, rents, profits or returns from the trust estate. 6 (3) To carry on and conduct any lawful business 7 designated in the deed or other instrument of trust, and 8 generally to do any lawful act in relation to such trust 9 property that any individual owning the same absolutely might 10 do. 11 (4) To merge with another business trust or other 12 association, to divide or to engage in any other fundamental 13 or other transaction contemplated by the deed or other 14 instrument of trust. 15 (b) Term.--Except as otherwise provided in the instrument, a 16 business trust shall have perpetual existence. 17 (c) Separate entity.--A business trust is a separate legal 18 entity. Except as otherwise provided in the instrument, title to 19 real and personal property may be held in the name of the trust, 20 without in any manner diminishing the rights, powers and duties 21 of the trustees as provided in subsection (a). 22 (d) Termination.--Except as otherwise provided in the 23 instrument: 24 (1) The business trust may not be terminated, dissolved 25 or revoked by a beneficial owner or other person. 26 (2) The death, incapacity, dissolution, termination or 27 bankruptcy of a beneficial owner or a trustee shall not 28 result in the termination, dissolution or revocation of the 29 business trust. 30 (e) Contents of instrument.--The instrument may contain any 19970S1157B2016 - 188 -
1 provision for the regulation of the internal affairs of the 2 business trust included in the instrument by the settlor, the 3 trustee or the beneficiaries in accordance with the applicable 4 procedures for the adoption or amendment of the instrument. 5 § 9503. Documentation of trust. 6 (a) General rule.--A business trust shall not be valid 7 unless created by deed of trust or other written instrument 8 subscribed by one or more individuals, associations or other 9 entities. The trustees of a business trust shall promptly cause 10 the instrument or any amendment thereof, except an amendment 11 solely effecting or reflecting the substitution of or other 12 change in the trustees, to be filed in the Department of State. 13 [The failure to effect the filing shall not affect the validity 14 of a business trust. A trustee who violates the requirements of 15 this subsection shall be liable for a civil penalty in the 16 amount of $1,000 payable to the department.] 17 * * * 18 § 9505. [Succession of trustees.] Trustees. 19 (a) Succession of trustees.--An instrument may provide for 20 the succession of title to [the] any trust property not titled 21 in the name of the trust to a successor trustee, in case of the 22 death, resignation, removal or incapacity of any trustee. In the 23 case of any such succession, the title to [the] such trust 24 property shall at once vest in the succeeding trustee. 25 (b) Nature of service.--Service as the trustee of a business 26 trust by an association that is not a banking institution shall 27 not be deemed to constitute acting as a fiduciary for purposes 28 of the act of November 30, 1965 (P.L.847, No.356), known as the 29 Banking Code of 1965. 30 § 9506. Liability of trustees and beneficiaries. 19970S1157B2016 - 189 -
1 (a) General rule.--[Liability to third parties for any act, 2 omission or obligation of a trustee of a business trust when 3 acting in such capacity shall extend to so much of the trust 4 estate as may be necessary to discharge such liability, but 5 personal liability shall not attach to the trustee or the 6 beneficiaries of the trust for any such act, omission or 7 liability.] 8 (1) Except as otherwise provided in the instrument, the 9 beneficiaries of a business trust shall be entitled to the 10 same limitation of personal liability as is extended to 11 shareholders in a domestic business corporation. 12 (2) Except as otherwise provided in the instrument, the 13 trustees of a trust, when acting in that capacity, shall not 14 be personally liable to any person other than the trust or a 15 beneficiary for any act or obligation of the trust or any 16 trustee. 17 (3) An obligation of a trust based upon a writing may be 18 limited to a specific fund or other identified pool or group 19 of assets of the trust. 20 * * * 21 (f) Permissible beneficiaries.--Except as otherwise provided 22 by a statute, rule or regulation applicable to a particular 23 profession, all of the [beneficiaries of] ultimate beneficial 24 owners of interests in a business trust that renders one or more 25 restricted professional services shall be licensed persons. As 26 used in this subsection, the term "restricted professional 27 services" shall have the meaning specified in section 8903 28 (relating to definitions and index of definitions). 29 * * * 30 (h) Medical professional liability.--A business trust shall <-- 19970S1157B2016 - 190 -
1 be deemed to be a professional corporation for purposes of 2 section 811 of the act of October 15, 1975 (P.L.390, No.111), 3 known as the Health Care Services Malpractice Act. 4 Section 3. Amendment of Title 54. 5 As much of Title 54 as is hereinafter set forth is amended or 6 added to read: 7 § 302. Definitions. 8 The following words and phrases when used in this chapter 9 shall have, unless the context clearly indicates otherwise, the 10 meanings given to them in this section: 11 "Business." Any commercial or professional activity. 12 "Entity." Any individual[,] or any corporation, association, 13 partnership, joint-stock company, business trust, syndicate, 14 joint adventureship or other combination or group of persons, 15 regardless of whether it is organized or formed under the laws 16 of this Commonwealth or any other jurisdiction. 17 "Fictitious name." Any assumed or fictitious name, style or 18 designation other than the proper name of the entity using such 19 name. The term includes [the], without limitation, any name [of 20 any association,] assumed by any general partnership, [business 21 trust,] syndicate, joint adventureship or similar combination or 22 group of persons. 23 "Proper name." When used with respect to an entity of a type 24 listed in the following paragraphs, the term means the name set 25 forth in: 26 (1) the articles of incorporation, if it is a 27 corporation; 28 (2) the statement of registration, if it is a limited 29 liability partnership; 30 (3) the certificate of limited partnership, if it is a 19970S1157B2016 - 191 -
1 limited partnership; 2 (4) the statement of election, if it is an electing 3 partnership; 4 (5) the certificate of organization, if it is a limited 5 liability company; 6 (6) the articles of association, if it is a professional 7 association; 8 (7) the deed of trust or other instrument, if it is a 9 business trust; or 10 (8) a publicly filed document of a type listed in any of 11 the foregoing paragraphs even though the document is referred 12 to by a different title under the laws of any other 13 jurisdiction. 14 § 303. Scope of chapter. 15 * * * 16 (b) Mandatory registration.-- 17 * * * 18 (2) Paragraph (1) shall not apply to any: 19 (i) Nonprofit or professional activities. 20 (ii) Activities [which] that are expressly or 21 impliedly prohibited by law from being carried on under a 22 fictitious name. 23 (iii) [Limited partnership which is registered in 24 the department pursuant to 15 Pa.C.S. Ch. 85 (relating to 25 limited partnerships) or under corresponding provisions 26 of prior law. The preceding sentence shall not apply to 27 any entity which includes the limited partnership as a 28 participant unless the entity is itself such a limited 29 partnership.] (Repealed). 30 (iv) Unincorporated nonprofit association. 19970S1157B2016 - 192 -
1 (v) [Electing partnership existing under 15 Pa.C.S. 2 Ch. 87 (relating to electing partnerships).] (Repealed). 3 (vi) [Limited liability company which is registered 4 in the department pursuant to 15 Pa.C.S. Ch. 89 (relating 5 to limited liability companies).] (Repealed). 6 (vii) [Registered limited liability partnership 7 which is registered in the department pursuant to 15 8 Pa.C.S. Ch. 82 (relating to registered limited liability 9 partnerships).] (Repealed). 10 (viii) [Business trust which is registered in the 11 department pursuant to 15 Pa.C.S. Ch. 95 (relating to 12 business trusts).] (Repealed). 13 * * * 14 § 311. Registration. 15 * * * 16 (e) Duplicate use of names.--The fictitious name shall [not <-- 17 be the same as or confusingly similar to:] BE DISTINGUISHABLE <-- 18 UPON THE RECORDS OF THE DEPARTMENT FROM: 19 (1) The name of any domestic corporation, or any foreign 20 corporation authorized to do business in this Commonwealth, 21 or the name of any corporation or other association 22 registered at any time under Chapter 5 (relating to corporate 23 and other association names) unless such name is available or 24 is made available for use under the provisions or procedures 25 of 15 Pa.C.S. § [5303(b)(1)(i) or (ii)] 5303(b)(1) (relating 26 to duplicate use of names) or the equivalent. 27 (2) [The name of any limited partnership organized under 28 15 Pa.C.S. Ch. 85 (relating to limited partnerships).] 29 (Repealed). 30 (3) The name of any administrative department, board or 19970S1157B2016 - 193 -
1 commission or other agency of this Commonwealth. 2 (4) A name the exclusive right to which is at the time 3 reserved by any other person whatsoever in the manner 4 provided by statute. 5 * * * <-- 6 (F) REQUIRED APPROVALS.--THE FICTITIOUS NAME SHALL NOT <-- 7 CONTAIN: 8 * * * 9 (2) THE WORDS "ENGINEER" OR "ENGINEERING" OR "SURVEYOR" 10 OR "SURVEYING" OR ANY OTHER WORD IMPLYING THAT ANY FORM OF 11 THE PRACTICE OF ENGINEERING OR SURVEYING AS DEFINED IN THE 12 ACT OF MAY 23, 1945 (P.L.913, NO.367), KNOWN AS THE 13 [PROFESSIONAL ENGINEERS] ENGINEER, LAND SURVEYOR AND 14 GEOLOGIST REGISTRATION LAW, IS PROVIDED UNLESS AT LEAST ONE 15 OF THE INCORPORATORS OF A PROPOSED CORPORATION OR THE 16 DIRECTORS OF THE EXISTING CORPORATION HAS BEEN PROPERLY 17 REGISTERED WITH THE STATE REGISTRATION BOARD FOR PROFESSIONAL 18 ENGINEERS, LAND SURVEYORS AND GEOLOGISTS IN THE PRACTICE OF 19 ENGINEERING OR SURVEYING AND THERE IS SUBMITTED TO THE 20 DEPARTMENT A CERTIFICATE FROM THE BOARD TO THAT EFFECT. 21 * * * 22 § 502. Certain additions to register. 23 * * * 24 (c) Limitation on names which may be registered.-- 25 Notwithstanding subsections (a) and (b), no new name shall be 26 registered or deemed to be registered under this section [which 27 is the same as or confusingly similar to] that is not 28 distinguishable upon the records of the department from any 29 other name then registered or deemed to be registered under this 30 chapter, without the consent of the senior registrant. 19970S1157B2016 - 194 -
1 * * * 2 Section 4. Repeals. 3 The following acts and parts of acts are repealed: 4 Section 32 of the act of June 1, 1889 (P.L.420, No.332), 5 entitled "A further supplement to an act entitled 'An act to 6 provide revenue by taxation,' approved the seventh day of June, 7 Anno Domini one thousand eight hundred and seventy-nine," to the 8 extent that it applies to the judicial dissolution of an 9 association under 15 Pa.C.S. 10 As much as reads ", and act as the attorney-in-fact and 11 authorized agent of such corporations for the service of process 12 thereon" in section 806 of the act of April 9, 1929 (P.L.177, 13 No.175), known as The Administrative Code of 1929. 14 Section 404(b) of the act of December 19, 1990 (P.L.834, 15 No.198), known as the GAA Amendments Act of 1990, insofar as it 16 applies to 15 Pa.C.S. §§ 1745 and 5745. 17 15 Pa.C.S. §§ 5543.1, 5546.1, 5764.1, 8103 and 8206. 18 Section 5. Effective date. 19 This act shall take effect in 60 days. I8L15WMB/19970S1157B2016 - 195 -