PRIOR PRINTER'S NO. 2459 PRINTER'S NO. 2510
No. 1761 Session of 1990
INTRODUCED BY FISHER AND LEWIS, AUGUST 23, 1990
SENATOR HOLL, BANKING AND INSURANCE, AS AMENDED,
SEPTEMBER 26, 1990
AN ACT
1 Amending Titles 13 (Commercial Code), 15 (Corporations and
2 Unincorporated Associations) and 17 (Reserved), 17 <--
3 (RESERVED), 20 (DECEDENTS, ESTATES AND FIDUCIARIES), 22
4 (DETECTIVES AND PRIVATE POLICE), 24 (EDUCATION), 42
5 (JUDICIARY AND JUDICIAL PROCEDURE), 54 (NAMES) AND 69
6 (SAVINGS AND VALIDATING PROVISIONS) of the Pennsylvania
7 Consolidated Statutes, RELATING TO ASSOCIATIONS; codifying <--
8 and correcting the law relating to credit unions; providing
9 for the incorporation and regulation of insurance companies;
10 making revisions, corrections and additions relating to other
11 associations; further providing for the fees of the
12 Department of State and certain filing officers; and making
13 repeals.
14 TABLE OF CONTENTS
15 DIVISION I. AMENDMENT OF TITLE 15
16 SECTION 101. SHORT TITLE. <--
17 SECTION 102. REPEAL AND AMENDMENT OF TITLE 15.
18 DIVISION II. INSURANCE CORPORATIONS
19 SECTION 201. DEFINITION OF TERM "INSURANCE CORPORATION."
20 SECTION 202. CORPORATE POWERS.
21 SECTION 203. AUTHORIZATION TO DO BUSINESS.
22 SECTION 204. AMENDMENT OF ARTICLES.
1 SECTION 205. OTHER FUNDAMENTAL TRANSACTIONS.
2 SECTION 206. INCREASES IN CAPITAL STOCK.
3 SECTION 207. ADMINISTRATIVE PROCEDURE.
4 SECTION 208. EXISTING POWERS PRESERVED.
5 DIVISION III. CONFORMING AMENDMENTS
6 SECTION 301. AMENDMENT OF TITLE 13.
7 SECTION 302. ENACTMENT OF TITLE 17.
8 SECTION 303. AMENDMENT OF TITLE 20.
9 SECTION 304. AMENDMENT OF TITLE 22.
10 SECTION 305. AMENDMENT OF TITLE 24.
11 SECTION 306. AMENDMENT OF TITLE 42.
12 SECTION 307. AMENDMENT OF TITLE 54.
13 SECTION 308. AMENDMENT OF TITLE 69.
14 SECTION 309. CONFORMING CROSS REFERENCES IN UNCONSOLIDATED
15 STATUTES.
16 DIVISION IV. MISCELLANEOUS PROVISIONS
17 SECTION 401. REPEALS.
18 SECTION 402. PREPARATION OF ACT FOR PRINTING.
19 SECTION 403. TRANSITIONAL PROVISION.
20 SECTION 404. EFFECTIVE DATES AND APPLICABILITY.
21 The General Assembly of the Commonwealth of Pennsylvania
22 hereby enacts as follows:
23 DIVISION I
24 AMENDMENT OF TITLE 15
25 Section 101. Short title.
26 This act shall be known and may be cited as the GAA
27 Amendments Act.
28 Section 102. Repeal and amendment of Title 15.
29 Subchapter B of Chapter 5, sections 1721, 1732(c) and 1770,
30 Chapter 27, sections 5303, 5305, 5702.1, 5721, 5974.1 and 5974.2
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1 and Chapters 73 and 75 of Title 15 of the Pennsylvania
2 Consolidated Statutes are repealed. As much of Title 15, amended
3 April 27, 1990 (P.L.129, No.36), as is hereinafter set forth is
4 amended or added, and as much of Subpart II C as is hereinafter
5 set forth is reenacted, to read:
6 § 102. Definitions.
7 Subject to additional or inconsistent definitions contained
8 in subsequent provisions of this title that are applicable to
9 specific provisions of this title, the following words and
10 phrases when used in this title shall have, unless the context
11 clearly indicates otherwise, the meanings given to them in this
12 section:
13 * * *
14 "Association." A corporation, a partnership or two or more
15 persons associated*in a common enterprise or undertaking. The
16 term does not include a testamentary trust or an inter vivos
17 trust as defined in 20 Pa.C.S. § 711(3) (relating to mandatory
18 exercise of jurisdiction through orphans' court division in
19 general).
20 * * *
21 "Corporation for profit." A corporation incorporated for a
22 purpose or purposes involving pecuniary profit, incidental or
23 otherwise, to its shareholders or members.
24 "Corporation not-for-profit." A corporation not incorporated
25 for a purpose or purposes involving pecuniary profit, incidental
26 or otherwise.
27 * * *
28 "Credit union." A credit union as defined in [section 1103]
29 17 Pa.C.S. § 102 (relating to application of title).
30 * * *
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1 "ELECTING PARTNERSHIP." AN ELECTING PARTNERSHIP AS DEFINED <--
2 IN SECTION 8701(C) (RELATING TO SCOPE AND DEFINITION).
3 * * *
4 "Insurance corporation." An insurance corporation as defined
5 in section [1103] 3102 (relating to definitions).
6 "REPRESENTATIVE." A REPRESENTATIVE AS DEFINED IN SECTION <--
7 1103 (RELATING TO DEFINITIONS).
8 * * *
9 § 105. Fees.
10 (a) General rule.--The Department of State shall be entitled
11 to receive for services performed, as required by this title and
12 other applicable provisions of law, such fees as are specified
13 in or pursuant to Subchapter C (relating to Department of State
14 and UCC fees).
15 (b) Other services.--Any other department, board, commission
16 or officer of this Commonwealth shall be entitled to receive for
17 services performed, as required by this title, such fees as are
18 or may be lawfully charged for those or similar services.
19 § 109. NAME OF COMMERCIAL REGISTERED OFFICE PROVIDER IN LIEU OF <--
20 REGISTERED ADDRESS.
21 * * *
22 (C) CHANGE OR WITHDRAWAL.--A REPRESENTING ASSOCIATION THAT
23 HAS EFFECTED A FILING IN THE DEPARTMENT UNDER SUBSECTION (B)
24 MAY:
25 (1) AMEND THE FILING BY FILING IN THE DEPARTMENT A
26 SUPERSEDING STATEMENT OF ADDRESS OF COMMERCIAL REGISTERED
27 OFFICE.
28 (2) WITHDRAW ITS FILING UNDER SUBSECTION (B) AND CEASE
29 TO PROVIDE REGISTERED OFFICE SERVICE BY FILING IN THE
30 DEPARTMENT A STATEMENT OF [ADDRESS] TERMINATION OF COMMERCIAL
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1 REGISTERED OFFICE SETTING FORTH[, IN LIEU OF THE INFORMATION
2 REQUIRED BY SUBSECTION (B)(3) AND (4), A STATEMENT THAT IT
3 HAS CEASED TO BE IN THE BUSINESS OF MAINTAINING REGISTERED
4 OFFICES IN THIS COMMONWEALTH FOR CORPORATIONS AND OTHER
5 ASSOCIATIONS AND THE STATEMENTS REQUIRED BY SECTION 108
6 (RELATING TO CHANGE IN LOCATION OR STATUS OF REGISTERED
7 OFFICE PROVIDED BY AGENT).]:
8 (I) THE NAME OF THE REPRESENTING ASSOCIATION.
9 (II) A STATEMENT THAT IT HAS CEASED TO BE IN THE
10 BUSINESS OF MAINTAINING REGISTERED OFFICES IN THIS
11 COMMONWEALTH FOR CORPORATIONS AND OTHER ASSOCIATIONS.
12 (D) ACTION BY AND NOTICE TO ASSOCIATION.--IT IS NOT
13 NECESSARY FOR AN ASSOCIATION REPRESENTED TO TAKE ANY ACTION IN
14 CONNECTION WITH A CHANGE OR WITHDRAWAL EFFECTED UNDER SUBSECTION
15 (C), BUT A REPRESENTING ASSOCIATION THAT HAS EFFECTED A FILING
16 UNDER SUBSECTION (C) [SHALL PROMPTLY FURNISH EACH AFFECTED
17 ASSOCIATION REPRESENTED WITH A COPY OF THE FILING. IF THE STATUS
18 OF AN AGENT AS A PROVIDER OF A REGISTERED OFFICE IS TERMINATED
19 UNDER THIS SECTION, THE LOCATION OF THE REGISTERED OFFICE OF THE
20 ASSOCIATION REPRESENTED SHALL NOT BE AFFECTED, BUT THE PERSON
21 FORMERLY IN CARE OF THE OFFICE SHALL THEREAFTER NOT HAVE ANY
22 RESPONSIBILITY WITH RESPECT TO MATTERS TENDERED TO THE OFFICE IN
23 THE NAME OF THE ASSOCIATION REPRESENTED.] (OTHER THAN TO REFLECT
24 A CHANGE IN THE INFORMATION REQUIRED BY SUBSECTION (B)(2)) SHALL
25 PROMPTLY FILE A STATEMENT OF CHANGE OF REGISTERED OFFICE BY
26 AGENT UNDER SECTION 108 (RELATING TO CHANGE IN LOCATION OR
27 STATUS OF REGISTERED OFFICE PROVIDED BY AGENT) WITH RESPECT TO
28 EACH ASSOCIATION REPRESENTED.
29 § 131. Application of subchapter.
30 As used in this subchapter, the term "this title" includes
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1 [Title] Titles 17 (relating to credit unions) and 54 (relating
2 to names) and any other provision of law that makes reference to
3 the powers and procedures of this subchapter.
4 § 133. Powers of Department of State.
5 (a) General rule.--The Department of State shall have the
6 power and authority reasonably necessary to enable it to
7 administer this subchapter efficiently and to perform the
8 functions specified in section 132 (relating to functions of
9 Department of State)[.], in 13 Pa.C.S. (relating to Uniform
10 Commercial Code) and in 17 Pa.C.S. (relating to credit unions).
11 The following shall not be agency regulations for the purposes
12 of section 612 of the act of April 9, 1929 (P.L.177, No.175),
13 known as The Administrative Code of 1929, the act of October 15,
14 1980 (P.L.950, No.164), known as the Commonwealth Attorneys Act,
15 the act of June 25, 1982 (P.L.633, No.181), known as the
16 Regulatory Review Act, or any similar provision of law, but
17 shall be subject to the opportunity of public comment
18 requirement under section 201 of the act of July 31, 1968
19 (P.L.769, No.240), referred to as the Commonwealth Documents
20 Law:
21 (1) Sample filing forms promulgated by the department
22 under subsection (d).
23 (2) Instructions accompanying sample filing forms and
24 other explanatory material published in the Pennsylvania Code
25 that is intended to substantially track applicable statutory
26 provisions relating to the particular filing or to any of the
27 functions of the department covered by this subsection, if a
28 regulation of the department expressly states that such
29 instructions or explanatory materials shall not have the
30 force of law.
19900S1761B2510 - 6 -
1 * * *
2 § 134. Docketing statement.
3 (a) General rule.--The Department of State may prescribe by
4 regulation one or more official docketing statement forms
5 designed to elicit from a person effecting a filing under this
6 title information that the department has found to be necessary
7 or desirable in connection with the processing of a filing. A
8 docketing statement submitted with the articles of incorporation
9 or division of a proposed domestic corporation for profit or
10 not-for-profit, the articles of domestication or application for
11 a certificate of authority of a foreign corporation for profit
12 or not-for-profit or the certificate of election of an electing
13 partnership shall set forth, inter alia, the kind or kinds of
14 business in which the association actually intends to engage in
15 this Commonwealth within one year of the [execution] submission
16 of the docketing statement. A docketing statement submitted with
17 articles of incorporation, consolidation or division of a
18 domestic corporation not-for-profit or an application for a
19 certificate of authority of a foreign corporation not-for-profit
20 shall set forth with respect to the new corporation or
21 corporations resulting therefrom, inter alia, the statute by or
22 under which it was incorporated, the date of incorporation, the
23 names and residence addresses of its chief executive officer,
24 secretary and treasurer, regardless of the names or titles by
25 which they may be designated, the address of its principal place
26 of business and the amount, if any, of its authorized and issued
27 capital stock. A form of docketing statement prescribed under
28 this subsection:
29 (1) Shall be published in the Pennsylvania Code.
30 (2) Shall not be integrated into a single document
19900S1761B2510 - 7 -
1 covering the requirements of the filing and its related
2 docketing statement.
3 (3) May be required by the department in connection with
4 a filing only if notice of the requirement appears on the
5 official format for the filing prescribed under section
6 133(d) (relating to physical characteristics and copies of
7 documents).
8 (4) Shall not be required to be submitted on department-
9 furnished forms.
10 (5) Shall not constitute a document filed in, with or by
11 the department for the purposes of this title or any other
12 provision of law except 18 Pa.C.S. § 4904 (relating to
13 unsworn falsification to authorities).
14 * * *
15 § 135. Requirements to be met by filed documents.
16 (a) General rule.--A document shall be accepted for filing
17 by the Department of State if it satisfies the following
18 requirements:
19 * * *
20 (7) It is executed. The department shall not examine a
21 document to determine whether the document has been executed
22 by an authorized person or by sufficient authorized persons
23 or otherwise is duly executed. A document shall be deemed
24 executed if it contains a facsimile signature so long as the
25 operative portions of the document meet any applicable
26 requirements prescribed under section 133(d) (relating to
27 physical characteristics and copies of documents).
28 * * *
29 (c) Addresses.--
30 (1) Whenever any provision of this title [or of Title 54
19900S1761B2510 - 8 -
1 (relating to names)] requires that any person set forth an
2 address in any document, such provision shall be construed to
3 require the submission of an actual street address or rural
4 route box number, and the department shall refuse to receive
5 or file any document that sets forth only a post office box
6 address.
7 (2) Whenever any provision of this title requires the
8 statement of a registered office address in any document
9 filed in the department, such provision shall be construed to
10 require the statement also of the county in which the
11 registered office address is located.
12 (d) Method of filing.--The department may prescribe by
13 regulation procedures for filing documents by electronic mail,
14 facsimile transmission, telex or other similar means of
15 communication.
16 § 136. Processing of documents by Department of State.
17 (a) Filing of documents.--If a document conforms to section
18 135 (relating to requirements to be met by filed documents) the
19 Department of State shall forthwith [or on such date as is
20 requested by the person delivering the document, whichever is
21 later,] file the document, certify that the document has been
22 filed by endorsing upon the document the fact and date of
23 filing, make and retain a copy thereof and return the document
24 or a copy thereof so endorsed to or upon the order of the person
25 who delivered the document to the department.
26 (b) Immediate certified copy.--
27 (1) If a duplicate copy, which may be either a signed or
28 conformed copy, of any articles or other document authorized
29 or required by this title to be filed in the department is
30 delivered to the department with the original signed
19900S1761B2510 - 9 -
1 document, the department shall compare the duplicate copy
2 with the original signed document and, if it finds that they
3 are identical, shall certify the duplicate copy by making
4 upon it the same endorsement that is required to appear upon
5 the original, together with a further endorsement that the
6 duplicate copy is a true copy of the original signed
7 document, and return the duplicate copy to the person who
8 delivered it to the department.
9 (2) If the duplicate copy is delivered by hand to the
10 office of the department at the seat of government at least
11 four hours before the close of business on any day not a
12 holiday and relates to a matter other than a label or other
13 mark requiring examination under Title 54 (relating to
14 names), and in the case of a document that creates a new
15 association or effects or reflects a change in name is
16 accompanied by evidence that the proposed name has been
17 reserved by or on behalf of the applicant, the department
18 before the close of business on that day shall either:
19 (i) Certify the duplicate copy as required by this
20 subsection and make such certified copy available at the
21 office of the department to or upon the order of the
22 person who delivered it to the department.
23 (ii) Make available at the office of the department
24 to or upon the order of the person who delivered it to
25 the department a brief statement in writing of the
26 reasons of the department for refusing to certify such
27 duplicate copy.
28 See section 153(a)(10) (relating to certification fees).
29 [(2)] (3) In lieu of comparing the duplicate copy with
30 the original signed document as provided in [paragraph (1)]
19900S1761B2510 - 10 -
1 paragraphs (1) and (2), the department may make a copy of the
2 original signed document at the cost of the person who
3 delivered it to the department.
4 * * *
5 § 139. Tax clearance of certain fundamental transactions.
6 A domestic association shall not file articles or a
7 certificate of merger or consolidation effecting a merger or
8 consolidation into a nonqualified foreign association or
9 articles or a certificate of dissolution or a statement of
10 revival, a qualified foreign association shall not file an
11 application for termination of authority or similar document in
12 the Department of State and a corporation shall not file
13 articles of division dividing solely into nonqualified foreign
14 corporations unless the articles, certificate, application or
15 other document are accompanied by:
16 (1) clearance certificates from the Department of
17 Revenue and the Office of Employment Security of the
18 Department of Labor and Industry, evidencing the payment by
19 the association of all taxes and charges due the Commonwealth
20 required by law[.];
21 (2) a statement of assumption of tax liability:
22 (i) executed by the surviving, resulting or
23 withdrawing association or accompanying and incorporated
24 by reference into the plan of merger, consolidation or
25 division, stating that the surviving, resulting,
26 withdrawing or new association agrees to be liable for
27 payment of all taxes and charges due to the Commonwealth
28 of any and all nonsurviving domestic or qualified foreign
29 association or of the withdrawing association; or
30 (ii) executed by one or more of the directors,
19900S1761B2510 - 11 -
1 shareholders or partners, or their attorneys-in-fact, of
2 a dissolving association, stating that the signatories
3 agree to be jointly and severally liable for payment of
4 all taxes and charges due to the Commonwealth by the
5 dissolving association up to the full amount of the net
6 assets of the association available for distribution on
7 dissolution;
8 if in either case the statement of assumption of tax
9 liability shall have been approved by the Department of
10 Revenue and by the Office of Employment Security of the
11 Department of Labor and Industry as adequately securing the
12 public revenues; or
13 (3) evidence of such other arrangement, agreed to by the
14 association and approved by the Department of Revenue and by
15 the Office of Employment Security of the Department of Labor
16 and Industry, as will adequately secure the public revenues.
17 § 140. Custody and management of orphan corporate and business
18 records.
19 (a) General rule.--Any orphan corporate and business record
20 under the custody or control of a county, including the City and
21 County of Philadelphia, may become a Commonwealth record in the
22 manner provided in this section. The Department of State, with
23 the concurrence of the county records committee existing under
24 the act of August 14, 1963 (P.L.839, No.407), may provide for
25 the transfer on a progressive and phased basis to the custody
26 and management of the department of any or all orphan corporate
27 and business records. To the extent feasible, such records shall
28 be integrated with records of the department relating to the
29 same type of matters or transactions.
30 (b) Procedure.--The transfer contemplated by subsection (a)
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1 shall be effected on a basis consistent with the availability of
2 appropriations. It is the intention of this section to encourage
3 the department to schedule work under this section on a seasonal
4 or otherwise intermittent basis in order to facilitate the
5 smoothing of the workload of the department. The department may
6 classify orphan corporate and business records for purposes of
7 priority of transfer by county of origin, type of matter or
8 transaction, vintage of matter or transaction, or on any other
9 basis or combination of bases which the department may deem to
10 be appropriate. The department shall publish and update in the
11 Pennsylvania Code a schedule, by county and type of matter or
12 transaction, setting forth where, as between a county and the
13 department, custody of all orphan corporate and business records
14 then resides.
15 (c) Fictitious name records.--The following statutes
16 provided for duplicate filing of fictitious name registrations
17 in both the department and in the office of the clerk of the
18 court of common pleas or an equivalent row office in a home rule
19 charter county:
20 (1) Act of June 28, 1917 (P.L.645, No.227), relating to
21 individual fictitious names.
22 (2) Act of May 24, 1945 (P.L.967, No.380), referred to
23 as the Fictitious Names Act.
24 (3) Act of July 11, 1957 (P.L.783, No.374), known as the
25 Fictitious Corporate Name Act.
26 The county records committee may provide for the destruction of
27 such duplicate records without transfer to the custody of the
28 department.
29 (d) Definition.--As used in this section, the term "orphan
30 corporate and business records" means corporate and limited
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1 partnership filings and recordings which were formerly effected
2 in the office of the clerk of the court of common pleas or the
3 office for the recording of deeds or an equivalent row office in
4 a home rule charter county and which are no longer effected in
5 such offices by reason of the enactment of:
6 (1) The act of , 1990 (P.L. , No. ),
7 known as the GAA Amendments Act, with respect to insurance
8 corporations, including corporations incorporated under or
9 subject to the act of May 17, 1921 (P.L.682, No.284), known
10 as The Insurance Company Law of 1921, or incorporated under
11 the acts of: April 28, 1903 (P.L.329, No.259); April 20, 1927
12 (P.L.317, No.190); June 24, 1939 (P.L.686, No.320); June 20,
13 1947 (P.L.687, No.298); June 28, 1951 (P.L.941, No.184); or
14 July 15, 1957 (P.L.929, No.401); or any similar act relating
15 to the incorporation or reincorporation of limited life
16 insurance companies.
17 (2) The act of December 21, 1988 (P.L.1444, No.177),
18 known as the General Association Act of 1988, with respect to
19 certain:
20 (i) cooperative corporations incorporated under or
21 subject to the act of June 7, 1887 (P.L.365, No.252),
22 referred to as the Cooperative Association Act; and
23 (ii) public utility corporations, including
24 corporations incorporated under or subject to the act of
25 April 4, 1868 (P.L.62, No.29), referred to as the General
26 Railroad Law; the act of April 29, 1874 (P.L.73, No.32),
27 known as the Corporation Act of 1874; or the act of May
28 29, 1885 (P.L.29, No.32), referred to as the Natural Gas
29 Company Act of 1885.
30 (3) The act of December 19, 1975 (P.L.524, No.155), with
19900S1761B2510 - 14 -
1 respect to certain limited partnerships, including limited
2 partnerships formed under the act of April 12, 1917 (P.L.55,
3 No.37), known as The Uniform Limited Partnership Act or the
4 act of March 21, 1836 (P.L.143, No.51) referred to as the
5 Limited Partnerships Act of 1836.
6 (4) The act of November 15, 1972 (P.L.1063, No.271),
7 with respect to nonprofit corporations incorporated under or
8 subject to the act of May 5, 1933 (P.L.289, No.105), known as
9 the Nonprofit Corporation Law of 1933, including corporations
10 of the first class incorporated under or subject to the
11 Corporation Act of 1874.
12 (5) Any similar act providing for the central filing in
13 the department of a document of a type previously filed or
14 recorded solely on a county or other decentralized basis.
15 SUBCHAPTER C
16 DEPARTMENT OF STATE AND UCC FEES
17 Sec.
18 151. Short title and application of subchapter.
19 152. Definitions.
20 153. Fee schedule.
21 154. Enforcement and collection.
22 155. Disposition of funds.
23 § 151. Short title and application of subchapter.
24 (a) Short title.--This subchapter shall be known and may be
25 cited as the Corporation Bureau and UCC Fee Law.
26 (b) Application.--This subchapter contains an enumeration of
27 fees to be charged by the Corporation Bureau of the Department
28 of State for services performed under this title or any other
29 provision of law relating to corporations or associations and
30 under Titles 13 (relating to commercial code), 17 (relating to
19900S1761B2510 - 15 -
1 credit unions) and 54 (relating to names), and by local filing
2 officers under Title 13.
3 § 152. Definitions.
4 The following words and phrases when used in this subchapter
5 shall have the meanings given to them in this section unless the
6 context clearly indicates otherwise:
7 "Ancillary transaction." Includes preclearance of document,
8 amendment of articles, charter, certificate or other organic
9 document, restatement of articles, charter, certificate or other
10 organic document, change in registered or principal office,
11 change in share structure, dissolution, cancellation or
12 termination, reorganization, withdrawal by foreign association,
13 withdrawal by a partner, or any similar transaction, or the
14 deposit in the Department of State for filing in, by or with the
15 Department of State or the Secretary of the Commonwealth of any
16 articles, statements, proceedings, agreements, or any like
17 papers affecting associations under the statutes of this
18 Commonwealth.
19 "Bureau." The Corporation Bureau of the Department of State
20 or any successor agency within the department.
21 "Bureau Augmentation Account." The account established by
22 section 155 (relating to disposition of funds).
23 "Monthly base amount." One-twelfth of the total
24 appropriation to the bureau for the current fiscal year, except
25 that by regulation the bureau may redistribute the total
26 appropriation among the months of the fiscal year for the
27 purposes of this definition in order to adjust for seasonal
28 variations in workload, but any such redistribution shall not
29 affect the actual availability of appropriated funds which shall
30 be disbursed in the manner provided by law.
19900S1761B2510 - 16 -
1 § 153. Fee schedule.
2 (a) General rule.--The fees of the Corporation Bureau of the
3 Department of State, including fees for the public acts and
4 transactions of the Secretary of the Commonwealth administered
5 through the bureau, and of filing officers under the Uniform
6 Commercial Code, shall be as follows:
7 (1) Domestic corporations:
8 Articles of incorporation, letters patent or
9 like instrument incorporating a corporation or
10 association..................................... $ 85
11 Articles or agreement or like instrument of
12 merger, consolidation or division............... 45
13 Additional fee for each association which is
14 a party to a merger or consolidation............ 20
15 Additional fee for each new corporation
16 resulting from a division....................... 85
17 Articles of conversion or like instrument... 45
18 Each ancillary transaction.................. 45
19 (2) Foreign corporations:
20 Certificates of authority or like
21 qualification to do business.................... 175
22 Amended certificate of authority or like
23 change in qualification to do business.......... 175
24 Domestication............................... 85
25 Statement of merger or consolidation or like
26 instrument reporting occurrence of merger or
27 consolidation not effected by a filing in the
28 department...................................... 50
29 Additional fee for each qualified foreign
30 corporation which is named in a statement of
19900S1761B2510 - 17 -
1 merger or consolidation or like instrument...... 20
2 Each ancillary transaction.................. 45
3 (3) Partnerships:
4 Certificate of limited partnership or like
5 instrument forming a limited partnership........ 85
6 Certificate of merger or consolidation...... 45
7 Additional fee for each association which is
8 a party to the merger or consolidation.......... 20
9 Application for registration of foreign
10 limited partnership............................. 175
11 Statement of election as an electing
12 partnership..................................... 85
13 Each ancillary transaction.................. 45
14 (4) Business trusts:
15 Deed of trust or other initial instrument
16 for a business trust............................ 85
17 Each ancillary transaction.................. 45
18 (5) Fictitious names:
19 Registration................................ 45
20 Each ancillary transaction.................. 45
21 (6) Service of process:
22 Each defendant named or served.............. 10
23 (7) Trademarks, emblems, union labels,
24 description of bottles and like matters:
25 Registration................................ 45
26 Each ancillary transaction.................. 45
27 (8) Uniform Commercial Code:
28 Financing statement......................... 10
29 Each ancillary transaction.................. 10
30 Search - per debtor name.................... 10
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1 Additional fee for each financing statement
2 found and for each statement of assignment
3 reported therein................................ 1
4 All filings under the Uniform Commercial
5 Code shall be made on standard forms approved by
6 the Department of State. No fee will be charged
7 for supplementary pages identical in size to the
8 standard form. A fee of $2 shall be charged for
9 each supplementary page of nonstandard size.
10 (9) Copy fees (including copies furnished by
11 filing officers under the Uniform Commercial
12 Code):
13 Each page of photocopy furnished............ 2
14 (10) Certification fees:
15 For certifying copies of any document or
16 paper on file, the fee specified in paragraph
17 (9), if the department furnished the copy, plus. 20
18 For certifying a duplicate copy of a
19 document pursuant to section 136(b)(2) (relating
20 to immediate certified copy).................... 50
21 For issuing any other certificate of the
22 Secretary of the Commonwealth or the Department
23 of State (other than an engrossed certificate).. 25
24 (11) Report of record search (other than search
25 under paragraph (8)):
26 For preparing and providing a written or
27 photocopy, or both, report of a record search,
28 the fee specified in paragraph (9), if any,
29 plus............................................ 10
30 (12) Reservation and registration of names:
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1 Reservation of association name............. 45
2 Registration of foreign or other corporation
3 name............................................ 45
4 (13) Change of registered office agency:
5 Each statement of change of registered
6 office by agent................................. 3
7 (14) Contingent domestication:
8 Statement of contingent domestication....... 85
9 Each year, or portion thereof, during which
10 a contingent domestication or temporary
11 domiciliary status is in effect................. 1,000
12 (b) Daily listings.--The bureau may provide listings or
13 copies of microfilm, or both, of complete daily filings of any
14 class of documents or papers for a fee of 25¢ per filing listed
15 or set forth therein.
16 (c) Other services.--The bureau may charge equivalent fees
17 for any like service not specified in subsections (a) and OR <--
18 (b).
19 § 154. Enforcement and collection.
20 (a) General rule.--The Department of State shall not be
21 required to receive or file any document or paper unless the
22 same shall be accompanied by the proper fee, but the department
23 may in its discretion permit the filing of any document or paper
24 without first requiring payment of the fee required by this
25 subchapter when satisfied that the fee will be paid promptly. If
26 any such fee is not paid in the manner and within the time
27 prescribed by regulation of the department, the filing to which
28 such fee relates shall become void.
29 (b) Extension of credit.--The department may make provision
30 by regulation for the extension of credit to persons dealing
19900S1761B2510 - 20 -
1 with it. Any person who shall fail or refuse to satisfy any
2 indebtedness owing to the Commonwealth under this subchapter in
3 the manner and within the time prescribed by regulation adopted
4 pursuant to this subsection shall pay to the Commonwealth, in
5 addition to the principal amount of such indebtedness and
6 interest thereon, liquidated damages in the amount of $500.
7 (c) Disposition.--One quarter of the amount collected in any
8 month pursuant to this subchapter in excess of the monthly base
9 amount for that month shall be paid into the Bureau Augmentation
10 Account. Any balance shall be paid into the General Fund.
11 § 155. Disposition of funds.
12 (a) General rule.--The Corporation Bureau Augmentation
13 Account is hereby created and shall be a special restricted
14 receipts account within the General Fund. Moneys in such account
15 shall be used only for the support of the operations of the
16 Corporation Bureau.
17 (b) Augmentation.--Amounts in the Bureau Augmentation
18 Account shall be credited to the appropriation of the bureau for
19 the fiscal year in which received. It is the intention of this
20 provision to enhance the service capability of the bureau by
21 permitting the bureau to adjust its level of services rapidly in
22 response to changes in the level of business and other economic
23 activity.
24 SUBCHAPTER [C] D
25 DEFINITIVE AND CONTINGENT DOMESTICATION OF
26 [FOREIGN] ALIEN ASSOCIATIONS <--
27 § [151] 161. Domestication of certain [foreign] ALIEN <--
28 associations.
29 * * *
30 (e) Exclusion.--An association that can be domesticated
19900S1761B2510 - 21 -
1 under section 4161 (relating to domestication) or 6161 (relating
2 to domestication) shall not be domesticated under this section.
3 (f) Definition.--As used in this section, the term
4 "association," except as restricted by subsection (e), includes
5 any foreign ALIEN incorporated organization, private law <--
6 corporation (whether or not organized for business purposes),
7 public law corporation, partnership, proprietorship, joint
8 venture, foundation, trust, association or similar organization
9 or entity.
10 * * *
11 § [152] 162. Contingent domestication of certain foreign
12 associations.
13 (a) General rule.--Any association as defined in subsection
14 (i) may become a contingent domestic association by filing in
15 the Department of State a statement of contingent domestication.
16 The statement of contingent domestication and all papers and
17 information relating thereto shall remain confidential and shall
18 not be available for public inspection until and unless the
19 association files a [notice] statement of consummation of
20 domestication as provided in subsection (c).
21 (b) Statement of contingent domestication.--The statement of
22 contingent domestication shall be executed by the association
23 and shall set forth in the English language:
24 (1) In the case of:
25 (i) a corporation subject to section 4161 (relating
26 to domestication), the statements required to be set
27 forth in articles of domestication (except the statement
28 required by section 4161(b)(6))[.];
29 (ii) a corporation subject to section 6161 (relating
30 to domestication), the statements required to be set
19900S1761B2510 - 22 -
1 forth in articles of domestication (except the statement
2 required by section 6161(b)(6)); or
3 [(2) In the case of]
4 (iii) any other association, the statements required
5 by section [151(b)] 161(b) (relating to statement of
6 domestication) to be set forth in a statement of
7 domestication (except the statement required by section
8 [151(b)(5)] 161(b)(5)).
9 [(3)] (2) A statement that the effectiveness of the
10 statement is contingent upon the subsequent filing of a
11 [notice] statement of consummation of domestication.
12 [(4)] (3) A statement that the filing of the statement
13 of contingent domestication and the delegation of authority
14 to file a [notice] statement of consummation of domestication
15 has been authorized (unless its charter or other organic
16 documents require a greater vote):
17 (i) by a majority vote of the votes cast by all
18 shareholders entitled to vote thereon and, if any class
19 of shares is entitled to vote thereon as a class, a
20 majority of the votes cast in each class vote, in the
21 case of a corporation subject to section 4161; [or]
22 (ii) by a majority vote of the votes cast by all
23 members, if any, entitled to vote thereon and, if any
24 class of members is entitled to vote thereon as a class,
25 a majority of the votes cast in each class vote, in the
26 case of a corporation subject to section 6161; or
27 [(ii)] (iii) by a majority in interest of the
28 shareholders, members or other proprietors of the
29 association in any other case.
30 (c) [Notice] Statement of consummation of domestication.--At
19900S1761B2510 - 23 -
1 any time after the filing of a statement of contingent
2 domestication, the association may file in the department a
3 [notice] statement of consummation of domestication which shall
4 be executed by the association and shall set forth:
5 (1) The name of the association. If the name is in a
6 foreign language, it shall be set forth in Roman letters or
7 characters or Arabic or Roman numerals.
8 (2) A statement that either:
9 (i) an emergency condition exists in the
10 jurisdiction the law of which governs the internal
11 affairs of the association and that in the judgment of
12 the management of the association a temporary transfer of
13 the domicile of the association to this Commonwealth is
14 warranted by the circumstances; or
15 (ii) an event has occurred that, under the law of
16 the jurisdiction governing the internal affairs of the
17 association, permits the association to transfer its
18 domicile.
19 (d) Statement of termination of domestication.--At any time
20 after the filing of a [notice] statement of consummation of
21 domestication, the association may file in the department a
22 statement of termination of domestication which shall be
23 executed by the association and shall set forth:
24 (1) The name of the association in the form set forth in
25 the prior filings under this section.
26 (2) [A] If a statement of consummation of domestication
27 has theretofore been filed and is then in effect, a statement
28 that the association elects to terminate its domicile in this
29 Commonwealth.
30 (3) A statement that either:
19900S1761B2510 - 24 -
1 (i) the statement of contingent domestication is
2 reinstated pending the filing in the department of a new
3 [notice] statement of consummation of domestication; or
4 (ii) the statement of contingent domestication is
5 withdrawn.
6 (e) [Method of filing] Execution of filings.--[Documents may
7 be filed in the department under this section by electronic
8 mail, telecopy, telex or other form of writing, but such filing
9 shall expire if a duly executed duplicate is not filed in the
10 usual format within 30 days after the initial filing.] All
11 documents filed under this section shall be signed on behalf of
12 the association by any authorized person.
13 (f) Effect of filing [notice] statement of consummation of
14 domestication.--Upon the filing of a [notice] statement of
15 consummation of domestication, and until the filing of a [notice
16 of revocation] statement of termination of domestication, the
17 association shall have the status under the law of this
18 Commonwealth of:
19 (1) a business corporation domesticated under section
20 4161, in the case of a corporation subject to that section;
21 [or]
22 (2) a nonprofit corporation domesticated under section
23 6161, in the case of a corporation subject to that section;
24 or
25 [(2)] (3) an association domesticated under section
26 [151] 161, in any other case.
27 (g) Effect of filing a statement of termination of
28 domestication.--Upon the filing of a statement of termination of
29 domestication, the association shall under the law of this
30 Commonwealth revert to the status it held prior to the filing
19900S1761B2510 - 25 -
1 of:
2 (1) the [notice] statement of consummation of
3 domestication, if the statement of termination of
4 domestication states that the statement of contingent
5 domestication is reinstated; or
6 (2) the statement of contingent domestication, if the
7 statement of termination of domestication states that the
8 statement of contingent domestication is withdrawn.
9 (h) [Filing fee and annual] Annual renewal.--[In addition to
10 the filing fees otherwise provided by law, an additional fee of
11 $1,000 per year or portion thereof shall be payable annually by
12 any association that has in effect any contingent or temporary
13 domiciliary status under this section.] A renewal application
14 may be filed between October 1 and December 31 in each year and
15 shall extend the applicability of this section for the following
16 calendar year. Otherwise the association shall not be entitled
17 to any of the benefits of this section. See section 153(a)(14)
18 (relating to contingent domestication).
19 * * *
20 SUBCHAPTER B
21 FIDUCIARY DUTY AND INDEMNIFICATION
22 Sec.
23 511. Application and effect of subchapter.
24 512. Standard of care and justifiable reliance.
25 513. Personal liability of directors.
26 514. Notation of dissent.
27 515. Exercise of powers generally.
28 516. Alternative standard.
29 517. Limitation on standing.
30 518. Nonexclusivity and supplementary coverage.
19900S1761B2510 - 26 -
1 § 511. Application and effect of subchapter.
2 (a) General rule.--This subchapter shall apply to and the
3 terms "corporation" or "domestic corporation" in this subchapter
4 shall mean a domestic corporation except:
5 (1) A business corporation as defined in section 1103
6 (relating to definitions).
7 (2) A nonprofit corporation as defined in section 5103
8 (relating to definitions).
9 (b) Alternative provisions.--Section 516 (relating to
10 alternative standard) shall not be applicable to any corporation
11 to which section 515 (relating to exercise of powers generally)
12 is applicable. Section 515 shall be applicable to any
13 corporation except a corporation:
14 (1) the bylaws of which by amendment adopted by the
15 board of directors on or before July 26, 1990, and not
16 subsequently rescinded by an articles amendment, explicitly
17 provide that section 515 or corresponding provisions of prior
18 law shall not be applicable to the corporation; or
19 (2) the articles of which explicitly provide that
20 section 515 or corresponding provisions of prior law shall
21 not be applicable to the corporation.
22 § 512. Standard of care and justifiable reliance.
23 (a) Directors.--A director of a domestic corporation shall
24 stand in a fiduciary relation to the corporation and shall
25 perform his duties as a director, including his duties as a
26 member of any committee of the board upon which he may serve, in
27 good faith, in a manner he reasonably believes to be in the best
28 interests of the corporation and with such care, including
29 reasonable inquiry, skill and diligence, as a person of ordinary
30 prudence would use under similar circumstances. In performing
19900S1761B2510 - 27 -
1 his duties, a director shall be entitled to rely in good faith
2 on information, opinions, reports or statements, including
3 financial statements and other financial data, in each case
4 prepared or presented by any of the following:
5 (1) One or more officers or employees of the corporation
6 whom the director reasonably believes to be reliable and
7 competent in the matters presented.
8 (2) Counsel, public accountants or other persons as to
9 matters which the director reasonably believes to be within
10 the professional or expert competence of such person.
11 (3) A committee of the board upon which he does not
12 serve, duly designated in accordance with law, as to matters
13 within its designated authority, which committee the director
14 reasonably believes to merit confidence.
15 (b) Effect of actual knowledge.--A director shall not be
16 considered to be acting in good faith if he has knowledge
17 concerning the matter in question that would cause his reliance
18 to be unwarranted.
19 (c) Officers.--Except as otherwise provided in the articles,
20 an officer shall perform his duties as an officer in good faith,
21 in a manner he reasonably believes to be in the best interests
22 of the corporation and with such care, including reasonable
23 inquiry, skill and diligence, as a person of ordinary prudence
24 would use under similar circumstances. A person who so performs
25 his duties shall not be liable by reason of having been an
26 officer of the corporation.
27 § 513. Personal liability of directors.
28 (a) General rule.--If a bylaw adopted by the shareholders
29 entitled to vote or members entitled to vote of a domestic
30 corporation so provides, a director shall not be personally
19900S1761B2510 - 28 -
1 liable, as such, for monetary damages for any action taken
2 unless:
3 (1) the director has breached or failed to perform the
4 duties of his office under this subchapter; and
5 (2) the breach or failure to perform constitutes self-
6 dealing, willful misconduct or recklessness.
7 (b) Exceptions.--Subsection (a) shall not apply to:
8 (1) the responsibility or liability of a director
9 pursuant to any criminal statute; or
10 (2) the liability of a director for the payment of taxes
11 pursuant to Federal, State or local law.
12 (c) Cross reference.--See 42 Pa.C.S. § 8332.5 (relating to
13 corporate representatives).
14 § 514. Notation of dissent.
15 A director of a domestic corporation who is present at a
16 meeting of its board of directors, or of a committee of the
17 board, at which action on any corporate matter is taken on which
18 the director is generally competent to act, shall be presumed to
19 have assented to the action taken unless his dissent is entered
20 in the minutes of the meeting or unless he files his written
21 dissent to the action with the secretary of the meeting before
22 the adjournment thereof or transmits the dissent, in writing, to
23 the secretary of the corporation immediately after the
24 adjournment of the meeting. The right to dissent shall not apply
25 to a director who voted in favor of the action. Nothing in this
26 subchapter shall bar a director from asserting that minutes of
27 the meeting incorrectly omitted his dissent if, promptly upon
28 receipt of a copy of such minutes, he notifies the secretary, in
29 writing, of the asserted omission or inaccuracy.
30 § 515. Exercise of powers generally.
19900S1761B2510 - 29 -
1 (a) General rule.--In discharging the duties of their
2 respective positions, the board of directors, committees of the
3 board and individual directors of a domestic corporation may, in
4 considering the best interests of the corporation, consider to
5 the extent they deem appropriate:
6 (1) The effects of any action upon any or all groups
7 affected by such action, including shareholders, members,
8 employees, suppliers, customers and creditors of the
9 corporation, and upon communities in which offices or other
10 establishments of the corporation are located.
11 (2) The short-term and long-term interests of the
12 corporation, including benefits that may accrue to the
13 corporation from its long-term plans and the possibility that
14 these interests may be best served by the continued
15 independence of the corporation.
16 (3) The resources, intent and conduct (past, stated and
17 potential) of any person seeking to acquire control of the
18 corporation.
19 (4) All other pertinent factors.
20 (b) Consideration of interests and factors.--The board of
21 directors, committees of the board and individual directors
22 shall not be required, in considering the best interests of the
23 corporation or the effects of any action, to regard any
24 corporate interest or the interests of any particular group
25 affected by such action as a dominant or controlling interest or
26 factor. The consideration of interests and factors in the manner
27 described in this subsection and in subsection (a) shall not
28 constitute a violation of section 512 (relating to standard of
29 care and justifiable reliance).
30 (c) Specific applications.--In exercising the powers vested
19900S1761B2510 - 30 -
1 in the corporation, and in no way limiting the discretion of the
2 board of directors, committees of the board and individual
3 directors pursuant to subsections (a) and (b), the fiduciary
4 duty of directors shall not be deemed to require them to act as
5 the board of directors, a committee of the board or an
6 individual director solely because of the effect such action
7 might have on an acquisition or potential or proposed
8 acquisition of control of the corporation or the consideration
9 that might be offered or paid to shareholders or members in such
10 an acquisition.
11 (d) Presumption.--Absent breach of fiduciary duty, lack of
12 good faith or self-dealing, any act as the board of directors, a
13 committee of the board or an individual director shall be
14 presumed to be in the best interests of the corporation. In
15 assessing whether the standard set forth in section 512 has been
16 satisfied, there shall not be any greater obligation to justify,
17 or higher burden of proof with respect to, any act as the board
18 of directors, any committee of the board or any individual
19 director relating to or affecting an acquisition or potential or
20 proposed acquisition of control of the corporation than is
21 applied to any other act as a board of directors, any committee
22 of the board or any individual director. Notwithstanding the
23 preceding provisions of this subsection, any act as the board of
24 directors, a committee of the board or an individual director
25 relating to or affecting an acquisition or potential or proposed
26 acquisition of control to which a majority of the disinterested
27 directors shall have assented shall be presumed to satisfy the
28 standard set forth in section 512, unless it is proven by clear
29 and convincing evidence that the disinterested directors did not
30 assent to such act in good faith after reasonable investigation.
19900S1761B2510 - 31 -
1 (e) Definition.--The term "disinterested director" as used
2 in subsection (d) and for no other purpose means:
3 (1) A director of the corporation other than:
4 (i) A director who has a direct or indirect
5 financial or other interest in the person acquiring or
6 seeking to acquire control of the corporation or who is
7 an affiliate or associate, as defined in section 2552
8 (relating to definitions), of, or was nominated or
9 designated as a director by, a person acquiring or
10 seeking to acquire control of the corporation.
11 (ii) Depending on the specific facts surrounding the
12 director and the act under consideration, an officer or
13 employee or former officer or employee of the
14 corporation.
15 (2) A person shall not be deemed to be other than a
16 disinterested director solely by reason of any or all of the
17 following:
18 (i) The ownership by the director of shares of or a
19 membership in the corporation.
20 (ii) The receipt as a holder of shares of or as a
21 member of any class or series of any distribution made to
22 all owners of shares of or members of that class or
23 series.
24 (iii) The receipt by the director of director's fees
25 or other consideration as a director.
26 (iv) Any interest the director may have in retaining
27 the status or position of director.
28 (v) The former business or employment relationship
29 of the director with the corporation.
30 (vi) Receiving or having the right to receive
19900S1761B2510 - 32 -
1 retirement or deferred compensation from the corporation
2 due to service as a director, officer or employee.
3 (f) Cross reference.--See section 511(b) (relating to
4 alternative provisions).
5 § 516. Alternative standard.
6 (a) General rule.--In discharging the duties of their
7 respective positions, the board of directors, committees of the
8 board and individual directors of a domestic corporation may, in
9 considering the best interests of the corporation, consider the
10 effects of any action upon employees, upon suppliers and
11 customers of the corporation and upon communities in which
12 offices or other establishments of the corporation are located,
13 and all other pertinent factors. The consideration of those
14 factors shall not constitute a violation of section 512
15 (relating to standard of care and justifiable reliance).
16 (b) Presumption.--Absent breach of fiduciary duty, lack of
17 good faith or self-dealing, actions taken as a director shall be
18 presumed to be in the best interests of the corporation.
19 (c) Cross reference.--See section 511(b) (relating to
20 alternative provisions).
21 § 517. Limitation on standing.
22 The duty of the board of directors, committees of the board
23 and individual directors under section 512 (relating to standard
24 of care and justifiable reliance) is solely to the domestic
25 corporation and may be enforced directly by the corporation or
26 may be enforced by a shareholder or member, as such, by an
27 action in the right of the corporation, and may not be enforced
28 directly by a shareholder, member or by any other person or
29 group. Notwithstanding the preceding sentence, sections 515(a)
30 and (b) (relating to exercise of powers generally) and 516(a)
19900S1761B2510 - 33 -
1 (relating to alternative standard) do not impose upon the board
2 of directors, committees of the board and individual directors,
3 any legal or equitable duties, obligations or liabilities or
4 create any right or cause of action against, or basis for
5 standing to sue, the board of directors, committees of the board
6 and individual directors.
7 § 518. Nonexclusivity and supplementary coverage.
8 (a) General rule.--The indemnification and advancement of
9 expenses provided by or pursuant to section 522 (relating to
10 indemnification of authorized representatives) or any other
11 provisions of law providing for indemnification or advancement
12 of expenses applicable to any domestic corporation shall not be
13 deemed exclusive of any other rights to which a person seeking
14 indemnification or advancement of expenses may be entitled under
15 any bylaw, agreement, vote of shareholders, members or directors
16 or otherwise, both as to action in his official capacity and as
17 to action in another capacity while holding that office. Any
18 domestic corporation may create a fund of any nature, which may,
19 but need not be, under the control of a trustee, or otherwise
20 secure or insure in any manner its indemnification obligations,
21 whether arising under or pursuant to this section or otherwise.
22 (b) When indemnification is not to be made.--Indemnification
23 pursuant to subsection (a) shall not be made in any case where
24 the act giving rise to the claim for indemnification is
25 determined by a court to have constituted willful misconduct or
26 recklessness.
27 (c) Grounds.--Indemnification pursuant to subsection (a)
28 under any bylaw, agreement, vote of shareholders, members or
29 directors or otherwise may be granted for any action taken and
30 may be made whether or not the corporation would have the power
19900S1761B2510 - 34 -
1 to indemnify the person under any other provision of law except
2 as provided in this section and whether or not the indemnified
3 liability arises or arose from any threatened, pending or
4 completed action by or in the right of the corporation. Such
5 indemnification is declared to be consistent with the public
6 policy of this Commonwealth.
7 (d) Payment of expenses.--Expenses incurred by an officer,
8 director, employee or agent in defending any action or
9 proceeding against which indemnification may be made pursuant to
10 this section may be paid by the corporation in advance of the
11 final disposition of such action or proceeding upon receipt of
12 an undertaking by or on behalf of such person to repay such
13 amount if it shall ultimately be determined that he is not
14 entitled to be indemnified by the corporation.
15 (e) Rights to indemnification.--The indemnification and
16 advancement of expenses provided by, or granted pursuant to,
17 this section shall, unless otherwise provided when authorized or
18 ratified, continue as to a person who has ceased to be a
19 director, officer, employee or agent and shall inure to the
20 benefit of the heirs, executors and administrators of such
21 person.
22 § 521. Pensions and allowances.
23 A banking institution[, a credit union, insurance
24 corporation] or a savings association may grant allowances or
25 pensions to officers, directors and employees for faithful and
26 long-continued services and, after the death of the officer,
27 director or employee either while in the service of the
28 corporation or after retirement, pensions or allowances may be
29 granted or continued to their dependents. The allowances to
30 dependents shall be reasonable in amount and paid only for a
19900S1761B2510 - 35 -
1 limited time and, unless part of an employee benefit plan or
2 employment contract in effect at the time of retirement or death
3 of the officer, director or employee, shall not exceed in total
4 the amount of the compensation paid to the officer, director or
5 employee during the 12 months preceding retirement or death.
6 § 522. Indemnification of authorized representatives.
7 A banking institution[, a credit union, an insurance
8 corporation] or a savings association shall be governed by the
9 provisions of Subchapter [C] D of Chapter 17 (relating to
10 indemnification).
11 § 523. Actions by shareholders or members to enforce a
12 secondary right.
13 (a) General rule.--In any action brought to enforce a
14 secondary right on the part of one or more shareholders or
15 members against any officer or director or former officer or
16 director of a banking institution[, a credit union, an insurance
17 corporation] or a savings association, because the corporation
18 refuses to enforce rights which may properly be asserted by it,
19 the plaintiff or plaintiffs must aver and it must be made to
20 appear that the plaintiff or each plaintiff was a shareholder or
21 was a member of the corporation at the time of the transaction
22 of which he complains or that his stock or membership devolved
23 upon him by operation of law from a person who was a shareholder
24 or member at that time.
25 * * *
26 § 1102. Application of subpart.
27 * * *
28 (c) Exclusions.--This subpart shall not apply to any of the
29 following corporations, whether proposed or existing, except as
30 otherwise expressly provided in this subpart or as otherwise
19900S1761B2510 - 36 -
1 provided by statute applicable to the corporation:
2 (1) A banking institution.
3 (2) A credit union.
4 (3) [A domestic or foreign insurance corporation.
5 (4)] A savings association.
6 * * *
7 § 1103. Definitions.
8 Subject to additional definitions contained in subsequent
9 provisions of this subpart that are applicable to specific
10 provisions of this subpart, the following words and phrases when
11 used in this subpart shall have the meanings given to them in
12 this section unless the context clearly indicates otherwise:
13 * * *
14 "Credit union." [or "domestic credit union." A domestic
15 corporation for profit that is a credit union as defined in the
16 act of September 20, 1961 (P.L.1548, No.658), known as the
17 Credit Union Act] A credit union as defined in 17 Pa.C.S. § 102
18 (relating to application of title).
19 * * *
20 "Distribution." A direct or indirect transfer of money or
21 other property (except its own shares or options, rights or
22 warrants to acquire its own shares) or incurrence of
23 indebtedness by a corporation to or for the benefit of any of
24 its shareholders in respect of any of its shares whether by
25 dividend or by purchase, redemption or other acquisition of its
26 shares or otherwise. A guarantee issued by a corporation for the
27 benefit of any of its shareholders shall not constitute a
28 distribution until such time as a valid demand for payment under
29 the guarantee is made upon the corporation.
30 * * *
19900S1761B2510 - 37 -
1 "Entitled to vote." Those persons entitled [at the time] to
2 vote on the matter under [a plan or the terms of a fundamental
3 transaction where dissenters rights are not available under
4 section 1571(b)(2)(ii) (relating to exceptions) or under the
5 articles or] either the bylaws of the corporation or any
6 applicable controlling provision of law. The term includes those
7 persons entitled at the time to vote on the matter under a plan
8 or the terms of a fundamental transaction where dissenters
9 rights are not available under section 1571(b)(2)(ii) (relating
10 to exceptions).
11 "Exchange Act." The Securities Exchange Act of 1934 (48
12 Stat. 881, 15 U.S.C. § 78a et seq.).
13 * * *
14 "Foreign insurance corporation." A corporation for profit
15 incorporated under any laws other than those of this
16 Commonwealth that is qualified to do business in this
17 Commonwealth under the act of [May 17, 1921 (P.L.682, No.284),
18 known as The Insurance Company Law of 1921.] May 17, 1921
19 (P.L.789, No.285), known as The Insurance Department Act of
20 1921.
21 * * *
22 "Insurance corporation" or "domestic insurance corporation."
23 [A domestic corporation for profit that is incorporated under or
24 subject to The Insurance Company Law of 1921 or any statute
25 relating to the incorporation or reincorporation of limited life
26 insurance companies.] An insurance corporation as defined in
27 section 3102 (relating to definitions).
28 "Internal Revenue Code of 1986." The Internal Revenue Code
29 of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).
30 "Investment Company Act of 1940." The Investment Company Act
19900S1761B2510 - 38 -
1 of 1940 (54 Stat. 789, 15 U.S.C. § 80a-1 et seq.).
2 * * *
3 "Mutual insurance company." A mutual insurance company as
4 defined in section 3102 (relating to definitions).
5 * * *
6 "Qualified foreign business corporation." A foreign business
7 corporation that is:
8 (1) authorized under Chapter 41 (relating to foreign
9 business corporations) to do business in this Commonwealth;
10 or
11 (2) a foreign insurance corporation.
12 "Reclassification." A change in the number, voting rights,
13 designations, preferences, limitations, special rights or par
14 value of shares, or a conversion or exchange of one class or
15 series of shares into or for another class or series of shares,
16 other securities or obligations of the same corporation, or the
17 cancellation of shares. The term does not include a stock
18 dividend or split effected by distribution of its own previously
19 authorized shares pro rata to the holders of shares of the same
20 or any other class or series pursuant to action solely of the
21 board of directors.
22 * * *
23 "Relax." When used with respect to a provision of the
24 articles or bylaws, means to provide lesser rights for an
25 affected representative or shareholder.
26 * * *
27 "Securities Act of 1933." The Securities Act of 1933 (48
28 Stat. 74, 15 U.S.C. § 77a et seq.).
29 * * *
30 § 1104. Other general provisions.
19900S1761B2510 - 39 -
1 The following provisions of this title are applicable to
2 corporations subject to this subpart:
3 Section 101 (relating to short title and application of
4 title).
5 Section 102 (relating to definitions).
6 Section 103 (relating to subordination of title to
7 regulatory laws).
8 Section 104 (relating to equitable remedies).
9 Section 105 (relating to fees).
10 Section 106 (relating to effect of filing papers required
11 to be filed).
12 Section 107 (relating to form of records).
13 Section 108 (relating to change in location or status of
14 registered office provided by agent).
15 Section 109 (relating to name of commercial registered
16 office provider in lieu of registered address).
17 Section 110 (relating to supplementary general principles
18 of law applicable).
19 Section 132 (relating to functions of Department of
20 State).
21 Section 133 (relating to powers of Department of State).
22 Section 134 (relating to docketing statement).
23 Section 135 (relating to requirements to be met by filed
24 documents).
25 Section 136 (relating to processing of documents by
26 Department of State).
27 Section 137 (relating to court to pass upon rejection of
28 documents by Department of State).
29 Section 138 (relating to statement of correction).
30 Section 139 (relating to tax clearance of certain
19900S1761B2510 - 40 -
1 fundamental transactions).
2 Section 140 (relating to custody and management of orphan
3 corporate and business records).
4 Section 152 (relating to definitions).
5 Section 153 (relating to fee schedule).
6 Section 154 (relating to enforcement and collection).
7 Section 155 (relating to disposition of funds).
8 Section [152] 162 (relating to contingent domestication
9 of certain foreign associations).
10 Section 501 (relating to reserved power of General
11 Assembly).
12 Section 503 (relating to actions to revoke corporate
13 franchises).
14 Section 504 (relating to validation of certain defective
15 corporations).
16 Section 505 (relating to validation of certain defective
17 corporate acts).
18 Section 506 (relating to scope and duration of certain
19 franchises).
20 Section 507 (relating to validation of certain share
21 authorizations).
22 [Section 511 (relating to standard of care and
23 justifiable reliance).
24 Section 512 (relating to personal liability of
25 directors).
26 Section 513 (relating to nonexclusivity and supplementary
27 coverage).]
28 § 1106. Uniform application of subpart.
29 * * *
30 (b) Exceptions.--
19900S1761B2510 - 41 -
1 (1) Unless expressly provided otherwise in any amendment
2 to this subpart, the amendment shall take effect only
3 prospectively.
4 (2) An existing corporation lawfully using a name or, as
5 part of its name, a word that could not be used as or
6 included in the name of a corporation subsequently
7 incorporated or qualified under this subpart may continue to
8 use the name or word as part of its name if the use or
9 inclusion of the word or name was lawful when first adopted
10 by the corporation in this Commonwealth.
11 (3) Subsection (a) shall not adversely affect the rights
12 specifically provided for or saved in this subpart. See:
13 [The provisions of section 1521(b)(3) (relating to
14 provisions specifically authorized).]
15 The provisions of section 1524(e) (relating to
16 transitional provision).
17 [The preemptive rights set forth in section 1530(b)
18 (relating to preexisting preemptive rights).]
19 The provisions of section 1554(c) (relating to
20 transitional provision).
21 The cumulative voting rights set forth in section
22 1758(c)(2) (relating to cumulative voting).
23 [The class voting rights upon certain amendments of
24 articles set forth in section 1914(b)(3) (relating to
25 statutory voting rights).]
26 The special voting requirements specified in section
27 1952(h) (relating to special requirements).
28 The provisions of section 2301(d) (relating to
29 transitional provisions).
30 The provisions of section 2541(a)(2) and (3) and (c)
19900S1761B2510 - 42 -
1 (relating to application and effect of subchapter).
2 The provisions of section 2543(b)(1) and (2)
3 (relating to exceptions generally).
4 The provisions of section 2551(b)(3)(i), (5) and (6)
5 (relating to exceptions).
6 The provisions of section 2553(b)(2) (relating to
7 exception).
8 (4) Except as otherwise expressly provided in the
9 articles, a domestic corporation for profit that, on
10 September 30, 1989, was not subject to the Business
11 Corporation Law of 1933 and that thereafter becomes subject
12 to this subpart by operation of law shall be deemed to have
13 in effect articles that provide that the following provisions
14 of this subpart shall not be applicable to the corporation:
15 (i) Section 1726(a)(1) (relating to removal by the
16 shareholders) insofar as it provides a statutory right on
17 the part of shareholders to remove directors from office
18 without assigning any cause.
19 (ii) Section 1755(b)(2) (relating to special
20 meetings).
21 (iii) Section 1912(a)(2) (relating to proposal of
22 amendments).
23 § 1107. (Reserved).
24 § [1107] 1108. Limitation on incorporation.
25 A corporation that can be incorporated under this subpart
26 shall not be incorporated except under the provisions of this
27 subpart.
28 § [1108] 1109. Execution of documents.
29 (a) General rule.--Any document filed in the Department of
30 State under this title by a domestic or foreign business
19900S1761B2510 - 43 -
1 corporation subject to this subpart may be executed on behalf of
2 the corporation by any one duly authorized officer thereof. The
3 corporate seal may be affixed and attested but the affixation or
4 attestation of the corporate seal shall not be necessary for the
5 due execution of any filing by a corporation under this title.
6 (b) Cross reference.--See section 135 (relating to
7 requirements to be met by filed documents).
8 § 1110. Annual report information.
9 The Department of State shall make available as public
10 information for inspection and copying the names of the
11 president, vice-president, secretary and treasurer of
12 corporations for profit as annually forwarded to the department
13 by the Department of Revenue pursuant to section 403(a)(3) of
14 the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform
15 Code of 1971.
16 § 1303. Corporate name.
17 * * *
18 (b) Duplicate use of names.--The corporate name shall not be
19 the same as or confusingly similar to:
20 (1) The name of any other domestic corporation for
21 profit or not-for-profit which is either in existence or for
22 which articles of incorporation have been filed but have not
23 yet become effective, or of any foreign corporation for
24 profit or not-for-profit which is either authorized to do
25 business in this Commonwealth or for which an application for
26 a certificate of authority has been filed but has not yet
27 become effective, or of any domestic or foreign limited
28 partnership that has filed in the Department of State a
29 certificate or qualified under Chapter 85 (relating to
30 limited partnerships) or under corresponding provisions of
19900S1761B2510 - 44 -
1 prior law, or the name of any association registered at any
2 time under 54 Pa.C.S. Ch. 5 (relating to corporate and other
3 association names), unless:
4 (i) where the name is the same or confusingly
5 similar, the other association:
6 (A) has stated that it is about to change its
7 name, or to cease to do business, or is being wound
8 up, or is a foreign association about to withdraw
9 from doing business in this Commonwealth, and the
10 statement and the written consent of the other
11 association to the adoption of the name is filed in
12 the Department of State;
13 (B) has filed with the Department of Revenue a
14 certificate of out of existence, or has failed for a
15 period of three successive years to file with [the
16 Department of State or] the Department of Revenue a
17 report or return required by law[,] and [in the case
18 of a failure to file with the Department of Revenue,]
19 the fact of such failure has been certified by the
20 Department of Revenue to the Department of State;
21 (C) has abandoned its name under the laws of its
22 jurisdiction of incorporation, by amendment, merger,
23 consolidation, division, expiration, dissolution or
24 otherwise, without its name being adopted by a
25 successor in a merger, consolidation, division or
26 otherwise, and an official record of that fact,
27 certified as provided by 42 Pa.C.S. § 5328 (relating
28 to proof of official records), is presented by any
29 person to the department; or
30 (D) has had the registration of its name under
19900S1761B2510 - 45 -
1 54 Pa.C.S. Ch. 5 terminated and, if the termination
2 was effected by operation of 54 Pa.C.S. § 504
3 (relating to effect of failure to make decennial
4 filings), the application for the use of the name is
5 accompanied by a verified statement stating that at
6 least 30 days' written notice of intention to
7 appropriate the name was given to the delinquent
8 association at its registered office and that, after
9 diligent search by the affiant, the affiant believes
10 the association to be out of existence; or
11 (ii) where the name is confusingly similar, the
12 consent of the other association to the adoption of the
13 name is filed in the Department of State.
14 The consent of the association shall be evidenced by a
15 [certificate] statement to that effect executed by the
16 association.
17 * * *
18 (c) Required approvals or conditions.--
19 (1) The corporate name shall not imply that the
20 corporation is:
21 * * *
22 (iii) An insurance company [that could be
23 incorporated under the act of May 17, 1921 (P.L.682,
24 No.284), known as The Insurance Company Law of 1921] nor
25 contain any of the words "annuity," "assurance,"
26 "beneficial," "bond," "casualty," "endowment,"
27 "fidelity," "fraternal," "guaranty," "indemnity,"
28 "insurance," "insurer," "reassurance," "reinsurance,"
29 "surety" or "title" when used in such a way as to imply
30 that the corporation is engaged in the business of
19900S1761B2510 - 46 -
1 writing insurance or reinsurance as principal or any
2 other words of like purport unless it is duly licensed as
3 an insurance company by its jurisdiction of incorporation
4 or the Insurance Department certifies that it has no
5 objection to the use by the corporation or proposed
6 corporation of the designation. The corporate name of a
7 domestic insurance corporation shall:
8 (A) contain the word "mutual" if, and only if,
9 it is a mutual insurance company; and
10 (B) clearly designate the object and purpose of
11 the corporation.
12 * * *
13 (v) A credit union. See 17 Pa.C.S. § 104 (relating
14 to prohibition on use of words "credit union," etc.).
15 * * *
16 § 1306. Articles of incorporation.
17 (a) General rule.--Articles of incorporation shall be signed
18 by each of the incorporators and shall set forth in the English
19 language:
20 * * *
21 (8) Any other provisions that the incorporators may
22 choose to insert if:
23 (i) any provision of this subpart authorizes or
24 requires provisions pertaining to the subject matter
25 thereof to be set forth in the articles or bylaws of a
26 business corporation or in an agreement or other
27 instrument; or
28 (ii) the provisions, whether or not specifically
29 authorized by this subpart, relate to the purpose or
30 purposes of the corporation, the management of its
19900S1761B2510 - 47 -
1 business or affairs or the rights, powers or duties of
2 its securityholders, directors or officers.
3 [The articles may, but need not, set forth a par value for
4 any authorized shares or class of shares.]
5 (b) Other provisions authorized.--A provision of the
6 original articles or a provision of the articles approved by the
7 shareholders, in either case adopted under subsection
8 (a)(8)(ii), may relax or be inconsistent with and supersede any
9 provision of this article CHAPTERS 13 (RELATING TO <--
10 INCORPORATION), 15 (RELATING TO CORPORATE POWERS, DUTIES AND
11 SAFEGUARDS), 17 (RELATING TO OFFICERS, DIRECTORS AND
12 SHAREHOLDERS) OR 19 (RELATING TO FUNDAMENTAL CHANGES) concerning
13 the subjects specified in subsection (a)(8)(ii), except where a
14 provision of this article THOSE CHAPTERS expressly provides that <--
15 the articles shall not relax or be inconsistent with any
16 provision on a specified subject. Notwithstanding the foregoing,
17 the articles may provide greater rights for shareholders than
18 are authorized by any provision of this article THOSE CHAPTERS <--
19 that otherwise provides that the articles shall not relax or be
20 inconsistent with any provision on a specified subject.
21 (c) Par value.--The articles may, but need not, set forth a
22 par value for any authorized shares or class or series of
23 shares.
24 [(b)] (d) Written consent to naming directors.--The naming
25 of directors in articles of incorporation shall constitute an
26 affirmation that the directors have consented in writing to
27 serve as such.
28 § 1504. Adoption, amendment and contents of bylaws.
29 * * *
30 (b) Exception.--Except as otherwise provided in section
19900S1761B2510 - 48 -
1 1310(a) (relating to organization meeting) or in the articles,
2 to the extent authorized by section 1306(b) (relating to other
3 provisions authorized), the board of directors shall not have
4 the authority to adopt or change a bylaw on any subject that is
5 committed expressly to the shareholders by any of the provisions
6 of this subpart. See:
7 Subsection (d) (relating to amendment of voting
8 provisions).
9 Section 1521 (relating to authorized shares).
10 Section 1713 (relating to personal liability of
11 directors).
12 Section 1721 (relating to board of directors).
13 Section 1725 (relating to selection of directors).
14 Section 1726 (relating to removal of directors).
15 Section 1729 (relating to voting rights of directors).
16 Section 1756 (relating to quorum).
17 Section 1757 (relating to action by shareholders).
18 Section 1765 (relating to judges of election).
19 Section 2105 (relating to termination of nonstock
20 corporation status).
21 Section 2122 (relating to classes of membership).
22 Section 2124 (relating to voting rights of members).
23 Section 2302 (relating to definition of minimum vote).
24 Section 2321 (relating to shares).
25 Section 2322 (relating to share transfer restrictions).
26 Section 2325 (relating to sale option of estate of
27 shareholder).
28 Section 2332 (relating to management by shareholders).
29 Section 2334 (relating to appointment of provisional
30 director in certain cases).
19900S1761B2510 - 49 -
1 Section 2337 (relating to option of shareholder to
2 dissolve corporation).
3 Section 2923 (relating to issuance and retention of
4 shares).
5 * * *
6 (d) Amendment of voting provisions.--[A provision in the
7 bylaws that requires a specific number or percentage of votes
8 for the taking of any action by the shareholders or a class of
9 shareholders may, unless otherwise provided in a bylaw adopted
10 by the shareholders, be amended or repealed in the same manner
11 and by the same vote as is required to amend or repeal any other
12 provision in the bylaws.] Unless otherwise provided in a bylaw
13 adopted by the shareholders, whenever the bylaws require for the
14 taking of any action by the shareholders or a class of
15 shareholders a specific number or percentage of votes, the
16 provision of the bylaws setting forth that requirement shall not
17 be amended or repealed by any lesser number or percentage of
18 votes of the shareholders or of the class of shareholders.
19 § 1505. Persons bound by bylaws.
20 Except as otherwise provided by [section 512 (relating to
21 personal liability of directors) or 1721(e) (relating to
22 personal liability of directors), or 42 Pa.C.S. § 8364] section
23 1713 (relating to personal liability of directors) or any
24 similar provision of law, the bylaws of a business corporation
25 shall operate only as regulations among the shareholders of the
26 corporation and shall not affect contracts or other dealings
27 with other persons unless those persons have actual knowledge of
28 the bylaws.
29 § 1508. Corporate records; inspection.
30 * * *
19900S1761B2510 - 50 -
1 (d) [Cross reference.--See section 4145 (relating to
2 applicability of certain safeguards to foreign domiciliary
3 corporations).] Certain provisions of articles ineffective.--
4 This section may not be relaxed by any provision of the
5 articles.
6 (e) Cross reference.--See section 1763(c) (relating to
7 certification by nominee).
8 § 1510. [Usury not a defense] Certain specifically authorized
9 debt terms.
10 (a) [General rule] Interest rates.--A business corporation
11 shall not plead or set up usury, or the taking of more than the
12 lawful rate of interest, or the taking of any finance, service
13 or default charge in excess of any maximum rate therefor
14 provided or prescribed by law, as a defense to any action or
15 proceeding brought against it to recover damages on, or to
16 enforce payment of, or to enforce any other remedy on, any
17 obligation executed or effected by the corporation.
18 (b) Yield maintenance premiums.--A prepayment premium
19 determined by reference to the approximate spread between the
20 yield at issuance, or at the date of amendment of any of the
21 terms, of an obligation of a corporation and the yield at or
22 about such date of an interest rate index of independent
23 significance and contingent upon a change in the ownership of
24 the shares of or a default by or other change in the condition
25 or prospects of the issuer or any affiliate of the issuer shall
26 be deemed liquidated damages and shall not constitute a penalty.
27 [(b) Definition] (c) Definitions.--As used in this section,
28 [the term "obligation" includes] the following words shall have
29 the meanings given to them in this subsection:
30 "Affiliate." An affiliate or associate as defined in section
19900S1761B2510 - 51 -
1 2552 (relating to definitions).
2 "Obligation." Includes an installment sale contract.
3 [(c)] (d) Cross reference.--See section 4146 (relating to
4 provisions applicable to all foreign corporations).
5 § 1521. Authorized shares.
6 * * *
7 (b) Provisions specifically authorized.--
8 (1) Without limiting the authority contained in
9 subsection (a), a corporation, when so authorized in its
10 articles, may issue classes or series of shares:
11 (i) Subject to the right or obligation of the
12 corporation to redeem any of the shares for the
13 consideration, if any, fixed by or in the manner provided
14 by the articles for the redemption thereof. Unless
15 otherwise provided in the articles, any shares subject to
16 redemption shall be redeemable only pro rata or by lot or
17 by such other equitable method as may be selected by the
18 corporation. An amendment of the articles to add or amend
19 a provision permitting the redemption of any shares by a
20 method that is not pro rata nor by lot nor otherwise
21 equitable may be effected only pursuant to section 1906
22 (relating to special treatment of holders of shares of
23 same class or series).
24 (ii) Entitling the holders thereof to cumulative,
25 noncumulative or partially cumulative dividends.
26 (iii) Having preference over any other shares as to
27 dividends or assets or both.
28 (iv) Convertible into shares of any other class or
29 series, or into obligations of the corporation.
30 (2) Any of the terms of a class or series of shares may
19900S1761B2510 - 52 -
1 be made dependent upon:
2 (i) Facts ascertainable outside of the articles if
3 the manner in which the facts will operate upon the terms
4 of the class or series is set forth in the articles.
5 (ii) Terms incorporated by reference to an existing
6 agreement between the corporation and one or more other
7 parties, or to another document of independent
8 significance, if the articles state that the full text of
9 the agreement or other document is on file at the
10 principal place of business of the corporation and state
11 the address thereof. A corporation that takes advantage
12 of this subparagraph shall furnish a copy of the full
13 text of the agreement or other document, on request and
14 without cost, to any shareholder and, unless it is a
15 closely held corporation, on request and at cost, to any
16 other person.
17 (3) The articles may [expressly] confer upon a
18 shareholder a specifically enforceable right to the
19 declaration and payment of dividends, the redemption of
20 shares or the making of any other form of distribution if the
21 distribution is at the time of enforcement then [permitted]
22 not prohibited by section [1551 (relating to distributions to
23 shareholders)] 1551(b)(2) (relating to limitation). Such a
24 [provision adopted on or after January 1, 1989, shall not be
25 valid unless it shall make] right shall not arise by
26 implication, but only by either an express reference to this
27 section or another express reference to specific
28 enforceability of a distribution.
29 * * *
30 § 1524. Payment for shares.
19900S1761B2510 - 53 -
1 (a) General rule.--Consideration for shares, unless
2 otherwise restricted in the bylaws:
3 (1) May consist of money, obligations (including an
4 obligation of a shareholder), services performed whether or
5 not contracted for, contracts for services to be performed,
6 shares or other securities or obligations of the issuing
7 business corporation, or any other tangible or intangible
8 property. If shares are issued for other than money, the
9 value of the consideration shall be determined by or in the
10 manner provided by the board of directors.
11 (2) Shall be paid to or as ordered by the [business]
12 corporation.
13 * * *
14 (c) Status of issued shares.--[All] Except as provided in
15 subsection (e), all issued shares of a business corporation
16 shall be deemed fully paid regardless of failure to pay in full
17 the agreed consideration therefor [and, except]. Except as
18 otherwise provided by a regulatory statute controlling under
19 section 103(c) (relating to structural provisions in regulatory
20 statutes controlling), all issued shares of a corporation shall
21 be nonassessable. This subsection shall not affect the personal
22 obligation of a subscriber for shares of a corporation to pay
23 the agreed consideration for the shares.
24 * * *
25 (e) Transitional provision.--A corporation may enforce calls
26 on partly paid shares outstanding on [January 1,] September 30,
27 1989, in the same manner and to the same extent as if this
28 subpart had not been enacted.
29 § 1525. Stock rights and options.
30 * * *
19900S1761B2510 - 54 -
1 (c) Standard of care unaffected.--The provisions of
2 subsections (a) and (b) and section 2513 shall not be construed
3 to effect a change in the fiduciary relationship between a
4 director and a business corporation or to change the standard of
5 care of a director provided for in [section 1721 (relating to
6 board of directors)] Subchapter B of Chapter 17 (relating to
7 fiduciary duty).
8 * * *
9 (e) Shares subject to preemptive rights.--Authorized but
10 unissued shares subject to preemptive rights may be issued and
11 sold [to holders of] pursuant to a plan providing for the
12 issuance of rights or options entitling the holders thereof to
13 purchase shares of the same class or series as the shares
14 subject to such preemptive rights upon the exercise of such
15 rights or options [only with the written consent or] if the plan
16 is approved by the affirmative vote of [shareholders entitled to
17 cast at least] a majority of the votes [that all] cast by the
18 shareholders entitled to exercise such preemptive rights [with
19 respect thereto are entitled to cast].
20 § 1528. Shares represented by certificates and uncertificated
21 shares.
22 * * *
23 (B) ISSUE OF CERTIFICATES.--EVERY SHAREHOLDER SHALL, EXCEPT <--
24 AS OTHERWISE PROVIDED IN A [BYLAW] PROVISION OF THE ARTICLES
25 ADOPTED PURSUANT TO SUBSECTION (F) OR IN THE TERMS OF A
26 SUBSCRIPTION THAT HAS NOT BEEN FULLY PERFORMED BY THE
27 SUBSCRIBER, BE ENTITLED TO A SHARE CERTIFICATE REPRESENTING THE
28 SHARES OWNED BY HIM.
29 * * *
30 (d) Notice of variations in rights.--Every certificate
19900S1761B2510 - 55 -
1 representing shares issued by a business corporation that is
2 authorized to issue shares of more than one class or series
3 shall set forth upon the face or back of the certificate (or
4 shall state on the face or back of the certificate that the
5 corporation will furnish to any shareholder upon request and
6 without charge) a full or summary statement of the designations,
7 voting rights, preferences, limitations and special rights of
8 the shares of each class or series authorized to be issued so
9 far as they have been fixed and determined and the authority of
10 the board of directors to fix and determine the designations,
11 voting rights, preferences, limitations and special rights of
12 the classes and series of shares of the corporation. See also
13 sections 1524(d) (relating to rights of subscribing
14 shareholder), 1529(f) (relating to notice to transferee) and
15 2321(c) (relating to notice of statutory close corporation
16 status).
17 * * *
18 (f) Uncertificated shares.--The [bylaws] articles may
19 provide that any or all classes and series of shares, or any
20 part thereof, shall be uncertificated shares except that such a
21 provision shall not apply to shares represented by a certificate
22 until the certificate is surrendered to the corporation. Within
23 a reasonable time after the issuance or transfer of
24 uncertificated shares, the corporation shall send to the
25 registered owner thereof a written notice containing the
26 information required to be set forth or stated on certificates
27 by subsections (c) and (d). Except as otherwise expressly
28 provided by law, the rights and obligations of the holders of
29 shares represented by certificates and the rights and
30 obligations of the holders of uncertificated shares of the same
19900S1761B2510 - 56 -
1 class and series shall be identical.
2 § 1530. Preemptive rights of shareholders.
3 (a) General rule.--Except as otherwise provided in the
4 articles [or in subsection (b)], a business corporation may
5 issue shares, option rights or securities having conversion or
6 option rights, or obligations without first offering them to
7 shareholders of any class or classes.
8 [(b) Preexisting preemptive rights.--Unless otherwise
9 provided in its articles, the shareholders of a nonregistered
10 corporation shall have a preemptive right to subscribe for
11 shares, option rights, or securities having option rights,
12 issued for cash by the corporation, if the corporation was not
13 incorporated hereunder or under the Business Corporation Law of
14 1933 and its shareholders were entitled to preemptive rights at
15 the date the corporation became subject to this subpart, but
16 this subsection shall apply neither to the holders of shares of
17 a class issued after the date such corporation became subject to
18 the Business Corporation Law of 1933 or this subpart nor to the
19 issue of securities having conversion rights.
20 (c) Release of shares subject to preemptive rights.--Except
21 as otherwise provided in the articles, shares (or any option
22 rights or securities having conversion or option rights with
23 respect to such shares) that have been offered to shareholders
24 having a preemptive right thereto, at a price and upon terms
25 duly fixed, and that have not been subscribed for by them within
26 the time duly fixed by the articles or the board of directors,
27 may be thereafter offered for subscription to any person or
28 persons at a price and upon terms not more favorable than those
29 at which they were offered to such shareholders.]
30 (b) Cross reference.--See section 1525(e) (relating to
19900S1761B2510 - 57 -
1 shares subject to preemptive rights).
2 § 1551. Distributions to shareholders.
3 (a) General rule.--Unless otherwise restricted in the
4 bylaws, the board of directors may authorize and a business
5 corporation may make distributions. A provision in the articles
6 setting forth a par value for any authorized shares or class or
7 series of shares shall not restrict the ability of a corporation
8 to make distributions.
9 (b) Limitation.--A distribution may not be made if, after
10 giving effect thereto:
11 (1) the corporation would be unable to pay its debts as
12 they become due in the usual course of its business; or
13 (2) the total assets of the corporation would be less
14 than the sum of its total liabilities plus (unless otherwise
15 provided in the articles) the amount that would be needed, if
16 the corporation were to be dissolved at the time as of which
17 the distribution is measured, to satisfy the preferential
18 rights upon dissolution of shareholders whose preferential
19 rights are superior to those receiving the distribution. [For
20 purposes of this paragraph, total assets and liabilities
21 shall be determined by the]
22 (c) Valuation.--The board of directors[, which] may base its
23 determination [on such factors as it considers relevant,
24 including without limitation:] that a distribution is not
25 prohibited under subsection (b)(2) on one or more of the
26 following:
27 [(i)] (1) the book values of the assets and liabilities
28 of the corporation, as reflected on its books and records;
29 [and
30 (ii)] (2) a valuation that takes into consideration
19900S1761B2510 - 58 -
1 unrealized appreciation and depreciation or other changes in
2 value of the assets and liabilities of the corporation;
3 (3) the current value of the assets and liabilities of
4 the corporation, either valued separately or valued in
5 segments or as an entirety as a going concern; or
6 (4) any other method that is reasonable in the
7 circumstances.
8 In determining whether a distribution is prohibited by
9 subsection (b)(2), the board of directors need not consider
10 obligations and liabilities unless they are required to be
11 reflected on a balance sheet (not including the notes thereto)
12 prepared on the basis of generally accepted accounting
13 principles, or such other accounting practices and principles as
14 are used generally by the corporation in the maintenance of its
15 books and records and as are reasonable in the circumstances.
16 [See section 1721(b) (relating to standard of care; justifiable
17 reliance).
18 (c)] (d) Date of distribution.--[In the case of a purchase,
19 redemption or other acquisition of its own shares by a
20 corporation, the effect of a distribution shall be measured as
21 of the date money or other property is transferred or debt is
22 incurred by the corporation or as of the date the shareholder
23 ceases to be a shareholder of the corporation with respect to
24 the shares, whichever is earlier. In] The effect of a
25 distribution shall be measured:
26 (1) as of the date specified by the board of directors
27 when it authorizes the distribution if the distribution
28 occurs within 125 days of the earlier of the date so
29 specified or the date of authorization; or
30 (2) as of the date of distribution in all other cases.[,
19900S1761B2510 - 59 -
1 the effect of a distribution shall be measured as of the date
2 of its authorization if payment occurs 120 days or less
3 following the date of authorization or as of the date of
4 payment if payment occurs more than 120 days following the
5 date of authorization.]
6 In the case of a purchase, redemption or other acquisition of
7 its own shares by a corporation, the distribution shall be
8 deemed to occur as of the date money or other property is
9 transferred or debt is incurred by the corporation or as of the
10 date the shareholder ceases to be a shareholder of the
11 corporation with respect to the shares, whichever is earlier.
12 [(d)] (e) Redemption related and similar debt.--Indebtedness
13 of a corporation [incurred or issued] to a shareholder [in]
14 incurred by reason of a distribution made in accordance with
15 this section shall be at least on a parity with the indebtedness
16 of the corporation to its general unsecured creditors except to
17 the extent subordinated by agreement.
18 [(e)] (f) Certain subordinated debt.--Indebtedness of a
19 corporation, including indebtedness issued as a distribution,
20 shall not be considered a liability for purposes of
21 determinations under subsection (b) if its terms provide that
22 payment of principal and interest are made only if and to the
23 extent that payment of a distribution to shareholders could then
24 be made under this section. If [the subordinated] such
25 indebtedness is issued as a distribution, each payment of
26 principal or interest shall be treated as a distribution, the
27 effect of which shall be measured on the date the payment is
28 actually made.
29 (g) Cross references.--See Subchapter B of Chapter 17
30 (relating to fiduciary duty) and section 3121 3122 (relating to <--
19900S1761B2510 - 60 -
1 distributions by insurance corporations).
2 § 1553. Liability for unlawful dividends and other
3 distributions.
4 (a) Directors.--Except as otherwise provided pursuant to
5 section [1721(e)] 1713 (relating to personal liability of
6 directors), a director who votes for or assents to any dividend
7 or other distribution contrary to the provisions of this subpart
8 or contrary to any restrictions contained in the bylaws shall,
9 if he has not complied with the standard provided in or pursuant
10 to section [1721(b)] 1712 (relating to standard of care[;] and
11 justifiable reliance), be liable to the corporation, jointly and
12 severally with all other directors so voting or assenting, for
13 the amount of the dividend that is paid or the value of the
14 other distribution in excess of the amount of the dividend or
15 other distribution that could have been made without a violation
16 of the provisions of this subpart or the restrictions in the
17 bylaws.
18 * * *
19 (e) Contrary articles ineffective.--Except as provided by
20 subsection (a), this section may not be varied by any provision
21 of the articles.
22 § 1554. Financial reports to shareholders.
23 * * *
24 (c) Transitional provision.--A bylaw adopted on or before
25 [December 31, 1989,] June 30, 1991, that:
26 (1) provides that this section shall not apply to the
27 shares of the corporation or to shares outstanding on a
28 specified or otherwise determinable date; or
29 (2) restricts the right of shareholders to receive
30 financial information in a manner permissible under the
19900S1761B2510 - 61 -
1 Business Corporation Law of 1933;
2 shall be deemed for the purposes of subsection (b) to be a
3 separate written agreement between the corporation and [each
4 holder of] any person holding shares, option rights or
5 securities having conversion or option rights, or to whom the
6 corporation is otherwise obligated to issue shares [outstanding
7 on the date of adoption of the bylaw for the purposes of
8 subsection (b)] on June 30, 1991, but only with respect to the
9 shares held by the person on that date or to be acquired
10 pursuant to such option rights, securities having conversion or
11 option rights or other obligation of the corporation.
12 (d) Certain provisions of articles ineffective.--This
13 section may not be relaxed by any provision of the articles.
14 [d)] (e) Cross references.--See [sections] section 2511
15 (relating to financial reports to shareholders) [and 4145
16 (relating to applicability of certain safeguards to foreign
17 domiciliary corporations)] and 42 Pa.C.S. § 2503(7) (relating to
18 right of participants to receive counsel fees).
19 § 1571. Application and effect of subchapter.
20 (a) General rule.--Except as otherwise provided in
21 subsection (b), any shareholder of a business corporation shall
22 have the right to dissent from, and to obtain payment of the
23 fair value of his shares in the event of, any corporate action,
24 or to otherwise obtain fair value for his shares, where this
25 [subpart] part expressly provides that a shareholder shall have
26 the rights and 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
19900S1761B2510 - 62 -
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] 2704(d) (relating to dissenters rights
13 upon election).
14 Section 2705(c) (relating to dissenters rights upon
15 renewal of election).
16 Section 2907(a) (relating to proceedings to terminate
17 breach of qualifying conditions).
18 Section 7104(b)(3) (relating to procedure).
19 (b) Exceptions.--
20 (1) Except as otherwise provided in paragraph (2), the
21 holders of the shares of any class or series of shares that,
22 at the record date fixed to determine the shareholders
23 entitled to notice of and to vote at the meeting at which a
24 plan specified in any of section 1930, 1931(d), 1932(c) or
25 1952(d) is to be voted on, are either:
26 (i) listed on a national securities exchange; or
27 (ii) held of record by more than 2,000 shareholders;
28 shall not have the right to obtain payment of the fair value
29 of any such shares under this subchapter.
30 (2) Paragraph (1) shall not apply to and dissenters
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1 rights shall be available without regard to the exception
2 provided in that paragraph in the case of:
3 (i) Shares converted by a plan if the shares are not
4 converted solely into shares of the acquiring, surviving,
5 new or other corporation or solely into such shares and
6 money in lieu of fractional shares.
7 (ii) Shares of any preferred or special class unless
8 the articles, the plan or the terms of the transaction
9 entitle all shareholders of the class to vote thereon and
10 require for the adoption of the plan or the effectuation
11 of the transaction the affirmative vote of a majority of
12 the votes cast by all shareholders of the class.
13 (iii) Shares entitled to dissenters rights under
14 section 1906(c) (relating to dissenters rights upon
15 special treatment).
16 (3) The shareholders of a corporation that acquires by
17 purchase, lease, exchange or other disposition all or
18 substantially all of the shares, property or assets of
19 another corporation by the issuance of shares, obligations or
20 otherwise, with or without assuming the liabilities of the
21 other corporation and with or without the intervention of
22 another corporation or other person, shall not be entitled to
23 the rights and remedies of dissenting shareholders provided
24 in this subchapter regardless of the fact, if it be the case,
25 that the acquisition was accomplished by the issuance of
26 voting shares of the corporation to be outstanding
27 immediately after the acquisition sufficient to elect a
28 majority or more of the directors of the corporation.
29 * * *
30 (e) Other statutes.--The procedures of this subchapter shall
19900S1761B2510 - 64 -
1 also be applicable to any transaction described in any statute
2 other than this [subpart] part that makes reference to this
3 subchapter for the purpose of granting dissenters rights.
4 (f) Certain provisions of articles ineffective.--This
5 subchapter may not be relaxed by any provision of the articles.
6 (g) Cross references.--See sections 1105 (relating to
7 restriction on equitable relief), 1904 (relating to de facto
8 transaction doctrine abolished) and 2512 (relating to dissenters
9 rights procedure).
10 § 1572. Definitions.
11 The following words and phrases when used in this subchapter
12 shall have the meanings given to them in this section unless the
13 context clearly indicates otherwise:
14 "Corporation." The issuer of the shares held or owned by the
15 dissenter before the corporate action or the successor by
16 merger, consolidation, division, conversion or otherwise of that
17 issuer. A plan of division may designate which of the resulting
18 corporations is the successor corporation for the purposes of
19 this subchapter. The successor corporation in a division shall
20 have sole responsibility for payments to dissenters and other
21 liabilities under this subchapter except as otherwise provided
22 in the plan of division.
23 * * *
24 § 1576. Failure to comply with notice to demand payment, etc.
25 (a) Effect of failure of shareholder to act.--A shareholder
26 who fails to timely demand payment, or fails (in the case of
27 certificated shares) to timely deposit certificates, as required
28 by a notice pursuant to section 1575 (relating to notice to
29 demand payment) shall not have any right under this subchapter
30 to receive payment of the fair value of his shares.
19900S1761B2510 - 65 -
1 * * *
2 § 1577. Release of restrictions or payment for shares.
3 * * *
4 (c) Payment of fair value of shares.--Promptly after
5 effectuation of the proposed corporate action, or upon timely
6 receipt of demand for payment if the corporate action has
7 already been effectuated, the corporation shall either remit to
8 dissenters who have made demand and (if their shares are
9 certificated) have deposited their certificates the amount that
10 the corporation estimates to be the fair value of the shares, or
11 give written notice that no remittance under this section will
12 be made. The remittance or notice shall be accompanied by:
13 (1) The closing balance sheet and statement of income of
14 the issuer of the shares held or owned by the dissenter for a
15 fiscal year ending not more than 16 months before the date of
16 remittance or notice together with the latest available
17 interim financial statements.
18 (2) A statement of the corporation's estimate of the
19 fair value of the shares.
20 (3) A notice of the right of the dissenter to demand
21 payment or supplemental payment, as the case may be,
22 accompanied by a copy of this subchapter.
23 (d) Failure to make payment.--If the corporation does not
24 remit the amount of its estimate of the fair value of the shares
25 as provided by subsection (c), it shall return any certificates
26 that have been deposited and release uncertificated shares from
27 any transfer restrictions imposed by reason of the demand for
28 payment. The corporation may make a notation on any such
29 certificate or on the records of the corporation relating to any
30 such uncertificated shares that such demand has been made. If
19900S1761B2510 - 66 -
1 shares with respect to which notation has been so made shall be
2 transferred, each new certificate issued therefor or the records
3 relating to any transferred uncertificated shares shall bear a
4 similar notation, together with the name of the original
5 dissenting holder or owner of such shares. A transferee of such
6 shares shall not acquire by such transfer any rights in the
7 corporation other than those that the original dissenter had
8 after making demand for payment of their fair value.
9 § 1578. Estimate by dissenter of fair value of shares.
10 * * *
11 (b) Effect of failure to file estimate.--Where [a
12 corporation has remitted payment of its estimated value of a
13 dissenter's shares, and] the dissenter does not file his own
14 estimate under subsection (a) within 30 days after the mailing
15 by the corporation of its remittance or notice, the dissenter
16 shall be entitled to no more than the amount stated in the
17 notice or remitted to him by the corporation.
18 § 1701. Applicability of subchapter.
19 (a) General rule.--The provisions of this subchapter shall
20 apply to every business corporation unless otherwise restricted:
21 (1) by any other provision of this subpart; or
22 (2) except with respect to section 1707(a) (relating to
23 exception to requirement of notice), in the bylaws.
24 (b) Limitation on certain provisions in the articles.--The
25 articles may not relax the statutory rights of shareholders to
26 notice provided in this subchapter.
27 § 1702. Manner of giving notice.
28 (a) General rule.--Whenever written notice is required to be
29 given to any person under the provisions of this subpart or by
30 the articles or bylaws of any business corporation, it may be
19900S1761B2510 - 67 -
1 given to the person either personally or by sending a copy
2 thereof by first class or express mail, postage prepaid, or by
3 telegram (with messenger service specified), telex or TWX (with
4 answerback received) or courier service, charges prepaid, or by
5 [telecopier] facsimile transmission, to his address (or to his
6 telex, TWX[, telecopier or telephone] or facsimile number)
7 appearing on the books of the corporation or, in the case of
8 directors, supplied by him to the corporation for the purpose of
9 notice. If the notice is sent by mail, telegraph or courier
10 service, it shall be deemed to have been given to the person
11 entitled thereto when deposited in the United States mail or
12 with a telegraph office or courier service for delivery to that
13 person or, in the case of telex or TWX, when dispatched. A
14 notice of meeting shall specify the place, day and hour of the
15 meeting and any other information required by any other
16 provision of this subpart.
17 (b) Adjourned shareholder meetings.--When a meeting of
18 shareholders is adjourned, it shall not be necessary to give any
19 notice of the adjourned meeting or of the business to be
20 transacted at an adjourned meeting, other than by announcement
21 at the meeting at which the adjournment is taken, unless the
22 board fixes a new record date for the adjourned meeting or this
23 subpart requires notice of the business to be transacted and
24 such notice has not previously been given.
25 (c) Bulk mail notice.--A corporation that is not a closely
26 held corporation and that gives notice by mail of any regular or
27 special meeting of the shareholders (or any other notice
28 required by this subpart or by the articles or bylaws to be
29 given to all shareholders or to all holders of a class or series
30 of shares) at least 20 days prior to the day named for the
19900S1761B2510 - 68 -
1 meeting or any corporate or shareholder action specified in the
2 notice may use any class of postpaid mail.
3 (d) Cross reference.--See section 3133 (relating to notice
4 of meetings of members of mutual insurance companies).
5 § 1703. Place and notice of meetings of board of directors.
6 * * *
7 (b) Notice.--[Meetings] Regular meetings of the board of
8 directors may be held upon such notice, if any, as the bylaws
9 may prescribe. Unless otherwise provided in the bylaws, written
10 notice of every special meeting of the board of directors shall
11 be given to each director at least five days before the day
12 named for the meeting. Neither the business to be transacted at,
13 nor the purpose of, any regular or special meeting of the board
14 need be specified in the notice of the meeting.
15 § 1704. Place and notice of meetings of shareholders.
16 * * *
17 (b) Notice.--Written notice of every meeting of the
18 shareholders shall be given by, or at the direction of, the
19 secretary or other authorized person to each shareholder of
20 record entitled to vote at the meeting at least:
21 (1) ten days prior to the day named for a meeting called
22 to consider a fundamental change under Chapter 19 (relating
23 to fundamental changes); or
24 (2) five days prior to the day named for the meeting in
25 any other case.
26 If the secretary or other authorized person neglects or refuses
27 to give notice of a meeting, the person or persons calling the
28 meeting may do so.
29 (c) Contents.--In the case of a special meeting of
30 shareholders, the notice shall specify the general nature of the
19900S1761B2510 - 69 -
1 business to be transacted, and in all cases the notice shall
2 comply with the express requirements of this subpart. The
3 corporation shall not have a duty to augment the notice.
4 § 1705. Waiver of notice.
5 (a) Written waiver.--Whenever any written notice is required
6 to be given under the provisions of this subpart or the articles
7 or bylaws of any business corporation, a waiver thereof in
8 writing, signed by the person or persons entitled to the notice,
9 whether before or after the time stated therein, shall be deemed
10 equivalent to the giving of the notice. [Except as otherwise
11 required by this subsection, neither] Neither the business to be
12 transacted at, nor the purpose of, a meeting need be specified
13 in the waiver of notice of the meeting. [In the case of a
14 special meeting of shareholders, the waiver of notice shall
15 specify the general nature of the business to be transacted.]
16 * * *
17 § 1708. Use of conference telephone and similar equipment.
18 [One] Except as otherwise provided in the bylaws, one or more
19 persons may participate in a meeting of the incorporators, the
20 board of directors or the shareholders of a business corporation
21 by means of conference telephone or similar communications
22 equipment by means of which all persons participating in the
23 meeting can hear each other. Participation in a meeting pursuant
24 to this section shall constitute presence in person at the
25 meeting.
26 SUBCHAPTER B
27 FIDUCIARY DUTY
28 Sec.
29 1711. Alternative provisions.
30 1712. Standard of care and justifiable reliance.
19900S1761B2510 - 70 -
1 1713. Personal liability of directors.
2 1714. Notation of dissent.
3 1715. Exercise of powers generally.
4 1716. Alternative standard.
5 1717. Limitation on standing.
6 § 1711. Alternative provisions.
7 (a) General rule.--Section 1716 (relating to alternative
8 standard) shall not be applicable to any business corporation to
9 which section 1715 (relating to exercise of powers generally) is
10 applicable.
11 (b) Exceptions.--Section 1715 shall be applicable to:
12 (1) Any registered corporation described in section
13 2502(1)(i) (relating to registered corporation status),
14 except a corporation:
15 (i) the bylaws of which explicitly provide that
16 section 1715 or corresponding provisions of prior law
17 shall not be applicable to the corporation by amendment
18 adopted by the board of directors on or before July 26,
19 1990, in the case of a corporation that was a registered
20 corporation described in section 2502(1)(i) on April 27,
21 1990; or
22 (ii) in any other case, the articles of which
23 explicitly provide that section 1715 or corresponding
24 provisions of prior law shall not be applicable to the
25 corporation by a provision included in the original
26 articles, or by an articles amendment adopted on or
27 before 90 days after the corporation first becomes a
28 registered corporation described in section 2502(1)(i).
29 (2) Any registered corporation described solely in
30 section 2502(1)(ii), except a corporation:
19900S1761B2510 - 71 -
1 (i) the bylaws of which explicitly provide that
2 section 1715 or corresponding provisions of prior law
3 shall not be applicable to the corporation by amendment
4 adopted by the board of directors on or before April 27,
5 1991, in the case of a corporation that was a registered
6 corporation described solely in section 2502(1)(ii) on
7 April 27, 1990; or
8 (ii) in any other case, the articles of which
9 explicitly provide that section 1715 or corresponding
10 provisions of prior law shall not be applicable to the
11 corporation by a provision included in the original
12 articles, or by an articles amendment adopted on or
13 before one year after the corporation first becomes a
14 registered corporation described in section 2502(1)(ii).
15 (3) Any business corporation that is not a registered
16 corporation described in section 2502(1), except a
17 corporation:
18 (i) the bylaws of which explicitly provide that
19 section 1715 or corresponding provisions of prior law
20 shall not be applicable to the corporation by amendment
21 adopted by the board of directors on or before April 27,
22 1991, in the case of a corporation that was a business
23 corporation on April 27, 1990; or
24 (ii) in any other case, the articles of which
25 explicitly provide that section 1715 or corresponding
26 provisions of prior law shall not be applicable to the
27 corporation by a provision included in the original
28 articles, or by an articles amendment adopted on or
29 before one year after the corporation first becomes a
30 business corporation.
19900S1761B2510 - 72 -
1 (c) Transitional provision.--A provision of the articles or
2 bylaws adopted pursuant to section 511(b) (relating to
3 alternative provisions) at a time when the corporation was not a
4 business corporation that provides that section 515 (relating to
5 exercise of powers generally) or corresponding provisions of
6 prior law shall not be applicable to the corporation shall be
7 deemed to provide that section 1715 shall not be applicable to
8 the corporation.
9 § 1712. Standard of care and justifiable reliance.
10 (a) Directors.--A director of a business corporation shall
11 stand in a fiduciary relation to the corporation and shall
12 perform his duties as a director, including his duties as a
13 member of any committee of the board upon which he may serve, in
14 good faith, in a manner he reasonably believes to be in the best
15 interests of the corporation and with such care, including
16 reasonable inquiry, skill and diligence, as a person of ordinary
17 prudence would use under similar circumstances. In performing
18 his duties, a director shall be entitled to rely in good faith
19 on information, opinions, reports or statements, including
20 financial statements and other financial data, in each case
21 prepared or presented by any of the following:
22 (1) One or more officers or employees of the corporation
23 whom the director reasonably believes to be reliable and
24 competent in the matters presented.
25 (2) Counsel, public accountants or other persons as to
26 matters which the director reasonably believes to be within
27 the professional or expert competence of such person.
28 (3) A committee of the board upon which he does not
29 serve, duly designated in accordance with law, as to matters
30 within its designated authority, which committee the director
19900S1761B2510 - 73 -
1 reasonably believes to merit confidence.
2 (b) Effect of actual knowledge.--A director shall not be
3 considered to be acting in good faith if he has knowledge
4 concerning the matter in question that would cause his reliance
5 to be unwarranted. The articles may not provide for a lower <--
6 standard of care than that required by this subsection or
7 subsection (a).
8 (c) Officers.--Except as otherwise provided in the bylaws,
9 an officer shall perform his duties as an officer in good faith,
10 in a manner he reasonably believes to be in the best interests
11 of the corporation and with such care, including reasonable
12 inquiry, skill and diligence, as a person of ordinary prudence
13 would use under similar circumstances. A person who so performs
14 his duties shall not be liable by reason of having been an
15 officer of the corporation.
16 § 1713. Personal liability of directors.
17 (a) General rule.--If a bylaw adopted by the shareholders of
18 a business corporation so provides, a director shall not be
19 personally liable, as such, for monetary damages for any action
20 taken unless:
21 (1) the director has breached or failed to perform the
22 duties of his office under this subchapter; and
23 (2) the breach or failure to perform constitutes self-
24 dealing, willful misconduct or recklessness.
25 (b) Exceptions.--
26 (1) Subsection (a) shall not apply to:
27 (i) the responsibility or liability of a director
28 pursuant to any criminal statute; or
29 (ii) the liability of a director for the payment of
30 taxes pursuant to Federal, State or local law.
19900S1761B2510 - 74 -
1 (2) The articles may not provide greater exoneration
2 from liability for directors than that permitted by this
3 section.
4 (c) Cross reference.--See 42 Pa.C.S. § 8332.5 (relating to
5 corporate representatives).
6 § 1714. Notation of dissent.
7 A director of a business corporation who is present at a
8 meeting of its board of directors, or of a committee of the
9 board, at which action on any corporate matter is taken on which
10 the director is generally competent to act, shall be presumed to
11 have assented to the action taken unless his dissent is entered
12 in the minutes of the meeting or unless he files his written
13 dissent to the action with the secretary of the meeting before
14 the adjournment thereof or transmits the dissent in writing to
15 the secretary of the corporation immediately after the
16 adjournment of the meeting. The right to dissent shall not apply
17 to a director who voted in favor of the action. Nothing in this
18 subchapter shall bar a director from asserting that minutes of
19 the meeting incorrectly omitted his dissent if, promptly upon
20 receipt of a copy of such minutes, he notifies the secretary, in
21 writing, of the asserted omission or inaccuracy.
22 § 1715. Exercise of powers generally.
23 (a) General rule.--In discharging the duties of their
24 respective positions, the board of directors, committees of the
25 board and individual directors of a business corporation may, in
26 considering the best interests of the corporation, consider to
27 the extent they deem appropriate:
28 (1) The effects of any action upon any or all groups
29 affected by such action, including shareholders, employees,
30 suppliers, customers and creditors of the corporation, and
19900S1761B2510 - 75 -
1 upon communities in which offices or other establishments of
2 the corporation are located.
3 (2) The short-term and long-term interests of the
4 corporation, including benefits that may accrue to the
5 corporation from its long-term plans and the possibility that
6 these interests may be best served by the continued
7 independence of the corporation.
8 (3) The resources, intent and conduct (past, stated and
9 potential) of any person seeking to acquire control of the
10 corporation.
11 (4) All other pertinent factors.
12 (b) Consideration of interests and factors.--The board of
13 directors, committees of the board and individual directors
14 shall not be required, in considering the best interests of the
15 corporation or the effects of any action, to regard any
16 corporate interest or the interests of any particular group
17 affected by such action as a dominant or controlling interest or
18 factor. The consideration of interests and factors in the manner
19 described in this subsection and in subsection (a) shall not
20 constitute a violation of section 1712 (relating to standard of
21 care and justifiable reliance).
22 (c) Specific applications.--In exercising the powers vested
23 in the corporation, including, without limitation, those powers
24 pursuant to section 1502 (relating to general powers), and in no
25 way limiting the discretion of the board of directors,
26 committees of the board and individual directors pursuant to
27 subsections (a) and (b), the fiduciary duty of directors shall
28 not be deemed to require them:
29 (1) to redeem any rights under, or to modify or render
30 inapplicable, any shareholder rights plan, including, but not
19900S1761B2510 - 76 -
1 limited to, a plan adopted pursuant or made subject to
2 section 2513 (relating to disparate treatment of certain
3 persons);
4 (2) to render inapplicable, or make determinations
5 under, the provisions of Subchapter E of Chapter 25 (relating
6 to control transactions), Subchapter F of Chapter 25
7 (relating to business combinations), Subchapter G of Chapter
8 25 (relating to control-share acquisitions) or Subchapter H
9 of Chapter 25 (relating to disgorgement by certain
10 controlling shareholders following attempts to acquire
11 control) or under any other provision of this title relating
12 to or affecting acquisitions or potential or proposed
13 acquisitions of control; or
14 (3) to act as the board of directors, a committee of the
15 board or an individual director solely because of the effect
16 such action might have on an acquisition or potential or
17 proposed acquisition of control of the corporation or the
18 consideration that might be offered or paid to shareholders
19 in such an acquisition.
20 (d) Presumption.--Absent breach of fiduciary duty, lack of
21 good faith or self-dealing, any act as the board of directors, a
22 committee of the board or an individual director shall be
23 presumed to be in the best interests of the corporation. In
24 assessing whether the standard set forth in section 1712 has
25 been satisfied, there shall not be any greater obligation to
26 justify, or higher burden of proof with respect to, any act as
27 the board of directors, any committee of the board or any
28 individual director relating to or affecting an acquisition or
29 potential or proposed acquisition of control of the corporation
30 than is applied to any other act as a board of directors, any
19900S1761B2510 - 77 -
1 committee of the board or any individual director.
2 Notwithstanding the preceding provisions of this subsection, any
3 act as the board of directors, a committee of the board or an
4 individual director relating to or affecting an acquisition or
5 potential or proposed acquisition of control to which a majority
6 of the disinterested directors shall have assented shall be
7 presumed to satisfy the standard set forth in section 1712,
8 unless it is proven by clear and convincing evidence that the
9 disinterested directors did not assent to such act in good faith
10 after reasonable investigation.
11 (e) Definition.--The term "disinterested director" as used
12 in subsection (d) and for no other purpose means:
13 (1) A director of the corporation other than:
14 (i) A director who has a direct or indirect
15 financial or other interest in the person acquiring or
16 seeking to acquire control of the corporation or who is
17 an affiliate or associate, as defined in section 2552
18 (relating to definitions), of, or was nominated or
19 designated as a director by, a person acquiring or
20 seeking to acquire control of the corporation.
21 (ii) Depending on the specific facts surrounding the
22 director and the act under consideration, an officer or
23 employee or former officer or employee of the
24 corporation.
25 (2) A person shall not be deemed to be other than a
26 disinterested director solely by reason of any or all of the
27 following:
28 (i) The ownership by the director of shares of the
29 corporation.
30 (ii) The receipt as a holder of any class or series
19900S1761B2510 - 78 -
1 of any distribution made to all owners of shares of that
2 class or series.
3 (iii) The receipt by the director of director's fees
4 or other consideration as a director.
5 (iv) Any interest the director may have in retaining
6 the status or position of director.
7 (v) The former business or employment relationship
8 of the director with the corporation.
9 (vi) Receiving or having the right to receive
10 retirement or deferred compensation from the corporation
11 due to service as a director, officer or employee.
12 (f) Cross reference.--See section 1711 (relating to
13 alternative provisions).
14 § 1716. Alternative standard.
15 (a) General rule.--In discharging the duties of their
16 respective positions, the board of directors, committees of the
17 board and individual directors of a business corporation may, in
18 considering the best interests of the corporation, consider the
19 effects of any action upon employees, upon suppliers and
20 customers of the corporation and upon communities in which
21 offices or other establishments of the corporation are located,
22 and all other pertinent factors. The consideration of those
23 factors shall not constitute a violation of section 1712
24 (relating to standard of care and justifiable reliance).
25 (b) Presumption.--Absent breach of fiduciary duty, lack of
26 good faith or self-dealing, actions taken as a director shall be
27 presumed to be in the best interests of the corporation.
28 (c) Cross reference.--See section 1711 (relating to
29 alternative provisions).
30 § 1717. Limitation on standing.
19900S1761B2510 - 79 -
1 The duty of the board of directors, committees of the board
2 and individual directors under section 1712 (relating to
3 standard of care and justifiable reliance) is solely to the
4 business corporation and may be enforced directly by the
5 corporation or may be enforced by a shareholder, as such, by an
6 action in the right of the corporation, and may not be enforced
7 directly by a shareholder or by any other person or group.
8 Notwithstanding the preceding sentence, sections 1715(a) and (b)
9 (relating to exercise of powers generally) and 1716(a) (relating
10 to alternative standard) do not impose upon the board of
11 directors, committees of the board and individual directors, any
12 legal or equitable duties, obligations or liabilities or create
13 any right or cause of action against, or basis for standing to
14 sue, the board of directors, committees of the board and
15 individual directors.
16 SUBCHAPTER [B] C
17 DIRECTORS AND OFFICERS
18 § 1721. Board of directors.
19 Unless otherwise provided by statute or in a bylaw adopted by
20 the shareholders, all powers enumerated in section 1502
21 (relating to general powers) and elsewhere in this subpart or
22 otherwise vested by law in a business corporation shall be
23 exercised by or under the authority of, and the business and
24 affairs of every business corporation shall be managed under the
25 direction of, a board of directors. If any such provision is
26 made in the bylaws, the powers and duties conferred or imposed
27 upon the board of directors by this subpart shall be exercised
28 or performed to such extent and by such person or persons as
29 shall be provided in the bylaws. Persons upon whom the
30 liabilities of directors are imposed by this section shall to
19900S1761B2510 - 80 -
1 that extent be entitled to the rights and immunities conferred
2 by or pursuant to this part and other provisions of law upon
3 directors of a corporation.
4 § 1722. Qualifications of directors.
5 (a) General rule.--Each director of a business corporation
6 shall be a natural person of full age who, unless otherwise
7 restricted in the bylaws, need not be a resident of this
8 Commonwealth or a shareholder of the corporation. Except as
9 otherwise provided in this section, the qualifications of
10 directors may be prescribed in the bylaws.
11 (b) Cross reference.--See section 3131 (relating to
12 directors).
13 § 1723. Number of directors.
14 (a) General rule.--The board of directors of a business
15 corporation shall consist of one or more members. The number of
16 directors shall be fixed by, or in the manner provided in, the
17 bylaws. If not so fixed, the number of directors shall be the
18 same as that stated in the articles or three if no number is so
19 stated.
20 (b) Cross reference.--See section 3131 (relating to
21 directors).
22 § 1724. Term of office of directors.
23 * * *
24 (b) Classified board of directors.--[If] Except as otherwise
25 provided in the articles, if the directors are classified in
26 respect of the time for which they shall severally hold office:
27 (1) Each class shall be as nearly equal in number as
28 possible.
29 (2) The term of office of at least one class shall
30 expire in each year.
19900S1761B2510 - 81 -
1 (3) The members of a class shall not be elected for a
2 longer period than four years.
3 § 1725. Selection of directors.
4 (a) General rule.--Except as otherwise provided in this
5 section, directors of a business corporation, other than those
6 constituting the first board of directors, shall be elected by
7 the shareholders. A bylaw adopted by the shareholders may
8 classify the directors with respect to the shareholders who
9 exercise the power to elect directors.
10 (b) Vacancies.--
11 (1) Except as otherwise provided in the bylaws:
12 (i) Vacancies in the board of directors, including
13 vacancies resulting from an increase in the number of
14 directors, may be filled by a majority vote of the
15 remaining members of the board though less than a quorum,
16 or by a sole remaining director, and each person so
17 selected shall be a director to serve for the balance of
18 the unexpired term unless otherwise restricted in the
19 bylaws.
20 (ii) When one or more directors resign from the
21 board effective at a future date, the directors then in
22 office, including those who have so resigned, shall have
23 power by the applicable vote to fill the vacancies, the
24 vote thereon to take effect when the resignations become
25 effective.
26 (2) In the case of a corporation having a [classified
27 board of directors] board classified as permitted by section
28 1724(b) (relating to classified board of directors), any
29 director chosen to fill a vacancy, including a vacancy
30 resulting from an increase in the number of directors, shall
19900S1761B2510 - 82 -
1 hold office until the next selection of the class for which
2 such director has been chosen, and until his successor has
3 been selected and qualified or until his earlier death,
4 resignation or removal.
5 * * *
6 (d) Cross [reference] references.--See the definition of
7 "shareholder" in section 1103 (relating to definitions) and
8 section 1758(c) relating to cumulative voting).
9 § 1726. Removal of directors.
10 (a) Removal by the shareholders.--
11 * * *
12 (5) The articles may not prohibit the removal of
13 directors by the shareholders for cause.
14 * * *
15 (c) Removal by the court.--Upon application of any
16 shareholder or director, the court may remove from office any
17 director in case of fraudulent or dishonest acts, or gross abuse
18 of authority or discretion with reference to the corporation, or
19 for any other proper cause, and may bar from office any director
20 so removed for a period prescribed by the court. The corporation
21 shall be made a party to the action and as a prerequisite to the
22 maintenance of an action under this subsection a shareholder
23 shall comply with Subchapter [E] F (relating to derivative
24 actions).
25 * * *
26 (e) Cross reference.--See section 1106(b)(4) (relating to
27 uniform application of subpart).
28 § 1732. Officers.
29 * * *
30 (c) Cross references.--See sections 1110 (relating to annual
19900S1761B2510 - 83 -
1 report information), 1712(C) (RELATING TO OFFICERS) and 3132 <--
2 (relating to officers).
3 SUBCHAPTER [C] D
4 INDEMNIFICATION
5 § 1746. Supplementary coverage.
6 (a) General rule.--The indemnification and advancement of
7 expenses provided by, or granted pursuant to, the other sections
8 of this subchapter shall not be deemed exclusive of any other
9 rights to which a person seeking indemnification or advancement
10 of expenses may be entitled under any bylaw, agreement, vote of
11 shareholders or disinterested directors or otherwise, both as to
12 action in his official capacity and as to action in another
13 capacity while holding that office. [Sections] Section 1728
14 (relating to interested directors or officers; quorum) and [1770
15 (relating to interested shareholders)] , in the case of a
16 registered corporation, section 2538 (relating to approval of
17 transactions with interested shareholders) shall be applicable
18 to any bylaw, contract or transaction authorized by the
19 directors under this section. A corporation may create a fund of
20 any nature, which may, but need not be, under the control of a
21 trustee, or otherwise secure or insure in any manner its
22 indemnification obligations, whether arising under or pursuant
23 to this section or otherwise.
24 (b) When indemnification is not to be made.--Indemnification
25 pursuant to subsection (a) shall not be made in any case where
26 the act or failure to act giving rise to the claim for
27 indemnification is determined by a court to have constituted
28 willful misconduct or recklessness. The articles may not provide
29 for indemnification in the case of willful misconduct or
30 recklessness.
19900S1761B2510 - 84 -
1 * * *
2 [(d) Cross references.--See section 513 (relating to
3 nonexclusivity and supplementary coverage) and 42 Pa.C.S. § 8365
4 (relating to nonexclusivity and supplementary coverage).]
5 § 1747. Power to purchase insurance.
6 [(a) General rule.--]Unless otherwise restricted in its
7 bylaws, a business corporation shall have power to purchase and
8 maintain insurance on behalf of any person who is or was a
9 representative of the corporation or is or was serving at the
10 request of the corporation as a representative of another
11 domestic or foreign corporation for profit or not-for-profit,
12 partnership, joint venture, trust or other enterprise against
13 any liability asserted against him and incurred by him in any
14 such capacity, or arising out of his status as such, whether or
15 not the corporation would have the power to indemnify him
16 against that liability under the provisions of this subchapter.
17 Such insurance is declared to be consistent with the public
18 policy of this Commonwealth.
19 [(b) Cross references.--See section 513 (relating to
20 nonexclusivity and supplementary coverage) and 42 Pa.C.S. § 8365
21 (relating to nonexclusivity and supplementary coverage).]
22 SUBCHAPTER [D] E
23 SHAREHOLDERS
24 § 1755. Time of holding meetings of shareholders.
25 (a) Regular meetings.--The bylaws of a business corporation
26 may provide for the number and the time of meetings of
27 shareholders[, but]. Except as otherwise provided in the
28 articles, at least one meeting of the shareholders shall be held
29 in each calendar year for the election of directors at such time
30 as shall be provided in or fixed pursuant to authority granted
19900S1761B2510 - 85 -
1 by the bylaws. Failure to hold the annual or other regular
2 meeting at the designated time shall not work a dissolution of
3 the corporation or affect otherwise valid corporate acts. If the
4 annual or other regular meeting is not called and held within
5 six months after the designated time, any shareholder may call
6 the meeting at any time thereafter.
7 * * *
8 (d) Cross reference.--See section 1106(b)(4) (relating to
9 uniform application of subpart).
10 § 1756. Quorum.
11 * * *
12 (c) Cross [reference] references.--See [section] sections
13 2523 (relating to quorum at shareholder meetings) and 3134
14 (relating to quorum at shareholder or member meetings).
15 § 1757. Action by shareholders.
16 (a) General rule.--Except as otherwise provided in this
17 subpart or in a bylaw adopted by the shareholders, whenever any
18 corporate action is to be taken by vote of the shareholders of a
19 business corporation, it shall be authorized [by] upon receiving
20 the affirmative vote of a majority of the votes cast [at a duly
21 organized meeting of shareholders by the holders of shares] by
22 all shareholders entitled to vote thereon and, if any
23 shareholders are entitled to vote thereon as a class, upon
24 receiving the affirmative vote of a majority of the votes cast
25 by the shareholders entitled to vote as a class.
26 * * *
27 § 1758. Voting rights of shareholders.
28 (a) General rule.--Unless otherwise provided in the
29 articles, every shareholder of a business corporation shall be
30 entitled to one vote for every share standing in his name on the
19900S1761B2510 - 86 -
1 books of the corporation. The articles may restrict the number
2 of votes that a single holder or beneficial owner, or such a
3 group of holders or owners as the bylaws may define, of shares
4 of any class or series may directly or indirectly cast in the
5 aggregate for the election of directors or on any other matter
6 coming before the shareholders[.] on the basis of any facts or
7 circumstances that are not manifestly unreasonable, including
8 without limitation:
9 (1) the number of shares of any class or series held by
10 such single holder or beneficial owner or group of holders or
11 owners; or
12 (2) the length of time shares of any class or series
13 have been held by such single holder or beneficial owner or
14 group of holders or owners.
15 (b) Procedures.--If the bylaws provide a fair and reasonable
16 procedure for the nomination of candidates for any office, only
17 candidates who have been duly nominated in accordance therewith
18 shall be eligible for election. Unless otherwise restricted in
19 the bylaws, in elections for directors, voting need not be by
20 ballot[, except upon demand made by a shareholder entitled to
21 vote at the election and] unless required by vote of the
22 shareholders before the voting for election of directors begins.
23 The candidates receiving the highest number of votes from each
24 class or group of classes, if any, entitled to elect directors
25 separately up to the number of directors to be elected by the
26 class or group of classes shall be elected. If at any meeting of
27 shareholders, directors of more than one class are to be
28 elected, each class of directors shall be elected in a separate
29 election.
30 * * *
19900S1761B2510 - 87 -
1 § 1759. Voting and other action by proxy.
2 * * *
3 (b) [Minimum requirements] Execution and filing.--Every
4 proxy shall be executed in writing by the shareholder or by his
5 duly authorized attorney-in-fact and filed with the secretary of
6 the corporation. A telegram, telex, cablegram, datagram or
7 similar transmission from a shareholder or attorney-in-fact, or
8 a photographic, facsimile or similar reproduction of a writing
9 executed by a shareholder or attorney-in-fact:
10 (1) may be treated as properly executed for purposes of
11 this subsection; and
12 (2) shall be so treated if it sets forth a confidential
13 and unique identification number or other mark furnished by
14 the corporation to the shareholder for the purposes of a
15 particular meeting or transaction.
16 (c) Revocation.--A proxy, unless coupled with an interest,
17 shall be revocable at will, notwithstanding any other agreement
18 or any provision in the proxy to the contrary, but the
19 revocation of a proxy shall not be effective until written
20 notice thereof has been given to the secretary of the
21 corporation. An unrevoked proxy shall not be valid after three
22 years from the date of its execution unless a longer time is
23 expressly provided therein. A proxy shall not be revoked by the
24 death or incapacity of the maker unless, before the vote is
25 counted or the authority is exercised, written notice of the
26 death or incapacity is given to the secretary of the
27 corporation.
28 [(c)] (d) Proxy coupled with an interest.--As used in this
29 section, the term "proxy coupled with an interest" includes:
30 (1) a vote pooling or similar arrangement among
19900S1761B2510 - 88 -
1 shareholders;
2 (2) an agreement permitted by section 1768(b) (relating
3 to other agreements); and
4 (3) an unrevoked proxy in favor of an existing or
5 potential creditor of a shareholder.
6 A proxy may be made irrevocable regardless of whether the
7 interest with which it is coupled is an interest in the share
8 itself or an interest in the corporation generally.
9 (e) Cross reference.--See section 3135 (relating to proxies
10 of members of mutual insurance companies).
11 § 1763. Determination of shareholders of record.
12 * * *
13 (b) Determination when a record date is not fixed.--Unless
14 otherwise provided in the bylaws, if a record date is not fixed:
15 * * *
16 (2) The record date for determining shareholders
17 entitled to:
18 (i) express consent or dissent to corporate action
19 in writing without a meeting, when prior action by the
20 board of directors is not necessary[,];
21 (ii) to call a special meeting of the shareholders;
22 or
23 (iii) propose an amendment of the articles;
24 shall be at the close of business on the day on which the
25 first written consent or dissent, request for a special
26 meeting or petition proposing an amendment of the articles is
27 filed with the secretary of the corporation.
28 * * *
29 § 1765. Judges of election.
30 (a) General rule.--Unless otherwise provided in a bylaw
19900S1761B2510 - 89 -
1 adopted by the shareholders:
2 (1) Appointment.--In advance of any meeting of
3 shareholders of a business corporation, the board of
4 directors may appoint judges of election, who need not be
5 shareholders, to act at the meeting or any adjournment
6 thereof. If judges of election are not so appointed, the
7 presiding officer of the meeting may, and on the request of
8 any shareholder shall, appoint judges of election at the
9 meeting. The number of judges shall be one or three. A person
10 who is a candidate for office to be filled at the meeting
11 shall not act as a judge.
12 (2) Vacancies.--In case any person appointed as a judge
13 fails to appear or fails or refuses to act, the vacancy may
14 be filled by appointment made by the board of directors in
15 advance of the convening of the meeting or at the meeting by
16 the presiding officer thereof.
17 (3) Duties.--The judges of election shall determine the
18 number of shares outstanding and the voting power of each,
19 the shares represented at the meeting, the existence of a
20 quorum, the authenticity, validity and effect of proxies,
21 receive votes or ballots, hear and determine all challenges
22 and questions in any way arising in connection with the right
23 to vote, count and tabulate all votes, determine the result
24 and do such acts as may be proper to conduct the election or
25 vote with fairness to all shareholders. The judges of
26 election shall perform their duties impartially, in good
27 faith, to the best of their ability and as expeditiously as
28 is practical. If there are three judges of election, the
29 decision, act or certificate of a majority shall be effective
30 in all respects as the decision, act or certificate of all.
19900S1761B2510 - 90 -
1 (4) Report.--On request of the presiding officer of the
2 meeting, or of any shareholder, the judges shall make a
3 report in writing of any challenge or question or matter
4 determined by them, and execute a certificate of any fact
5 found by them. Any report or certificate made by them shall
6 be prima facie evidence of the facts stated therein.
7 (b) Cross references.--See sections 2525 (relating to judges
8 of election) and 3136 (relating to judges of election).
9 § 1766. Consent of shareholders in lieu of meeting.
10 * * *
11 (b) Partial written consent.--If the [articles (or, in the
12 case of a nonregistered corporation, the] bylaws[)] so provide,
13 any action required or permitted to be taken at a meeting of the
14 shareholders or of a class of shareholders may be taken without
15 a meeting upon the written consent of shareholders who would
16 have been entitled to cast the minimum number of votes that
17 would be necessary to authorize the action at a meeting at which
18 all shareholders entitled to vote thereon were present and
19 voting. The consents shall be filed with the secretary of the
20 corporation. The action shall not become effective until after
21 at least ten days' written notice of the action has been given
22 to each shareholder entitled to vote thereon who has not
23 consented thereto. See section 2524 (relating to consent of
24 shareholders in lieu of meeting).
25 § 1767. Appointment of custodian of corporation on deadlock or
26 other cause.
27 (a) General rule.--[Upon] Except as provided in subsection
28 (b), upon application of any shareholder, the court may appoint
29 one or more persons to be custodians of and for any business
30 corporation when it is made to appear that:
19900S1761B2510 - 91 -
1 * * *
2 (3) the conditions specified in section [1981(1)]
3 1981(a)(1), (2) or (3) (relating to proceedings upon
4 application of shareholder or director), other than that it
5 is beneficial to the interests of the shareholders that the
6 corporation be wound up and dissolved, exist with respect to
7 the corporation.
8 (b) [Exception] Exceptions.--
9 (1) The court shall not appoint a custodian to resolve a
10 deadlock if the shareholders by agreement or otherwise have
11 provided for the appointment of a provisional director or
12 other means for the resolution of the deadlock, but the court
13 shall enforce the remedy so provided if appropriate.
14 (2) Subsection (a)(2) shall not be applicable:
15 (i) to a corporation that has at the time a person
16 holding or owning 5% or more of the outstanding shares of
17 any class of the corporation that is:
18 (A) a registered corporation or a foreign
19 corporation-for-profit CORPORATION FOR PROFIT <--
20 described in section 4102(b) (relating to registered
21 corporation exclusions); or
22 (B) a person (other than a natural person) that
23 is engaged principally in the business of making
24 equity investments in other businesses; or
25 (ii) with respect to any matter involving a person
26 described in subparagraph (i) that is or was a holder or
27 owner of shares of the corporation.
28 * * *
29 (d) Contrary provisions of the articles.--
30 (1) The articles may not contain a provision that varies
19900S1761B2510 - 92 -
1 or is otherwise inconsistent with subsection (b)(2).
2 (2) A provision of the articles that varies or is
3 otherwise inconsistent with any provision of this section
4 shall not be effective unless it is included in the original
5 articles or in an amendment adopted by the affirmative vote
6 of all shareholders of the corporation whether or not
7 otherwise entitled to vote thereon.
8 (e) Cross references.--See sections 2526 (relating to
9 appointment of custodian) and 3137 (relating to appointment of
10 custodian).
11 SUBCHAPTER [E] F
12 DERIVATIVE ACTIONS
13 SUBCHAPTER [F] G
14 JUDICIAL SUPERVISION OF CORPORATE ACTION
15 § 1791. Corporate action subject to subchapter.
16 (a) General rule.--This subchapter shall apply to and the
17 term "corporate action" in this subchapter shall mean any of the
18 following actions:
19 (1) The election, appointment, designation or other
20 selection and the suspension or removal of directors or
21 officers of a business corporation.
22 (2) The taking of any action on any matter that is
23 required under this subpart or under any other provision of
24 law to be, or that under the bylaws may be, submitted for
25 action to the shareholders, directors or officers of a
26 business corporation.
27 (b) Cross reference.--See section [4145 (relating to
28 applicability of certain safeguards to foreign domiciliary
29 corporations)] 3138 (relating to judicial supervision of
30 corporate action).
19900S1761B2510 - 93 -
1 § 1792. Proceedings prior to corporate action.
2 * * *
3 (c) Cross reference.--See section [4145 (relating to
4 applicability of certain safeguards to foreign domiciliary
5 corporations)] 3138 (relating to judicial supervision of
6 corporate action).
7 § 1793. Review of contested corporate action.
8 * * *
9 (c) Cross reference.--See section [4145 (relating to
10 applicability of certain safeguards to foreign domiciliary
11 corporations)] 3138 (relating to judicial supervision of
12 corporate action).
13 § 1901. Omission of certain provisions from filed plans.
14 (a) General rule.--A plan as filed in the Department of
15 State under any provision of this chapter may omit all
16 provisions of the plan except provisions, if any[,]:
17 (1) that are intended to amend or constitute the
18 operative provisions of the articles of a corporation as in
19 effect subsequent to the effective date of the plan[, if]; or
20 (2) that allocate or specify the respective assets and
21 liabilities of the resulting corporations, in the case of a
22 plan of division.
23 (b) Availability of full plan.--If any of the provisions of
24 a plan are omitted from the plan as filed in the department, the
25 articles of amendment, merger, consolidation, exchange, division
26 or conversion shall state that the full text of the plan is on
27 file at the principal place of business of the reclassifying,
28 surviving or new or a resulting corporation and shall state the
29 address thereof. A corporation that takes advantage of this
30 section shall furnish a copy of the full text of the plan, on
19900S1761B2510 - 94 -
1 request and without cost, to any shareholder of any corporation
2 that was a party to the plan and, unless all parties to the plan
3 were closely held corporations, on request and at cost to any
4 other person.
5 § 1903. Bankruptcy or insolvency proceedings.
6 (a) General rule.--Whenever a business corporation is
7 insolvent or in financial difficulty, the board of directors
8 may, by resolution and without the consent of the shareholders,
9 authorize and designate the officers of the corporation to
10 execute a deed of assignment for the benefit of creditors, or
11 file a voluntary petition in bankruptcy, or file an answer
12 consenting to the appointment of a receiver upon a complaint in
13 the nature of an equity action filed by creditors or
14 shareholders, or, if insolvent, file an answer to an involuntary
15 petition in bankruptcy admitting the insolvency of the
16 corporation and its willingness to be adjudged a [bankrupt]
17 debtor on that ground.
18 (b) Bankruptcy proceedings.--A business corporation may
19 participate in proceedings under and in the manner provided by
20 the Bankruptcy Code (11 U.S.C. § 101 et seq.) notwithstanding
21 any contrary provision of [this subpart or of] its articles or
22 bylaws[.] or this subpart, other than section 103 (relating to
23 subordination of title to regulatory laws). The corporation
24 shall have full power and authority to put into effect and carry
25 out a plan of reorganization or arrangement and the decrees and
26 orders of the court, or judge or referee relative thereto, and
27 may take any proceeding and do any act provided in the plan or
28 arrangement or directed by such decrees and orders, without
29 further action by its directors or shareholders. Such power and
30 authority may be exercised, and such proceedings and acts may be
19900S1761B2510 - 95 -
1 taken, as may be directed by such decrees or orders, by the
2 trustees or receivers of the corporation appointed in the
3 bankruptcy proceedings, or a majority thereof, or if none be
4 appointed and acting, by designated officers of the corporation,
5 or by a master or other representative appointed by the court or
6 judge or referee, with the effect as if exercised and taken by
7 unanimous action of the directors and shareholders of the
8 corporation. Without limiting the generality or effect of the
9 foregoing, the corporation may:
10 (1) alter, amend or repeal its bylaws;
11 (2) constitute or reconstitute and classify or
12 reclassify its board of directors and name, constitute or
13 appoint directors and officers in place of or in addition to
14 all or some of the directors or officers then in office;
15 (3) amend its articles of incorporation, including
16 without limitation for the purpose of:
17 (i) canceling or modifying the relative rights or
18 preferences of any or all authorized classes or series of
19 shares, whether or not any shares thereof are
20 outstanding;
21 (ii) providing that any of Subchapter E of Chapter
22 25 (relating to control transactions), Subchapter F of
23 Chapter 25 (relating to business combinations),
24 Subchapter G of Chapter 25 (relating to control-share
25 acquisitions) or Subchapter H of Chapter 25 (relating to
26 disgorgement by certain controlling shareholders
27 following attempts to acquire control) shall not be
28 applicable to the corporation, whether or not the
29 amendment is adopted in conformance with the procedures
30 specified in those subchapters, which amendment may take
19900S1761B2510 - 96 -
1 effect immediately without regard to any passage of time
2 otherwise required by those subchapters; or
3 (iii) otherwise altering, amending or repealing any
4 provision of the articles or bylaws notwithstanding any
5 provision therein that the articles or bylaws may be
6 altered, amended or repealed only under certain
7 conditions or only upon receiving the approval of a
8 specified number or percentage of votes of shareholders
9 or of a class of shareholders;
10 (4) be dissolved, transfer all or part of its assets,
11 merge, consolidate, participate in a share exchange, divide
12 or convert to a nonprofit corporation, as permitted by this
13 chapter, but in any such case a shareholder shall not be
14 entitled to dissenters rights with respect to his shares;
15 (5) authorize and fix the terms, manner and conditions
16 of the issuance of obligations, whether or not convertible
17 into shares of any class or series, or bearing warrants or
18 other evidence of optional rights to purchase or subscribe
19 for shares of any class or series; or
20 (6) lease its property and franchises to any person.
21 (c) Cross reference.--See the definition of "officer" in
22 section 1103 (relating to definitions).
23 § 1905. Proposal of fundamental transactions.
24 Where any provision of this chapter requires that an
25 amendment of the articles [or], a plan or the dissolution of a
26 business corporation be proposed or approved by action of the
27 board of directors, that requirement shall be construed to
28 authorize and be satisfied by the written agreement or consent
29 of all of the shareholders of [a business] the corporation
30 entitled to vote thereon.
19900S1761B2510 - 97 -
1 § 1906. Special treatment of holders of shares of same class or
2 series.
3 (a) General rule.--[An] Except as otherwise restricted in
4 the articles, an amendment or plan may contain a provision
5 classifying the holders of shares of a class or series into one
6 or more separate groups by reference to any facts or
7 circumstances that are not manifestly unreasonable and providing
8 mandatory treatment for shares of the class or series held by
9 particular shareholders or groups of shareholders that differs
10 materially from the treatment accorded other shareholders or
11 groups of shareholders holding shares of the same class or
12 series (including a provision modifying or rescinding rights
13 previously created under this section) if:
14 (1) (i) such provision is specifically authorized by a
15 majority of the votes cast by all shareholders entitled
16 to vote on the amendment or plan, as well as by a
17 majority of the votes cast by any class or series of
18 shares [whose rights are diminished thereby] any of the
19 shares of which are so classified into groups, whether or
20 not such class or series would otherwise be entitled to
21 vote on the amendment or plan; and
22 (ii) the provision voted on specifically enumerates
23 the type and extent of the special treatment authorized;
24 or
25 (2) under all the facts and circumstances, a court of
26 competent jurisdiction finds such special treatment is
27 undertaken in good faith, after reasonable deliberation and
28 is in the best interest of the corporation.
29 (b) Statutory voting rights upon special treatment.--Except
30 as provided in subsection (c), if an amendment or plan contains
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1 a provision for special treatment, each [subgroup] group of
2 [the] holders of any outstanding shares of a class or series who
3 are to receive the same special treatment under the amendment or
4 plan shall be entitled to vote as a special class in respect to
5 the plan regardless of any limitations stated in the articles or
6 bylaws on the voting rights of any class or series.
7 * * *
8 (d) [Exception] Exceptions.--This section shall not apply to
9 [the]:
10 (1) The creation or issuance of securities, contracts,
11 warrants or other instruments evidencing any shares, option
12 rights, securities having conversion or option rights or
13 obligations authorized by section 2513 (relating to disparate
14 treatment of certain persons).
15 (2) A provision of an amendment or plan that offers to
16 all holders of shares of a class or series the same option to
17 elect certain treatment.
18 (3) An amendment or plan that contains an express
19 provision that this section shall not apply or that fails to
20 contain an express provision that this section shall apply.
21 The shareholders of a corporation that proposes an amendment
22 or plan to which this section is not applicable by reason of
23 this paragraph shall have the remedies contemplated by
24 section 1105 (relating to restriction on equitable relief).
25 § 1911. Amendment of articles authorized.
26 (a) General rule.--A business corporation, in the manner
27 provided in this subchapter, may from time to time amend its
28 articles for one or more of the following purposes:
29 (1) To adopt a new name, subject to the restrictions
30 provided in this subpart.
19900S1761B2510 - 99 -
1 (2) To modify any provision of the articles relating to
2 its term of existence.
3 (3) To change, add to or diminish its purposes or to set
4 forth different or additional purposes.
5 (4) To cancel or otherwise affect the right of holders
6 of the shares of any class or series to receive dividends
7 that have accrued but have not been declared or to otherwise
8 effect a reclassification of or otherwise affect the
9 substantial rights of the holders of any shares, including
10 without limitation by providing special treatment of shares
11 held by any shareholder or group of shareholders as
12 authorized by, and subject to the provisions of, section 1906
13 (relating to special treatment of holders of shares of same
14 class or series).
15 (5) To restate the articles in their entirety.
16 (6) In any and as many other respects as desired.
17 * * *
18 (c) Cross reference.--See section 1521(b)(1)(i) (relating to
19 provisions specifically authorized).
20 § 1912. Proposal of amendments.
21 (a) General rule.--Every amendment of the articles of a
22 business corporation shall be proposed:
23 (1) by the adoption by the board of directors of a
24 resolution setting forth the proposed amendment; or
25 (2) unless otherwise provided in the articles, by
26 petition of shareholders entitled to cast at least 10% of the
27 votes that all shareholders are entitled to cast thereon,
28 setting forth the proposed amendment, which petition shall be
29 directed to the board of directors and filed with the
30 secretary of the corporation.
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1 Except where the approval of the shareholders is unnecessary
2 under this subchapter, the board of directors shall direct that
3 the proposed amendment be submitted to a vote of the
4 shareholders entitled to vote thereon. An amendment proposed
5 pursuant to paragraph (2) shall be submitted to a vote either at
6 the next annual meeting held not earlier than 120 days after the
7 amendment is proposed or at a special meeting of the
8 shareholders called for that purpose by the shareholders. See
9 [section] sections 1106(b)(4) (relating to uniform application
10 of subpart) and 2535 (relating to proposal of amendment to
11 articles).
12 * * *
13 § 1914. Adoption of amendments.
14 * * *
15 (b) Statutory voting rights.--Except as provided in
16 subsection (c), if a proposed amendment would:
17 (1) authorize the board of directors to fix and
18 determine the relative rights and preferences, as between
19 series, of any preferred or special class;
20 (2) make any change in the preferences, limitations or
21 special rights (other than preemptive rights or the right to
22 vote cumulatively) of the shares of a class or series adverse
23 to the class or series;
24 (3) [increase the number of authorized shares of a class
25 or series unless otherwise provided in original articles of
26 incorporation filed after January 1, 1969, or in an amendment
27 to the articles which created the class or series filed after
28 January 1, 1969, or in any amendment to the articles which
29 was adopted by a majority of the votes cast by all
30 shareholders of the class or series;
19900S1761B2510 - 101 -
1 (4)] authorize a new class or series of shares having a
2 preference as to dividends or assets which is senior to the
3 shares of a class or series; or
4 [(5)] (4) increase the number of authorized shares of
5 any class or series having a preference as to dividends or
6 assets which is senior in any respect to the shares of a
7 class or series;
8 then the holders of the outstanding shares of the class or
9 series shall be entitled to vote as a class in respect to the
10 amendment regardless of any limitations stated in the articles
11 or bylaws on the voting rights of any class or series.
12 (c) Adoption by board of directors.--Unless otherwise
13 restricted in the articles, an amendment of articles shall not
14 require the approval of the shareholders of the corporation if:
15 * * *
16 (2) the amendment is restricted to [a change in] any of
17 the following:
18 (i) changing the corporate name [or to provide];
19 (ii) providing for perpetual existence [or to
20 reflect];
21 (iii) reflecting a reduction in authorized shares
22 effected by operation of section 1552(a) (relating to
23 power of corporation to acquire its own shares) and, if
24 appropriate, [the deletion of] deleting all references to
25 a class or series of shares that is no longer
26 outstanding; or
27 (iv) adding or deleting a provision authorized by
28 section 1528(f) (relating to uncertificated shares).
29 * * *
30 (e) Amendment of voting provisions.--Unless otherwise
19900S1761B2510 - 102 -
1 provided in [a bylaw adopted by the shareholders] the articles,
2 whenever the articles require for the taking of any action by
3 the shareholders or a class of shareholders a specific number or
4 percentage of votes, the provision of the articles setting forth
5 that requirement shall not be amended or repealed by any lesser
6 number or percentage of votes of the shareholders or of the
7 class of shareholders.
8 § 1921. Merger and consolidation authorized.
9 * * *
10 (c) Business trusts, partnerships and other associations.--
11 The provisions of this subchapter applicable to domestic and
12 foreign business corporations shall also be applicable to a
13 merger [or], consolidation or share exchange to which a domestic
14 business corporation is a party or in which such a corporation
15 is the resulting entity with [or], into or involving a domestic
16 or foreign partnership, business trust or other association. The
17 surviving [or], resulting or exchanging entity in such a merger
18 [or], consolidation or share exchange may be a corporation,
19 partnership, business trust or other association. Subject to the
20 provisions of Subchapter F of Chapter 85 (relating to merger and
21 consolidation), the powers and duties vested in and imposed upon
22 the board of directors and shareholders in this subchapter shall
23 be exercised and performed by the group of persons under the
24 direction of whom the business and affairs of the partnership,
25 business trust or other association are managed and the holders
26 or owners of beneficial or other interests in the partnership,
27 business trust or other association, respectively, irrespective
28 of the names by which the managing group and the holders or
29 owners of beneficial or other interests are designated. The
30 units into which the beneficial or other interests in the
19900S1761B2510 - 103 -
1 partnership, business trust or other association are divided
2 shall be deemed to be shares for the purposes of applying the
3 provisions of this subchapter to a merger, consolidation or
4 share exchange involving the partnership, business trust or
5 other association. Dissenters rights shall be available to a
6 holder of beneficial or other interests only to the extent, if
7 any, provided by the law under which the partnership, business
8 trust or other association is organized.
9 § 1922. Plan of merger or consolidation.
10 (a) Preparation of plan.--A plan of merger or consolidation,
11 as the case may be, shall be prepared, setting forth:
12 * * *
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).
18 * * *
19 (d) Party to plan.--A corporation, partnership, business
20 trust or other association that approves a plan in its capacity
21 as a shareholder or creditor of a merging or consolidating
22 corporation, or that furnishes all or a part of the
23 consideration contemplated by a plan, does not thereby become a
24 party to the plan for the purposes of this subchapter.
25 § 1923. Notice of meeting of shareholders.
26 (a) General rule.--Written notice of the meeting of
27 shareholders called for the purpose of considering the proposed
28 plan shall be given to each shareholder of record, whether or
29 not entitled to vote thereon, of each domestic business
30 corporation that is a party to the plan. There shall be included
19900S1761B2510 - 104 -
1 in, or enclosed with, the notice a copy of the proposed plan or
2 a summary thereof and, if Subchapter D of Chapter 15 (relating
3 to dissenters rights) is applicable to the holders of shares of
4 any class or series, a copy of that subchapter and of section
5 1930 (relating to dissenters rights) shall be furnished to the
6 holders of shares of that class or series.
7 * * *
8 § 1924. Adoption of plan.
9 (a) General rule.--The plan of merger or consolidation shall
10 be adopted upon receiving the affirmative vote of a majority of
11 the votes cast by all shareholders entitled to vote thereon of
12 each of the domestic business corporations that is a party to
13 the plan and, if any class or series of shares is entitled to
14 vote thereon as a class, the affirmative vote of a majority of
15 the votes cast in each class vote. The holders of any class or
16 series of shares of a domestic corporation that is a party to a
17 plan that effects any change in the articles of the corporation
18 shall be entitled to vote as a class on the plan if they would
19 have been entitled to a class vote under the provisions of
20 section 1914 (relating to adoption of amendments) had the change
21 been accomplished under Subchapter B (relating to amendment of
22 articles). A proposed plan of merger or consolidation shall not
23 be deemed to have been adopted by the corporation unless it has
24 also been approved by the board of directors, regardless of the
25 fact that the board has directed or suffered the submission of
26 the plan to the shareholders for action.
27 (b) Adoption by board of directors.--
28 (1) Unless otherwise required by its bylaws, a plan of
29 merger or consolidation shall not require the approval of the
30 shareholders of a constituent domestic business corporation
19900S1761B2510 - 105 -
1 if:
2 (i) whether or not the constituent corporation is
3 the surviving corporation:
4 (A) [the plan, whether or not the corporation is
5 the surviving corporation, does not alter the status
6 of the corporation as] the surviving or new
7 corporation is a domestic business corporation [or
8 alter in any respect the provisions of its articles]
9 and the articles of the surviving or new corporation
10 are identical to the articles of the constituent
11 corporation, except changes that under section
12 1914(c) (relating to adoption by board of directors)
13 may be made without shareholder action; [and]
14 (B) each share of the constituent corporation
15 outstanding immediately prior to the effective date
16 of the merger or consolidation is to continue as or
17 to be converted into, except as may be otherwise
18 agreed by the holder thereof, an identical share of
19 the surviving or new corporation after the effective
20 date of the merger or consolidation; and
21 (C) the plan provides that the shareholders of
22 the constituent corporation are to hold in the
23 aggregate shares of the surviving or new corporation
24 to be outstanding immediately after the effectiveness
25 of the plan entitled to cast at least a majority of
26 the votes entitled to be cast generally for the
27 election of directors;
28 (ii) immediately prior to the adoption of the plan
29 and at all times thereafter prior to its effective date,
30 another corporation that is a party to the plan owns
19900S1761B2510 - 106 -
1 directly or indirectly 90% or more of the outstanding
2 shares of each class of the constituent corporation; or
3 (iii) no shares of the constituent corporation have
4 been issued prior to the adoption of the plan of merger
5 or consolidation by the board of directors pursuant to
6 section 1922 (relating to plan of merger or
7 consolidation).
8 (2) If a merger or consolidation is effected pursuant to
9 paragraph (1)(i) or (iii), the plan of merger or
10 consolidation shall be deemed adopted by the constituent
11 corporation when it has been adopted by the board of
12 directors pursuant to section 1922.
13 (3) If a merger or consolidation of a subsidiary
14 corporation with a parent corporation is effected pursuant to
15 paragraph (1)(ii), the plan of merger or consolidation shall
16 be deemed adopted by the subsidiary corporation when it has
17 been adopted by the board of the parent corporation and
18 execution of articles of merger or consolidation by the
19 subsidiary corporation shall not be necessary.
20 * * *
21 § 1931. Share exchanges.
22 * * *
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 converting the shares of the
27 exchanging corporation into shares or other securities or
28 obligations of the acquiring person[. If], and, if any of the
29 shares of the exchanging corporation are not to be converted
30 solely into shares or other securities or obligations of the
19900S1761B2510 - 107 -
1 acquiring person, the shares or other securities or
2 obligations of any other person or cash, property or rights
3 that the holders of the shares of the exchanging corporation
4 are to receive in exchange for, or upon conversion of, the
5 shares and the surrender of any certificates [or instruments]
6 evidencing them, which securities or obligations, if any, of
7 any other person or cash, property and rights may be in
8 addition to or in lieu of the shares or other securities or
9 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 * * *
26 (h) Special requirements.--If any provision of the articles
27 or bylaws of an exchanging domestic business corporation adopted
28 before October 1, 1989, requires for the proposal or adoption of
29 a plan of merger, consolidation or asset transfer a specific
30 number or percentage of votes of directors or shareholders or
19900S1761B2510 - 108 -
1 other special procedures, the plan of exchange shall not be
2 proposed by the directors or adopted by the shareholders without
3 that number or percentage of votes or compliance with the other
4 special procedures.
5 § 1952. Proposal and adoption of plan of division.
6 (a) Preparation of plan.--A plan of division shall be
7 prepared, setting forth:
8 * * *
9 (5) Any provisions desired providing special treatment
10 of shares held by any shareholder or group of shareholders as
11 authorized by, and subject to the provisions of, section 1906
12 (relating to special treatment of holders of shares of same
13 class or series).
14 * * *
15 (h) Special requirements.--If any provision of the articles
16 or bylaws of a dividing domestic business corporation adopted
17 before [January] October 1, 1989, requires for the proposal or
18 adoption of a plan of merger, consolidation or asset transfer a
19 specific number or percentage of votes of directors or
20 shareholders or other special procedures, the plan of division
21 shall not be proposed or adopted by the directors or (if
22 adoption by the shareholders is otherwise required by this
23 subchapter) adopted by the shareholders without that number or
24 percentage of votes or compliance with the other special
25 procedures.
26 § 1954. Articles of division.
27 Upon the adoption of a plan of division by the corporation
28 desiring to divide, as provided in this subchapter, articles of
29 division shall be executed by the corporation and shall, subject
30 to section 109 (relating to name of commercial registered office
19900S1761B2510 - 109 -
1 provider in lieu of registered address), set forth:
2 (1) The name and the location of the registered office,
3 including street and number, if any, of the dividing domestic
4 business corporation or, in the case of a dividing foreign
5 business corporation, the name of the corporation and the
6 jurisdiction in which it is incorporated, together with
7 either:
8 (i) If a qualified foreign business corporation, the
9 address, including street and number, if any, of its
10 registered office in this Commonwealth.
11 (ii) If a nonqualified foreign business corporation,
12 the address, including street and number, if any, of its
13 principal office under the laws of that jurisdiction.
14 (2) The statute under which the dividing corporation was
15 incorporated and the date of incorporation.
16 (3) A statement that the dividing corporation will, or
17 will not, survive the division.
18 (4) The name and the address, including street and
19 number, if any, of[:
20 (i)] the registered office of each new domestic
21 business corporation or qualified foreign business
22 corporation resulting from the division[; and
23 (ii) the principal office under the laws of the
24 jurisdiction in which it is incorporated of each new
25 nonqualified foreign business corporation resulting from
26 the division].
27 (5) If the plan is to be effective on a specific date,
28 the hour, if any, and the month, day and year of the
29 effective date.
30 (6) The manner in which the plan was adopted by the
19900S1761B2510 - 110 -
1 corporation.
2 (7) Except as provided in section 1901 (relating to
3 omission of certain provisions from filed plans), the plan of
4 division.
5 § 1957. Effect of division.
6 * * *
7 (g) Disposition of shares.--Unless otherwise provided in the
8 plan, the shares and other securities or obligations, if any, of
9 each new corporation resulting from the division shall be
10 distributable to:
11 (1) the surviving corporation, if the dividing
12 corporation survives the division; or
13 (2) the holders of the common or other residuary shares
14 of the dividing corporation pro rata, in any other case.
15 § 1962. Proposal and adoption of plan of conversion.
16 (a) Preparation of plan.--A plan of conversion shall be
17 prepared, setting forth:
18 (1) The terms and conditions of the conversion.
19 (2) A restatement of the articles of the resulting
20 corporation, which articles shall comply with the
21 requirements of this part relating to nonprofit corporations.
22 (3) Any provisions desired providing special treatment
23 of shares held by any shareholder or group of shareholders as
24 authorized by, and subject to the provisions of, section 1906
25 (relating to special treatment of holders of shares of same
26 class or series).
27 (4) Such other provisions as are deemed desirable.
28 Any of the terms of the plan may be made dependent upon facts
29 ascertainable outside of the plan if the manner in which the
30 facts will operate upon the terms of the plan is set forth in
19900S1761B2510 - 111 -
1 the plan.
2 * * *
3 § 1972. Proposal of voluntary dissolution.
4 (a) General rule.--Any business corporation that has
5 commenced business may elect to dissolve voluntarily and wind up
6 its affairs in the manner provided in this subchapter. Voluntary
7 dissolution shall be proposed by the adoption by the board of
8 directors of a resolution recommending that the corporation be
9 dissolved voluntarily.
10 (b) Submission to shareholders.--The board of directors
11 shall direct that the question of dissolution be submitted to a
12 vote of the shareholders of the corporation entitled to vote
13 thereon at a regular or special meeting of the shareholders.
14 § 1974. Adoption of proposal.
15 (a) General rule.--The resolution shall be adopted upon
16 receiving the affirmative vote of a majority of the votes cast
17 by all shareholders of the business corporation entitled to vote
18 thereon and, if any class of shares is entitled to vote thereon
19 as a class, the affirmative vote of a majority of the votes cast
20 in each class vote. A proposal for the voluntary dissolution of
21 a corporation shall not be deemed to have been adopted by the
22 corporation unless it has also been recommended by resolution of
23 the board of directors, regardless of the fact that the board
24 has directed or suffered the submission of such a proposal to
25 the shareholders for action.
26 * * *
27 § 2101. Application and effect of chapter.
28 (a) General rule.--This chapter shall be applicable to:
29 (1) A business corporation that elects to become a
30 nonstock corporation in the manner provided by this chapter.
19900S1761B2510 - 112 -
1 (2) A domestic corporation for profit subject to Subpart
2 D (relating to cooperative corporations) organized on a
3 nonstock basis.
4 (3) A domestic insurance corporation that is a mutual
5 insurance company.
6 * * *
7 § 2105. Termination of nonstock corporation status.
8 * * *
9 (c) Mutual insurance companies.--With respect to the
10 termination of the status of a mutual insurance company as a
11 nonstock corporation, see section 103 (relating to subordination
12 of title to regulatory laws) and the act of December 10, 1970
13 (P.L.884, No.279) referred to as the Mutual Insurance Company
14 Conversion Law.
15 § 2121. Corporate name of nonstock corporations.
16 * * *
17 (b) Insurance names.--[A nonstock corporation shall not use
18 a name containing any of the words "annuity," "assurance,"
19 "beneficial," "bond," "casualty," "endowment," "fidelity,"
20 "fraternal," "guaranty," "indemnity," "insurance," "surety" or
21 "title" when used in such a way as to imply that the corporation
22 is engaged in the business of writing insurance as principal, or
23 any other words of like purport, unless there is submitted a
24 certificate from the Insurance Department certifying that the
25 department has no objection to the use by the corporation or
26 proposed corporation of such designation.] See section
27 1303(c)(1)(iii) (relating to corporate name).
28 § 2301. Application and effect of chapter.
29 * * *
30 (d) Transitional provisions.--The following provisions of
19900S1761B2510 - 113 -
1 this chapter shall not apply to a statutory close corporation
2 existing on [January 1,] September 30, 1989, unless otherwise
3 provided in a bylaw adopted in the manner provided by section
4 2332(b) (relating to procedure):
5 Section 2321(b) (relating to preemptive rights) insofar
6 as such provision authorizes the shareholders to adopt a
7 bylaw eliminating or limiting the preemptive rights provided
8 in that subsection.
9 Section 2322 (relating to share transfer restrictions).
10 Section 2323 (relating to transfer of shares in breach of
11 transfer restrictions). If section 2323 is not applicable to
12 the corporation, transfer restrictions (including a
13 restriction that is held not to be authorized by section 1529
14 (relating to transfer of securities; restrictions)) shall be
15 enforced in the same manner as if this article had not been
16 enacted.
17 Section 2325 (relating to sale option of estate of
18 shareholder).
19 Section 2336 (relating to fundamental changes).
20 * * *
21 § 2304. Additional contents of articles of statutory close
22 corporations.
23 (a) General rule.--In addition to the provisions otherwise
24 required by this subpart, the articles of a statutory close
25 corporation shall provide that neither the corporation nor any
26 shareholder shall make an offering of any of its shares of any
27 class that would constitute a "public offering" within the
28 meaning of the Securities Act of 1933 [(15 U.S.C. § 77a et
29 seq.)].
30 * * *
19900S1761B2510 - 114 -
1 § 2309. Involuntary termination of statutory close corporation
2 status; proceeding to prevent loss of status.
3 (a) General rule.--If any event occurs as a result of which
4 the provision included in the articles of a statutory close
5 corporation pursuant to section 2304(a) (relating to additional
6 contents of articles of statutory close corporations) to qualify
7 it as a statutory close corporation has been breached, the
8 status of the business corporation as a statutory close
9 corporation under this chapter shall terminate unless:
10 (1) Within 30 days after the occurrence of the event or
11 within 30 days after the event has been discovered, whichever
12 is later, the corporation:
13 (i) Files in the Department of State a [certificate]
14 statement executed by the corporation setting forth:
15 (A) The name of the corporation and, subject to
16 section 109 (relating to name of commercial
17 registered office provider in lieu of registered
18 address), the address, including street and number,
19 if any, of its registered office.
20 (B) A statement that the provision included in
21 its articles pursuant to section 2304(a) to qualify
22 it as a statutory close corporation has been
23 breached.
24 (ii) Furnishes a copy of the [certificate] statement
25 to each shareholder.
26 (2) The corporation concurrently with the filing of the
27 [certificate] statement takes such steps as are necessary to
28 correct the situation that threatens its status as a
29 statutory close corporation including, without limitation,
30 the refusal to register the transfer of shares that have been
19900S1761B2510 - 115 -
1 wrongfully transferred as provided by section 2308 (relating
2 to issuance or transfer of shares of a statutory close
3 corporation in breach of qualifying conditions) or initiation
4 of a proceeding under subsection (b).
5 * * *
6 (c) Notice of cure of breach.--When the situation that
7 threatened the status of the corporation as a statutory close
8 corporation has been remedied and if the corporation has not
9 amended its articles in accordance with section 2307 (relating
10 to voluntary termination of statutory close corporation status
11 by amendment of articles), the corporation shall file in the
12 department a [certificate] statement executed by the
13 corporation, setting forth:
14 (1) The name of the corporation and, subject to section
15 109 (relating to name of commercial registered office
16 provider in lieu of registered address), the address,
17 including street and number, if any, of its registered
18 office.
19 (2) A statement that no breach of the provision included
20 in its articles pursuant to section 2304(a) exists.
21 Upon the filing of the [certificate] statement, the status of
22 the corporation as a statutory close corporation under this
23 chapter, if theretofore terminated by reason of subsection (a),
24 shall be restored.
25 * * *
26 § 2334. Appointment of provisional director in certain cases.
27 * * *
28 (b) Application for relief.--
29 (1) An application for relief under this section must be
30 filed by or on behalf of:
19900S1761B2510 - 116 -
1 (i) at least one-half of the number of directors
2 then in office;
3 (ii) the holders of shares entitled to cast at least
4 one-third of the votes that all shareholders are entitled
5 to cast for the election of directors; or
6 (iii) shareholders entitled to cast at least two-
7 thirds of the votes that all shareholders of [the] any
8 class entitled to elect one or more directors are
9 entitled to cast for the election of directors, if there
10 is more than one class of shares then entitled to elect
11 one or more directors.
12 A bylaw of a statutory close corporation adopted by the
13 shareholders may provide that a lesser proportion of the
14 directors or of the shareholders or of a class of
15 shareholders may apply for relief under this section.
16 (2) Even though the requirements of paragraph (1) are
17 not satisfied, the court may nevertheless appoint a
18 provisional director if permitted by section 2333(b)
19 (relating to provisional director).
20 * * *
21 § 2502. Registered corporation status.
22 Subject to additional definitions contained in subsequent
23 provisions of this chapter which are applicable to specific
24 subchapters of this chapter, as used in this chapter, the term
25 "registered corporation" shall mean:
26 (1) A domestic business corporation:
27 (i) [having] that:
28 (A) has a class or series of shares entitled to
29 vote generally in the election of directors of the
30 corporation registered under the [Securities]
19900S1761B2510 - 117 -
1 Exchange Act [of 1934 (15 U.S.C. § 78a et seq.)]; or
2 (B) is registered as a management company under
3 the Investment Company Act of 1940 and in the
4 ordinary course of business does not redeem
5 outstanding shares at the option of a shareholder at
6 the net asset value or at another agreed method or
7 amount of value thereof; or
8 (ii) that is:
9 (A) subject to the reporting obligations imposed
10 by section 15(d) of the [Securities] Exchange Act [of
11 1934 (15 U.S.C. § 78o(d))] by reason of having filed
12 a registration statement which has become effective
13 under the Securities Act of 1933 [(15 U.S.C. § 77a et
14 seq.)] relating to shares of a class or series of its
15 equity securities[.] entitled to vote generally in
16 the election of directors; or
17 (B) registered as a management company under the
18 Investment Company Act of 1940 and in the ordinary
19 course of business redeems outstanding shares at the
20 option of a shareholder at the net asset value or at
21 another agreed method or amount of value thereof.
22 A corporation which satisfies both subparagraphs (i) and (ii)
23 shall be deemed to be described solely in subparagraph (i)
24 for the purposes of this chapter.
25 (2) A domestic business corporation all of the shares of
26 which are owned, directly or indirectly, by one or more
27 registered corporations or foreign corporations for profit
28 described in section 4102(b) (relating to registered
29 corporation exclusions).
30 § 2524. Consent of shareholders in lieu of meeting.
19900S1761B2510 - 118 -
1 (a) General rule.--An action may be authorized by the
2 shareholders of a registered corporation without a meeting by
3 less than unanimous written consent[, if action by less than
4 unanimous written consent is] only if permitted by its
5 articles[,].
6 (b) Effectiveness of action.--An action authorized by the
7 shareholders of a registered corporation without a meeting by
8 less than unanimous written consent may become effective
9 immediately upon its authorization, but prompt notice of the
10 action shall be given to those shareholders entitled to vote
11 thereon who have not consented.
12 § 2525. Judges of election. <--
13 The board of directors of a registered corporation may adopt
14 or change a bylaw on any subject otherwise expressly committed
15 to the shareholders by section 1765 (relating to judges of
16 election).
17 § 2526. Appointment of custodian.
18 § 2525. APPOINTMENT OF CUSTODIAN. <--
19 Section 1767(a)(2) (relating to appointment of custodian of
20 corporation on deadlock or other cause) shall not be applicable
21 to a registered corporation described in section 2502(2)
22 (relating to registered corporation status).
23 § 2538. Approval of transactions with interested shareholders.
24 (a) General rule.--The following transactions shall require
25 the affirmative vote of the shareholders entitled to cast at
26 least a majority of the votes that all shareholders other than
27 the interested shareholder are entitled to cast with respect to
28 the transaction, without counting the vote of the interested
29 shareholder:
30 (1) Any transaction authorized under Subchapter C of
19900S1761B2510 - 119 -
1 Chapter 19 (relating to merger, consolidation, share
2 exchanges and sale of assets) between a registered
3 corporation or subsidiary thereof and a shareholder of the
4 registered corporation.
5 (2) Any transaction authorized under Subchapter D of
6 Chapter 19 (relating to division) in which the interested
7 shareholder receives a disproportionate amount of any of the
8 shares or other securities of any corporation surviving or
9 resulting from the plan of division.
10 (3) Any transaction authorized under Subchapter F of
11 Chapter 19 (relating to voluntary dissolution and winding up)
12 in which a shareholder is treated differently from other
13 shareholders of the same class (other than any dissenting
14 shareholders under Subchapter D of Chapter 15 (relating to
15 dissenters rights)).
16 (4) Any reclassification authorized under Subchapter B
17 of Chapter 19 (relating to amendment of articles) in which
18 the percentage of voting or economic share interest in the
19 corporation of a shareholder is materially increased relative
20 to substantially all other shareholders.
21 (b) Exceptions.--Subsection (a) shall not apply to a
22 transaction:
23 (1) that has been approved by a majority vote of the
24 board of directors without counting the vote of directors
25 who:
26 (i) are directors or officers of, or have a material
27 equity interest in, the interested shareholder; or
28 (ii) were nominated for election as a director by
29 the interested shareholder, and first elected as a
30 director, within 24 months of the date of the vote on the
19900S1761B2510 - 120 -
1 proposed transaction; or
2 (2) in which the consideration to be received by the
3 shareholders for shares of any class of which shares are
4 owned by the interested shareholder is not less than the
5 highest amount paid by the interested shareholder in
6 acquiring shares of the same class.
7 (c) Additional approvals.--The approvals required by this
8 section shall be in addition to, and not in lieu of, any other
9 approval required by this subpart, the articles of the
10 corporation, the bylaws of the corporation, or otherwise.
11 (d) Definition of "interested shareholder."--As used in this
12 section, the term "interested shareholder" includes the
13 shareholder who is a party to the transaction or who is treated
14 differently from other shareholders and any person, or group of
15 persons, that is acting jointly or in concert with the
16 interested shareholder and any person who, directly or
17 indirectly, controls, is controlled by, or is under common
18 control with, the interested shareholder. An interested
19 shareholder shall not include any person who, in good faith and
20 not for the purpose of circumventing this section, is an agent,
21 bank, broker, nominee or trustee for one or more other persons,
22 to the extent that the other person or persons are not
23 interested shareholders.
24 § 2541. Application and effect of subchapter.
25 (a) General rule.--Except as otherwise provided in this
26 section, this subchapter shall apply to a registered corporation
27 unless:
28 (1) the registered corporation is one described in
29 section 2502(1)(ii) or (2) (relating to registered
30 corporation status);
19900S1761B2510 - 121 -
1 (2) (i) the bylaws, by amendment adopted either:
2 [(i)] (A) by March 23, 1984; or
3 [(ii)] (B) on or after March 23, 1988, and on or
4 before June 21, 1988;
5 and, in either event, not subsequently rescinded by an
6 article amendment, explicitly provide that this
7 subchapter shall not be applicable to the corporation[;
8 or] in the case of a corporation which on June 21, 1988,
9 did not have outstanding one or more classes or series of
10 preference shares entitled, upon the occurrence of a
11 default in the payment of dividends or another similar
12 contingency, to elect a majority of the members of the
13 board of directors;
14 (ii) a bylaw adopted on or before June 21, 1988, by
15 a corporation excluded from the scope of this paragraph
16 by the restriction of subparagraph (i) relating to
17 certain outstanding preference shares shall be
18 ineffective unless ratified under paragraph (3);
19 (3) the bylaws of which explicitly provide that this
20 subchapter shall not be applicable to the corporation by
21 amendment ratified by the board of directors on or after (in
22 printing this act in the Laws of Pennsylvania and the
23 Pennsylvania Consolidated Statutes, the Legislative Reference
24 Bureau shall insert here, in lieu of this statement, the date
25 which is the date of enactment of this amendatory act) and on
26 or before (in printing this act in the Laws of Pennsylvania
27 and the Pennsylvania Consolidated Statutes, the Legislative
28 Reference Bureau shall insert here, in lieu of this
29 statement, the date which is 90 days after the date of
30 enactment of this amendatory act) in the case of a
19900S1761B2510 - 122 -
1 corporation:
2 (i) which on June 21, 1988, had outstanding one or
3 more classes or series of preference shares entitled,
4 upon the occurrence of a default in the payment of
5 dividends or another similar contingency, to elect a
6 majority of the members of the board of directors; and
7 (ii) the bylaws of which on that date contained a
8 provision described in paragraph (2); or
9 [(3)] (4) the articles explicitly provide that this
10 subchapter shall not be applicable to the corporation by a
11 provision included in the original articles, by an article
12 amendment adopted prior to the date of the control
13 transaction and prior to or on March 23, 1988, pursuant to
14 the procedures then applicable to the corporation, or by an
15 [article] articles amendment adopted prior to the date of the
16 control transaction and subsequent to March 23, 1988,
17 pursuant to both:
18 (i) the procedures then applicable to the
19 corporation; and
20 (ii) unless such proposed amendment has been
21 approved by the board of directors of the corporation, in
22 which event this subparagraph shall not be applicable,
23 the affirmative vote of the shareholders entitled to cast
24 at least 80% of the votes which all shareholders are
25 entitled to cast thereon.
26 A reference in the articles or bylaws to former section 910
27 (relating to right of shareholders to receive payment for shares
28 following a control transaction) of the act of May 5, 1933
29 (P.L.364, No.106), known as the Business Corporation Law of
30 1933, shall be deemed a reference to this subchapter for the
19900S1761B2510 - 123 -
1 purposes of this section. See section 101(c) (relating to
2 references to prior statutes).
3 * * *
4 § 2543. Controlling person or group.
5 (a) General rule.--For the purpose of this subchapter, a
6 "controlling person or group" means a person who has, or a group
7 of persons acting in concert that has, voting power over voting
8 shares of the registered corporation that would entitle the
9 holders thereof to cast at least 20% of the votes that all
10 shareholders would be entitled to cast in an election of
11 directors of the corporation.
12 (b) Exceptions generally.--Notwithstanding subsection (a):
13 (1) A person or group which would otherwise be a
14 controlling person or group within the meaning of this
15 section shall not be deemed a controlling person or group
16 unless, subsequent to the later of March 23, 1988, or the
17 date this subchapter becomes applicable to a corporation by
18 bylaw or article amendment or otherwise, that person or group
19 increases the percentage of outstanding voting shares of the
20 corporation over which it has voting power to in excess of
21 the percentage of outstanding voting shares of the
22 corporation over which that person or group had voting power
23 on such later date, and to at least the amount specified in
24 subsection (a), as the result of forming or enlarging a group
25 or acquiring, by purchase, voting power over voting shares of
26 the corporation.
27 (2) No person or group shall be deemed to be a
28 controlling person or group at any particular time if voting
29 power over any of the following voting shares is required to
30 be counted at such time in order to meet the 20% minimum:
19900S1761B2510 - 124 -
1 (i) Shares which have been held continuously by a
2 natural person since January 1, 1983, and which are held
3 by such natural person at such time.
4 (ii) Shares which are held at such time by any
5 natural person or trust, estate, foundation or other
6 similar entity to the extent the shares were acquired
7 solely by gift, inheritance, bequest, devise or other
8 testamentary distribution or series of these
9 transactions, directly or indirectly, from a natural
10 person who had acquired the shares prior to January 1,
11 1983.
12 (iii) Shares which were acquired pursuant to a stock
13 split, stock dividend, reclassification or similar
14 recapitalization with respect to shares described under
15 this paragraph that have been held continuously since
16 their issuance by the corporation by the natural person
17 or entity that acquired them from the corporation or that
18 were acquired, directly or indirectly, from such natural
19 person or entity, solely pursuant to a transaction or
20 series of transactions described in subparagraph (ii),
21 and that are held at such time by a natural person or
22 entity described in subparagraph (ii).
23 (iv) Control shares as defined in section 2562
24 (relating to definitions) which have not yet been
25 accorded voting rights pursuant to section 2564(a)
26 (relating to voting rights of shares acquired in a
27 control-share acquisition).
28 (v) Shares, the voting rights of which are
29 attributable to a person under subsection (d) if:
30 (A) the person acquired the option or conversion
19900S1761B2510 - 125 -
1 right directly from or made the contract, arrangement
2 or understanding or has the relationship directly
3 with the corporation; and
4 (B) the person does not at the particular time
5 own or otherwise effectively possess the voting
6 rights of the shares.
7 (vi) Shares acquired directly from the corporation
8 or an affiliate or associate, as defined in section 2552
9 (relating to definitions), of the corporation by a person
10 engaged in business as an underwriter of securities who
11 acquires the shares through his participation in good
12 faith in a firm commitment underwriting registered under
13 the Securities Act of 1933.
14 (3) In determining whether a person or group is or would
15 be a controlling person or group at any particular time,
16 there shall be disregarded voting power arising from a
17 contingent right of the holders of one or more classes or
18 series of preference shares to elect one or more members of
19 the board of directors upon or during the continuation of a
20 default in the payment of dividends on such shares or another
21 similar contingency.
22 * * *
23 § 2552. Definitions.
24 The following words and phrases when used in this subchapter
25 shall have the meanings given to them in this section unless the
26 context clearly indicates otherwise:
27 * * *
28 ["Exchange Act." The Securities Exchange Act of 1934 (48
29 Stat. 881, 15 U.S.C. § 78a et seq.), as amended.]
30 * * *
19900S1761B2510 - 126 -
1 § 2554. Business combination.
2 The term "business combination," when used in reference to
3 any registered corporation and any interested shareholder of the
4 corporation, means any of the following:
5 (1) A merger [or], consolidation, share exchange or
6 division of the corporation or any subsidiary of the
7 corporation [with]:
8 (i) with the interested shareholder; or
9 (ii) with, involving or resulting in any other
10 corporation (whether or not itself an interested
11 shareholder of the registered corporation) which is, or
12 after the merger [or consolidation], CONSOLIDATION, SHARE <--
13 EXCHANGE OR DIVISION would be, an affiliate or associate
14 of the interested shareholder.
15 * * *
16 § 2561. Application and effect of subchapter.
17 * * *
18 (b) Exceptions.--This subchapter shall not apply to any
19 control-share acquisition:
20 * * *
21 (2) Of a corporation:
22 (i) (A) the bylaws of which explicitly provide that
23 this subchapter shall not be applicable to the
24 corporation by amendment adopted by the board of
25 directors on or before July 26, 1990, in the case of
26 a corporation [which]:
27 (I) which on April 27, 1990, was a
28 registered corporation described in section
29 2502(1)(i) [on April 27, 1990; or]; and
30 (II) did not on that date have outstanding
19900S1761B2510 - 127 -
1 one or more classes or series of preference
2 shares entitled, upon the occurrence of a default
3 in the payment of dividends or another similar
4 contingency, to elect a majority of the members
5 of the board of directors;
6 (B) a bylaw adopted on or before July 26, 1990,
7 by a corporation excluded from the scope of this
8 subparagraph by clause (A)(II) shall be ineffective
9 unless ratified under subparagraph (ii);
10 (ii) the bylaws of which explicitly provide that
11 this subchapter shall not be applicable to the
12 corporation by amendment ratified by the board of
13 directors on or after (in printing this act in the Laws
14 of Pennsylvania and the Pennsylvania Consolidated
15 Statutes, the Legislative Reference Bureau shall insert
16 here, in lieu of this statement, the date which is the
17 date of enactment of this amendatory act) and on or
18 before (in printing this act in the Laws of Pennsylvania
19 and the Pennsylvania Consolidated Statutes, the
20 Legislative Reference Bureau shall insert here, in lieu
21 of this statement, the date which is 90 days after the
22 date of enactment of this amendatory act) in the case of
23 a corporation:
24 (A) which on April 27, 1990, was a registered
25 corporation described in section 2502(1)(i);
26 (B) which on that date had outstanding one or
27 more classes or series of preference shares entitled,
28 upon the occurrence of a default in the payment of
29 dividends or another similar contingency, to elect a
30 majority of the members of the board of directors;
19900S1761B2510 - 128 -
1 and
2 (C) the bylaws of which on that date contained a
3 provision described in subparagraph (i); or
4 [(ii)] (iii) in any other case, the articles of
5 which explicitly provide that this subchapter shall not
6 be applicable to the corporation by a provision included
7 in the original articles, or by an articles amendment
8 adopted at any time by a corporation other than a
9 registered corporation described in section 2502(1)(i) or
10 on or before 90 days after the corporation first becomes
11 a registered corporation described in section 2502(1)(i).
12 * * *
13 (5) Consummated:
14 * * *
15 (xi) By a person engaged in business as an
16 underwriter of securities who acquires the shares
17 directly from the corporation or an affiliate or
18 associate of the corporation through his participation in
19 good faith in a firm commitment underwriting registered
20 under the Securities Act of 1933.
21 (XII) OR COMMENCED BY A PERSON WHO FIRST BECAME AN <--
22 ACQUIRING PERSON:
23 (A) AFTER APRIL 27, 1990; AND
24 (B) (I) AT A TIME WHEN THIS SUBCHAPTER WAS OR
25 IS NOT APPLICABLE TO THE CORPORATION; OR
26 (II) ON OR BEFORE TEN BUSINESS DAYS AFTER
27 THE FIRST PUBLIC ANNOUNCEMENT BY THE CORPORATION
28 THAT THIS SUBCHAPTER IS APPLICABLE TO THE
29 CORPORATION, IF THIS SUBCHAPTER WAS NOT
30 APPLICABLE TO THE CORPORATION ON JULY 27, 1990.
19900S1761B2510 - 129 -
1 * * *
2 (d) Status of certain shares and effect of formation of
3 group on status.--
4 * * *
5 (4) No share of a corporation over which voting power,
6 or of which beneficial ownership, was or is acquired by the
7 acquiring person after April 27, 1990, at a time when this
8 subchapter was or is not applicable to the corporation shall
9 be deemed to be a control share.
10 (e) Application of duties.--The duty of the board of
11 directors, committees of the board and individual directors
12 under section [2564] 2565 (relating to procedure for
13 establishing voting rights of control shares) is solely to the
14 corporation and may be enforced directly by the corporation or
15 may be enforced by a shareholder, as such, by an action in the
16 right of the corporation, and may not be enforced directly by a
17 shareholder or by any other person or group.
18 § 2562. Definitions.
19 The following words and phrases when used in this subchapter
20 shall have the meanings given to them in this section unless the
21 context clearly indicates otherwise:
22 * * *
23 "Disinterested shares." All voting shares of a corporation
24 that are not affiliate shares and that were beneficially owned
25 by the same holder (or a direct or indirect transferee from the
26 holder to the extent such shares were acquired by the transferee
27 solely pursuant to a transfer or series of transfers under
28 section 2561(b)(5)(i) through (vi) (relating to application and
29 effect of subchapter)) continuously during the period from:
30 * * *
19900S1761B2510 - 130 -
1 (2) the record date established pursuant to section
2 [2564(c)] 2565(c) (relating to notice and record date).
3 ["Exchange Act." The term shall have the meaning specified
4 in section 2552 (relating to definitions).]
5 * * *
6 "Proxy solicitation" or "solicitation of proxies." Includes
7 any solicitation of a proxy, including a solicitation of a
8 revocable proxy of the nature and under the circumstances
9 described in section [2562.1(b)(3)] 2563(b)(3) (relating to
10 acquiring person safe harbor).
11 * * *
12 § [2562.1] 2563. Acquiring person safe harbor.
13 (a) Nonparticipant.--For the purposes of this subchapter, a
14 person shall not be deemed an acquiring person, absent
15 significant other activities indicating that a person should be
16 deemed an acquiring person, by reason of voting or giving a
17 proxy or consent as a shareholder of the corporation if the
18 person is one who:
19 (1) did not acquire any voting shares of the corporation
20 with the purpose of changing or influencing control of the
21 corporation, seeking to acquire control of the corporation or
22 influencing the outcome of a vote of shareholders under
23 section [2563] 2564 (relating to voting rights of shares
24 acquired in a control-share acquisition) or in connection
25 with or as a participant in any agreement, arrangement,
26 relationship, understanding or otherwise having any such
27 purpose;
28 * * *
29 (b) Certain holders.--For the purpose of this subchapter, a
30 person shall not be deemed an acquiring person if such person
19900S1761B2510 - 131 -
1 holds voting power within any of the ranges specified in the
2 definition of "control-share acquisition":
3 * * *
4 (2) in connection with the solicitation of proxies or
5 consents by or on behalf of the corporation in connection
6 with shareholder meetings or actions of the corporation; [or]
7 (3) as a result of the solicitation of revocable proxies
8 or consents with respect to voting shares if such proxies or
9 consents both:
10 (i) are given without consideration in response to a
11 proxy or consent solicitation made in accordance with the
12 applicable rules and regulations under the Exchange Act;
13 and
14 (ii) do not empower the holder thereof, whether or
15 not this power is shared with any other person, to vote
16 such shares except on the specific matters described in
17 such proxy or consent and in accordance with the
18 instructions of the giver of such proxy or consent[.]; or
19 (4) to the extent of voting power arising from a
20 contingent right of the holders of one or more classes or
21 series of preference shares to elect one or more members of
22 the board of directors upon or during the continuation of a
23 default in the payment of dividends on such shares or another
24 similar contingency.
25 § [2563] 2564. Voting rights of shares acquired in a control-
26 share acquisition.
27 * * *
28 § [2564] 2565. Procedure for establishing voting rights of
29 control shares.
30 (a) Special meeting.--A special meeting of the shareholders
19900S1761B2510 - 132 -
1 of a registered corporation shall be called by the board of
2 directors of the corporation for the purpose of considering the
3 voting rights to be accorded to the control shares if an
4 acquiring person:
5 (1) files an information statement fully conforming to
6 section [2565] 2566 (relating to information statement of
7 acquiring person);
8 * * *
9 (d) Special meeting or submission of issue at annual or
10 special meeting not required.--Notwithstanding subsections (a)
11 and (b), the corporation is not required to call a special
12 meeting of shareholders or otherwise present the issue of the
13 voting rights to be accorded to the control shares at any annual
14 or special meeting of shareholders unless:
15 (1) the acquiring person delivers to the corporation a
16 complete information statement pursuant to section [2565]
17 2566; and
18 * * *
19 § [2565] 2566. Information statement of acquiring person.
20 (a) Delivery of information statement.--An acquiring person
21 may deliver to the registered corporation at its principal
22 executive office an information statement which shall contain
23 all of the following:
24 * * *
25 (8) Any other facts that would be substantially likely
26 to affect the decision of a shareholder with respect to
27 voting on the control-share acquisition pursuant to section
28 [2563] 2564 (relating to voting rights of shares acquired in
29 a control-share acquisition).
30 * * *
19900S1761B2510 - 133 -
1 § [2566] 2567. Redemption.
2 Unless prohibited by the terms of the articles of a
3 registered corporation in effect before a control-share
4 acquisition has occurred, the corporation may redeem all control
5 shares from the acquiring person at the average of the high and
6 low sales price of shares of the same class and series as such
7 prices are specified on a national securities exchange, national
8 quotation system or similar quotation listing service on the
9 date the corporation provides notice to the acquiring person of
10 the call for redemption:
11 (1) at any time within 24 months after the date on which
12 the acquiring person consummates a control-share acquisition,
13 if the acquiring person does not, within 30 days after
14 consummation of the control-share acquisition, properly
15 request that the issue of voting rights to be accorded
16 control shares be presented to the shareholders under section
17 [2564(a)] 2565(a) or (b) (relating to procedure for
18 establishing voting rights of control shares); and
19 (2) at any time within 24 months after the issue of
20 voting rights to be accorded such shares is submitted to the
21 shareholders pursuant to section [2564(a)] 2565(a) or (b);
22 and
23 (i) such voting rights are not accorded pursuant to
24 section [2563(a)] 2564(a) (relating to voting rights of
25 shares acquired in control-share acquisition); or
26 (ii) such voting rights are accorded and
27 subsequently lapse pursuant to section [2563(b)] 2564(b)
28 (relating to lapse of voting rights).
29 § [2567] 2568. Board determinations.
30 * * *
19900S1761B2510 - 134 -
1 § 2571. Application and effect of subchapter.
2 * * *
3 (b) Exceptions.--This subchapter shall not apply to any
4 transfer of an equity security:
5 * * *
6 (2) Of a corporation:
7 (i) (A) the bylaws of which explicitly provide that
8 this subchapter shall not be applicable to the
9 corporation by amendment adopted by the board of
10 directors on or before July 26, 1990, in the case of
11 a corporation [which]:
12 (I) which on April 27, 1990, was a
13 registered corporation described in section
14 2502(1)(i) [on April 27, 1990; or]; and
15 (II) did not on that date have outstanding
16 one or more classes or series of preference
17 shares entitled, upon the occurrence of a default
18 in the payment of dividends or another similar
19 contingency, to elect a majority of the members
20 of the board of directors;
21 (B) a bylaw adopted on or before July 26, 1990,
22 by a corporation excluded from the scope of this
23 subparagraph by clause (A)(II) shall be ineffective
24 unless ratified under subparagraph (ii);
25 (ii) the bylaws of which explicitly provide that
26 this subchapter shall not be applicable to the
27 corporation by amendment ratified by the board of
28 directors on or after (in printing this act in the Laws
29 of Pennsylvania and the Pennsylvania Consolidated
30 Statutes, the Legislative Reference Bureau shall insert
19900S1761B2510 - 135 -
1 here, in lieu of this statement, the date which is the
2 date of enactment of this amendatory act) and on or
3 before (in printing this act in the Laws of Pennsylvania
4 and the Pennsylvania Consolidated Statutes, the
5 Legislative Reference Bureau shall insert here, in lieu
6 of this statement, the date which is 90 days after the
7 date of enactment of this amendatory act) in the case of
8 a corporation:
9 (A) which on April 27, 1990, was a registered
10 corporation described in section 2502(1)(i);
11 (B) which on that date had outstanding one or
12 more classes or series of preference shares entitled,
13 upon the occurrence of a default in the payment of
14 dividends or another similar contingency, to elect a
15 majority of the members of the board of directors;
16 and
17 (C) the bylaws of which on that date contained a
18 provision described in subparagraph (i); or
19 [(ii)] (iii) in any other case, the articles of
20 which explicitly provide that this subchapter shall not
21 be applicable to the corporation by a provision included
22 in the original articles, or by an articles amendment
23 adopted at any time by a corporation other than a
24 registered corporation described in section 2502(1)(i) or
25 on or before 90 days after the corporation first becomes
26 a registered corporation described in section 2502(1)(i).
27 * * *
28 (6) Consummated by:
29 * * *
30 (iii) A person engaged in business as an underwriter
19900S1761B2510 - 136 -
1 of securities who acquires the equity securities directly
2 from the corporation or an affiliate or associate, as
3 defined in section 2552 (relating to definitions), of the
4 corporation through his participation in good faith in a
5 firm commitment underwriting registered under the
6 Securities Act of 1933.
7 * * *
8 (8) Acquired by the controlling person or group after <--
9 April 27, 1990, at a time when this subchapter was or is not
10 applicable to the corporation.
11 (8) ACQUIRED AT ANY TIME BY A PERSON OR GROUP WHO FIRST <--
12 BECAME A CONTROLLING PERSON OR GROUP:
13 (I) AFTER APRIL 27, 1990; AND
14 (II) (A) AT A TIME WHEN THIS SUBCHAPTER WAS OR IS
15 NOT APPLICABLE TO THE CORPORATION; OR
16 (B) ON OR BEFORE TEN BUSINESS DAYS AFTER THE
17 FIRST PUBLIC ANNOUNCEMENT BY THE CORPORATION THAT
18 THIS SUBCHAPTER IS APPLICABLE TO THE CORPORATION, IF
19 THIS SUBCHAPTER WAS NOT APPLICABLE TO THE CORPORATION
20 ON JULY 27, 1990.
21 * * *
22 § 2573. 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 * * *
27 "Proxy solicitation" or "solicitation of proxies." Includes
28 any solicitation of a proxy, including a solicitation of a
29 revocable proxy of the nature and under the circumstances
30 described in section [2573.1(b)(3)] 2574(b)(3) (relating to
19900S1761B2510 - 137 -
1 controlling person or group safe harbor).
2 * * *
3 § [2573.1] 2574. Controlling person or group safe harbor.
4 * * *
5 (c) Preference shares.--In determining whether a person or
6 group would be a controlling person or group within the meaning
7 of this subchapter, there shall be disregarded voting power, and
8 the seeking to acquire control of a corporation to the extent
9 based upon voting power, to the extent of voting power arising <--
10 from a contingent right of the holders of one or more classes or
11 series of preference shares to elect one or more members of the
12 board of directors upon or during the continuation of a default
13 in the payment of dividends on such shares or another similar
14 contingency.
15 § [2574] 2575. Ownership by corporation of profits resulting
16 from certain transactions.
17 * * *
18 § [2575] 2576. Enforcement actions.
19 * * *
20 § 2581. Definitions.
21 The following words and phrases when used in this subchapter
22 shall have the meanings given to them in this section unless the
23 context clearly indicates otherwise:
24 * * *
25 "Control-share approval."
26 (1) The occurrence of both:
27 * * *
28 (ii) the according by such registered corporation of
29 voting rights pursuant to section [2563(a)] 2564(a)
30 (relating to voting rights of shares acquired in a
19900S1761B2510 - 138 -
1 control-share acquisition) in connection with such
2 control-share acquisition to control shares of the
3 acquiring person.
4 (2) The term shall also include a control-share
5 acquisition effected by an acquiring person, other than a
6 control-share acquisition described in section 2561(b)(3),
7 (4) or (5) (other than subparagraph 2561(b)(5)(vii))
8 (relating to application and effect of subchapter) if the
9 control-share acquisition:
10 (i) (A) occurs primarily in response to the actions
11 of an other acquiring person where Subchapter G
12 (relating to control-share acquisitions) applies to a
13 control-share acquisition or proposed control-share
14 acquisition by such other acquiring person; and
15 (B) either:
16 (I) pursuant to an agreement or plan
17 described in section 2561(b)(5)(vii);
18 (II) after adoption of an amendment to the
19 articles of the registered corporation pursuant
20 to section [2561(b)(2)(ii)] 2561(b)(2)(iii); or
21 (III) after reincorporation of the
22 registered corporation in another jurisdiction;
23 if the agreement or plan is approved or the amendment or
24 reincorporation is adopted by the board of directors of
25 the corporation during the period commencing after the
26 satisfaction by such other acquiring person of the
27 requirements of section [2564(a)] 2565(a) or (b)
28 (relating to procedure for establishing voting rights of
29 control shares) and ending 90 days after the date such
30 issue is voted on by the shareholders, is withdrawn from
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1 consideration or becomes moot; or
2 (ii) is consummated in any manner by a person who
3 satisfied, within two years prior to such acquisition,
4 the requirements of section [2564(a)] 2565(a) or (b).
5 * * *
6 CHAPTER 27
7 MANAGEMENT CORPORATIONS
8 Subchapter
9 A. Preliminary Provisions
10 B. Directors and Shareholders
11 C. Fundamental Changes
12 SUBCHAPTER A
13 PRELIMINARY PROVISIONS
14 Sec.
15 2701. Application and effect of chapter.
16 2702. Formation of management corporations.
17 2703. Additional contents of articles of management
18 corporations.
19 2704. Election of an existing business corporation to become
20 a management corporation.
21 2705. Termination and renewal of status as management
22 corporation.
23 § 2701. Application and effect of chapter.
24 (a) General rule.--This chapter shall be applicable to a
25 business corporation, other than a statutory close corporation
26 or a professional corporation, that elects to become a
27 management corporation in the manner provided by this chapter.
28 (b) Laws applicable to management corporations.--Except as
29 otherwise provided in this chapter, this subpart shall be
30 generally applicable to all management corporations. The
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1 specific provisions of this chapter shall control over the
2 general provisions of this subpart. Except as otherwise provided
3 in this article, a management corporation may be simultaneously
4 subject to this chapter and one or more other chapters of this
5 article.
6 (c) Effect of a contrary provision of the bylaws.--The
7 bylaws of a management corporation may provide either expressly
8 or by necessary implication that any one or more of the
9 provisions of this chapter, except this subchapter, shall not be
10 applicable, in whole or in part, to the corporation.
11 § 2702. Formation of management corporations.
12 A management corporation shall be formed in accordance with
13 Article B (relating to domestic business corporations generally)
14 except that its articles shall contain:
15 (1) A heading stating the name of the corporation and
16 that it is a management corporation.
17 (2) The provisions required by section 2703 (relating to
18 additional contents of articles of management corporations).
19 § 2703. Additional contents of articles of management
20 corporations.
21 In addition to the provisions otherwise required by this
22 subpart, the articles of a management corporation shall provide
23 that:
24 (1) If, and so long as, the corporation is not a
25 registered corporation:
26 (i) All of the outstanding shares of the corporation
27 of all classes shall be subject to one or more of the
28 restrictions on transfer permitted by section 1529
29 (relating to transfer of securities; restrictions).
30 (ii) Except as part of a transaction having as a
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1 purpose the establishment of the corporation as a
2 registered corporation, neither the corporation nor any
3 shareholder shall make an offering of any of its shares
4 of any class that would constitute a "public offering"
5 within the meaning of the Securities Act of 1933.
6 (2) If and so long as the corporation is not a
7 management company registered under the Investment Company
8 Act of 1940:
9 (i) if the compensation or cost of benefits of the
10 directors and five most highly-compensated officers of
11 the corporation is determined other than by a fixed
12 annual amount in dollars per year, or if the corporation
13 is managed by persons other than its directors and
14 officers, the rate, formula or other basis for payment by
15 the corporation of such compensation or benefits shall be
16 valid only if approved by the shareholders from time to
17 time by the affirmative vote; or
18 (ii) if subparagraph (i) is not applicable, the
19 compensation or the cost of benefits of directors and of
20 the five most highly-compensated officers of the
21 corporation shall not be increased to a higher number of
22 dollars per year without the prior affirmative vote
23 obtained within one year of such increase;
24 of the holders of the outstanding shares of each class or
25 series whether or not otherwise entitled to vote by the
26 articles. If the articles confer upon the holders of a class
27 or series a specifically enforceable right to the declaration
28 and payment of dividends which are not contingent upon or
29 related to net income (other than as provided by section
30 1551(b) (relating to limitation)), the articles may deny the
19900S1761B2510 - 142 -
1 holders of such class or series voting rights under this
2 paragraph.
3 (3) The terms "compensation" and "benefits" shall mean
4 amounts taxable, either currently or on a deferred basis, to
5 a director or officer of the corporation under the Internal
6 Revenue Code of 1986.
7 § 2704. Election of an existing business corporation to become
8 a management corporation.
9 (a) General rule.--A business corporation may become a
10 management corporation under this chapter by filing articles of
11 amendment which shall contain in addition to the requirements of
12 section 1915 (relating to articles of amendment):
13 (1) A heading stating the name of the corporation and
14 that it is a management corporation.
15 (2) A statement that it elects to become a management
16 corporation.
17 (3) The provisions required by section 2703 (relating to
18 additional contents of articles of management corporations).
19 (b) Procedure.--An election to become subject to this
20 chapter shall be proposed by a resolution adopted by the board
21 of directors and shall be adopted in accordance with the
22 requirements of Subchapter B of Chapter 19 (relating to
23 amendment of articles). If an effective date is not stated in
24 the articles of amendment, this chapter shall become applicable
25 to the corporation on the date the articles of amendment are
26 filed in the Department of State.
27 (c) Dissenters rights upon election.--If any shareholder of
28 a corporation, other than a management company registered under
29 the Investment Company Act of 1940, that adopts an election
30 under this chapter to become a management corporation objects to
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1 that action and complies with the provisions of Subchapter D of
2 Chapter 15 (relating to dissenters rights), the dissenting
3 shareholder shall be entitled to the rights and remedies of
4 dissenting shareholders therein provided.
5 (d) Cross reference.--See section 134 (relating to docketing
6 statement).
7 § 2705. Termination and renewal of status as a management
8 corporation.
9 (a) General rule.--A management corporation may terminate
10 its status as such and cease to be subject to this chapter by
11 amending its articles to delete therefrom the additional
12 provisions required by section 2702 (relating to formation of
13 management corporations) to be included in the articles of a
14 management corporation. If an effective date is not stated in
15 the articles of amendment, this chapter shall cease to be
16 applicable to the corporation on the date the articles of
17 amendment are filed in the Department of State.
18 (b) Automatic termination.--The status of a nonregistered
19 corporation as a management corporation shall terminate at the
20 time specified in this subsection upon the occurrence of any of
21 the following:
22 (1) Three months after the end of any fiscal year:
23 (i) at the end of which the corporation had less
24 than $50,000,000 of assets; and
25 (ii) during which it had revenue or receipts of less
26 than $50,000,000.
27 (2) Three years after its date of incorporation or the
28 effective date of its most recent articles of amendment filed
29 under section 2704 (relating to election of an existing
30 business corporation to become a management corporation).
19900S1761B2510 - 144 -
1 (c) Renewal.--An election to be subject to this chapter
2 terminated under subsection (b) may be renewed by complying with
3 the provisions of section 2704 (except subsection (c)) in the
4 same manner as an initial election, if the corporation then
5 satisfies the requirements of paragraph (b)(1).
6 (d) Dissenters rights upon renewal of election.--If any
7 shareholder of a nonregistered corporation that renews an
8 election under this chapter to continue as a management
9 corporation objects to that action and complies with the
10 provision of Subchapter D of Chapter 15 (relating to dissenters
11 rights), the dissenting shareholder shall be entitled to the
12 rights and remedies of dissenting shareholders therein provided.
13 SUBCHAPTER B
14 DIRECTORS AND SHAREHOLDERS
15 Sec.
16 2711. Selection and removal of directors.
17 2712. Shareholder meetings unnecessary.
18 § 2711. Selection and removal of directors.
19 (a) General rule.--The bylaws of a management corporation
20 may specify the manner in which and the persons by whom the
21 directors of the corporation shall be selected and may be
22 removed. Unless otherwise provided in the bylaws, the directors
23 of a management corporation shall be selected and may be removed
24 by the board of directors. An incidental reference to the
25 election of directors by common or other junior shares contained
26 in the express terms of any class or series of any preference
27 shares defining the contingent or other voting rights of
28 preference shares shall not constitute for the purposes of this
29 section a provision of the articles providing for the election
30 of directors by the common or other junior shares.
19900S1761B2510 - 145 -
1 (b) Term.--The duration of the term of office of a director
2 of a management corporation shall not be limited by statute.
3 § 2712. Shareholder meetings unnecessary.
4 Annual or other regular meetings of the shareholders of a
5 management corporation need not be held.
6 SUBCHAPTER C
7 FUNDAMENTAL CHANGES
8 Sec.
9 2721. Bylaw and fundamental change procedures.
10 2722. Changes in authorized shares.
11 § 2721. Bylaw and fundamental change procedures.
12 So long as a business corporation is a management corporation
13 subject to this chapter:
14 (1) The board of directors shall have the full authority
15 vested by this subpart in the shareholders to amend the
16 articles under section 2704(b) (relating to procedure) to
17 renew the election of the corporation to be subject to this
18 chapter and to adopt or change the bylaws, and a bylaw
19 adopted by the board of directors pursuant to this section
20 may continue in effect as long as the corporation remains
21 subject to this chapter.
22 (2) An amendment or plan shall not be adopted under
23 Chapter 19 (relating to fundamental changes), and a bylaw
24 shall not be adopted or changed by the shareholders, without
25 the approval of the board of directors.
26 (3) In the case of a corporation that in the ordinary
27 course of business redeems all outstanding shares at the
28 option of the shareholder at the net asset value or at
29 another agreed method or amount of value thereof, an
30 amendment or plan under Chapter 19 shall not require the
19900S1761B2510 - 146 -
1 approval of the shareholders of the corporation for adoption
2 by the corporation.
3 § 2722. Changes in authorized shares.
4 (a) General rule.--An amendment of the articles of a
5 management corporation shall not require the approval of the
6 shareholders of the corporation to the extent it increases or
7 decreases (to a number not less than that then outstanding) the
8 number of authorized shares of the corporation, or of any class
9 or series of the corporation.
10 (b) Procedure.--The articles of amendment shall set forth in
11 addition to the requirements of section 1915 (relating to
12 articles of amendment):
13 (1) The aggregate number of shares that the corporation
14 shall have authority to issue, or the designations of the
15 classes of shares of the corporation and the maximum number
16 of shares of each class that may be issued.
17 (2) A statement of the voting rights, designations,
18 preferences, limitations and special rights, if any, in
19 respect of the shares of any class or any series of any
20 class, to the extent that they have been determined, and the
21 maximum number of shares of any series of any class that may
22 be issued.
23 (3) A statement of any authority vested in the board of
24 directors to divide the authorized and unissued shares into
25 classes or series, or both, and to determine for any such
26 class or series its voting rights, designations, preferences,
27 limitations and special rights.
28 § 2923. Issuance and retention of shares.
29 (a) General rule.--Shares in a professional corporation may
30 be beneficially owned, directly or indirectly, only by one or
19900S1761B2510 - 147 -
1 more licensed persons and any issuance or transfer of shares
2 [issued] in violation of this restriction shall be void. A
3 shareholder of a professional corporation shall not enter into a
4 voting trust, proxy or any other arrangement vesting another
5 person (other than another licensed person who is a direct or
6 indirect shareholder of the same corporation) with the authority
7 to exercise the voting power of any or all of his shares, and
8 any such purported voting trust, proxy or other arrangement
9 shall be void.
10 [(b) Transfer of shares.--Shares in a professional
11 corporation may be transferred only to or on behalf of a
12 licensed person or to the professional corporation. Any transfer
13 in violation of this restriction shall be void.
14 (c)] (b) Ownership by estate.--Unless a lesser period of
15 time is provided in a bylaw of the corporation adopted by the
16 shareholders or in a written agreement among the shareholders of
17 the corporation, the estate of a deceased shareholder may
18 continue to hold shares of the professional corporation for a
19 reasonable period of administration of the estate, but the
20 personal representative of the estate shall not by reason of the
21 retention of shares be authorized to participate in any
22 decisions concerning the rendering of professional service.
23 [(d)] (c) Interstate application.--Where the activities in
24 this Commonwealth of a person who is a licensed person under the
25 laws of another jurisdiction would be unlawful unless that
26 person were also a licensed person under the laws of this
27 Commonwealth, shares of a professional corporation shall not be
28 issued to or retained by or on behalf of him unless he is also a
29 licensed person under the laws of this Commonwealth. Except as
30 provided in the preceding sentence, this chapter shall not be
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1 construed to require that any proportion or number of the
2 holders or beneficial owners of a professional corporation who
3 are licensed persons shall be licensed persons under the laws of
4 this Commonwealth.
5 CHAPTER 31
6 INSURANCE CORPORATIONS
7 Subchapter
8 A. Preliminary Provisions
9 B. Powers, Duties and Safeguards
10 C. Officers, Directors and Shareholders
11 SUBCHAPTER A
12 PRELIMINARY PROVISIONS
13 Sec.
14 3101. Application and effect of chapter.
15 3102. Definitions.
16 § 3101. Application and effect of chapter.
17 (a) General rule.--This chapter shall be applicable to a
18 business corporation that is a domestic insurance corporation.
19 (b) Application to business corporations generally.--The
20 existence of a provision of this chapter shall not of itself
21 create any implication that a contrary or different rule of law
22 is or would be applicable to a business corporation that is not
23 an insurance corporation. This chapter shall not affect any
24 statute or rule of law that is or would be applicable to a
25 business corporation that is not an insurance corporation.
26 (c) Laws applicable to insurance corporations.--Except as
27 otherwise provided in this chapter, this subpart shall be
28 generally applicable to all insurance corporations. The specific
29 provisions of this chapter shall control over the general
30 provisions of this subpart. Except as otherwise provided in this
19900S1761B2510 - 149 -
1 article, an insurance corporation may be simultaneously subject
2 to this chapter and one or more other chapters of this article.
3 § 3102. Definitions.
4 The following words and phrases when used in this chapter
5 shall have the meanings given to them in this section unless the
6 context clearly indicates otherwise:
7 "Insurance corporation" or "domestic insurance corporation."
8 A domestic business corporation that is engaged in the business
9 of writing insurance or reinsurance as principal and as such is
10 subject to regulation by the Insurance Department.
11 "Mutual insurance company." An insurance corporation that is
12 organized on the mutual principle.
13 SUBCHAPTER B
14 POWERS, DUTIES AND SAFEGUARDS
15 Sec.
16 3121. Bylaws.
17 3122. Distributions by insurance corporations.
18 § 3121. Bylaws.
19 Except as provided in section 1504(b) (relating to adoption,
20 amendment and contents of bylaws), the board of directors of an
21 insurance corporation shall have the authority to adopt, amend
22 and repeal bylaws, subject to the power of the members to change
23 such action. The articles may restrict the authority of the
24 board to adopt, amend or repeal bylaws generally or on any
25 subject or class of subjects.
26 § 3122. Distributions by insurance corporations.
27 The amount of capital received by an insurance corporation
28 upon its stock shall be a liability of the corporation for the
29 purpose of determining the power of the corporation to make any
30 distribution of money or other assets to its shareholders or
19900S1761B2510 - 150 -
1 members.
2 SUBCHAPTER C
3 OFFICERS, DIRECTORS AND SHAREHOLDERS
4 Sec.
5 3131. Directors.
6 3132. Officers.
7 3133. Notice of meetings of members of mutual insurance
8 companies.
9 3134. Quorum at shareholder or member meetings.
10 3135. Proxies of members of mutual insurance companies.
11 3136. Judges of election.
12 3137. Appointment of custodian.
13 3138. Judicial supervision of corporate action.
14 § 3131. Directors.
15 (a) Qualifications.--Two-thirds of the directors of an
16 insurance corporation shall be citizens of the United States.
17 (b) Number.--The board of directors of an insurance
18 corporation shall consist of not less than seven members.
19 § 3132. Officers.
20 The president, secretary and treasurer of an insurance
21 corporation shall be different persons. The treasurer shall be a
22 natural person of full age. The president shall be a director of
23 the corporation.
24 § 3133. Notice of meetings of members of mutual insurance
25 companies.
26 (a) General rule.--Unless otherwise restricted in the
27 bylaws, persons authorized or required to give notice of an
28 annual meeting of members of a mutual insurance company for the
29 election of directors or of a meeting of members of a mutual
30 insurance company called for the purpose of considering an
19900S1761B2510 - 151 -
1 amendment of the articles of the corporation may, in lieu of any
2 written notice of meeting of members required to be given by
3 this subpart, give notice of such meeting by causing notice of
4 such meeting to be officially published. Such notice shall be
5 published each week for at least:
6 (1) Three successive weeks, in the case of an annual
7 meeting.
8 (2) Four successive weeks, in the case of a meeting to
9 consider an amendment of the articles.
10 (b) Cross reference.--See 1 Pa.C.S. § 1909 (relating to
11 time; publication for successive weeks).
12 § 3134. Quorum at shareholder or member meetings.
13 The board of directors of an insurance corporation may adopt
14 or change a bylaw on any subject otherwise expressly committed
15 to the shareholders or members by section 1756(a) (relating to
16 quorum).
17 § 3135. Proxies of members of mutual insurance companies.
18 In no event shall a proxy given by a member of a mutual
19 insurance company, unless coupled with an interest, be voted on
20 or utilized to express consent or dissent to corporate action in
21 writing after 11 months from the date of execution of the proxy.
22 § 3136. Judges of election.
23 The board of directors of an insurance corporation may adopt
24 or change a bylaw on any subject otherwise expressly committed
25 to the shareholders or members by section 1765 (relating to
26 judges of election).
27 § 3137. Appointment of custodian.
28 Section 1767 (relating to appointment of custodian of
29 corporation on deadlock or other cause) shall not be applicable
30 to an insurance corporation.
19900S1761B2510 - 152 -
1 § 3138. Judicial supervision of corporate action.
2 Subchapter F of Chapter 17 (relating to judicial supervision
3 of corporate action) shall not be applicable to an insurance
4 corporation, insofar as inconsistent with the jurisdiction of
5 the Insurance Department.
6 § 4101. Application of article.
7 (a) General rule.--Except as otherwise provided in this
8 section or in subsequent provisions of this article, this
9 article shall apply to and the words "corporation" or "foreign
10 business corporation" in this article shall include every
11 foreign corporation for profit, including a corporation that, if
12 a domestic corporation for profit, would be a banking
13 institution, credit union[, insurance corporation] or savings
14 association.
15 (b) Domestic Federal financial institution exclusion.--
16 Except as permitted by act of Congress, this article shall not
17 apply to:
18 (1) Any of the following institutions or similar
19 federally chartered institutions engaged in this Commonwealth
20 in activities similar to those conducted by banking
21 institutions, saving associations or credit unions:
22 (i) National banking associations organized under
23 The National Bank Act (13 Stat. 99, 12 U.S.C. § 1 et
24 seq.).
25 (ii) Federal savings and loan associations and
26 Federal mutual savings banks organized under the Home
27 Owners' Loan Act of 1933 (48 Stat. 128, 12 U.S.C. § 1461
28 et seq.).
29 (iii) Federal credit unions organized under the
30 Federal Credit Union Act (48 Stat. 1216, 12 U.S.C. § 1751
19900S1761B2510 - 153 -
1 et seq.).
2 (2) Any other Federal corporation intended by the
3 Congress to be treated for state law purposes as a domestic
4 corporation of this Commonwealth.
5 [(c) Qualified insurance corporation exclusion.--This
6 article shall not apply to any foreign corporation for profit
7 qualified to do business in this Commonwealth under the act of
8 May 17, 1921 (P.L.682, No.284), known as The Insurance Company
9 Law of 1921, except as otherwise expressly provided by statute
10 applicable to the corporation.]
11 § 4121. Admission of foreign corporations.
12 * * *
13 (b) Qualification under former statutes.--If a foreign
14 corporation for profit was on March 19, 1966, admitted to do
15 business in this Commonwealth by the filing of a power of
16 attorney and statement under the act of June 8, 1911 (P.L.710,
17 No. 283), the power of attorney and statement shall be deemed an
18 approved application for a certificate of authority issued under
19 this subchapter and the corporation shall be deemed a holder of
20 the certificate. The corporation shall include in its initial
21 application, if any, for an amended certificate of authority
22 under this subchapter the information required by this
23 subchapter to be set forth in an application for a certificate
24 of authority. A certificate of authority issued under the former
25 provisions of [the act of May 5, 1933 (P.L.364, No.106), known
26 as] the Business Corporation Law of 1933, shall be deemed to be
27 issued under this subchapter, and the certificate of authority
28 shall be deemed not to contain any reference to the kind of
29 business that the corporation proposes to do in this
30 Commonwealth.
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1 (c) Foreign insurance corporations.--A foreign insurance
2 corporation shall not be required to procure a certificate of
3 authority under this subchapter.
4 § 4123. Requirements for foreign corporation names.
5 (a) General rule.--The Department of State shall not issue a
6 certificate of authority to any foreign business corporation
7 that, except as provided in subsection (b), has a name that is
8 rendered unavailable for use by a domestic business corporation
9 by any provision of section 1303(a), (b) or (c) (relating to
10 corporate name), except [subsections] subsection (c)(1)(ii) [or
11 (iii)] thereof (relating to banking [and insurance] names).
12 [(b) Exception; name.--The provisions of section 1303(b)
13 (relating to duplicate use of names) shall not prevent the
14 issuance of a certificate of authority to a foreign business
15 corporation setting forth a name that is confusingly similar to
16 the name of any other domestic or foreign corporation for profit
17 or corporation not-for-profit, or of any domestic or foreign
18 limited partnership that has filed a certificate or qualified
19 under Chapter 85 (relating to limited partnerships) or
20 corresponding provisions of prior law, or of any corporation or
21 other association then registered under 54 Pa.C.S. Ch. 5
22 (relating to corporate and other association names) or to any
23 name reserved or registered as provided in this part, if the
24 foreign business corporation applying for a certificate of
25 authority files in the department one of the following:
26 (1) A resolution of its board of directors adopting a
27 fictitious name for use in transacting business in this
28 Commonwealth which fictitious name is not confusingly similar
29 to the name of the other corporation or other association or
30 to any name reserved or registered as provided in this part.
19900S1761B2510 - 155 -
1 (2) The written consent of the other corporation or
2 other association or holder of a reserved or registered name
3 to use the same or confusingly similar name and one or more
4 words are added to make the name applied for distinguishable
5 from the other name.]
6 (b) Exceptions.--
7 (1) The provisions of section 1303(b) (relating to
8 duplicate use of names) shall not prevent the issuance of a
9 certificate of authority to a foreign business corporation
10 setting forth a name that is confusingly similar to the name
11 of any other domestic or foreign corporation for profit or
12 corporation not-for-profit, or of any domestic or foreign
13 limited partnership that has filed a certificate or qualified
14 under Chapter 85 (relating to limited partnerships) or
15 corresponding provisions of prior law, or of any corporation
16 or other association then registered under 54 Pa.C.S. Ch. 5
17 (relating to corporate and other association names) or to any
18 name reserved or registered as provided in this part, if the
19 foreign business corporation applying for a certificate of
20 authority files in the department one of the following:
21 (i) A resolution of its board of directors adopting
22 a fictitious name for use in transacting business in this
23 Commonwealth which fictitious name is not confusingly
24 similar to the name of the other corporation or other
25 association or to any name reserved or registered as
26 provided in this part and that is otherwise available for
27 use by a domestic business corporation.
28 (ii) The written consent of the other corporation or
29 other association or holder of a reserved or registered
30 name to use the same or confusingly similar name and one
19900S1761B2510 - 156 -
1 or more words are added to make the name applied for
2 distinguishable from the other name.
3 (2) The provisions of section 1303(c) (relating to
4 required approvals or conditions) shall not prevent the
5 issuance of a certificate of authority to a foreign business
6 corporation setting forth a name that is prohibited by that
7 subsection if the foreign business corporation applying for a
8 certificate of authority files in the department a resolution
9 of its board of directors adopting a fictitious name for use
10 in transacting business in this Commonwealth that is
11 available for use by a domestic business corporation.
12 § 4125. Issuance of certificate of authority.
13 Upon the filing of the application for a certificate of
14 authority, [the Department of State shall issue to] the foreign
15 business corporation shall be deemed to hold a certificate of
16 authority to do business in this Commonwealth. [The certificate
17 of authority shall be annexed to or endorsed upon the
18 application for a certificate of authority and shall state that,
19 subject to the Constitution and laws of this Commonwealth, the
20 corporation named in the application is authorized to do
21 business in this Commonwealth.]
22 § 4126. Amended certificate of authority.
23 * * *
24 (b) Issuance of amended certificate of authority.--Upon the
25 filing of the application, [the department shall issue to] the
26 applicant corporation shall be deemed to hold an amended
27 certificate of authority. [The amended certificate of authority
28 shall be annexed to or endorsed upon the application for an
29 amended certificate of authority and shall state that the
30 certificate of authority of the corporation named in the
19900S1761B2510 - 157 -
1 application is amended to reflect the change of name specified
2 in the application.]
3 * * *
4 § 4128. Revocation of certificate of authority.
5 * * *
6 (c) Exception.--Subsections (a) and (b) shall not apply to a
7 foreign insurance corporation.
8 § 4129. Application for termination of authority.
9 (a) General rule.--Any qualified foreign business
10 corporation may withdraw from doing business in this
11 Commonwealth and surrender its certificate of authority by
12 filing in the Department of State an application for termination
13 of authority, executed by the corporation, which shall set
14 forth:
15 (1) The name of the corporation and, subject to section
16 109 (relating to name of commercial registered office
17 provider in lieu of registered address), the address,
18 including street and number, if any, of its last registered
19 office in this Commonwealth.
20 (2) The name of the jurisdiction under the laws of which
21 it is incorporated.
22 (3) The date on which it received a certificate of
23 authority to do business in this Commonwealth.
24 (4) A statement that it surrenders its certificate of
25 authority to do business in this Commonwealth.
26 (5) A statement that notice of its intention to withdraw
27 from doing business in this Commonwealth was mailed by
28 certified or registered mail to each municipal corporation in
29 which the registered office or principal place of business of
30 the corporation in this Commonwealth is located, and that the
19900S1761B2510 - 158 -
1 official publication required by subsection (b) has been
2 effected.
3 (6) The post office address, including street and
4 number, if any, to which process may be sent in an action or
5 proceeding upon any liability incurred before the filing of
6 the application for termination of authority.
7 * * *
8 § 4142. General powers and duties of qualified foreign
9 corporations.
10 * * *
11 (c) Foreign insurance corporations.--A foreign insurance
12 corporation shall, insofar as it is engaged in the business of
13 writing insurance or reinsurance as principal, be subject to the
14 laws of this Commonwealth regulating the business of insurance
15 in lieu of the provisions of subsection (a).
16 § 4146. Provisions applicable to all foreign corporations.
17 The following provisions of this subpart shall, except as
18 otherwise provided in this section, be applicable to every
19 foreign corporation for profit, whether or not required to
20 procure a certificate of authority under this chapter:
21 Section 1503 (relating to defense of ultra vires), as to
22 contracts and conveyances made in this Commonwealth and
23 conveyances affecting real property situated in this
24 Commonwealth.
25 Section 1506 (relating to form of execution of
26 instruments), as to instruments or other documents made or to
27 be performed in this Commonwealth or affecting real property
28 situated in this Commonwealth.
29 Section 1510 (relating to [usury not a defense] certain
30 specifically authorized debt terms), as to obligations (as
19900S1761B2510 - 159 -
1 defined in the section) executed or effected in this
2 Commonwealth or affecting real property situated in this
3 Commonwealth.
4 Section 1782 (relating to actions against directors and
5 officers), as to any action or proceeding brought in a court
6 of this Commonwealth.
7 Subchapter F of Chapter 25 (relating to business
8 combinations), to the extent provided in section 2551(d)
9 (relating to continuing applicability).
10 § 4161. Domestication.
11 * * *
12 (b) Articles of domestication.--The articles of
13 domestication shall be executed by the corporation and shall set
14 forth in the English language:
15 * * *
16 (6) A statement that the filing of articles of
17 domestication and, if desired, the renunciation of the
18 original charter or articles of the corporation has been
19 authorized (unless its charter or other organic documents
20 require a greater vote) by a majority of the votes cast by
21 all shareholders entitled to vote thereon and, if any class
22 of shares is entitled to vote thereon as a class, a majority
23 of the votes cast in each class vote.
24 * * *
25 § 5102. APPLICATION OF SUBPART. <--
26 (A) GENERAL RULE.--EXCEPT AS OTHERWISE PROVIDED IN THIS
27 SECTION, IN THE SCOPE PROVISIONS OF SUBSEQUENT PROVISIONS OF
28 THIS SUBPART OR WHERE THE CONTEXT CLEARLY INDICATES OTHERWISE,
29 THIS SUBPART SHALL APPLY TO AND THE WORDS "CORPORATION" OR
30 "NONPROFIT CORPORATION" IN THIS SUBPART SHALL MEAN A DOMESTIC
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1 CORPORATION NOT-FOR-PROFIT. SEE SECTION 101(B) (RELATING TO
2 APPLICATION OF TITLE).
3 (B) COORDINATION WITH OTHER LAWS.--WHERE ANY OTHER PROVISION
4 OF LAW CONTEMPLATES NOTICE TO, THE PRESENCE OF, OR THE VOTE,
5 CONSENT OR OTHER ACTION BY THE MEMBERS, DIRECTORS OR OFFICERS OF
6 A NONPROFIT CORPORATION, WITHOUT SPECIFYING THE APPLICABLE
7 CORPORATE STANDARDS AND PROCEDURES, THE STANDARDS AND PROCEDURES
8 SPECIFIED BY OR PURSUANT TO THIS SUBPART SHALL BE APPLICABLE.
9 (C) EXCLUSION.--THIS SUBPART SHALL NOT APPLY TO A FRATERNAL
10 BENEFIT SOCIETY, WHETHER PROPOSED OR EXISTING, EXCEPT AS
11 OTHERWISE EXPRESSLY PROVIDED IN THIS SUBPART OR AS OTHERWISE
12 PROVIDED BY STATUTE APPLICABLE TO THE FRATERNAL BENEFIT SOCIETY.
13 (D) COOPERATIVE CORPORATIONS.--THIS SUBPART SHALL APPLY TO A
14 DOMESTIC CORPORATION NOT-FOR-PROFIT ORGANIZED ON THE COOPERATIVE
15 PRINCIPLE ONLY TO THE EXTENT PROVIDED BY SUBPART D (RELATING TO
16 COOPERATIVE CORPORATIONS).
17 [(C)] (E) NONPROFIT CORPORATION ANCILLARIES.--THE DOMESTIC
18 CORPORATION PROVISIONS OF THIS SUBPART SHALL APPLY TO ANY OF THE
19 FOLLOWING CORPORATIONS, WHETHER PROPOSED OR EXISTING, EXCEPT AS
20 OTHERWISE EXPRESSLY PROVIDED BY STATUTE APPLICABLE TO THE
21 CORPORATION:
22 (1) THE PENNSYLVANIA DEPOSIT INSURANCE CORPORATION
23 ESTABLISHED BY THE ACT OF OCTOBER 5, 1978 (P.L.1088, NO.255),
24 KNOWN AS THE PENNSYLVANIA DEPOSIT INSURANCE CORPORATION ACT.
25 (2) THE PENNSYLVANIA SAVINGS ASSOCIATION CORPORATION
26 ESTABLISHED BY THE ACT OF APRIL 6, 1979 (P.L.17, NO.5),
27 REFERRED TO AS THE PENNSYLVANIA SAVINGS ASSOCIATION INSURANCE
28 CORPORATION ACT.
29 (3) THE LAWYER TRUST ACCOUNT BOARD ESTABLISHED BY THE
30 ACT OF APRIL 29, 1988 (P.L.373, NO.59), KNOWN AS THE INTEREST
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1 ON LAWYERS' TRUST ACCOUNTS ACT.
2 (4) ANY OTHER DOMESTIC CORPORATION NOT-FOR-PROFIT
3 INCORPORATED UNDER OR SUBJECT TO A STATUTE THAT PROVIDES THAT
4 THE CORPORATE AFFAIRS OF THE CORPORATION SHALL BE GOVERNED BY
5 THE LAWS APPLICABLE TO DOMESTIC NONPROFIT CORPORATIONS.
6 § 5103. Definitions.
7 Subject to additional definitions contained in subsequent
8 provisions of this subpart [which] that are applicable to
9 specific [articles, chapters or other] provisions of this
10 subpart, the following words and phrases[,] when used in this
11 subpart shall have[, unless the context clearly indicates
12 otherwise,] the meanings given to them in this section unless
13 the context clearly indicates otherwise:
14 "Act" or "action." Includes failure to act.
15 "Articles." The original articles of incorporation, all
16 amendments [thereto, articles of merger and consolidation]
17 thereof, and any other articles, statements or certificates
18 permitted or required to be filed [by] in the Department of
19 State by sections 108 (relating to change in location or status
20 of registered office provided by agent) and 138 (relating to
21 statement of correction) or this subpart [or by Chapter 1
22 (relating to general provisions),] and including what have
23 heretofore been designated by law as certificates of
24 incorporation or charters. If an amendment of the articles or
25 articles of merger[,] or division [or conversion] made in the
26 manner permitted by this subpart restates articles in their
27 entirety or if there are articles of consolidation, conversion
28 or domestication, thenceforth the "articles" shall not include
29 any prior documents and any certificate issued by the
30 [Department of State] department with respect thereto shall so
19900S1761B2510 - 162 -
1 state.
2 "Board of directors" or "board." The group of persons vested
3 with the management of the business and affairs of the
4 corporation irrespective of the name by which such group is
5 designated. The term does not include an other body. The term,
6 when used in any provision of this subpart relating to the
7 organization or procedures of or the manner of taking action by
8 the board of directors, shall be construed to include and refer
9 to any executive or other committee of the board. Any provision
10 of this subpart relating or referring to action to be taken by
11 the board of directors or the procedure required therefor shall
12 be satisfied by the taking of corresponding action by a
13 committee of the board of directors to the extent authority to
14 take such action has been delegated to such committee pursuant
15 to section 5731 (relating to executive and other committees of
16 the board).
17 "Business." [In the case of a domestic nonprofit
18 corporation, any] Any or all of the activities for which [it] a
19 corporation has been incorporated[, and, in the case of a
20 foreign corporation not-for-profit, any or all of the activities
21 in which its certificate of authority authorizes it to engage
22 within this Commonwealth].
23 "Bylaws." The code or codes of rules adopted for the
24 regulation or management of the business and affairs of the
25 corporation irrespective of the name or names by which such
26 rules are designated.
27 "Charitable purposes." The relief of poverty, the
28 advancement of education, the advancement of religion, the
29 promotion of health, governmental or municipal purposes, and
30 other purposes the accomplishment of which is beneficial to the
19900S1761B2510 - 163 -
1 community.
2 "Common trust fund." A fund maintained by the corporation
3 for the collective investment and reinvestment of trust assets,
4 and any other funds contributed thereto by such corporation, as
5 fiduciary or otherwise.
6 "Corporation for profit." A corporation incorporated for a
7 purpose or purposes involving pecuniary profit, incidental or
8 otherwise, to its shareholders or members.
9 "Corporation not-for-profit." A corporation not incorporated
10 for a purpose or purposes involving pecuniary profit, incidental
11 or otherwise.
12 "Court." Subject to any inconsistent general rule prescribed
13 by the Supreme Court of Pennsylvania:
14 (1) the court of common pleas of the judicial district
15 embracing the county where the registered office of the
16 corporation is or is to be located; or
17 (2) where a corporation results from a merger,
18 consolidation, division or other transaction without
19 establishing a registered office in this Commonwealth or
20 withdraws as a foreign corporation, the court of common pleas
21 in which venue would have been laid immediately prior to the
22 transaction or withdrawal.
23 "Department." The Department of State of the Commonwealth.
24 "Directors." Persons designated, elected or appointed, by
25 that or any other name or title, to act as directors, and their
26 successors. The term does not include a member of an other body,
27 as such. The term, when used in relation to any power or duty
28 requiring collective action, shall be construed to mean "board
29 of directors."
30 "Domestic corporation for profit." A corporation for profit
19900S1761B2510 - 164 -
1 incorporated under the laws of this Commonwealth.
2 "Domestic corporation not-for-profit." A corporation not-
3 for-profit incorporated under the laws of this Commonwealth.
4 "Entitled to vote." Those persons entitled to vote on the
5 matter under either the bylaws of the corporation or any
6 applicable controlling provision of law.
7 "Foreign corporation for profit." A corporation for profit
8 incorporated under any laws other than those of this
9 Commonwealth.
10 "Foreign corporation not-for-profit." A corporation not-for-
11 profit incorporated under any laws other than those of this
12 Commonwealth.
13 "Foreign nonprofit corporation." A foreign corporation not-
14 for-profit or other entity subject to Chapter 61 (relating to
15 foreign nonprofit corporations), whether or not required to
16 qualify thereunder.
17 "FRATERNAL BENEFIT SOCIETY." A DOMESTIC CORPORATION NOT-FOR- <--
18 PROFIT THAT IS A SOCIETY AS DEFINED IN THE ACT OF JULY 29, 1977
19 (P.L.105, NO.38), KNOWN AS THE FRATERNAL BENEFIT SOCIETY CODE.
20 "Full age." Of the age of 18 years or over.
21 "Incorporator." A signer of the original articles of
22 incorporation.
23 "Member." One having membership rights in a corporation in
24 accordance with the provisions of its bylaws. The term, when
25 used in relation to the taking of corporate action includes:
26 (1) the proxy of a member, if action by proxy is
27 permitted under the bylaws of the corporation; and
28 (2) a delegate to any convention or assembly of
29 delegates of members established pursuant to any provision of
30 this subpart.
19900S1761B2510 - 165 -
1 If and to the extent the bylaws confer rights of members upon
2 holders of securities evidencing indebtedness or governmental or
3 other entities pursuant to any provision of this subpart the
4 term shall be construed to include such security holders and
5 governmental or other entities. The term shall be construed to
6 include "shareholder" if the corporation issues shares of stock.
7 "Nonprofit corporation" or "domestic nonprofit corporation."
8 A domestic corporation not-for-profit which is not excluded from
9 the scope of this subpart by section 5102 (relating to
10 application of subpart).
11 "Nonqualified foreign corporation[.]" or "nonqualified
12 foreign nonprofit corporation." A foreign corporation not-for-
13 profit which is not a qualified foreign corporation, as defined
14 in this section.
15 "Officer." If a corporation is in the hands of a custodian,
16 receiver, trustee or like official, the term includes that
17 official or any person appointed by that official to act as an
18 officer for any purpose under this subpart.
19 "Other body." A term employed in this subpart to denote a
20 person or group, other than the board of directors or a
21 committee thereof, who pursuant to authority expressly conferred
22 by this subpart may be vested by the bylaws of the corporation
23 with powers which, if not vested by the bylaws in such person or
24 group, would by this subpart be required to be exercised by
25 either:
26 (1) the membership of a corporation taken as a whole;
27 (2) a convention or assembly of delegates of members
28 established pursuant to any provision of this subpart; or
29 (3) the board of directors.
30 Except as otherwise provided in this subpart a corporation may
19900S1761B2510 - 166 -
1 establish distinct persons or groups to exercise different
2 powers which this subpart authorizes a corporation to vest in an
3 other body.
4 "Qualified foreign corporation[.]" or "qualified foreign
5 nonprofit corporation." A foreign corporation not-for-profit
6 authorized under Chapter 61 (relating to foreign nonprofit
7 corporations) to do business in this Commonwealth.
8 "Registered office." That office maintained by a corporation
9 in this Commonwealth, the address of which is filed in the
10 Department of State or which was recorded in the office of the
11 recorder of deeds in the manner formerly required by statute.
12 "Relax." When used with respect to a provision of the
13 articles or bylaws, means to provide lesser rights for an
14 affected representative or member.
15 "Representative." When used with respect to a corporation,
16 partnership, joint venture, trust or other enterprise, means a
17 director, officer, employee or agent thereof.
18 "Trust instrument." Any lawful deed of gift, grant, will or
19 other document by which the donor, grantor or testator shall
20 give, grant or devise any real or personal property or the
21 income therefrom in trust for any charitable purpose.
22 "Unless otherwise provided." When used to introduce a rule
23 implies that the alternative provisions contemplated may either
24 relax or restrict the stated rule.
25 "Unless otherwise restricted." When used to introduce a rule
26 implies that the alternative provisions contemplated may further
27 restrict, but may not relax, the stated rule.
28 § 5104. Other general provisions.
29 The following provisions of this title are applicable to
30 corporations subject to this subpart:
19900S1761B2510 - 167 -
1 Section 101 (relating to short title and application of
2 title).
3 Section 102 (relating to definitions).
4 Section 103 (relating to subordination of title to
5 regulatory laws).
6 Section 104 (relating to equitable remedies).
7 Section 105 (relating to fees).
8 Section 106 (relating to effect of filing papers required
9 to be filed).
10 Section 107 (relating to form of records).
11 Section 108 (relating to change in location or status of
12 registered office provided by agent).
13 Section 109 (relating to name of commercial registered
14 office provider in lieu of registered address).
15 Section 110 (relating to supplementary general principles
16 of law applicable).
17 Section 132 (relating to functions of Department of
18 State).
19 Section 133 (relating to powers of Department of State).
20 Section 134 (relating to docketing statement).
21 Section 135 (relating to requirements to be met by filed
22 documents).
23 Section 136 (relating to processing of documents by
24 Department of State).
25 Section 137 (relating to court to pass upon rejection of
26 documents by Department of State).
27 Section 138 (relating to statement of correction).
28 Section 139 (relating to tax clearance of certain
29 fundamental transactions).
30 Section 140 (relating to custody and management of orphan
19900S1761B2510 - 168 -
1 corporate and business records).
2 Section 152 (relating to definitions).
3 Section 153 (relating to fee schedule).
4 Section 154 (relating to enforcement and collection).
5 Section 155 (relating to disposition of funds).
6 [Section 151 (relating to domestication of certain
7 foreign associations).]
8 Section [152] 162 (relating to contingent domestication
9 of certain foreign associations).
10 Section 501 (relating to reserved power of General
11 Assembly).
12 Section 503 (relating to actions to revoke corporate
13 franchises).
14 Section 504 (relating to validation of certain defective
15 corporations).
16 Section 505 (relating to validation of certain defective
17 corporate acts).
18 [Section 511 (relating to standard of care and
19 justifiable reliance).
20 Section 512 (relating to personal liability of
21 directors).
22 Section 513 (relating to nonexclusivity and supplementary
23 coverage).]
24 Section 2552 (relating to definitions) (definitions of
25 "affiliate" and "associate").
26 § 5110. Annual report.
27 (a) General rule.--On or before April 30 of each year, a
28 corporation described in subsection (b) that has effected any
29 change in its officers during the preceding calendar year shall
30 file in the Department of State a statement executed by the
19900S1761B2510 - 169 -
1 corporation and setting forth:
2 (1) The name of the corporation.
3 (2) The post office address, including street and
4 number, if any, of its principal office.
5 (3) The names and titles of the persons who are its
6 principal officers.
7 (b) Application.--This section shall apply to every:
8 (1) domestic nonprofit corporation that has been
9 incorporated after December 31, 1972, or that has filed a
10 summary of record with the Department of State after December
11 31, 1972; and
12 (2) qualified foreign nonprofit corporation.
13 (c) Separate change in registered office required.--A filing
14 under this section shall not constitute compliance with section
15 5507(b) (relating to registered office).
16 (d) Fee.--No fee shall be charged for effecting a filing
17 under this section.
18 (e) Cross reference.--See section 134 (relating to docketing
19 statement).
20 § 5301. Purposes.
21 [Corporations] (a) General rule.--Except as provided in
22 subsection (b), corporations may be incorporated under this
23 article for any lawful purpose or purposes, including, but not
24 limited to, any one or more of the following or similar
25 purposes: athletic; any lawful business purpose to be conducted
26 on a not-for-profit basis; beneficial; benevolent; cemetery;
27 charitable; civic; control of fire; cultural; educational;
28 encouragement of agriculture or horticulture; fraternal;
29 [fraternal benefit;] health; literary; missionary; musical;
30 mutual improvement; patriotic; political; prevention of cruelty
19900S1761B2510 - 170 -
1 to persons or animals; professional, commercial, industrial,
2 trade, service or business associations; promotion of the arts;
3 protection of natural resources; religious; research; scientific
4 and social.
5 (b) Exception.--Except as otherwise provided by Title 40
6 (relating to insurance) or the act of December 29, 1972
7 (P.L.1701, No.364), known as the Health Maintenance Organization
8 Act, a corporation may not be incorporated under this article
9 for the purpose of engaging in the business of writing insurance
10 or reinsurance as principal.
11 § 5303. Corporate name.
12 (a) General rule.--The corporate name may be in any
13 language, but must be expressed in Roman letters or characters
14 or Arabic or Roman numerals.
15 (b) Duplicate use of names.--The corporate name shall not be
16 the same as or confusingly similar to:
17 (1) The name of any other domestic corporation for
18 profit or not-for-profit which is either in existence or for
19 which articles of incorporation have been filed but have not
20 yet become effective, or of any foreign corporation for
21 profit or not-for-profit which is either authorized to do
22 business in this Commonwealth or for which an application for
23 a certificate of authority has been filed but which has not
24 yet become effective, or of any domestic or foreign limited
25 partnership that has filed in the Department of State a
26 certificate or qualified under Chapter 85 (relating to
27 limited partnerships) or under corresponding provisions of
28 prior law, or the name of any association registered at any
29 time under 54 Pa.C.S. Ch.5 (relating to corporate and other
30 association names), unless:
19900S1761B2510 - 171 -
1 (i) where the name is the same or confusingly
2 similar, the other association:
3 (A) has stated that it is about to change its
4 name, or to cease to do business, or is being wound
5 up, or is a foreign association about to withdraw
6 from doing business in this Commonwealth, and the
7 statement and the written consent of the other
8 association to the adoption of the name is filed in
9 the Department of State;
10 (B) has filed with the Department of Revenue a
11 certificate of out of existence, or has failed for a
12 period of three successive years to file with the
13 Department of Revenue a report or return required by
14 law and the fact of such failure has been certified
15 by the Department of Revenue to the Department of
16 State;
17 (C) has abandoned its name under the laws of its
18 jurisdiction of incorporation, by amendment, merger,
19 consolidation, division, expiration, dissolution or
20 otherwise, without its name being adopted by a
21 successor in a merger, consolidation, division or
22 otherwise, and an official record of that fact,
23 certified as provided by 42 Pa.C.S. § 5328 (relating
24 to proof of official records), is presented by any
25 person to the department; or
26 (D) has had the registration of its name under
27 54 Pa.C.S. Ch.5 terminated and, if the termination
28 was effected by operation of 54 Pa.C.S. § 504
29 (relating to effect of failure to make decennial
30 filings), the application for the use of the name is
19900S1761B2510 - 172 -
1 accompanied by a verified statement stating that at
2 least 30 days' written notice of intention to
3 appropriate the name was given to the delinquent
4 association at its registered office and that, after
5 diligent search by the affiant, the affiant believes
6 the association to be out of existence; or
7 (ii) where the name is confusingly similar, the
8 consent of the other association to the adoption of the
9 name is filed in the Department of State.
10 The consent of the association shall be evidenced by a
11 statement to that effect executed by the association.
12 (2) A name the exclusive right to which is at the time
13 reserved by any other person whatsoever in the manner
14 provided by statute. A name shall be rendered unavailable for
15 corporate use by reason of the filing in the Department of
16 State of any assumed or fictitious name required by 54
17 Pa.C.S. Ch.3 (relating to fictitious names) to be filed in
18 the department only if and to the extent expressly so
19 provided in that chapter.
20 (c) Required approvals or conditions.--
21 (1) The corporate name shall not imply that the
22 corporation is:
23 (i) A governmental agency of the Commonwealth or of
24 the United States.
25 (ii) A bank, bank and trust company, savings bank,
26 private bank or trust company, as defined in the act of
27 November 30, 1965 (P.L.847, No.356), known as the Banking
28 Code of 1965.
29 (iii) An insurance company.
30 (iv) A public utility as defined in 66 Pa.C.S. § 102
19900S1761B2510 - 173 -
1 (relating to definitions).
2 (v) A credit union. See 17 Pa.C.S. § 104 (relating
3 to prohibition on use of words "credit union," etc.).
4 (2) The corporate name shall not contain:
5 (i) The word "college," "university" or "seminary"
6 when used in such a way as to imply that it is an
7 educational institution conforming to the standards and
8 qualifications prescribed by the State Board of
9 Education, unless there is submitted a certificate from
10 the Department of Education certifying that the
11 corporation or proposed corporation is entitled to use
12 that designation.
13 (ii) Words that constitute blasphemy, profane
14 cursing or swearing or that profane the Lord's name.
15 (iii) The words "engineer" or "engineering" or
16 "surveyor" or "surveying" or any other word implying that
17 any form of the practice of engineering or surveying as
18 defined in the act of May 23, 1945 (P.L.913, No.367),
19 known as the Professional Engineers Registration Law, is
20 provided unless at least one of the incorporators of a
21 proposed corporation or the directors of the existing
22 corporation has been properly registered with the State
23 Registration Board for Professional Engineers in the
24 practice of engineering or surveying and there is
25 submitted to the department a certificate from the board
26 to that effect.
27 (iv) The words "Young Men's Christian Association"
28 or any other words implying that the corporation is
29 affiliated with the State Young Men's Christian
30 Association of Pennsylvania unless the corporation is
19900S1761B2510 - 174 -
1 incorporated for the purpose of the improvement of the
2 spiritual, mental, social and physical condition of young
3 people, by the support and maintenance of lecture rooms,
4 libraries, reading rooms, religious and social meetings,
5 gymnasiums, and such other means and services as may
6 conduce to the accomplishment of that object, according
7 to the general rules and regulations of such State
8 association.
9 (v) The words "architect" or "architecture" or any
10 other word implying that any form of the practice of
11 architecture as defined in the act of December 14, 1982
12 (P.L.1227, No.281), known as the Architects Licensure
13 Law, is provided unless at least one of the incorporators
14 of a proposed corporation or the directors of the
15 existing corporation has been properly registered with
16 the Architects Licensure Board in the practice of
17 architecture and there is submitted to the department a
18 certificate from the board to that effect.
19 (vi) The word "cooperative" or an abbreviation
20 thereof unless the corporation is a cooperative
21 corporation.
22 (d) Other rights unaffected.--This section shall not
23 abrogate or limit the law as to unfair competition or unfair
24 practices, nor derogate from the common law, the principles of
25 equity, or the provisions of Title 54 (relating to names) with
26 respect to the right to acquire and protect trade names.
27 Subsection (b) shall not apply if the applicant files in the
28 department a certified copy of a final order of a court of
29 competent jurisdiction establishing the prior right of the
30 applicant to the use of a name in this Commonwealth.
19900S1761B2510 - 175 -
1 (e) Remedies for violation of section.--The use of a name in
2 violation of this section shall not vitiate or otherwise affect
3 the corporate existence but any court having jurisdiction, upon
4 the application of:
5 (1) the Attorney General, acting on his own motion or at
6 the instance of any administrative department, board, or
7 commission of this Commonwealth; or
8 (2) any person adversely affected;
9 may enjoin the corporation from using or continuing to use a
10 name in violation of this section.
11 § 5305. Reservation of corporate name.
12 (a) General rule.--The exclusive right to the use of a
13 corporate name may be reserved by any person. The reservation
14 shall be made by delivering to the Department of State an
15 application to reserve a specified corporate name, executed by
16 the applicant. If the department finds that the name is
17 available for corporate use, it shall reserve the name for the
18 exclusive use of the applicant for a period of 120 days.
19 (b) Transfer of reservation.--The right to exclusive use of
20 a specified corporate name reserved under subsection (a) may be
21 transferred to any other person by delivering to the department
22 a notice of the transfer, executed by the person who reserved
23 the name, and specifying the name and address of the transferee.
24 (c) Cross references.--See sections 134 (relating to
25 docketing statement) and 6131 (relating to registration of
26 name).
27 § 5306. Articles of incorporation.
28 (a) General rule.--Articles of incorporation shall be signed
29 by each of the incorporators[,] and shall set forth[,] in the
30 English language:
19900S1761B2510 - 176 -
1 (1) The name of the corporation, unless the name is in a
2 foreign language[,] in which case it shall be set forth in
3 [English] Roman letters or characters or Arabic or Roman
4 numerals.
5 (2) [The] Subject to section 109 (relating to name of
6 commercial registered office provider in lieu of registered
7 address), the address, including street and number, if any,
8 of its initial registered office in this Commonwealth.
9 (3) A brief statement of the purpose or purposes for
10 which the corporation is incorporated.
11 (4) A statement that the corporation is one which does
12 not contemplate pecuniary gain or profit, incidental or
13 otherwise.
14 (5) [The term for which it is to exist, which may be
15 perpetual] A statement that the corporation is incorporated
16 under the provisions of the Nonprofit Corporation Law of
17 1988.
18 (6) A statement whether the corporation is to be
19 organized upon a nonstock basis or a stock share basis, and,
20 if it is to be organized on a stock share basis:
21 (i) The aggregate number of shares [which] that the
22 corporation shall have authority to issue[, and, if the
23 shares are to consist of one class only, the par value of
24 each of the shares or a statement that all of the shares
25 are without par value, or if the shares are to be divided
26 into classes, the number of shares of each class, if any,
27 that are to have a par value and the par value of each
28 share of each class and the number of shares of each
29 class, if any, that are to be without par value]. It
30 shall not be necessary to set forth in the [original]
19900S1761B2510 - 177 -
1 articles the designations of the classes of shares of the
2 corporation, or the maximum number of shares of each
3 class that may be issued.
4 (ii) A statement of the voting rights, designations,
5 preferences, [qualifications,] limitations[,
6 restrictions] and [the] special [or relative] rights in
7 respect of the shares of any class [the fixing of which
8 by the articles of incorporation is desired] or any
9 series of any class, to the extent that they have been
10 determined.
11 (iii) A statement of [such authority as it may then
12 be desired to vest in the members,] any authority vested
13 in the board of directors or other body to [fix by
14 provision in the bylaws any] divide by provision in the
15 bylaws the authorized and unissued shares into classes or
16 series, or both, and to determine for any class or series
17 its voting rights, designations, preferences,
18 [qualifications,] limitations[, restrictions,] and
19 special [or relative] rights [of any class that may be
20 desired but which shall not be fixed in the articles].
21 (7) If the corporation is to have no members, a
22 statement to that effect.
23 (8) The name and address, including street and number,
24 if any, of each of the incorporators.
25 (9) The term for which the corporation is to exist, if
26 not perpetual.
27 (10) If the articles are to be effective on a specified
28 date, the hour, if any, and the month, day and year of the
29 effective date.
30 [(9)] (11) Any other provisions [which] that the
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1 incorporators may choose to insert if:
2 (i) any provision of this [article] subpart
3 authorizes or requires provisions pertaining to the
4 subject matter thereof to be set forth in the articles or
5 bylaws of a nonprofit corporation or in an agreement or
6 other instrument; or
7 (ii) such provisions, [whether or not specifically
8 authorized by this article,] are not inconsistent with
9 this subpart and relate to the [regulation of the
10 internal affairs or business of the corporation, or to]
11 purpose or purposes of the corporation, the management of
12 its business or affairs or the rights, powers or duties
13 of its members, security holders, directors or officers.
14 (b) Par value.--The articles may, but need not, set forth a
15 par value for any authorized shares or class or series of
16 shares.
17 [(b)] (c) Written consent to naming directors.--The naming
18 of directors in articles of incorporation shall constitute an
19 affirmation that such directors have consented in writing to
20 serve as such.
21 § 5311. Filing of [certificate] statement of summary of record
22 by certain corporations.
23 (a) General rule.--[Any nonprofit corporation which was not
24 incorporated under this article and which] Where any of the
25 valid charter documents of a nonprofit corporation are not on
26 file in the Department of State and the corporation desires to
27 file any document in the [Department of State] department under
28 any other provision of this article or [which] the corporation
29 desires to secure from the department any certificate to the
30 effect that the corporation is a corporation duly incorporated
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1 and existing under the laws of this Commonwealth or a certified
2 copy of the articles of the corporation, the corporation shall
3 file in the department a [certificate] statement of summary of
4 record[,] which shall be executed [under the seal of] by the
5 corporation [by two duly authorized officers thereof] and shall
6 set forth:
7 (1) The name of the corporation and, subject to section
8 109 (relating to name of commercial registered office
9 provides in lieu of registered address), the location,
10 including street and number, if any, of its registered
11 office.
12 (2) The statute by or under which the corporation was
13 incorporated.
14 (3) The name under which, the manner in which and the
15 date on which the corporation was originally incorporated,
16 including the date when and the place where the original
17 articles were recorded.
18 (4) The place or places, including volume and page
19 numbers or their equivalent, where the documents constituting
20 the currently effective articles are filed or recorded, the
21 date or dates of each such filing or recording[,] and the
22 text of such currently effective articles. The information
23 specified in this paragraph may be omitted in a [certificate]
24 statement of summary of record [which] that is delivered to
25 the department contemporaneously with amended and restated
26 articles of the corporation filed under this [article]
27 subpart.
28 (5) Each name by which the corporation was known, if
29 any, other than its original name and its current name, and
30 the date or dates on which each change of name of the
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1 corporation became effective.
2 A corporation shall be required to make only one filing under
3 this subsection.
4 (b) Validation of prior defects in incorporation.--Upon the
5 filing of a [certificate] statement under this section, the
6 corporation named in the [certificate] statement shall be deemed
7 to be a validly subsisting corporation to the same extent as if
8 it had been duly incorporated and was existing under this
9 [article] subpart and the [Department of State] department shall
10 so certify regardless of any absence of or defect in the prior
11 [proceeding] proceedings relating to incorporation.
12 (c) Cross reference.--See section 134 (relating to docketing
13 statement).
14 SUBCHAPTER C
15 REVIVAL
16 [(Reserved)]
17 Sec.
18 5341. Statement of revival.
19 § 5341. Statement of revival.
20 (a) General rule.--Any nonprofit corporation whose charter
21 or articles have been forfeited by proclamation of the Governor
22 pursuant to section 1704 of the act of April 9, 1929 (P.L.343,
23 No.176), known as The Fiscal Code, or otherwise, or whose
24 corporate existence has expired by reason of any limitation
25 contained in its charter or articles and the failure to effect a
26 timely renewal or extension of its corporate existence, may at
27 any time by filing a statement of revival procure a revival of
28 its charter or articles, together with all the rights,
29 franchises, privileges and immunities and subject to all of its
30 duties, debts and liabilities that had been vested in and
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1 imposed upon the corporation by its charter or articles as last
2 in effect.
3 (b) Contents of statement.--The statement of revival shall
4 be executed in the name of the forfeited or expired corporation
5 and shall, subject to section 109 (relating to name of
6 commercial registered office provider in lieu of registered
7 address), set forth:
8 (1) The name of the corporation at the time its charter
9 or articles were forfeited or expired and the address,
10 including street and number, if any, of its last registered
11 office.
12 (2) The statute by or under which the corporation was
13 incorporated and the date of incorporation.
14 (3) The name that the corporation adopts as its new name
15 if the adoption of a new name is required by section 5304
16 (relating to required name changes by senior corporations).
17 (4) The address, including street and number, if any, of
18 its registered office in this Commonwealth.
19 (5) A reference to the proclamation or other action by
20 which its charter or articles were forfeited or a reference
21 to the limitation contained in its expired charter or
22 articles.
23 (6) A statement that the corporate existence of the
24 corporation shall be revived.
25 (7) A statement that the filing of the statement of
26 revival has been authorized by the corporation. Every
27 forfeited or expired corporation may act by its last
28 directors or may elect directors and officers in the manner
29 provided by this subpart for the limited purpose of effecting
30 a filing under this section.
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1 (c) Filing and effect.--The statement of revival and, in the
2 case of a forfeited corporation, the clearance certificates
3 required by section 139 (relating to tax clearance of certain
4 fundamental transactions) shall be filed in the Department of
5 State. Upon the filing of the statement of revival, the
6 corporation shall be revived with the same effect as if its
7 charter or articles had not been forfeited or expired by
8 limitation. The revival shall validate all contracts and other
9 transactions made and effected within the scope of the articles
10 of the corporation by its representatives during the time when
11 its charter or articles were forfeited or expired to the same
12 effect as if its charter or articles had not been forfeited or
13 expired.
14 (d) Cross reference.--See section 134 (relating to docketing
15 statement).
16 § 5502. General powers.
17 (a) General rule.--Subject to the limitations and
18 restrictions imposed by statute and, except as otherwise
19 provided in paragraph (4) [of this subsection], subject to the
20 limitations and restrictions contained in its articles, every
21 nonprofit corporation shall have power:
22 (1) To [continue as a corporation for the time] have
23 perpetual succession by its corporate name unless a limited
24 period of duration is specified in its articles, subject to
25 the power of the Attorney General under section 503 (relating
26 to actions to revoke corporate franchises) and to the power
27 of the General Assembly under the Constitution of
28 Pennsylvania.
29 (2) To sue and be sued, complain and defend[,] and
30 participate as a party or otherwise in any judicial,
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1 administrative, arbitrative or other proceeding in its
2 corporate name.
3 (3) To have a corporate seal, which may be altered at
4 pleasure, and to use the [same] seal by causing it or a
5 facsimile thereof to be impressed or affixed[,] or in any
6 manner reproduced.
7 (4) To acquire, own and [dispose of] utilize any real or
8 personal property, or any interest therein, wherever
9 situated, regardless of any limitation set forth in its
10 articles prior to January 1, 1972 as to the quantity or value
11 of real or personal property which it may hold, or as to the
12 amount of income derived therefrom.
13 (5) To sell [and convey, lease away], convey, mortgage,
14 pledge, lease, exchange or otherwise dispose of all or any
15 part of its property and assets, or any interest therein,
16 wherever situated.
17 (6) To guarantee, become surety for, acquire, own and
18 dispose of obligations, capital stock and other securities[,
19 and evidences of indebtedness].
20 (7) To borrow money, [to] issue [its evidences of
21 indebtedness, for labor done, or money or property, including
22 shares of the corporation, if the corporation is organized on
23 a stock share basis, properly acquirable by it, actually
24 received and to] or incur its obligations and secure any of
25 its obligations by mortgage on or pledge of or security
26 interest in all or any part of its property and assets,
27 wherever situated, franchises or income, or any interest
28 therein.
29 (8) To invest its [surplus] funds, [to] lend money and
30 to take and hold real and personal property as security for
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1 the [payment] repayment of funds so invested or loaned.
2 (9) To make contributions and donations [for charitable
3 purposes].
4 (10) To use abbreviations, words, logos or symbols upon
5 the records of the corporation, and in connection with the
6 registration of, and inscription of ownership or entitlement
7 on, certificates evidencing membership in [the corporation or
8 ownership of its] or securities [and upon the other records
9 of the corporation,] or obligations of the corporation, and
10 upon checks, proxies, notices and other instruments and
11 documents relating to the foregoing, which abbreviations,
12 words, logos or symbols shall [thereupon] have the same force
13 and effect as though the respective words and phrases for
14 which they stand were set forth in full for the purposes of
15 all statutes of this Commonwealth and all other purposes.
16 (11) To be a promoter, partner, member, associate or
17 manager of any partnership, enterprise or venture or in any
18 transaction, undertaking or arrangement [which] that the
19 [participating] corporation would have power to conduct
20 itself, whether or not [such] its participation involves
21 sharing or delegation of control with or to others.
22 (12) To transact any lawful business [which] that the
23 board of directors or other body [shall find to be in] finds
24 will aid [of] governmental [authority] policy.
25 (13) To continue the salaries of such of its employees
26 as may be serving in the active or reserve armed forces of
27 the United States, or in the national guard or in any other
28 organization established for the protection of the lives and
29 property of citizens of this Commonwealth or the United
30 States, during the term of [such] that service or during such
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1 part thereof as [such] the employees, by reason of [such]
2 that service, may be unable to perform their duties as
3 employees of the corporation.
4 (14) To [grant allowances or] pay pensions [to its
5 directors, officers and employees] and establish pension
6 plans, pension trusts, profit sharing plans, share bonus
7 plans, share option plans, incentive and deferred
8 compensation plans and other plans or trusts for any or all
9 of its present or former representatives and, after their
10 death, to grant allowances or pensions to their dependents or
11 beneficiaries, whether or not [such a] the grant was made
12 during their lifetime.
13 (15) To conduct its business, carry on its operations,
14 [and] have offices and exercise the powers granted by this
15 article or any other provision of law in any jurisdiction
16 within or without the United States.
17 [(16) To adopt, amend and repeal bylaws.
18 (17)] (16) To elect or appoint and remove officers,
19 employees and agents of the corporation, define their duties,
20 fix their reasonable compensation and the reasonable
21 compensation of directors, [and to indemnify corporate
22 personnel] to lend any of the foregoing money and credit and
23 to pay bonuses or other additional compensation to any of the
24 foregoing for past services.
25 [(18)] (17) To enter into any obligation appropriate for
26 the transaction of its affairs, including contracts or other
27 agreements with its members.
28 [(19)] (18) To have and exercise all of the powers and
29 means appropriate to effect the purpose or purposes for which
30 the corporation is incorporated.
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1 [(20) To dissolve and wind up.]
2 (19) To have and exercise all other powers enumerated
3 elsewhere in this subpart or otherwise vested by law in the
4 corporation.
5 (b) Enumeration unnecessary.--It shall not be necessary to
6 set forth in the articles of the corporation the powers
7 enumerated in subsection (a) [of this section].
8 (c) Board to exercise.--[Except as otherwise provided by
9 statute or in the bylaws, the powers enumerated in this section
10 and elsewhere in this article shall be exercised by the board of
11 directors of the corporation.] See section 5721 (relating to
12 board of directors).
13 § 5504. Adoption, amendment and contents of bylaws.
14 (a) General rule.--The members entitled to vote shall have
15 the power to adopt, amend and repeal the bylaws of a nonprofit
16 corporation[, but except]. Except as provided in subsection (b)
17 [of this section], the authority to adopt, amend and repeal
18 bylaws may be expressly vested by the bylaws in the board of
19 directors or other body, subject to the power of the members to
20 change such action. [Unless the bylaws otherwise provide, the
21 powers hereby conferred shall be exercised by a majority vote of
22 the members in office of the board of directors or other body,
23 or by the vote of members entitled to cast at least a majority
24 of the votes which all members present are entitled to cast
25 thereon, as the case may be, at any regular or special meeting
26 duly convened after notice to the members, directors or members
27 of such other body of that purpose.] The bylaws may contain any
28 provisions for [the regulation and management of] managing the
29 business and regulating the affairs of the corporation not
30 inconsistent with law or the articles. In the case of a meeting
19900S1761B2510 - 187 -
1 of members, written notice shall be given to each member
2 entitled to vote that the purpose, or one of the purposes, of a
3 meeting is to consider the adoption, amendment or repeal of the
4 bylaws. There shall be included in, or enclosed with, the notice
5 a copy of the proposed amendment or a summary of the changes to
6 be effected thereby. Any change in the bylaws shall take effect
7 when adopted unless otherwise provided in the resolution
8 effecting the change.
9 (b) Exception.--Except as provided in section 5310(a)
10 (relating to organization meeting), the board of directors or
11 other body shall not have the authority to adopt or change a
12 bylaw on any subject [which] that is committed [exclusively]
13 expressly to the members by any of the [following] provisions of
14 this [article:] subpart. See:
15 Subsection (d) (relating to amendment of voting
16 provisions).
17 Section 5713 (relating to personal liability of
18 directors.
19 [(1)] Section 5721 (relating to board of directors).
20 [(2)] Section 5725(b) (relating to selection of
21 directors).
22 [(3)] Section 5726(a) (relating to removal of directors
23 by the members).
24 [(4)] Section 5726(b) (relating to removal of directors
25 by the board).
26 [(5)] Section 5729 (relating to voting rights of
27 directors).
28 [(6)] Section 5751(a) (relating to classes and
29 qualifications of membership).
30 [(7)] Section 5752(c) (relating to rights of
19900S1761B2510 - 188 -
1 shareholders).
2 [(8)] Section 5754(a) (relating to members grouped in
3 local units).
4 [(9)] Section 5755(a) (relating to regular meetings).
5 [(10)] Section 5756 (relating to quorum).
6 [(11)] Section 5757 (relating to action by members).
7 [(12)] Section 5758 (relating to voting rights of
8 members).
9 [(13)] Section 5759(a) (relating to voting and other
10 action by proxy).
11 [(14)] Section 5760(a) (relating to voting in nonprofit
12 corporation matters).
13 [(15)] Section 5762 (relating to judges of election).
14 [(16)] Section 5766(a) (relating to termination and
15 transfer of membership).
16 [(17)] Section 5767 (relating to voting powers and other
17 rights of certain security holders and other entities).
18 [(18)] Section 5975(c) (relating to winding up and
19 distribution).
20 (c) Bylaw provisions in articles.--Where any provision of
21 this subpart or any other provision of law refers to a rule as
22 set forth in the bylaws of a corporation [such], the reference
23 shall be construed to include and be satisfied by any rule on
24 the same subject as set forth in the articles of the
25 corporation.
26 (d) Amendment of voting provisions.--Unless otherwise
27 restricted in a bylaw adopted by the members, whenever the
28 bylaws require for the taking of any action by the members or a
29 class of members a specific number or percentage of votes, the
30 provision of the bylaws setting forth that requirement shall not
19900S1761B2510 - 189 -
1 be amended or repealed by any lesser number or percentage of
2 votes of the members or of the class of members.
3 § 5505. Persons bound by bylaws.
4 [The] Except as otherwise provided by section 5713 (relating
5 to personal liability of directors) or any similar provision of
6 law, bylaws of a nonprofit corporation shall operate [merely]
7 only as regulations among the members of the corporation, and
8 shall not affect contracts or other dealings with other persons,
9 unless [such] those persons have actual knowledge of [such] the
10 bylaws.
11 § 5507. Registered office.
12 (a) General rule.--Every nonprofit corporation shall have
13 and continuously maintain in this Commonwealth a registered
14 office which may, but need not, be the same as its place of
15 business.
16 (b) [Change] Statement of change of registered office.--
17 After incorporation, a change of the location of the registered
18 office may be authorized at any time by [a majority vote of the
19 members in office of] the board of directors or other body.
20 Before [such] the change of location [shall become] becomes
21 effective, the corporation either shall amend its articles under
22 the provisions of this [article to reflect such] subpart to
23 reflect the change in location or shall file in the Department
24 of State a statement of change of registered office executed
25 [under the seal of the corporation and signed by two duly
26 authorized officers of] by the corporation, setting forth:
27 (1) The name of the corporation.
28 (2) The address, including street number, if any, of its
29 then registered office.
30 (3) The address, including street number, if any, to
19900S1761B2510 - 190 -
1 which the registered office is to be changed.
2 (4) A statement that [such] the change was authorized by
3 [resolution duly adopted by at least a majority of the
4 members in office of] the board of directors or other body.
5 (c) Alternative procedure.--A corporation may satisfy the
6 requirements of this subpart concerning the maintenance of a
7 registered office in this Commonwealth by setting forth in any
8 document filed in the department under any provision of this
9 subpart that permits or requires the statement of the address of
10 its then registered office, in lieu of that address, the
11 statement authorized by section 109(a) (relating to name of
12 commercial registered office provider in lieu of registered
13 address).
14 [(c)] (d) Cross reference.--See section 134 (relating to
15 docketing statement).
16 § 5701. Applicability of subchapter.
17 The provisions of this subchapter shall apply to every
18 nonprofit corporation unless otherwise restricted:
19 (1) by any other provision of this [article] subpart; or
20 (2) except with respect to section [5707] 5707(a)
21 (relating to exception to requirement of notice), in the
22 bylaws.
23 § 5702. Manner of giving notice.
24 (a) General rule.--Whenever written notice is required to be
25 given to any person under the provisions of this [article]
26 subpart or by the articles or bylaws of any nonprofit
27 corporation, it may be given to [such] the person[,] either
28 personally or by sending a copy thereof by first class or
29 express mail, postage prepaid, or by telegram (with messenger
30 service specified), telex or TWX (with answer back received) or
19900S1761B2510 - 191 -
1 courier service, charges prepaid, or by facsimile transmission,
2 to his address (or to his telex, TWX or facsimile number)
3 appearing on the books of the corporation[,] or, in the case of
4 directors or members of an other body, supplied by him to the
5 corporation for the purpose of notice. If the notice is sent by
6 mail [or by], telegraph or courier service, it shall be deemed
7 to have been given to the person entitled thereto when deposited
8 in the United States mail or with a telegraph office [for
9 transmission to such person] or courier service for delivery to
10 that person or, in the case of telex or TWX, when dispatched. A
11 notice of meeting shall specify the place, day and hour of the
12 meeting and any other information required by any other
13 provision of this [article] subpart.
14 (b) Adjourned meetings of members.--When a meeting of
15 members is adjourned, it shall not be necessary to give any
16 notice of the adjourned meeting or of the business to be
17 transacted at an adjourned meeting, other than by announcement
18 at the meeting at which [such] the adjournment is taken[.],
19 unless the board or other body fixes a new record date for the
20 adjourned meeting or this subpart requires notice of the
21 business to be transacted and such notice has not previously
22 been given.
23 (c) Bulk mail notice.--A corporation having more than 100
24 members of record that gives notice by mail of any regular or
25 special meeting of the members (or any other notice required by
26 this subpart or by the articles or bylaws to be given to all
27 members or to a class of members) at least 20 days prior to the
28 day named for the meeting or any corporate or member action
29 specified in the notice may use any class of postpaid mail.
30 (d) Notice by publication.--If the bylaws so provide,
19900S1761B2510 - 192 -
1 persons authorized or required to give notice of a meeting of
2 members may, in lieu of any written notice of a meeting of
3 members required to be given by this subpart, give notice of the
4 meeting by causing notice of the meeting to be officially
5 published. If 80% of the members of record entitled to vote at
6 the meeting do not have addresses of record within the territory
7 of general circulation of the newspapers required for official
8 publication, the notice shall also be published in newspapers
9 that have an aggregate territory of general circulation that
10 includes the addresses of record of at least 80% of the members
11 of record.
12 (e) Notice by public announcement.--In lieu of any written
13 notice of a meeting of members required to be given by this
14 subpart, persons authorized or required to give notice of a
15 meeting of members of any church or other religious organization
16 may give notice of the meeting by announcement at any two
17 regular church or religious services held during different weeks
18 within 30 days prior to the time at which the meeting of members
19 will be held. In any case where notice of a meeting is given by
20 announcement, notice shall be given at the last service
21 preceding the meeting. In the event that two church or religious
22 services are not held within such 30 day period, notice of a
23 meeting of members shall be given as otherwise provided in this
24 subchapter.
25 (f) Effect of notice pursuant to optional procedures.--For
26 the purposes of this subpart, notice given under subsection (d)
27 or (e) shall be deemed to be written notice to every member of
28 record entitled to vote at a meeting or to every person
29 otherwise entitled to notice.
30 § 5703. Place and notice of meetings of board of directors or
19900S1761B2510 - 193 -
1 other body.
2 (a) Place.--Meetings of the board of directors or other body
3 may be held at such place within or without this Commonwealth as
4 the board of directors or other body may from time to time
5 appoint[,] or as may be designated in the notice of the meeting.
6 (b) Notice.--[Meetings] Regular meetings of the board of
7 directors or other body may be held upon such notice, if any, as
8 the bylaws may prescribe. Unless otherwise provided in the
9 bylaws, written notice of every special meeting of the board of
10 directors or other body shall be given to each director or
11 member of such other body at least five days before the day
12 named for the meeting. Neither the business to be transacted at,
13 nor the purpose of, any regular or special meeting of the board
14 or other body need be specified in the notice of the meeting.
15 § 5704. Place and notice of meetings of members.
16 (a) Place.--[Meeting] Meetings of members may be held at
17 such place within or without this Commonwealth as may be
18 provided in or fixed pursuant to the bylaws [or as may be fixed
19 by the board of directors or other body pursuant to authority
20 granted by the bylaws]. Unless otherwise provided in or pursuant
21 to the bylaws, all meetings of the members shall be held in this
22 Commonwealth at the registered office of the corporation.
23 (b) Notice.--Written notice of every meeting of the members
24 shall be given by, or at the direction of, the secretary or
25 other authorized person[,] to each member of record entitled to
26 vote at the meeting[,] at least:
27 (1) ten days prior to the day named for a meeting called
28 to consider a fundamental change under Chapter 59 (relating
29 to fundamental changes); or
30 (2) five days prior to the day named for the meeting in
19900S1761B2510 - 194 -
1 any other case.
2 If the secretary or [such] other authorized person [shall
3 neglect or refuse] neglects or refuses to give notice of a
4 meeting, the person or persons calling the meeting may do so.
5 (c) Contents.--In the case of a special meeting of the
6 members, the notice shall specify the general nature of the
7 business to be transacted, and in all cases the notice shall
8 comply with the express requirements of this subpart. The
9 corporation shall not have a duty to augment the notice.
10 § 5705. Waiver of notice.
11 (a) Written waiver.--Whenever any written notice is required
12 to be given under the provisions of this [article] subpart or
13 the articles or bylaws of any nonprofit corporation, a waiver
14 thereof in writing, signed by the person or persons entitled to
15 [such] the notice, whether before or after the time stated
16 therein, shall be deemed equivalent to the giving of [such] the
17 notice. Except as otherwise required by this subsection, neither
18 the business to be transacted at, nor the purpose of, a meeting
19 need be specified in the waiver of notice of [such] the meeting.
20 [In the case of a special meeting of members such waiver of
21 notice shall specify the general nature of the business to be
22 transacted.]
23 (b) Waiver by attendance.--Attendance of a person at any
24 meeting shall constitute a waiver of notice of [such] the
25 meeting[,] except where a person attends a meeting for the
26 express purpose of objecting, at the beginning of the meeting,
27 to the transaction of any business because the meeting was not
28 lawfully called or convened.
29 § 5706. Modification of proposal contained in notice.
30 Whenever the language of a proposed resolution is included in
19900S1761B2510 - 195 -
1 a written notice of a meeting required to be given under the
2 provisions of this subpart or the articles or bylaws of any
3 nonprofit corporation, the meeting considering the resolution
4 may without further notice adopt it with such clarifying or
5 other amendments as do not enlarge its original purpose.
6 § 5707. Exception to requirement of notice.
7 [Wherever] (a) General rule.--Whenever any notice or
8 communication is required to be given to any person under the
9 provisions of this [article] subpart or by the articles or
10 bylaws of any nonprofit corporation[,] or by the terms of any
11 agreement or other instrument or as a condition precedent to
12 taking any corporate action[,] and communication with [such]
13 that person is then unlawful, the giving of [such] the notice or
14 communication to such person shall not be required and there
15 shall be no duty to apply for a license or other permission to
16 do so. Any action or meeting [which shall be] that is taken or
17 held without notice or communication to [any such] that person
18 shall have the same validity as if [such] the notice or
19 communication had been duly given. If the action taken is such
20 as to require the filing of any document with respect thereto
21 under any provision of law or any agreement or other instrument,
22 it shall be sufficient, if such is the fact and if notice or
23 communication is required, to state therein that notice or
24 communication was given to all persons entitled to receive
25 notice or communication except [such] persons with whom
26 communication was unlawful.
27 (b) Members without forwarding addresses.--Subsection (a)
28 shall also be applicable to any member with whom the corporation
29 has been unable to communicate for more than 24 consecutive
30 months because communications to the member are returned
19900S1761B2510 - 196 -
1 unclaimed or the member has otherwise failed to provide the
2 corporation with a current address. Whenever the member provides
3 the corporation with a current address, subsection (a) shall
4 cease to be applicable to the member under this subsection.
5 § 5708. Use of conference telephone and similar equipment.
6 [One] Except as otherwise provided in the bylaws, one or more
7 persons may participate in a meeting of the incorporators, the
8 board[,] of directors or [of] an other body, or [of] the members
9 of a nonprofit corporation by means of conference telephone or
10 similar communications equipment by means of which all persons
11 participating in the meeting can hear each other. Participation
12 in a meeting pursuant to this section shall constitute presence
13 in person at [such] the meeting.
14 SUBCHAPTER B
15 FIDUCIARY DUTY
16 Sec.
17 5711. Alternative provisions.
18 5712. Standard of care and justifiable reliance.
19 5713. Personal liability of directors.
20 5714. Notation of dissent.
21 5715. Exercise of powers generally.
22 5716. Alternative standard.
23 5717. Limitation on standing.
24 § 5711. Alternative provisions.
25 Section 5716 (relating to alternative standard) shall not be
26 applicable to any nonprofit corporation to which section 5715
27 (relating to exercise of powers generally) is applicable.
28 Section 5715 shall be applicable to any corporation except a
29 corporation:
30 (1) the bylaws of which by amendment adopted by the
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1 board of directors on or before July 26, 1990, and not
2 subsequently rescinded by an articles amendment, explicitly
3 provide that section 5715 or corresponding provisions of
4 prior law shall not be applicable to the corporation; or
5 (2) the articles of which explicitly provide that
6 section 5715 or corresponding provisions of prior law shall
7 not be applicable to the corporation.
8 § 5712. Standard of care and justifiable reliance.
9 (a) Directors.--A director of a nonprofit corporation shall
10 stand in a fiduciary relation to the corporation and shall
11 perform his duties as a director, including his duties as a
12 member of any committee of the board upon which he may serve, in
13 good faith, in a manner he reasonably believes to be in the best
14 interests of the corporation and with such care, including
15 reasonable inquiry, skill and diligence, as a person of ordinary
16 prudence would use under similar circumstances. In performing
17 his duties, a director shall be entitled to rely in good faith
18 on information, opinions, reports or statements, including
19 financial statements and other financial data, in each case
20 prepared or presented by any of the following:
21 (1) One or more officers or employees of the corporation
22 whom the director reasonably believes to be reliable and
23 competent in the matters presented.
24 (2) Counsel, public accountants or other persons as to
25 matters which the director reasonably believes to be within
26 the professional or expert competence of such person.
27 (3) A committee of the board upon which he does not
28 serve, duly designated in accordance with law, as to matters
29 within its designated authority, which committee the director
30 reasonably believes to merit confidence.
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1 (b) Effect of actual knowledge.--A director shall not be
2 considered to be acting in good faith if he has knowledge
3 concerning the matter in question that would cause his reliance
4 to be unwarranted.
5 (c) Officers.--Except as otherwise provided in the bylaws,
6 an officer shall perform his duties as an officer in good faith,
7 in a manner he reasonably believes to be in the best interests
8 of the corporation and with such care, including reasonable
9 inquiry, skill and diligence, as a person of ordinary prudence
10 would use under similar circumstances. A person who so performs
11 his duties shall not be liable by reason of having been an
12 officer of the corporation.
13 § 5713. Personal liability of directors.
14 (a) General rule.--If a bylaw adopted by the members of a
15 nonprofit corporation so provides, a director shall not be
16 personally liable, as such, for monetary damages for any action
17 taken unless:
18 (1) the director has breached or failed to perform the
19 duties of his office under this subchapter; and
20 (2) the breach or failure to perform constitutes self-
21 dealing, willful misconduct or recklessness.
22 (b) Exception.--Subsection (a) shall not apply to:
23 (1) the responsibility or liability of a director
24 pursuant to any criminal statute; or
25 (2) the liability of a director for the payment of taxes
26 pursuant to Federal, State or local law.
27 (c) Cross reference.--See 42 Pa.C.S. § 8332.5 (relating to
28 corporate representatives).
29 § 5714. Notation of dissent.
30 A director of a nonprofit corporation who is present at a
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1 meeting of its board of directors, or of a committee of the
2 board, at which action on any corporate matter is taken on which
3 the director is generally competent to act, shall be presumed to
4 have assented to the action taken unless his dissent is entered
5 in the minutes of the meeting or unless he files his written
6 dissent to the action with the secretary of the meeting before
7 the adjournment thereof or transmits the dissent in writing to
8 the secretary of the corporation immediately after the
9 adjournment of the meeting. The right to dissent shall not apply
10 to a director who voted in favor of the action. Nothing in this
11 subchapter shall bar a director from asserting that minutes of
12 the meeting incorrectly omitted his dissent if, promptly upon
13 receipt of a copy of such minutes, he notifies the secretary, in
14 writing, of the asserted omission or inaccuracy.
15 § 5715. Exercise of powers generally.
16 (a) General rule.--In discharging the duties of their
17 respective positions, the board of directors, committees of the
18 board and individual directors of a nonprofit corporation may,
19 in considering the best interests of the corporation, consider
20 to the extent they deem appropriate:
21 (1) The effects of any action upon any or all groups
22 affected by such action, including members, employees,
23 suppliers, customers and creditors of the corporation, and
24 upon communities in which offices or other establishments of
25 the corporation are located.
26 (2) The short-term and long-term interests of the
27 corporation, including benefits that may accrue to the
28 corporation from its long-term plans and the possibility that
29 these interests may be best served by the continued
30 independence of the corporation.
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1 (3) The resources, intent and conduct (past, stated and
2 potential) of any person seeking to acquire control of the
3 corporation.
4 (4) All other pertinent factors.
5 (b) Consideration of interests and factors.--The board of
6 directors, committees of the board and individual directors
7 shall not be required, in considering the best interests of the
8 corporation or the effects of any action, to regard any
9 corporate interest or the interests of any particular group
10 affected by such action as a dominant or controlling interest or
11 factor. The consideration of interests and factors in the manner
12 described in this subsection and in subsection (a) shall not
13 constitute a violation of section 5712 (relating to standard of
14 care and justifiable reliance).
15 (c) Specific applications.--In exercising the powers vested
16 in the corporation, including, without limitation, those powers
17 pursuant to section 5502 (relating to general powers), and in no
18 way limiting the discretion of the board of directors,
19 committees of the board and individual directors pursuant to
20 subsections (a) and (b), the fiduciary duty of directors shall
21 not be deemed to require them to act as the board of directors,
22 a committee of the board or an individual director solely
23 because of the effect such action might have on an acquisition
24 or potential or proposed acquisition of control of the
25 corporation or the consideration that might be offered or paid
26 to members in such an acquisition.
27 (d) Presumption.--Absent breach of fiduciary duty, lack of
28 good faith or self-dealing, any act as the board of directors, a
29 committee of the board or an individual director shall be
30 presumed to be in the best interests of the corporation. In
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1 assessing whether the standard set forth in section 5712 has
2 been satisfied, there shall not be any greater obligation to
3 justify, or higher burden of proof with respect to, any act as
4 the board of directors, any committee of the board or any
5 individual director relating to or affecting an acquisition or
6 potential or proposed acquisition of control of the corporation
7 than is applied to any other act as a board of directors, any
8 committee of the board or any individual director.
9 Notwithstanding the preceding provisions of this subsection, any
10 act as the board of directors, a committee of the board or an
11 individual director relating to or affecting an acquisition or
12 potential or proposed acquisition of control to which a majority
13 of the disinterested directors shall have assented shall be
14 presumed to satisfy the standard set forth in section 5712,
15 unless it is proven by clear and convincing evidence that the
16 disinterested directors did not assent to such act in good faith
17 after reasonable investigation.
18 (e) Definition.--The term "disinterested director" as used
19 in subsection (d) and for no other purpose means:
20 (1) A director of the corporation other than:
21 (i) A director who has a direct or indirect
22 financial or other interest in the person acquiring or
23 seeking to acquire control of the corporation or who is
24 an affiliate or associate, as defined in section 2552
25 (relating to definitions), of, or was nominated or
26 designated as a director by, a person acquiring or
27 seeking to acquire control of the corporation.
28 (ii) Depending on the specific facts surrounding the
29 director and the act under consideration, an officer or
30 employee or former officer or employee of the
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1 corporation.
2 (2) A person shall not be deemed to be other than a
3 disinterested director solely by reason of any or all of the
4 following:
5 (i) The ownership by the director of a membership in
6 or shares of the corporation.
7 (ii) The receipt as a member of or holder of shares
8 of any class of any distribution made to all members of
9 or holders of shares of that class.
10 (iii) The receipt by the director of director's fees
11 or other consideration as a director.
12 (iv) Any interest the director may have in retaining
13 the status or position of director.
14 (v) The former business or employment relationship
15 of the director with the corporation.
16 (vi) Receiving or having the right to receive
17 retirement or deferred compensation from the corporation
18 due to service as a director, officer or employee.
19 (f) Cross reference.--See section 5711 (relating to
20 alternative provisions).
21 § 5716. Alternative standard.
22 (a) General rule.--In discharging the duties of their
23 respective positions, the board of directors, committees of the
24 board and individual directors of a nonprofit corporation may,
25 in considering the best interests of the corporation, consider
26 the effects of any action upon employees, upon suppliers and
27 customers of the corporation and upon communities in which
28 offices or other establishments of the corporation are located,
29 and all other pertinent factors. The consideration of those
30 factors shall not constitute a violation of section 5712
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1 (relating to standard of care and justifiable reliance).
2 (b) Presumption.--Absent breach of fiduciary duty, lack of
3 good faith or self-dealing, actions taken as a director shall be
4 presumed to be in the best interests of the corporation.
5 (c) Cross reference.--See section 5711 (relating to
6 alternative provisions).
7 § 5717. Limitation on standing.
8 The duty of the board of directors, committees of the board
9 and individual directors under section 5712 (relating to
10 standard of care and justifiable reliance) is solely to the
11 nonprofit corporation and may be enforced directly by the
12 corporation or may be enforced by a member, as such, by an
13 action in the right of the corporation, and may not be enforced
14 directly by a member or by any other person or group.
15 Notwithstanding the preceding sentence, sections 5715(a) and (b)
16 (relating to exercise of powers generally) and 5716(a) (relating
17 to alternative standard) do not impose upon the board of
18 directors, committees of the board and individual directors, any
19 legal or equitable duties, obligations or liabilities or create
20 any right or cause of action against, or basis for standing to
21 sue, the board of directors, committees of the board and
22 individual directors.
23 SUBCHAPTER [B] C
24 DIRECTORS, OFFICERS AND MEMBERS OF
25 AN OTHER BODY
26 § 5721. Board of directors.
27 Unless otherwise provided by statute or in a bylaw adopted by
28 the members, all powers enumerated in section 5502 (relating to
29 general powers) and elsewhere in this subpart or otherwise
30 vested by law in a nonprofit corporation shall be exercised by
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1 or under the authority of, and the business and affairs of every
2 nonprofit corporation shall be managed under the direction of, a
3 board of directors. If any such provision is made in the bylaws,
4 the powers and duties conferred or imposed upon the board of
5 directors by this subpart shall be exercised or performed to
6 such extent and by such other body as shall be provided in the
7 bylaws.
8 § 5732. Officers.
9 (a) General rule.--Every nonprofit corporation shall have a
10 president, a secretary, and a treasurer, or persons who shall
11 act as such, regardless of the name or title by which they may
12 be designated, elected or appointed and may have such other
13 officers and assistant officers as it [shall] may authorize from
14 time to time. The bylaws may prescribe special qualifications
15 for [such] the officers. The president and secretary shall be
16 natural persons of full age. The treasurer may be a corporation,
17 but if a natural person shall be of full age. [Such officers and
18 assistant officers shall be elected or appointed at such time,
19 in such manner, and for such terms, as the bylaws shall
20 prescribe.] Unless otherwise restricted in the bylaws, it shall
21 not be necessary for the officers to be directors [and any]. Any
22 number of offices may be held by the same person. [Unless
23 otherwise provided in the bylaws, the board of directors shall
24 elect and fix the compensation of the officers and assistant
25 officers.] The officers and assistant officers shall be elected
26 or appointed at such time, in such manner and for such terms as
27 may be fixed by or pursuant to the bylaws. Unless otherwise
28 provided by or pursuant to the bylaws, each officer shall hold
29 office for a term of one year and until his successor has been
30 selected and qualified or until his earlier death, resignation
19900S1761B2510 - 205 -
1 or removal. Any officer may resign at any time upon written
2 notice to the corporation. The resignation shall be effective
3 upon receipt thereof by the corporation or at such subsequent
4 time as may be specified in the notice of resignation. The
5 [board of directors or other body] corporation may secure the
6 fidelity of any or all of [such] the officers by bond or
7 otherwise. Unless otherwise provided in the bylaws, the board of
8 directors shall have power to fill any vacancies in any office
9 occurring from whatever reason.
10 (b) Authority.--Unless otherwise provided in the bylaws, all
11 officers of the corporation, as between themselves and the
12 corporation, shall [respectively] have such authority and
13 perform such duties in the management of the [property and
14 affairs of the] corporation as may be provided [in] by or
15 pursuant to the bylaws[,] or, in the absence of controlling
16 provisions in the bylaws, as may be determined by or pursuant to
17 resolutions or orders of the board of directors or other body.
18 (c) Nomination of officers.--Unless the bylaws provide
19 otherwise, officers shall be nominated by a nominating committee
20 or from the floor.
21 (d) Cross reference.--See section 5110 (relating to annual
22 report.
23 § 5734. Other body.
24 The [limitations, safeguards and procedures] provisions of
25 this subchapter, of Subchapters B (relating to fiduciary duty)
26 and D (relating to indemnification) and of other provisions of
27 law applicable to the board of directors and to directors
28 individually shall be applicable also to any "other body" as
29 defined in section 5103 (relating to definitions) and to the
30 members of an other body individually.
19900S1761B2510 - 206 -
1 SUBCHAPTER [C] D
2 INDEMNIFICATION
3 § 5741. Third-party actions.
4 Unless otherwise restricted in its bylaws, a nonprofit
5 corporation shall have power to indemnify any person who was or
6 is a party or is threatened to be made a party to any
7 threatened, pending or completed action[, suit] or proceeding,
8 whether civil, criminal, administrative or investigative (other
9 than an action by or in the right of the corporation), by reason
10 of the fact that he is or was a representative of the
11 corporation, or is or was serving at the request of the
12 corporation as a representative of another domestic or foreign
13 corporation for profit or not-for-profit, partnership, joint
14 venture, trust or other enterprise, against expenses (including
15 attorneys' fees), judgments, fines and amounts paid in
16 settlement actually and reasonably incurred by him in connection
17 with [such] the action[, suit] or proceeding if he acted in good
18 faith and in a manner he reasonably believed to be in, or not
19 opposed to, the best interests of the corporation[,] and, with
20 respect to any criminal [action or] proceeding, had no
21 reasonable cause to believe his conduct was unlawful. The
22 termination of any action[, suit] or proceeding by judgment,
23 order, settlement[,] or conviction[,] or upon a plea of nolo
24 contendere or its equivalent[,] shall not of itself create a
25 presumption that the person did not act in good faith and in a
26 manner [which] that he reasonably believed to be in, or not
27 opposed to, the best interests of the corporation[,] and, with
28 respect to any criminal [action or] proceeding, had reasonable
29 cause to believe that his conduct was unlawful.
30 § 5742. Derivative actions.
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1 Unless otherwise restricted in its bylaws, a nonprofit
2 corporation shall have power to indemnify any person who was or
3 is a party, or is threatened to be made a party, to any
4 threatened, pending or completed action [or suit] by or in the
5 right of the corporation to procure a judgment in its favor by
6 reason of the fact that he is or was a representative of the
7 corporation[,] or is or was serving at the request of the
8 corporation as a representative of another domestic or foreign
9 corporation for profit or not-for-profit, partnership, joint
10 venture, trust or other enterprise, against expenses (including
11 attorneys' fees) actually and reasonably incurred by him in
12 connection with the defense or settlement of [such] the action
13 [or suit] if he acted in good faith and in a manner he
14 reasonably believed to be in, or not opposed to, the best
15 interests of the corporation [and except that no
16 indemnification]. Indemnification shall not be made under this
17 section in respect of any claim, issue or matter as to which
18 [such] the person [shall have] has been adjudged to be liable
19 [for negligence or misconduct in the performance of his duty] to
20 the corporation unless and only to the extent that the court of
21 common pleas of the judicial district embracing the county in
22 which the registered office of the corporation is located or the
23 court in which [such] the action [or suit] was brought [shall
24 determine] determines upon application that, despite the
25 adjudication of liability but in view of all the circumstances
26 of the case, such person is fairly and reasonably entitled to
27 indemnity for such expenses [which] that the court of common
28 pleas or [such] other court shall deem proper.
29 § 5743. Mandatory indemnification.
30 [Notwithstanding any contrary provision of its articles or
19900S1761B2510 - 208 -
1 bylaws, to] To the extent that a representative of a nonprofit
2 corporation has been successful on the merits or otherwise in
3 defense of any action[, suit] or proceeding referred to in
4 section 5741 (relating to third-party actions) or [section] 5742
5 (relating to derivative actions) or in defense of any claim,
6 issue or matter therein, he shall be indemnified against
7 expenses (including attorneys' fees) actually and reasonably
8 incurred by him in connection therewith.
9 § 5744. Procedure for effecting indemnification.
10 Unless ordered by a court, any indemnification under section
11 5741 (relating to third-party actions) or [section] 5742
12 (relating to derivative actions) shall be made by the nonprofit
13 corporation only as authorized in the specific case upon a
14 determination that indemnification of the representative is
15 proper in the circumstances because he has met the applicable
16 standard of conduct set forth in [such section. Such] those
17 sections. The determination shall be made:
18 (1) by the board of directors by a majority vote of a
19 quorum consisting of directors who were not parties to [such
20 action, suit] the action or proceeding;
21 (2) if such a quorum is not obtainable[,] or[, even] if
22 obtainable and a majority vote of a quorum of disinterested
23 directors so directs, by independent legal counsel in a
24 written opinion;
25 (3) by such other body as may be provided in the bylaws;
26 or
27 (4) by the members.
28 § 5745. [(Reserved)] Advancing expenses.
29 Expenses (including attorneys' fees) incurred in defending
30 any action or proceeding referred to in this subchapter may be
19900S1761B2510 - 209 -
1 paid by a nonprofit corporation in advance of the final
2 disposition of the action or proceeding upon receipt of an
3 undertaking by or on behalf of the representative to repay the
4 amount if it is ultimately determined that he is not entitled to
5 be indemnified by the corporation as authorized in this
6 subchapter or otherwise.
7 § 5746. [Scope of subchapter] Supplementary coverage.
8 (a) General rule.--The indemnification and advancement of
9 expenses provided by, or granted pursuant to, the other sections
10 of this subchapter shall not be deemed exclusive of any other
11 rights to which a person seeking indemnification or advancement
12 of expenses may be entitled under any bylaw, agreement, vote of
13 members or disinterested directors or otherwise, both as to
14 action in his official capacity and as to action in another
15 capacity while holding [such] that office[, and shall continue
16 as to a person who has ceased to be a representative and shall
17 inure to the benefit of the heirs and personal representative of
18 such a person]. Section 5728 (relating to interested members,
19 directors or officers; quorum) shall be applicable to any bylaw,
20 contract or transaction authorized by the directors under this
21 section. A corporation may create a fund of any nature, which
22 may, but need not be, under the control of a trustee, or
23 otherwise secure or insure in any manner its indemnification
24 obligations, whether arising under or pursuant to this section
25 or otherwise.
26 (b) When indemnification is not to be made.--Indemnification
27 pursuant to subsection (a) shall not be made in any case where
28 the act or failure to act giving rise to the claim for
29 indemnification is determined by a court to have constituted
30 willful misconduct or recklessness.
19900S1761B2510 - 210 -
1 (c) Grounds.--Indemnification pursuant to subsection (a)
2 under any bylaw, agreement, vote of members or directors or
3 otherwise may be granted for any action taken or any failure to
4 take any action and may be made whether or not the corporation
5 would have the power to indemnify the person under any other
6 provision of law except as provided in this section and whether
7 or not the indemnified liability arises or arose from any
8 threatened, pending or completed action by or in the right of
9 the corporation. Such indemnification is declared to be
10 consistent with the public policy of this Commonwealth.
11 [(b)] (d) Trust property.--This subchapter shall not affect
12 the liability of a representative with respect to the
13 administration of assets held by the corporation pursuant to
14 section 5547 (relating to authority to take and hold trust
15 property).
16 § 5747. Power to purchase insurance.
17 Unless otherwise restricted in its bylaws, a nonprofit
18 corporation shall have power to purchase and maintain insurance
19 on behalf of any person who is or was a representative of the
20 corporation[,] or is or was serving at the request of the
21 corporation as a representative of another domestic or foreign
22 corporation for profit or not-for-profit, partnership, joint
23 venture, trust or other enterprise against any liability
24 asserted against him and incurred by him in any such capacity,
25 or arising out of his status as such, whether or not the
26 corporation would have the power to indemnify him against [such]
27 that liability under the provisions of this subchapter. Such
28 insurance is declared to be consistent with the public policy of
29 this Commonwealth.
30 § 5748. Application to surviving or new corporations.
19900S1761B2510 - 211 -
1 For the purposes of this subchapter, references to "the
2 corporation" include all constituent corporations absorbed in a
3 consolidation, merger or division, as well as the surviving or
4 new corporations surviving or resulting therefrom, so that any
5 person who is or was a representative of [such a] the
6 constituent, surviving or new corporation, or is or was serving
7 at the request of [such] the constituent, surviving or new
8 corporation as a representative of another domestic or foreign
9 corporation for profit or not-for-profit, partnership, joint
10 venture, trust or other enterprise, shall stand in the same
11 position under the provisions of this subchapter with respect to
12 the surviving or new corporation as he would if he had served
13 the surviving or new corporation in the same capacity.
14 § 5749. Application to employee benefit plans.
15 For the purposes of this subchapter:
16 (1) References to "other enterprises" shall include
17 employee benefit plans and references to "serving at the
18 request of the corporation" shall include any service as a
19 representative of the nonprofit corporation that imposes
20 duties on, or involves services by, the representative with
21 respect to an employee benefit plan, its participants or
22 beneficiaries.
23 (2) Excise taxes assessed on a person with respect to
24 any employee benefit plan pursuant to applicable law shall be
25 deemed "fines."
26 (3) Action with respect to an employee benefit plan
27 taken or omitted in good faith by a representative of the
28 corporation in a manner he reasonably believed to be in the
29 interest of the participants and beneficiaries of the plan
30 shall be deemed to be action in a manner that is not opposed
19900S1761B2510 - 212 -
1 to the best interests of the corporation.
2 § 5750. Duration and extent of coverage.
3 The indemnification and advancement of expenses provided by,
4 or granted pursuant to, this subchapter shall, unless otherwise
5 provided when authorized or ratified, continue as to a person
6 who has ceased to be a representative of the corporation and
7 shall inure to the benefit of the heirs and personal
8 representative of that person.
9 SUBCHAPTER [D] E
10 MEMBERS
11 § 5758. Voting rights of members.
12 * * *
13 (b) Procedures.--The manner of voting on any matter,
14 including changes in the articles or bylaws, may be by ballot,
15 mail, or any reasonable means provided in a bylaw adopted by the
16 members. If a bylaw adopted by the members provides a fair and
17 reasonable procedure for the nomination of candidates for any
18 office, only candidates who have been duly nominated in
19 accordance therewith shall be eligible for election. [The manner
20 of voting may be by ballot, mail, or any reasonable means
21 provided in a bylaw adopted by the members.] Unless otherwise
22 provided in such a bylaw, in elections for directors, voting
23 shall be by ballot, and the candidates receiving the highest
24 number of votes from each class or group [or] of classes, if
25 any, of members entitled to elect directors separately up to the
26 number of directors to be elected by such class or group of
27 classes shall be elected. If at any meeting of members,
28 directors of more than one class are to be elected, each class
29 of directors shall be elected in a separate election.
30 * * *
19900S1761B2510 - 213 -
1 SUBCHAPTER [E] F
2 DERIVATIVE ACTIONS
3 (Reserved)
4 SUBCHAPTER [F] G
5 JUDICIAL SUPERVISION OF CORPORATE ACTION
6 SUBCHAPTER A
7 PRELIMINARY PROVISIONS
8 [(Reserved)]
9 Sec.
10 5901. Omission of certain provisions from filed plans.
11 5902. Statement of termination.
12 5903. Bankruptcy or insolvency proceedings.
13 5904. (Reserved).
14 5905. Proposal of fundamental transactions.
15 § 5901. Omission of certain provisions from filed plans.
16 (a) General rule.--A plan as filed in the Department of
17 State under any provision of this chapter may omit all
18 provisions of the plan except provisions, if any:
19 (1) that are intended to amend or constitute the
20 operative provisions of the articles of a corporation as in
21 effect subsequent to the effective date of the plan; or
22 (2) that allocate or specify the respective assets and
23 liabilities of the resulting corporations, in the case of a
24 plan of division.
25 (b) Availability of full plan.--If any of the provisions of
26 a plan are omitted from the plan as filed in the department, the
27 articles of amendment, merger, consolidation, division or
28 conversion shall state that the full text of the plan is on file
29 at the principal place of business of the surviving or new or a
30 resulting corporation and shall state the address thereof. A
19900S1761B2510 - 214 -
1 corporation that takes advantage of this section shall furnish a
2 copy of the full text of the plan, on request and without cost,
3 to any member of any corporation that was a party to the plan
4 and on request and at cost to any other person.
5 § 5902. Statement of termination.
6 (a) General rule.--If articles of amendment or articles of
7 merger, consolidation, division or conversion of a nonprofit
8 corporation or to which it is a party have been filed in the
9 Department of State prior to the termination of the amendment or
10 plan pursuant to provisions therefor set forth in the resolution
11 or petition relating to the amendment or in the plan, the
12 termination shall not be effective unless the corporation shall,
13 prior to the time the amendment or plan is to become effective,
14 file in the department a statement of termination. The statement
15 of termination shall be executed by the corporation that filed
16 the amendment or by each corporation that is a party to the
17 plan, unless the plan permits termination by less than all of
18 the corporations, in which case the statement shall be executed
19 on behalf of the corporation or corporations exercising the
20 right to terminate, and shall set forth:
21 (1) A copy of the articles of amendment or articles of
22 merger, consolidation, division or conversion relating to the
23 amendment or plan that is terminated.
24 (2) A statement that the amendment or plan has been
25 terminated in accordance with the provisions therefor set
26 forth therein.
27 (b) Cross references.--See sections 134 (relating to
28 docketing statement) and 138 (relating to statement of
29 correction).
30 § 5903. Bankruptcy or insolvency proceedings.
19900S1761B2510 - 215 -
1 (a) General rule.--Whenever a nonprofit corporation is
2 insolvent or in financial difficulty, the board of directors
3 may, by resolution and without the consent of the members,
4 authorize and designate the officers of the corporation to
5 execute a deed of assignment for the benefit of creditors, or
6 file a voluntary petition in bankruptcy, or file an answer
7 consenting to the appointment of a receiver upon a complaint in
8 the nature of an equity action filed by creditors or members,
9 or, if insolvent, file an answer to an involuntary petition in
10 bankruptcy admitting the insolvency of the corporation and its
11 willingness to be adjudged a debtor on that ground.
12 (b) Bankruptcy proceedings.--A nonprofit corporation may
13 participate in proceedings under and in the manner provided by
14 Title 11 of the United States Code (relating to bankruptcy)
15 notwithstanding any contrary provision of its articles or bylaws
16 or this subpart, other than section 103 (relating to
17 subordination of title to regulatory laws). The corporation
18 shall have full power and authority to put into effect and carry
19 out a plan of reorganization or arrangement and the decrees and
20 orders of the court, or judge or referee relative thereto, and
21 may take any proceeding and do any act provided in the plan or
22 arrangement or directed by such decrees and orders, without
23 further action by its directors or members. Such power and
24 authority may be exercised, and such proceedings and acts may be
25 taken, as may be directed by such decrees or orders, by the
26 trustees or receivers of the corporation appointed in the
27 bankruptcy proceedings, or a majority thereof, or if none be
28 appointed and acting, by designated officers of the corporation,
29 or by a master or other representative appointed by the court or
30 judge or referee, with the effect as if exercised and taken by
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1 unanimous action of the directors and members of the
2 corporation. Without limiting the generality or effect of the
3 foregoing, the corporation may:
4 (1) alter, amend or repeal its bylaws;
5 (2) constitute or reconstitute and classify or
6 reclassify its board of directors and name, constitute or
7 appoint directors and officers in place of or in addition to
8 all or some of the directors or officers then in office;
9 (3) amend its articles of incorporation, including
10 without limitation for the purpose of altering, amending or
11 repealing any provision of the articles or bylaws
12 notwithstanding any provision therein that the articles or
13 bylaws may be altered, amended or repealed only under certain
14 conditions or only upon receiving the approval of a specified
15 number or percentage of votes of members or of a class of
16 members;
17 (4) be dissolved, transfer all or part of its assets,
18 merge, consolidate, divide or convert to a business
19 corporation, as permitted by this chapter;
20 (5) authorize and fix the terms, manner and conditions
21 of the issuance of obligations; or
22 (6) lease its property and franchises to any person.
23 (c) Cross reference.--See the definition of "officer" in
24 section 5103 (relating to definitions).
25 § 5904. (Reserved).
26 § 5905. Proposal of fundamental transactions.
27 Where any provision of this chapter requires that an
28 amendment of the articles, a plan or the dissolution of a
29 nonprofit corporation be proposed or approved by action of the
30 board of directors, that requirement shall be construed to
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1 authorize and be satisfied by the written agreement or consent
2 of all of the members of the corporation ENTITLED TO VOTE <--
3 THEREON.
4 § 5915. Articles of amendment.
5 Upon the adoption of an amendment by [the] a nonprofit
6 corporation, as provided in this subchapter, articles of
7 amendment shall be executed [under the seal of] by the
8 corporation [by two duly authorized officers thereof,] and shall
9 set forth:
10 (1) The name of the corporation and, subject to section
11 109 (relating to name of commercial registered office
12 provider in lieu of registered address), the address,
13 including street and number, if any, of its registered
14 office.
15 (2) The statute under which the corporation was
16 incorporated and the date of incorporation.
17 (3) If the amendment is to be effective on a specified
18 date, the hour, if any, and the month, day and year of [such]
19 the effective date.
20 (4) The manner in which the amendment was adopted by the
21 corporation.
22 (5) The amendment adopted by the corporation, which
23 shall be set forth in full.
24 (6) If the amendment effects a restatement of the
25 articles, a statement that the restated articles supersede
26 the original articles and all amendments thereto.
27 § 5916. Filing and effectiveness of articles of amendment.
28 (a) Filing.--The articles of amendment of a nonprofit
29 corporation shall be filed in the Department of State. See
30 section 134 (relating to docketing statement).
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1 (b) Effectiveness.--Upon the filing of the articles of
2 amendment in the department[,] or upon the effective date
3 specified in the articles of amendment, whichever is later, the
4 amendment shall become effective and the articles of
5 incorporation shall be deemed to be amended accordingly. [No] An
6 amendment shall not affect any existing cause of action in favor
7 of or against the corporation, or any pending action or
8 proceeding to which the corporation [shall be] is a party, or
9 the existing rights of persons other than members or, except as
10 otherwise provided by order, if any, obtained pursuant to
11 section 5547(b) (relating to nondiversion of certain property)
12 divert any property subject to such section from the purpose or
13 purposes to which it was committed. [In the event] If the
14 corporate name [shall be] is changed by the amendment, [no] an
15 action brought by or against the corporation under its former
16 name shall not be abated for that reason.
17 [(c) Advertisement.--The corporation shall officially
18 publish notice of its intention to file or the filing of
19 articles of amendment. The notice may appear prior to or after
20 the day upon which the articles of amendment are filed in the
21 department, and shall set forth briefly:
22 (1) The name of the corporation, and the address,
23 including street and number, if any, of its registered
24 office.
25 (2) A statement that the articles of amendment are to be
26 or were filed under the provisions of this subpart.
27 (3) The nature and character of the amendment.
28 (4) The date when the articles of amendment will be or
29 were filed in the Department of State.]
30 § 5926. Articles of merger or consolidation.
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1 Upon the adoption of the plan of merger or consolidation by
2 the corporations desiring to merge or consolidate, as provided
3 in this subchapter, articles of merger or articles of
4 consolidation, as the case may be, shall be executed [under the
5 seal of] by each corporation [by two duly authorized officers of
6 each corporation,] and shall, subject to section 109 (relating
7 to name of commercial registered office provider in lieu of
8 registered address), set forth:
9 (1) The name and the location of the registered office,
10 including street and number, if any, of the domestic
11 surviving or new corporation[,] or, in the case of a foreign
12 surviving or new corporation, the name of [such] the
13 corporation and its [domiciliary] jurisdiction of
14 incorporation, together with either:
15 (i) if a qualified foreign nonprofit corporation,
16 the address, including street and number, if any, of its
17 registered office in this Commonwealth; or
18 (ii) if a nonqualified foreign nonprofit
19 corporation, the address, including street and number, if
20 any, of its principal office under the laws of [such
21 domiciliary] the jurisdiction in which it is
22 incorporated.
23 (2) The name and [the] address, including street and
24 number, if any, of the registered office of each other
25 domestic nonprofit corporation and qualified foreign
26 nonprofit corporation [which] that is a party to the plan.
27 (3) If the plan is to be effective on a specified date,
28 the hour, if any, and the month, day and year of [such] the
29 effective date.
30 (4) The manner in which the plan was adopted by each
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1 domestic corporation[,] and, if one or more foreign
2 corporations are parties to the plan, the fact that the plan
3 was authorized, adopted or approved, as the case may be, by
4 each of the foreign corporations in accordance with the laws
5 of the jurisdiction in which it is incorporated.
6 (5) [The] Except as provided in section 5901 (relating
7 to omission of certain provisions from filed plans), the plan
8 of merger or consolidation.
9 § 5954. Articles of division.
10 Upon the adoption of a plan of division by the corporation
11 desiring to divide, as provided in this subchapter, articles of
12 division shall be executed [under the seal of] by the
13 corporation [by two duly authorized officers thereof,] and
14 shall, subject to section 109 (relating to name of commercial
15 registered office provider in lieu of registered address), set
16 forth:
17 (1) The name and the location of the registered office,
18 including street and number, if any, of the dividing domestic
19 nonprofit corporation[,] or, in the case of a dividing
20 foreign nonprofit corporation, the name of [such] the
21 corporation and [its domiciliary] the jurisdiction in which
22 it is incorporated, together with either:
23 (i) [if] If a qualified foreign nonprofit
24 corporation, the address, including street and number, if
25 any, of its registered office in this Commonwealth[; or].
26 (ii) [if] If a nonqualified foreign nonprofit
27 corporation, the address, including street and number, if
28 any, of its principal office under the laws of [such
29 domiciliary] that jurisdiction.
30 (2) The statute under which the dividing corporation was
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1 incorporated and the date of incorporation.
2 (3) A statement that the dividing corporation will, or
3 will not, survive the division.
4 (4) The name and the address, including street and
5 number, if any, of the registered office of each new domestic
6 nonprofit corporation or qualified foreign nonprofit
7 corporation resulting from the division.
8 (5) If the plan is to be effective on a specified date,
9 the hour, if any, and the month, day and year of [such] the
10 effective date.
11 (6) The manner in which the plan was adopted by the
12 corporation.
13 (7) [The] Except as provided in section 5901 (relating
14 to omission of certain provisions from filed plans), the plan
15 of division.
16 § 5963. Articles of conversion.
17 Upon the adoption of a plan of conversion by the nonprofit
18 corporation desiring to convert, as provided in this subchapter,
19 articles of conversion shall be executed [under the seal of] by
20 the corporation [by two duly authorized officers thereof,] and
21 shall set forth:
22 (1) The name of the corporation and, subject to section
23 109 (relating to name of commercial registered office
24 provider in lieu of registered address), the address,
25 including street and number, if any, of its registered
26 office.
27 (2) The statute under which the corporation was
28 incorporated and the date of incorporation.
29 (3) If the plan is to be effective on a specified date,
30 the hour, if any, and the month, day and year of [such] the
19900S1761B2510 - 222 -
1 effective date.
2 (4) The manner in which the plan was adopted by the
3 corporation.
4 (5) [The] Except as provided in section 5901 (relating
5 to omission of certain provisions from filed plans), the plan
6 of conversion.
7 § 5971. Voluntary dissolution by members or incorporators.
8 (a) General rule.--The members or incorporators of a
9 nonprofit corporation [which] that has not commenced business
10 may effect the dissolution of the corporation by filing articles
11 of dissolution in the Department of State. The articles of
12 dissolution shall be executed [under the seal] in the name of
13 the corporation by a majority of the members or incorporators,
14 and shall set forth:
15 (1) The name of the corporation and, subject to section
16 109 (relating to name of commercial registered office
17 provider in lieu of registered address), the address,
18 including street and number, if any, of its registered
19 office.
20 (2) The statute under which the corporation was
21 incorporated and the date of incorporation.
22 (3) That the corporation has not received any property
23 in trust, or otherwise commenced business.
24 (4) That the amount, if any, actually paid in on
25 subscriptions for memberships, less any part thereof
26 disbursed for necessary expenses, has been returned to those
27 entitled thereto.
28 (5) That [no debts of the corporation remain unpaid] all
29 liabilities of the corporation have been discharged or that
30 adequate provision has been made [therefore] therefor.
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1 (6) That [all] a majority of the members or
2 incorporators elect that the corporation be dissolved.
3 (b) Filing.--The articles of dissolution shall be filed in
4 the Department of State. See section 134 (relating to docketing
5 statement).
6 (c) Effect.--Upon the filing of the articles of dissolution,
7 the existence of the corporation shall cease.
8 § 5972. Proposal of voluntary dissolution.
9 (a) General rule.--Any nonprofit corporation [which] that
10 has commenced business may elect to dissolve voluntarily, and
11 wind up its affairs in the manner provided in this subchapter.
12 Voluntary dissolution shall be proposed by:
13 (1) the adoption by the board of directors or other body
14 of a resolution recommending that the corporation be
15 dissolved voluntarily;
16 (2) petition of members entitled to cast at least 10% of
17 the votes [which] that all members are entitled to cast
18 thereon, setting forth a resolution recommending that the
19 corporation be dissolved voluntarily, which petition shall be
20 directed to the board of directors and filed with the
21 secretary of the corporation; or
22 (3) such other method as may be provided in the bylaws.
23 (b) Submission to members.--The board of directors or other
24 body or the petitioning members shall direct that the question
25 of dissolution be submitted to a vote of the members of [such]
26 the corporation entitled to vote thereon at a regular or special
27 meeting of the members.
28 § 5973. Notice of meeting of members.
29 (a) General rule.--Written notice [shall, not less than ten
30 days before] of the meeting of members called for the purpose of
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1 considering the advisability of voluntarily dissolving the
2 corporation[,] shall be given to each member of record entitled
3 to vote thereon[, and such] and the purpose shall be included in
4 the notice of the meeting.
5 (b) Cross reference.--See Subchapter A of Chapter 57
6 (relating to notice and meetings generally.
7 § 5974. Adoption of proposal.
8 (a) General rule.--The resolution shall be adopted upon
9 receiving the affirmative vote of [the members present entitled
10 to cast at least a majority of the votes which all members
11 present are entitled to cast thereon, and if any class of
12 members is entitled to vote thereon as a class, the affirmative
13 vote of the members present of such class entitled to cast at
14 least a majority of the votes which all members present of such
15 class are entitled to cast thereon] a majority of the votes cast
16 by all members of the nonprofit corporation entitled to vote
17 thereon and, if any class of members is entitled to vote thereon
18 as a class, the affirmative vote of a majority of the votes cast
19 in each class vote.
20 (b) Adoption in absence of voting members.--If the
21 corporation has no members entitled to vote on the question of
22 the advisability of voluntarily dissolving the corporation, the
23 resolution shall be deemed adopted by the corporation when it
24 has been adopted by the board of directors or other body
25 pursuant to section 5972 (relating to proposal of voluntary
26 dissolution).
27 (c) Termination of proposal.--[The resolution or petition
28 may contain a provision that at any time prior to the filing of
29 articles of election to dissolve in the Department of State the
30 proposal may be terminated by the board of directors or other
19900S1761B2510 - 225 -
1 body notwithstanding the adoption of the resolution by the
2 corporation.] Prior to the time when articles of dissolution are
3 filed in the Department of State, the proposal may be terminated
4 pursuant to provisions therefor, if any, set forth in the
5 resolution.
6 (d) Action rescinding election to dissolve.--Prior to the
7 time when articles of dissolution are filed in the department,
8 any nonprofit corporation may rescind its election to dissolve
9 in the same manner and by the same procedure as that provided in
10 this subchapter for the election of a corporation to dissolve
11 voluntarily.
12 § 5975. Winding up in voluntary dissolution proceedings.
13 (a) Powers of board.--The board of directors or other body
14 of a nonprofit corporation shall have full power to wind up and
15 settle the affairs of a nonprofit corporation in the event of a
16 voluntary dissolution proceeding.
17 (b) Notice to creditors and taxing authorities.--After the
18 [filing in the Department of State of articles of election to
19 dissolve, the board of directors or other body] approval by the
20 members or the board of directors or other body pursuant to
21 section 5974(b) (relating to adoption in absence of voting
22 members) that the corporation dissolve voluntarily, the
23 corporation shall immediately cause notice of the winding up
24 proceedings to be officially published and to be mailed by
25 certified or registered mail to each known creditor and claimant
26 and to each [local government] municipal corporation in which
27 its registered office or principal place of business in this
28 Commonwealth is located.
29 (c) Winding up and distribution.--The [board of directors or
30 other body] corporation shall, as speedily as possible, proceed
19900S1761B2510 - 226 -
1 to collect all sums due [to the corporation, to] it, convert
2 into cash all corporate assets the conversion of which into cash
3 is required to discharge its liabilities[, to collect the whole
4 or so much as may be necessary or just of any amounts remaining
5 unpaid on subscriptions for membership,] and, out of the assets
6 of the corporation, [to] discharge or make adequate provision
7 for the discharge of all liabilities of the corporation,
8 according to their respective priorities. Except as otherwise
9 provided in a bylaw adopted by the members or in this [article]
10 subpart or by any other provision of law, any surplus remaining
11 after paying or providing for all liabilities of the corporation
12 shall be distributed [by the board of directors or other body]
13 to the shareholders, if any, pro rata, or if there be no
14 shareholders, among the members per capita.
15 § 5976. Judicial supervision of proceedings.
16 (a) General rule.--[The board of directors or other body] A
17 nonprofit corporation, at any time during the winding up
18 proceedings, may[, by petition,] apply to the court to have the
19 proceedings continued under the supervision of the court[,] and
20 thereafter the proceedings shall continue under the supervision
21 of the court[,] as provided in Subchapter G (relating to
22 involuntary liquidation and dissolution).
23 (b) Distribution of property committed to charitable
24 purposes.--If the assets of the corporation include any property
25 committed to charitable purposes, the board of directors or
26 other body shall apply to the court for an order pursuant to
27 section 5547(b) (relating to nondiversion of certain property)
28 specifying the disposition of the property.
29 (c) Religious assets.--In entering a decree providing for
30 the distribution of the assets of a corporation organized for
19900S1761B2510 - 227 -
1 the support of public worship, the court shall, by its decree,
2 provide for the disposition of the assets of the corporation,
3 either by:
4 (1) vesting title thereto in such other corporation as
5 may, by its articles, be organized for the purpose of holding
6 title to the real estate held for public worship, according
7 to the formularies of the church or religious organization to
8 which the dissolved corporation was in allegiance;
9 (2) authorizing the sale of such assets by a master or
10 trustee appointed for that purpose and the vesting of the
11 proceeds, upon the confirmation of such sale, in such body as
12 may be directed by the court, to be held in trust for
13 carrying out the intent and purpose of public worship; or
14 (3) vesting the title to such assets in any incorporated
15 or unincorporated body designated by the petitioners for the
16 same uses and trusts as the assets were theretofore held by
17 the dissolved corporation.
18 § 5977. Articles of dissolution.
19 (a) Preparation of articles.--When all liabilities of the
20 nonprofit corporation have been discharged, or adequate
21 provision [shall have] has been made therefor, and all of the
22 remaining assets of the corporation [shall] have been
23 distributed as provided in this subchapter, or in case its
24 assets are not sufficient to discharge its liabilities, when all
25 the assets have been fairly and equitably applied, as far as
26 they will go, to the payment of such liabilities, articles of
27 dissolution shall be executed [under the seal of] by the
28 corporation [by two duly authorized officers thereof,] and shall
29 set forth:
30 (1) The name of the corporation and, subject to section
19900S1761B2510 - 228 -
1 109 (relating to name of commercial registered office
2 provider in lieu of registered address), the address,
3 including street and number, if any, of its registered
4 office.
5 (2) [A statement that the corporation has theretofore
6 delivered to the Department of State articles of election to
7 dissolve, and the date on which such articles were filed in
8 the department.] The statute under which the corporation was
9 incorporated and the date of incorporation.
10 (3) The names and respective addresses, including street
11 and number, if any, of its directors and officers.
12 (4) The manner in which the proposal to dissolve
13 voluntarily was adopted by the corporation.
14 [(3)] (5) A statement:
15 (i) that all liabilities of the corporation have
16 been discharged[,] or that adequate provision has been
17 made therefor; or
18 (ii) that the assets of the corporation are not
19 sufficient to discharge its liabilities, and that all the
20 assets of the corporation have been fairly and equitably
21 applied, as far as they will go, to the payment of such
22 liabilities.
23 An election by the corporation to proceed under Subchapter H
24 (relating to postdissolution claims) shall constitute the
25 making of adequate provision for the liabilities of the
26 corporation.
27 [(4)] (6) A statement:
28 (i) that all the remaining assets of the
29 corporation, if any, have been distributed as provided in
30 [this subchapter.] the Nonprofit Corporation Law of 1988;
19900S1761B2510 - 229 -
1 or
2 (ii) that the corporation has elected to proceed
3 under Subchapter H and that any remaining assets of the
4 corporation will be distributed as provided in that
5 subchapter.
6 [(5)] (7) A statement that [there are] no actions or
7 proceedings are pending against the corporation in any court,
8 or that adequate provision has been made for the satisfaction
9 of any judgment or decree [which] that may be obtained
10 against the corporation in each [such] pending action or
11 proceeding.
12 [(6)] (8) A statement that notice of the winding-up
13 proceedings of the corporation was mailed by certified or
14 registered mail to each [local government] known creditor and
15 claimant and to each municipal corporation in which the
16 registered office or principal place of business of the
17 corporation in this Commonwealth is located.
18 (b) Filing.--The articles of dissolution and the
19 certificates or statement required by section 139 (relating to
20 tax clearance of certain fundamental transactions) shall be
21 filed in the Department of State. [At the same time proof of the
22 advertisement required by section 5975(b) (relating to notice to
23 creditors and taxing authorities) shall be delivered to the
24 department.] See section 134 (relating to docketing statement).
25 (c) Effect.--Upon the filing of the articles of dissolution
26 in the department, the existence of the corporation shall cease.
27 § 5978. Winding up of corporation upon the expiration of its
28 period of duration.
29 Every nonprofit corporation [which] that is dissolved by
30 expiration of its period of duration shall, nevertheless,
19900S1761B2510 - 230 -
1 continue to exist for the purpose of winding up its affairs,
2 prosecuting and defending actions or proceedings by or against
3 it, collecting and discharging obligations, disposing of and
4 conveying its property[,] and collecting and dividing its
5 assets, but not for the purpose of continuing business[,] except
6 insofar as necessary for the winding up of the corporation. The
7 board of directors or other body of [such] the corporation shall
8 continue as such[,] and shall have full power to wind up the
9 affairs of the corporation.
10 § 5979. Survival of remedies and rights after dissolution.
11 [(a) Liabilities.--The dissolution of a nonprofit
12 corporation, either under this subchapter or under Subchapter G
13 (relating to involuntary liquidation and dissolution) or by
14 expiration of its period of duration, shall not take away or
15 impair any remedy given against such corporation, its directors
16 or members, for any liability incurred prior to such
17 dissolution, if an action thereon is brought before or within
18 two years after the date of such dissolution. Such actions may
19 be prosecuted against and defended by the corporation in its
20 corporate name.]
21 (a) General rule.--The dissolution of a nonprofit
22 corporation, either under this subchapter or under Subchapter G
23 (relating to involuntary liquidation and dissolution) or by
24 expiration of its period of duration or otherwise, shall not
25 eliminate nor impair any remedy available to or against the
26 corporation or its directors, members of an other body, officers
27 or members for any right or claim existing, or liability
28 incurred, prior to the dissolution, if an action thereon is
29 brought on behalf of:
30 (1) the corporation within the time otherwise limited by
19900S1761B2510 - 231 -
1 law; or
2 (2) any other person before or within two years after
3 the date of the dissolution or within the time otherwise
4 limited by this subpart or other provision of law, whichever
5 is less. See sections 5987 (relating to proofs of claims),
6 5993 (relating to acceptance or rejection of matured claims)
7 and 5994 (relating to disposition of unmatured claims).
8 The actions or proceedings may be prosecuted against and
9 defended by the corporation in its corporate name.
10 (b) Rights and assets.--The dissolution of a nonprofit
11 corporation shall not [take away or impair any property right,
12 tangible or intangible, including any right of action, of such
13 corporation.] affect the limited liability of a member of the
14 corporation theretofore existing with respect to transactions
15 occurring or acts or omissions done or omitted in the name of or
16 by the corporation except that, subject to section 5998
17 (relating to liability of members), if applicable, each member
18 shall be liable for his pro rata portion of the unpaid
19 liabilities of the corporation up to the amount of the net
20 assets of the corporation distributed to the member in
21 connection with the dissolution. Should any [such] property
22 right of a corporation be discovered after the dissolution of
23 the corporation, the surviving member or members of the board of
24 directors or other body [which] that wound up the affairs of the
25 corporation, or a receiver appointed by the court, shall have
26 authority to enforce [such] the property right and to collect
27 and divide the assets so discovered among the persons entitled
28 thereto and to prosecute actions or proceedings in the corporate
29 name of the corporation. Any assets so collected shall be
30 distributed and disposed of in accordance with the applicable
19900S1761B2510 - 232 -
1 [decree] order of court, if any, otherwise in accordance with
2 this subchapter.
3 § 5989. Articles of involuntary dissolution.
4 (a) General rule.--[The court, in] In a proceeding under
5 this subchapter, the court shall enter [a decree] an order
6 dissolving the nonprofit corporation when the order, if any,
7 obtained pursuant to section 5547(b) (relating to nondiversion
8 of certain property) has been entered and when the costs and
9 expenses of [such] the proceeding, and all liabilities of the
10 corporation [shall] have been discharged, and all of its
11 remaining assets have been distributed to the persons entitled
12 thereto, or, in case its assets are not sufficient to discharge
13 such costs, expenses and liabilities, when all the assets have
14 been applied, as far as they will go, to the payment of such
15 costs, expenses and liabilities.
16 (b) Filing.--[After the court shall have entered a decree of
17 dissolution, it shall be the duty of the prothonotary to] After
18 entry of an order of dissolution, the office of the clerk of the
19 court of common pleas shall prepare and execute articles of
20 dissolution substantially in the form provided by section 5977
21 (relating to articles of dissolution), [to] attach thereto a
22 certified copy of the [decree and to] order and transmit the
23 articles and attached [decree] order to the Department of State.
24 [No fee shall be charged by the department] A certificate or
25 statement provided for by section 139 (relating to tax clearance
26 of certain fundamental transactions) shall not be required, and
27 the department shall not charge a fee in connection with the
28 filing of articles of dissolution under this section. See
29 section 134 (relating to docketing statement).
30 (c) Effect.--Upon the filing of the articles of dissolution
19900S1761B2510 - 233 -
1 in the department, the existence of the corporation shall cease.
2 SUBCHAPTER H
3 POSTDISSOLUTION CLAIMS
4 [(Reserved)]
5 Sec.
6 5991. Definition of successor entity.
7 5992. Notice to claimants.
8 5993. Acceptance or rejection of matured claims.
9 5994. Disposition of unmatured claims.
10 5995. Court proceedings.
11 5996. No revival or waiver.
12 5997. Payments and distributions.
13 5998. Liability of members.
14 § 5991. Definition of successor entity.
15 As used in this subchapter, the term "successor entity"
16 includes any trust, receivership or other legal entity governed
17 by the laws of this Commonwealth or any other jurisdiction to
18 which the remaining assets of a dissolved nonprofit corporation
19 are transferred subject to its liabilities and which exists
20 solely for the purposes of prosecuting and defending actions, by
21 or against the corporation, enabling the corporation to settle
22 and close its business, to dispose of and convey the property of
23 the corporation, to discharge the liabilities of the
24 corporation, and to distribute to the members of the corporation
25 any remaining assets, but not for the purpose of continuing the
26 business for which the corporation was incorporated.
27 § 5992. Notice to claimants.
28 (a) General rule.--After a nonprofit corporation has been
29 dissolved in accordance with the procedures set forth in this
30 chapter, the corporation or any successor entity may give notice
19900S1761B2510 - 234 -
1 of the dissolution requesting all persons having a claim against
2 the corporation to present their claims against the corporation
3 in accordance with the notice. The notice shall state:
4 (1) That all claims must be presented in writing and
5 must contain sufficient information reasonably to inform the
6 corporation or successor entity of the identity of the
7 claimant and the substance of the claim.
8 (2) The mailing address to which a claim must be sent.
9 (3) The date by which a claim must be received by the
10 corporation or successor entity, which date shall be not less
11 than 60 days after the date the notice is given.
12 (4) That the corporation or a successor entity may make
13 distribution to other claimants and the members of the
14 corporation or persons interested as having been such without
15 further notice to the claimant.
16 (b) Unmatured claims.--The corporation or successor entity
17 electing to follow the procedures specified in subsection (a)
18 shall also give notice of the dissolution of the corporation to
19 persons with claims contingent upon the occurrence or
20 nonoccurrence of future events or otherwise conditional or
21 unmatured, and shall request that such persons present their
22 claims in accordance with the terms of the notice. The notice
23 shall be in substantially the form specified in subsection (a).
24 (c) Publication and service of notices.--The notices
25 required by this section shall be officially published at least
26 once a week for two consecutive weeks. Concurrently with or
27 preceding the publication, the corporation or successor entity
28 shall mail a copy of the notice by registered or certified mail,
29 return receipt requested, to each known claimant of the
30 corporation.
19900S1761B2510 - 235 -
1 § 5993. Acceptance or rejection of matured claims.
2 A dissolved nonprofit corporation or successor entity may
3 reject, in whole or in part, any matured claim made by a
4 claimant pursuant to section 5992 (relating to notice to
5 claimants) by mailing notice of the rejection by registered or
6 certified mail, return receipt requested, to the claimant within
7 90 days after receipt of the claim and, in all events, at least
8 30 days before the expiration of the two-year period specified
9 in section 5979(a)(2) (relating to survival of remedies and
10 rights after dissolution). A notice sent pursuant to this
11 section shall include or be accompanied by a copy of this
12 subchapter and of section 5979.
13 § 5994. Disposition of unmatured claims.
14 The dissolved nonprofit corporation or successor entity shall
15 offer any claimant whose claim made pursuant to section 5992
16 (relating to notice to claimants) is contingent, conditional or
17 unmatured, such security as the corporation or successor entity
18 determines is sufficient to provide compensation to the claimant
19 if the claim matures. The corporation or successor entity shall
20 mail the offer to the claimant by registered or certified mail,
21 return receipt requested, within 90 days after receipt of the
22 claim and, in all events, at least 30 days before the expiration
23 of the two-year period specified in section 5979(a)(2) (relating
24 to survival of remedies and rights after dissolution). A notice
25 sent pursuant to this section shall include or be accompanied by
26 a copy of this subchapter and of section 5979. If the claimant
27 offered the security does not deliver to the corporation or
28 successor entity a written notice rejecting the offer within 60
29 days after mailing of the offer for security, the claimant shall
30 be deemed to have accepted the security as the sole source from
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1 which to satisfy his claim against the corporation.
2 § 5995. Court proceedings.
3 (a) General rule.--A dissolved nonprofit corporation or
4 successor entity that has given notice in accordance with
5 section 5992 (relating to notice to claimants) shall file an
6 application with the court for a determination of the amount and
7 form of security that will be sufficient to provide compensation
8 to:
9 (1) Claimants whose matured claims are known to the
10 corporation or successor entity but whose identities are
11 unknown.
12 (2) Any claimant who has rejected the offer for security
13 made pursuant to section 5994 (relating to disposition of
14 unmatured claims).
15 (b) Guardian ad litem.--The court shall appoint a guardian
16 ad litem to represent all claimants whose identities are unknown
17 in any proceeding brought under this subchapter. The reasonable
18 fees and expenses of the guardian, including all reasonable
19 expert witness fees, shall be paid by the applicant in the
20 proceeding unless otherwise ordered by the court.
21 § 5996. No revival or waiver.
22 The giving of any notice or making of any offer under this
23 subchapter shall not revive any claim then barred or constitute
24 acknowledgment by the dissolved nonprofit corporation or
25 successor entity that any person to whom the notice is sent is a
26 proper claimant and shall not operate as a waiver of any defense
27 or counterclaim in respect of any claim asserted by any person
28 to whom the notice is sent.
29 § 5997. Payments and distributions.
30 (a) General rule.--A dissolved nonprofit corporation or
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1 successor entity that has elected to proceed under the preceding
2 provisions of this subchapter shall:
3 (1) Pay the claims made and not rejected under section
4 5993 (relating to acceptance or rejection of matured claims).
5 (2) Post the security offered and not rejected under
6 section 5994 (relating to disposition of unmatured claims).
7 (3) Post security ordered by the court in any proceeding
8 under section 5995 (relating to court proceedings).
9 (4) Pay or make provision for all other liabilities of
10 the corporation or the successor entity.
11 (b) Disposition.--The claims and liabilities shall be paid
12 in full and any provision for payment shall be made in full if
13 there are sufficient assets. If there are insufficient assets,
14 the claims and liabilities shall be paid or provided for in
15 order of their priority, and, among claims of equal priority,
16 ratably to the extent of funds legally available therefor. Any
17 remaining assets shall be distributed as provided in the last
18 sentence of section 5975(c) (relating to winding up and
19 distribution), except that the distribution shall not be made
20 less than 60 days after the last notice of rejection, if any,
21 was given under section 5993 (relating to acceptance or
22 rejection of matured claims).
23 (c) Evaluation of other liabilities.--In the absence of
24 actual fraud, the judgment of the board of directors or other
25 body of the dissolved corporation or the governing persons of
26 the successor entity as to the provision made for the payment of
27 all liabilities under subsection (a)(4) shall be conclusive.
28 (d) Disposition in absence of claims procedure.--A dissolved
29 corporation or successor entity that has not followed the
30 procedures in the preceding provisions of this subchapter shall
19900S1761B2510 - 238 -
1 pay or make reasonable provision to pay all claims and
2 liabilities, including all contingent, conditional or unmatured
3 claims known to the corporation or the successor entity and all
4 claims that are known to the corporation or the successor entity
5 but for which the identity of the claimant is unknown. The
6 claims shall be paid in full and any such provision for payment
7 made shall be made in full if there are sufficient assets. If
8 there are insufficient assets, the claims and liabilities shall
9 be paid or provided for according to their priority and, among
10 claims of equal priority, ratably to the extent of funds legally
11 available therefor. Any remaining assets shall be distributed as
12 provided in the last sentence of section 5975(c) (relating to
13 winding up and distribution).
14 (e) Liability of directors.--Directors or members of an
15 other body of a dissolved corporation or governing persons of a
16 successor entity that has complied with this section shall not
17 be personally liable to the claimants of the dissolved
18 corporation.
19 § 5998. Liability of members.
20 (a) General rule.--A member of a dissolved nonprofit
21 corporation, the assets of which were distributed pursuant to
22 section 5997 (relating to payments and distributions), shall not
23 be liable for any claim against the corporation in an amount in
24 excess of the member's pro rata share of the claim or the
25 amount, if any, distributed to the member, whichever is less.
26 (b) Limitation of actions.--A member of a dissolved
27 corporation, the assets of which were distributed pursuant to
28 section 5997(a) through (c), shall not be liable for any claim
29 against the corporation on which an action is not commenced
30 prior to the expiration of the period specified in section
19900S1761B2510 - 239 -
1 5979(a)(2) (relating to survival of remedies and rights after
2 dissolution).
3 (c) Limitation of liability.--The aggregate liability of any
4 member of a dissolved corporation for claims against the
5 dissolved corporation shall not exceed the amount, if any,
6 distributed to the member in dissolution.
7 § 6101. APPLICATION OF ARTICLE. <--
8 (A) GENERAL RULE.--EXCEPT AS OTHERWISE PROVIDED IN THIS
9 SECTION OR IN SUBSEQUENT PROVISIONS OF THIS ARTICLE, THIS
10 ARTICLE SHALL APPLY TO AND THE WORDS "CORPORATION" OR "FOREIGN
11 NONPROFIT CORPORATION" IN THIS ARTICLE SHALL [MEAN A] INCLUDE
12 EVERY FOREIGN CORPORATION NOT-FOR-PROFIT.
13 (B) GOVERNMENT ENTITIES.--THIS ARTICLE SHALL ALSO APPLY TO
14 AND THE WORDS "CORPORATION," "FOREIGN CORPORATION" AND "FOREIGN
15 [CORPORATION NOT-FOR-PROFIT] NONPROFIT CORPORATION" SHALL
16 INCLUDE A GOVERNMENT OR OTHER SOVEREIGN (OTHER THAN THE
17 COMMONWEALTH) AND ANY GOVERNMENTAL CORPORATION, AGENCY OR OTHER
18 ENTITY THEREOF.
19 (C) ADMITTED FOREIGN FRATERNAL BENEFIT SOCIETY EXCLUSION.--
20 THIS ARTICLE SHALL NOT APPLY TO ANY FOREIGN CORPORATION NON-FOR-
21 PROFIT QUALIFIED TO DO BUSINESS IN THIS COMMONWEALTH UNDER
22 SECTION 603 OF THE ACT OF JULY 29, 1977 (P.L.105, NO.38), KNOWN
23 AS THE FRATERNAL BENEFIT SOCIETY CODE.
24 § 6121. Admission of foreign corporations.
25 (a) General rule.--A foreign nonprofit corporation [not-for-
26 profit], before doing business in this Commonwealth, shall
27 procure a certificate of authority to do so from the Department
28 of State, in the manner provided in this subchapter. A foreign
29 nonprofit corporation [not-for-profit] shall not be denied a
30 certificate of authority by reason of the fact that the laws of
19900S1761B2510 - 240 -
1 the jurisdiction governing its incorporation and internal
2 affairs differ from the laws of this Commonwealth.
3 (b) Qualification under former statute.--If a foreign
4 corporation was on March 19, 1966 admitted to do business in
5 this Commonwealth by the filing of a power of attorney and
6 statement under the act of June 8, 1911 (P.L.710, No.283), such
7 power of attorney and statement shall be deemed an approved
8 application for a certificate of authority issued under this
9 subchapter and [such] the corporation shall be deemed a holder
10 of [such a] the certificate. [Such] The corporation shall
11 include in its initial application, if any, for an amended
12 certificate of authority under this subchapter the information
13 required by this subchapter to be set forth in an application
14 for a certificate of authority. A certificate of authority
15 issued under the former provisions of the Nonprofit Corporation
16 Law of 1933, or former 15 Pa.C.S. Pt. III, Art. B, known as the
17 Nonprofit Corporation Law of 1972, as added by the act of
18 November 15, 1972 (P.L.1063, No.271), shall be deemed to be
19 issued under this subchapter and the certificate of authority
20 shall be deemed not to contain any reference to the kind of
21 business that the corporation proposes to do in this
22 Commonwealth.
23 § 6122. Excluded activities.
24 (a) General rule.--Without excluding other activities which
25 may not constitute doing business in this Commonwealth, a
26 foreign nonprofit corporation [not-for-profit] shall not be
27 considered to be doing business in this Commonwealth for the
28 purposes of this subchapter by reason of carrying on in this
29 Commonwealth any one or more of the following acts:
30 (1) Maintaining or defending any action or [any]
19900S1761B2510 - 241 -
1 administrative or arbitration proceeding or effecting the
2 settlement thereof or the settlement of claims or disputes.
3 (2) Holding meetings of its directors, other body or
4 members or carrying on other activities concerning its
5 internal affairs.
6 (3) Maintaining bank accounts.
7 (4) Maintaining offices or agencies for the transfer,
8 exchange and registration of its memberships or securities,
9 or appointing and maintaining trustees or depositories with
10 relation to its memberships or securities.
11 (5) Granting funds.
12 (6) Distributing information to its members.
13 (7) Creating as borrower or lender [evidences of debt],
14 acquiring or incurring, obligations or mortgages[, and rights
15 in real] or other security interests in real or personal
16 property.
17 (8) [Collecting] Securing or collecting debts [and] or
18 enforcing [mortgages and] any rights in property securing
19 [the same] them.
20 (9) Transacting any business in interstate or foreign
21 commerce.
22 (10) Conducting an isolated transaction completed within
23 a period of 30 days and not in the course of a number of
24 repeated transactions of like nature.
25 (11) Inspecting, appraising and acquiring real estate
26 and mortgages and other liens thereon and personal property
27 and security interests therein, and holding, leasing [away],
28 conveying and transferring [the same] them, as fiduciary or
29 otherwise.
30 (b) Exceptions.--The specification of activities in
19900S1761B2510 - 242 -
1 subsection (a) does not establish a standard for activities
2 [which] that may subject a foreign corporation to:
3 (1) [service] Service of process under any statute[;] or
4 general rule.
5 (2) [taxation] Taxation by the Commonwealth or any
6 political subdivision thereof[; or].
7 (3) [the] The provisions of section 6145 (relating to
8 applicability of certain safeguards to foreign corporations).
9 § 6123. [Restriction on admission of foreign corporations]
10 Requirements for foreign corporation names.
11 (a) General rule.--The Department of State shall not issue a
12 certificate of authority to any foreign [corporation not-for-
13 profit:
14 (1) If the application for the certificate of authority
15 required to be filed by this subchapter sets forth any kind
16 of business which a foreign corporation not-for-profit may
17 not lawfully do in this Commonwealth.
18 (2) The name of which is not expressed in English
19 letters or characters.
20 (3) Which, except as provided in subsection (b) of this
21 section, has a name which under section 7313 of this title
22 (relating to corporate name) is not available through consent
23 or otherwise for use by a domestic nonprofit corporation or a
24 domestic cooperative corporation, as the case may be.]
25 nonprofit corporation that, except as provided in subsection
26 (b), has a name that is rendered unavailable for use by a
27 domestic nonprofit corporation by any provision of section
28 5303(a), (b) or (c) (relating to corporate name).
29 [(b) Exception; name.--The provisions of section 5303(b)
30 (relating to duplicate use of names) shall not prevent the
19900S1761B2510 - 243 -
1 issuance of a certificate of authority to a foreign corporation
2 not-for-profit setting forth a name which is similar to the name
3 of any other domestic or foreign corporation for profit or
4 corporation not-for-profit, if:
5 (1) the department finds, upon proof by affidavit or
6 otherwise as it may determine, that:
7 (i) the applicant has engaged in business as a
8 corporation under its proposed name for not less than
9 three consecutive years immediately prior to the date of
10 its application;
11 (ii) the business to be conducted in this
12 Commonwealth is not the same as or similar to the
13 business conducted in this Commonwealth by the
14 corporation with whose name it may conflict; and
15 (iii) the public is not likely to be confused or
16 deceived; and
17 (2) the applicant shall agree in its application for a
18 certificate of authority to use with its corporate name in
19 this Commonwealth, to be placed immediately under or
20 following such name, the words "a .... (name or abbreviation
21 of jurisdiction of incorporation) corporation."]
22 (b) Exceptions.--
23 (1) The provisions of section 5303(b) (relating to
24 duplicate use of names) shall not prevent the issuance of a
25 certificate of authority to a foreign nonprofit corporation
26 setting forth a name that is confusingly similar to the name
27 of any other domestic or foreign corporation for profit or
28 corporation not-for-profit, or of any domestic or foreign
29 limited partnership that has filed a certificate or qualified
30 under Chapter 85 (relating to limited partnerships) or
19900S1761B2510 - 244 -
1 corresponding provisions of prior law, or of any corporation
2 or other association then registered under 54 Pa.C.S. Ch. 5
3 (relating to corporate and other association names) or to any
4 name reserved or registered as provided in this part, if the
5 foreign nonprofit corporation applying for a certificate of
6 authority files in the department one of the following:
7 (i) A resolution of its board of directors or other
8 body adopting a fictitious name for use in transacting
9 business in this Commonwealth which fictitious name is
10 not confusingly similar to the name of the other
11 corporation or other association or to any name reserved
12 or registered as provided in this part and that is
13 otherwise available for use by a domestic nonprofit
14 corporation.
15 (ii) The written consent of the other corporation or
16 other association or holder of a reserved or registered
17 name to use the same or confusingly similar name and one
18 or more words are added to make the name applied for
19 distinguishable from the other name.
20 (2) The provisions of section 5303(c) (relating to
21 required approvals or conditions) shall not prevent the
22 issuance of a certificate of authority to a foreign nonprofit
23 corporation setting forth a name that is prohibited by that
24 subsection if the foreign nonprofit corporation applying for
25 a certificate of authority files in the department a
26 resolution of its board of directors adopting a fictitious
27 name for use in transacting business in this Commonwealth
28 that is available for use by a domestic nonprofit
29 corporation.
30 § 6124. Application for a certificate of authority.
19900S1761B2510 - 245 -
1 (a) General rule.--[The foreign corporation not-for-profit
2 shall file in the Department of State an application for a
3 certificate of authority and at the same time shall deliver to
4 the department a certificate of the appropriate official of the
5 jurisdiction under the laws of which it was incorporated, dated
6 within 60 days of delivery of he application to the Department
7 of State, to the effect that it is a corporation duly
8 incorporated and existing under the laws of such jurisdiction.
9 The] An application for a certificate of authority shall be
10 executed [under the seal of the corporation, by two duly
11 authorized officers thereof,] by the foreign nonprofit
12 corporation and shall set forth:
13 (1) The name of the corporation.
14 (2) The name of the jurisdiction under the laws of which
15 it is incorporated.
16 (3) The address, including street and number, if any, of
17 its principal office under the laws of [its domiciliary
18 jurisdiction] the jurisdiction in which it is incorporated.
19 (4) [The] Subject to section 109 (relating to name of
20 commercial registered office provider in lieu of registered
21 address), the address, including street and number, if any,
22 of its proposed registered office in this Commonwealth.
23 (5) [A brief statement of the business it proposes to do
24 within this Commonwealth and a statement that such business
25 is authorized by its articles.
26 (6)] A statement that it is a corporation incorporated
27 for a purpose or purposes not involving pecuniary profit,
28 incidental or otherwise.
29 (b) Advertisement.--A foreign nonprofit corporation shall
30 officially publish notice of its intention to apply or its
19900S1761B2510 - 246 -
1 application for a certificate of authority. The notice may
2 appear prior to or after the day on which application is made to
3 the Department of State[,] and shall set forth briefly:
4 (1) A statement that the corporation will apply or has
5 applied for a certificate of authority under the provisions
6 of the Nonprofit Corporation Law of 1988.
7 (2) The name of the corporation and of the jurisdiction
8 under the laws of which it is incorporated.
9 (3) The address, including street and number, if any, of
10 its principal office under the laws of [its domiciliary
11 jurisdiction] the jurisdiction in which it is incorporated.
12 (4) [The] Subject to section 109, the address,
13 including street and number, if any, of its proposed
14 registered office in this Commonwealth.
15 [(5) The character and nature of the business it
16 proposes to do within this Commonwealth.
17 (6) The date when its application for a certificate of
18 authority will be or was filed in the Department of State.]
19 (c) Filing.--The application for a certificate of authority
20 shall be filed in the Department of State.
21 [(c)] (d) Cross reference.--See section 134 (relating to
22 docketing statement).
23 § 6125. Issuance of certificate of authority.
24 Upon the filing of the application for a certificate of
25 authority [and accompanying documents required by this
26 subchapter, the Department of State shall issue to], the foreign
27 nonprofit corporation shall be deemed to hold a certificate of
28 authority to do business in this Commonwealth. [The certificate
29 of authority shall be annexed to or endorsed upon the
30 application for a certificate of authority and shall state that
19900S1761B2510 - 247 -
1 subject to the Constitution and laws of this Commonwealth the
2 corporation named in such application is authorized to do in
3 this Commonwealth the business specified in such application.]
4 § 6126. Amended certificate of authority.
5 (a) General rule.--After receiving a certificate of
6 authority, a qualified foreign nonprofit corporation may,
7 subject to the provisions of this subchapter, change [its name,
8 or be authorized to do in this Commonwealth other or additional
9 business than that authorized by its certificate of authority,]
10 the name under which it is authorized to transact business in
11 this Commonwealth by filing in the Department of State an
12 application for an amended certificate of authority[, and if the
13 application is for or includes a change of name, a certificate
14 of the appropriate official of the jurisdiction under the laws
15 of which it was incorporated, dated within 60 days of the
16 delivery of the application to the department, to the effect
17 that it is a corporation duly incorporated and existing under
18 the laws of such jurisdiction under the new name. Such]. The
19 application shall be executed [under the seal of the corporation
20 by two duly authorized officers thereof,] by the corporation and
21 shall state:
22 (1) The name under which the applicant corporation
23 [received] currently holds a certificate of authority to do
24 business [within] in this Commonwealth.
25 (2) The name of the jurisdiction under the laws of which
26 the corporation is incorporated.
27 (3) The address, including street and number, if any, of
28 its principal office under the laws of [its domiciliary
29 jurisdiction] the jurisdiction in which it is incorporated.
30 (4) [The] Subject to section 109 (relating to name of
19900S1761B2510 - 248 -
1 commercial registered office provider in lieu of registered
2 address), the address, including street and number, if any,
3 of its registered office in this Commonwealth which may
4 constitute a change in the address of its registered office.
5 (5) The [change in the certificate of authority of the
6 corporation which is desired and a statement that the change
7 of name, if any, reflects a change effected in the
8 jurisdiction of incorporation or that the amended statement
9 of the business, if any, proposed to be done in this
10 Commonwealth is such as is authorized by the articles of the
11 corporation in its domiciliary jurisdiction, or both.] new
12 name of the corporation and a statement that either:
13 (i) the change of name reflects a change effected in
14 the jurisdiction of incorporation; or
15 (ii) documents complying with section 6123(b)
16 (relating to exception; name) accompany the application.
17 [(b) Advertisement.--A foreign corporation shall officially
18 publish notice of its intention to apply or its application for
19 an amended certificate of authority in a manner similar to that
20 prescribed in this subchapter in the case of the filing of an
21 application for a certificate of authority. The notice may
22 appear prior to or after the day on which application is filed
23 in the Department of State, and shall in addition to the
24 foregoing requirements set forth briefly:
25 (1) If the application is for permission to do in this
26 Commonwealth other or additional business, the character and
27 nature of the business it proposes to do under the amended
28 certificate of authority.
29 (2) If the application is for a change of name, the new
30 name under which it proposes to do business.
19900S1761B2510 - 249 -
1 (c)] (b) Issuance of amended certificate of authority.--Upon
2 the filing of [such application the Department of State shall
3 issue to] the application, the applicant corporation shall be
4 deemed to hold an amended certificate of authority. [The amended
5 certificate of authority shall be annexed to or endorsed upon
6 the application for an amended certificate of authority and
7 shall state that, subject to the Constitution and laws of this
8 Commonwealth, the certificate of authority of the corporation
9 named in such application is amended as specified in such
10 application.
11 (d)] (c) Cross reference.--See section 134 (relating to
12 docketing statement).
13 § 6127. Merger [or], consolidation or division of qualified
14 foreign corporations.
15 (a) General rule.--Whenever a qualified foreign nonprofit
16 corporation [shall be] is a nonsurviving party to a statutory
17 merger [or], consolidation or division permitted by the laws of
18 the jurisdiction under which it is incorporated, the corporation
19 surviving the merger, or the new corporation resulting from the
20 consolidation or division, as the case may be, shall file in the
21 Department of State a statement of merger [or], consolidation or
22 division, which shall be executed by the surviving or new
23 corporation and shall set forth:
24 (1) The name of each nonsurviving qualified foreign
25 nonprofit corporation.
26 (2) The name of the jurisdictions under the laws of
27 which each nonsurviving qualified foreign nonprofit
28 corporation was incorporated.
29 (3) The date on which each nonsurviving qualified
30 foreign nonprofit corporation received a certificate of
19900S1761B2510 - 250 -
1 authority to do business [within] in this Commonwealth.
2 (4) A statement that the corporate existence of each
3 nonsurviving qualified foreign nonprofit corporation has been
4 terminated by merger [or], consolidation or division, as the
5 case may be.
6 (5) In the case of a consolidation[,] or division or if
7 the surviving corporation was a nonqualified foreign
8 nonprofit corporation prior to the merger, the statements on
9 the part of the surviving or new corporation required by
10 section 6124(a) (relating to application for a certificate of
11 authority).
12 (b) Effect of filing.--The filing of [such] the statement
13 shall operate, as of the effective date of the merger [or],
14 consolidation or division to cancel the certificate of authority
15 of each nonsurviving constituent corporation [which] that was a
16 qualified foreign nonprofit corporation and to qualify the
17 surviving or new corporation under this subchapter. If the
18 surviving or new corporation does not desire to continue as a
19 qualified foreign nonprofit corporation, it may thereafter
20 withdraw in the manner provided by section 6129 (relating to
21 application for termination of authority).
22 (c) Surviving qualified foreign corporations.--It shall not
23 be necessary for a surviving corporation [which] that was a
24 qualified foreign nonprofit corporation to effect any filing
25 under this subchapter with respect to a merger or division or to
26 procure [either a new or] an amended certificate of authority to
27 do business in this Commonwealth[,] unless the name of such
28 corporation is changed by [such merger, or unless the
29 corporation desires to do in this Commonwealth other or
30 additional business than that which it is then authorized to do
19900S1761B2510 - 251 -
1 in this Commonwealth] the merger or division.
2 (d) Cross reference.--See section 134 (relating to docketing
3 statement).
4 § 6128. Revocation of certificate of authority.
5 (a) General rule.--Whenever the Department of State [shall
6 find] finds that a qualified foreign nonprofit corporation [is
7 engaged in this Commonwealth in any business which it is not
8 authorized to do by its certificate of authority or by any
9 amended certificate of authority, or] has failed to secure an
10 amended certificate of authority as required by this subchapter
11 after changing its name, or has failed or refused to appear by
12 its proper [officers, agents, or employees] representatives, or
13 otherwise to comply with any subpoena issued by any court having
14 jurisdiction of the subject matter, or to produce [such] books,
15 papers, records or documents as required by [any such] a
16 subpoena, or is violating any of the laws of this Commonwealth,
17 or that its articles have been revoked or voided by its
18 [domiciliary] jurisdiction of incorporation, the [Department of
19 State] department shall give notice and opportunity for hearing
20 by registered or certified mail to [such] the corporation that
21 [such] the default exists and that its certificate of authority,
22 including any amendments [thereto] thereof, will be revoked
23 unless [such] the default [shall be] is cured within 30 days
24 after the mailing of [such] the notice. If [such] the default
25 [shall not be] is not cured within [such] the period of 30 days,
26 the department shall revoke the certificate of authority,
27 including any amendments [thereto] thereof, of [such] the
28 foreign nonprofit corporation. Upon revoking [such] the
29 certificate of authority, the department shall mail to the
30 corporation, at its registered office in this Commonwealth, a
19900S1761B2510 - 252 -
1 certificate of revocation.
2 (b) Effect of revocation.--Upon the issuance of [such] the
3 certificate of revocation, the authority of the corporation to
4 do business in this Commonwealth shall cease[,] and [such] the
5 corporation shall not thereafter do any business in this
6 Commonwealth unless it applies for and receives a new
7 certificate of authority.
8 § 6129. Application for termination of authority.
9 (a) General rule.--Any qualified foreign nonprofit
10 corporation may withdraw from doing business in this
11 Commonwealth and surrender its certificate of authority by
12 filing in the Department of State an application for termination
13 of authority, executed [under the seal of] by the corporation
14 [by two duly authorized officers thereof], which shall set
15 forth:
16 (1) The name of the corporation and, subject to section
17 109 (relating to name of commercial registered office
18 provider in lieu of registered address), the address,
19 including street and number, if any, of its registered office
20 in this Commonwealth.
21 (2) The name of the jurisdiction under the laws of which
22 it is incorporated.
23 (3) The date on which it received a certificate of
24 authority to do business [within] in this Commonwealth.
25 [(4) A statement that it revokes its designation of the
26 Department of State or the Secretary of the Commonwealth, as
27 the case may be, as the agency or person on whom process
28 against it may be served in this Commonwealth.
29 (5)] (4) A statement that it surrenders its certificate
30 of authority to do business in this Commonwealth.
19900S1761B2510 - 253 -
1 [(6) Repealed.
2 (7) A post-office address.
3 (8)] (5) A statement that notice of its intention to
4 withdraw from doing business in this Commonwealth was mailed
5 by certified or registered mail to each [local government]
6 municipal corporation in which the registered office or
7 principal place of business of the corporation in this
8 Commonwealth is located, and that the official publication
9 required by subsection (b) has been effected.
10 (6) The post office address, including street and
11 number, if any, to which process may be sent in an action or
12 proceeding upon any liability incurred before the filing of
13 the application for termination of authority.
14 (b) Advertisement.--A qualified foreign nonprofit
15 corporation shall, before filing an application for termination
16 of authority, officially publish and mail a notice of its
17 intention to withdraw from doing business in this Commonwealth
18 in a manner similar to that required by section 5975(b)
19 (relating to notice to creditors and taxing authorities). The
20 notice shall set forth briefly:
21 (1) The name of the corporation and the jurisdiction
22 under the laws of which it is incorporated.
23 (2) The address, including street and number, if any, of
24 its principal office under the laws of its [domiciliary]
25 jurisdiction of incorporation.
26 (3) [The] Subject to section 109, the address, including
27 street and number, if any, of its last registered office in
28 this Commonwealth.
29 [(4) The date on or after which its application for
30 termination of authority will be filed in the Department of
19900S1761B2510 - 254 -
1 State.]
2 (c) Filing.--[Such application] The application for
3 termination of authority and the certificates or statement
4 required by section 139 (relating to tax clearance of certain
5 fundamental transactions) shall be filed in the [Department of
6 State and shall be accompanied by proof of the advertisement
7 required by subsection (b)] department. See section 134
8 (relating to docketing statement).
9 (d) Effect of filing.--Upon the filing of the application
10 for termination of authority, the authority of the corporation
11 to do business [within] in this Commonwealth shall cease. The
12 termination of authority shall not affect any action or
13 proceeding pending at the time thereof or affect any right of
14 action arising with respect to the corporation before the filing
15 of the application for termination of authority. Process against
16 the corporation in an action upon any liability incurred before
17 the filing of the application for termination of authority may
18 be served as provided in 42 Pa.C.S. Ch. 53 (relating to bases of
19 jurisdiction and interstate and international procedure) or as
20 otherwise provided or prescribed by law.
21 § 6130. Change of address after withdrawal.
22 (a) General rule.--Any foreign nonprofit corporation [not-
23 for-profit withdrawing or which] that has withdrawn from doing
24 business in this Commonwealth, or its successor in interest,
25 may, from time to time, change the address to which process may
26 be sent in an action upon any liability [or obligation] incurred
27 before the filing of an application for termination of
28 authority[, upon] by filing in the Department of State of a
29 statement of change of address by withdrawn corporation executed
30 [under the seal of] by the corporation [by two duly authorized
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1 officers thereof], setting forth:
2 (1) The name of the [corporation] withdrawn corporation
3 and, if the statement is filed by a successor in interest,
4 the name and capacity of the successor.
5 (2) The name of the jurisdiction under the laws of which
6 [it] the corporation filing the statement is incorporated.
7 (3) The former post office address, including street and
8 number, if any, of [its former address] the withdrawn
9 corporation as of record in the department.
10 (4) The new post office address, including street and
11 number, if any, of [its new address] the withdrawn
12 corporation or its successor.
13 (b) Cross reference.--See section 134 (relating to docketing
14 statement).
15 § 6131. Registration of name.
16 (a) General rule.--A nonqualified foreign nonprofit
17 corporation may register its name under 54 Pa.C.S. Ch. 5
18 (relating to corporate and other association names) if the name
19 is available for use by a qualified foreign nonprofit
20 corporation under section 6123 (relating to requirements for
21 foreign corporation names), by filing in the Department of State
22 an application for registration of name, executed by the
23 corporation, which shall set forth:
24 (1) The name of the corporation.
25 (2) The address, including street and number, if any, of
26 the corporation.
27 (b) Annual renewal.--A corporation that has in effect a
28 registration of its corporate name may renew the registration
29 from year to year by annually filing an application for renewal
30 setting forth the facts required to be set forth in an original
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1 application for registration. A renewal application may be filed
2 between October 1 and December 31 in each year and shall extend
3 the registration for the following calendar year.
4 (c) Cross reference.--See section 134 (relating to docketing
5 statement).
6 § 6144. Registered office of qualified foreign corporations.
7 (a) General rule.--[Every] Subject to the provisions of
8 section 5507(c) (relating to alternative procedure) every
9 qualified foreign nonprofit corporation shall have, and
10 continuously maintain, in this Commonwealth a registered office,
11 which may but need not be the same as its place of business in
12 this Commonwealth.
13 (b) Change.--A qualified foreign corporation may, from time
14 to time, change the address of its registered office [upon
15 filing in the Department of State, before such change is made,
16 either an application for an amended certificate of authority
17 setting forth the changed registered office or a statement
18 executed under the seal of the corporation by two duly
19 authorized officers thereof, setting forth:
20 (1) The name of the corporation.
21 (2) The address, including street and number, if any, of
22 its then registered office.
23 (3) The address, including street and number, if any, to
24 which the registered office is to be changed.
25 (4) The procedure whereby such change was authorized.]
26 in the manner provided by section 5507(b) (relating to statement
27 of change of registered office).
28 [(c) Cross reference.--See section 134 (relating to
29 docketing statement).]
30 § 6145. Applicability of certain safeguards to foreign
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1 corporations.
2 * * *
3 (c) Minimum safeguards.--The following provisions of this
4 subpart shall be applicable to foreign corporations to which
5 this section applies, except that nothing in this subsection
6 shall require the filing of any document in the Department of
7 State as a prerequisite to the validity of any corporate action
8 or the doing of any corporate action by the foreign corporation
9 which is impossible under the laws of its domiciliary
10 jurisdiction:
11 * * *
12 (11) Subchapter [F] G of Chapter 57 (relating to
13 judicial supervision of corporate action).
14 * * *
15 For the purposes of this subsection, corporate action shall not
16 be deemed to be impossible under the laws of the domiciliary
17 jurisdiction of a foreign corporation merely because prohibited
18 or restricted by the terms of the articles, certificate of
19 incorporation, bylaws or other organic law of the corporation,
20 but the court may require the corporation to amend such organic
21 law so as to be consistent with the minimum safeguards
22 prescribed by this subsection.
23 * * *
24 SUBCHAPTER D
25 DOMESTICATION
26 [(Reserved)]
27 § 6161. Domestication.
28 (a) General rule.--Any qualified foreign nonprofit
29 corporation may become a domestic nonprofit corporation by
30 filing in the Department of State articles of domestication. The
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1 articles of domestication, upon being filed in the department,
2 shall constitute the articles of the domesticated foreign
3 corporation, and it shall thereafter continue as a corporation
4 which shall be a domestic nonprofit corporation subject to this
5 subpart.
6 (b) Articles of domestication.--The articles of
7 domestication shall be executed by the corporation and shall set
8 forth in the English language:
9 (1) The name of the corporation. If the name is in a
10 foreign language, it shall be set forth in Roman letters or
11 characters or Arabic or Roman numerals.
12 (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.
16 (3) A statement that upon domestication the corporation
17 will be subject to the domestic corporation provisions of the
18 Nonprofit Corporation Law of 1988 and a brief statement of
19 the purpose or purposes for which it is to be domesticated
20 which shall be a purpose or purposes for which a domestic
21 nonprofit corporation may be incorporated under Article B
22 (relating to domestic nonprofit corporations generally).
23 (4) The term for which upon domestication it is to
24 exist, if not perpetual.
25 (5) Any desired provisions relating to the manner and
26 basis of reclassifying the memberships in the corporation.
27 (6) A statement that the filing of articles of
28 domestication and, if desired, the renunciation of the
29 original charter or articles of the corporation has been
30 authorized (unless its charter or other organic documents
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1 require a greater vote) by a majority of the votes cast by
2 all members entitled to vote thereon and, if any class of
3 members is entitled to vote thereon as a class, a majority of
4 the votes cast in each class vote.
5 (7) Any other provisions authorized by Article B to be
6 set forth in the original articles.
7 (c) Cross reference.--See section 134 (relating to docketing
8 statement).
9 § 6162. Effect of domestication.
10 As a domestic nonprofit corporation, the domesticated
11 corporation shall no longer be a foreign nonprofit corporation
12 for the purposes of this subpart and shall have all the powers
13 and privileges and be subject to all the duties and limitations
14 granted and imposed upon domestic nonprofit corporations. The
15 property, franchises, debts, liens, estates, taxes, penalties
16 and public accounts due the Commonwealth shall continue to be
17 vested in and imposed upon the corporation to the same extent as
18 if it were the successor by merger of the domesticating
19 corporation with and into a domestic nonprofit corporation under
20 Subchapter C of Chapter 59 (relating to merger, consolidation
21 and sale of assets). Memberships in the domesticated corporation
22 shall be unaffected by the domestication except to the extent,
23 if any, reclassified in the articles of domestication.
24 § 7102. Cooperative corporations generally.
25 (a) General rule.--Any corporation incorporated under this
26 part may be organized on the cooperative principle by setting
27 forth in its articles a common bond of membership among its
28 shareholders or members by reason of occupation, residence or
29 otherwise and that it is a cooperative corporation.
30 (b) Applicable law.--A corporation incorporated under this
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1 subpart shall be governed by the applicable provisions of this
2 subpart and, to the extent not inconsistent with this subpart:
3 (1) Subpart B (relating to business corporations) if its
4 articles state that it is incorporated for a purpose or
5 purposes involving pecuniary profit, incidental or otherwise,
6 to its shareholders or members or if its articles are silent
7 on the subject.
8 (2) Subpart C (relating to nonprofit corporations) if:
9 (i) [Its] its articles state that it is incorporated
10 for a purpose or purposes not involving pecuniary
11 profit[.]; or
12 (ii) [(Reserved).] it is subject to Chapter 73
13 (relating to electric cooperative corporations).
14 (c) Credit unions.--This subpart shall not apply to a credit
15 union, whether proposed or existing, except as otherwise
16 [expressly provided in this subpart or as otherwise] provided by
17 [statute applicable to the corporation] Title 17 (relating to
18 credit unions).
19 (d) Workers' cooperative corporations.--Except as otherwise
20 expressly provided in Chapter 77 (relating to workers'
21 cooperative corporations), only Chapters 1 (relating to general
22 provisions), 5 (relating to corporations) and 77 shall apply to
23 a corporation subject to Chapter 77. A cooperative corporation
24 may be incorporated under this chapter notwithstanding the fact
25 that its corporate purposes consist of or include a purpose or
26 purposes within the scope of Chapter 77.
27 § 7103. Use of term "cooperative" in corporate name.
28 * * *
29 (b) Cross reference.--See section [7 of the act of June 21,
30 1937 (P.L.1969, No.389), known as the Electric Cooperative
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1 Corporation Act] 7307 (relating to prohibition on use of words
2 "electric cooperative").
3 § 7104. Election of an existing business corporation to become
4 a cooperative corporation.
5 (a) General rule.--Any business corporation not organized on
6 the cooperative principle may become a cooperative corporation
7 for profit under this chapter by:
8 (1) Adopting a plan of conversion:
9 (i) providing for the redemption by the corporation
10 of all of its shares, whether or not redeemable by the
11 terms of its articles, if the corporation is to be
12 organized as a nonstock corporation; and
13 (ii) adjusting its affairs so as to comply with the
14 requirements of this chapter applicable to cooperative
15 corporations.
16 (2) Filing articles of amendment which shall contain, in
17 addition to the requirements of section 1915 (relating to
18 articles of amendment):
19 (i) A statement that the corporation elects to
20 become a cooperative corporation.
21 (ii) The provisions required by section 7102(a)
22 (relating to cooperative corporations generally) to be
23 set forth in the articles of a cooperative corporation.
24 (iii) If the corporation is to be a nonstock
25 corporation, a statement that the corporation is
26 organized on a nonstock basis.
27 (iv) Such other changes, if any, that may be desired
28 in the articles.
29 (b) Procedure.--The plan of conversion of the corporation
30 into a cooperative corporation (which plan shall include the
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1 amendment of the articles required by subsection (a)) shall be
2 adopted in accordance with the requirements of Subchapter B of
3 Chapter 19 (relating to amendment of articles) except that:
4 (1) The holders of shares of every class shall be
5 entitled to vote on the plan regardless of any limitations
6 stated in the articles or bylaws on the voting rights of any
7 class.
8 (2) The plan must be approved by two-thirds of the votes
9 cast by all shares of each class.
10 (3) If any shareholder of a business corporation that
11 adopts a plan of conversion into a cooperative corporation
12 objects to the plan of conversion and complies with the
13 provisions of Subchapter D of Chapter 15 (relating to
14 dissenters rights), the shareholder shall be entitled to the
15 rights and remedies of dissenting shareholders therein
16 provided. There shall be included in, or enclosed with, the
17 notice of the meeting of shareholders called to act upon the
18 plan of conversion a copy or a summary of the plan and a copy
19 of Subchapter D of Chapter 15 and of this subsection.
20 (4) The plan shall not impose any additional liability
21 upon any existing patron of the business of the corporation,
22 whether or not that person becomes a member of the
23 corporation pursuant to the plan, unless the patron expressly
24 assumes such liability.
25 § 7105. Termination of status as a cooperative corporation for
26 profit.
27 (a) General rule.--A cooperative corporation for profit may
28 terminate its status as such and cease to be subject to this
29 chapter by:
30 (1) Adopting a plan of conversion:
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1 (i) providing for the issue of appropriate shares to
2 its members if it is organized as a nonstock corporation
3 and is not to continue as such; and
4 (ii) adjusting its affairs so as to comply with the
5 requirements of this subpart applicable to business
6 corporations that are not cooperative corporations.
7 (2) Amending its articles to delete therefrom the
8 additional provisions required or permitted by:
9 (i) sections 2102(a)(1) (relating to formation of
10 nonstock corporations) and 2103 (relating to contents of
11 articles and other documents of nonstock corporations) to
12 be stated in the articles of a nonstock corporation if it
13 is organized as a nonstock corporation and is not to
14 continue as such;
15 (ii) section 7102(a) relating to cooperative
16 corporations generally) to be stated in the articles of a
17 cooperative corporation; and
18 (iii) section 7103 (relating to use of term
19 "cooperative" in corporate name).
20 (b) Procedure.--The plan of conversion (which plan shall
21 include the amendment of the articles required by this section)
22 shall be adopted in accordance with Subchapter B of Chapter 19
23 (relating to amendment of articles) except that:
24 (1) The members of every class shall be entitled to vote
25 on the plan regardless of any limitations stated in the
26 articles or bylaws, or in a document evidencing membership,
27 on the voting rights of any class.
28 (2) The plan must be approved by a majority of the votes
29 cast by the members of each class.
30 (c) Increased vote requirements.--The bylaws of a
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1 cooperative corporation for profit adopted by the shareholders
2 or members may provide that, on any amendment to terminate its
3 status as a cooperative corporation, a vote greater than that
4 specified in subsection (b) shall be required. If the bylaws
5 contain such a provision, that provision shall not be amended,
6 repealed or modified by any vote less than that required to
7 terminate the status of the corporation as a cooperative
8 corporation.
9 § 7106. Election of an existing nonprofit corporation to become
10 a cooperative corporation.
11 (a) General rule.--Any nonprofit corporation not organized
12 on the cooperative principle may become a nonprofit cooperative
13 corporation under this chapter by:
14 (1) Adopting a plan of conversion adjusting its affairs
15 so as to comply with the requirements of this chapter
16 applicable to cooperative corporations.
17 (2) Filing articles of amendment which shall contain, in
18 addition to the requirements of section 5915 (relating to
19 articles of amendment):
20 (i) A statement that the corporation elects to
21 become a cooperative corporation.
22 (ii) The provisions required by section 7102(a)
23 (relating to cooperative corporations generally) to be
24 set forth in the articles of a cooperative corporation.
25 (iii) Such other changes, if any, that may be
26 desired in the articles.
27 (b) Procedure.--The plan of conversion of the corporation
28 into a cooperative corporation (which plan shall include the
29 amendment of the articles required by subsection (a)) shall be
30 adopted in accordance with the requirements of Subchapter B of
19900S1761B2510 - 265 -
1 Chapter 59 (relating to amendment of articles) except that:
2 (1) The members of every class shall be entitled to vote
3 on the plan regardless of any limitations stated in the
4 articles or bylaws, or in a document evidencing membership,
5 on the voting rights of any class.
6 (2) The plan must be approved by two-thirds of the votes
7 cast by the members of each class.
8 (3) The plan shall not impose any additional liability
9 upon any existing patron of the business of the corporation,
10 whether or not that person becomes a member of the
11 corporation pursuant to the plan, unless the patron expressly
12 assumes such liability.
13 § 7107. Termination of nonprofit cooperative corporation
14 status.
15 (a) General rule.--A nonprofit cooperative corporation may
16 terminate its status as such and cease to be subject to this
17 chapter by:
18 (1) Adopting a plan of conversion adjusting its affairs
19 so as to comply with the requirements of this subpart
20 applicable to nonprofit corporations that are not cooperative
21 corporations.
22 (2) Amending its articles to delete therefrom the
23 additional provisions required or permitted by:
24 (i) section 7102(a) (relating to cooperative
25 corporations generally) to be stated in the articles of a
26 cooperative corporation; and
27 (ii) section 7103 (relating to use of term
28 "cooperative" in corporate name).
29 (b) Procedure.--The plan of conversion (which plan shall
30 include the amendment of the articles required by this section)
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1 shall be adopted in accordance with Subchapter B of Chapter 59
2 (relating to amendment of articles) except that:
3 (1) The members of every class shall be entitled to vote
4 on the plan regardless of any limitations stated in the
5 articles or bylaws, or in a document evidencing membership,
6 on the voting rights of any class.
7 (2) The plan must be approved by a majority of the votes
8 cast by the members of each class.
9 (c) Increased vote requirements.--The bylaws of a nonprofit
10 cooperative corporation adopted by the members may provide that,
11 on any amendment to terminate its status as a cooperative
12 corporation, a vote greater than that specified in subsection
13 (b) shall be required. If the bylaws contain such a provision,
14 that provision shall not be amended, repealed or modified by any
15 vote less than that required to terminate the status of the
16 corporation as a cooperative corporation.
17 CHAPTER 73
18 ELECTRIC COOPERATIVE CORPORATIONS
19 Subchapter
20 A. Preliminary Provisions
21 B. Powers, Duties and Safeguards
22 C. Unincorporated Area Certified Territory
23 SUBCHAPTER A
24 PRELIMINARY PROVISIONS
25 Sec.
26 7301. Short chapters TITLES. <--
27 7302. Application of chapter.
28 7303. Definitions.
29 7304. Number and qualifications of incorporators.
30 7305. Purpose.
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1 7306. Articles of incorporation.
2 7307. Prohibition on use of words "electric cooperative."
3 7308. Liberal construction.
4 § 7301. Short chapters TITLES. <--
5 (a) Short chapter TITLE of chapter.--This chapter shall be <--
6 known and may be cited as the Electric Cooperative Law of 1990.
7 (b) Short chapter TITLE of Subchapter C.--Subchapter C shall <--
8 be known and may be cited as the Unincorporated Area Certified
9 Territory Law of 1990.
10 § 7302. Application of chapter.
11 (a) General rule.--This chapter shall apply to and, unless
12 the context clearly indicates otherwise, the term "corporation"
13 or "electric cooperative corporation" in this chapter shall mean
14 a corporation incorporated under:
15 (1) the act of June 21, 1937 (P.L.1969, No.389), known
16 as the Electric Cooperative Corporation Act; or
17 (2) this chapter.
18 (b) Provisions complete in themselves.--The provisions of
19 this chapter, as supplemented by or pursuant to Subchapters 71A
20 (relating to general provisions) and 71C (relating to
21 cooperative contracts), are complete in themselves and shall be
22 controlling. The provisions of any other law of this
23 Commonwealth, except as provided in Part V of Title 1 (relating
24 to statutory construction) and in this chapter, shall not apply
25 to a corporation subject to this chapter.
26 § 7303. Definitions.
27 The following words and phrases when used in this subchapter
28 and Subchapter B (relating to powers, duties and safeguards)
29 shall have the meanings given to them in this section unless the
30 context clearly indicates otherwise:
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1 "Acquire." Construct or acquire by purchase, lease, devise,
2 gift or other mode of acquisition.
3 "Board." A board of directors of a corporation.
4 "Federal agency." Includes the United States of America and
5 any department, administration, commission, board, bureau,
6 office, establishment, agency, authority or instrumentality of
7 the United States of America, heretofore or hereafter created.
8 "Member." The incorporators of a corporation and each person
9 thereafter lawfully admitted to membership therein.
10 "Obligations." Includes bonds, notes, debentures, interim
11 certificates or receipts and all other evidences of indebtedness
12 issued by a corporation, whether secured or unsecured.
13 "Person." Includes any Federal agency, State or political
14 subdivision thereof or any body politic.
15 "Rural area." Any area, not included within the boundaries
16 of any incorporated or unincorporated city, town, village or
17 borough, having a population in excess of 2,500 inhabitants,
18 including both the farm and nonfarm population thereof.
19 § 7304. Number and qualifications of incorporators.
20 Three or more natural persons of full age who are residents
21 of this Commonwealth may incorporate an electric cooperative
22 corporation.
23 § 7305. Purpose.
24 Nonprofit cooperative corporations may be organized under
25 this chapter for the purpose of engaging in rural
26 electrification by any one or more of the following methods:
27 (1) Furnishing of electric energy to persons in rural
28 areas who are not receiving central station service.
29 (2) Assisting in the wiring of the premises of persons
30 in rural areas or the acquisition, supply or installation of
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1 electrical or plumbing equipment therein.
2 (3) Furnishing of electric energy, wiring facilities,
3 electrical or plumbing equipment or services to any other
4 corporation or to the members thereof.
5 § 7306. Articles of incorporation.
6 (a) General rule.--The articles of incorporation shall
7 state:
8 (1) The name of the corporation, which shall include the
9 words "Electric Cooperative" and the word "Corporation,"
10 "Incorporated," "Inc." or "Company" and shall not be
11 confusingly similar to the name of any other corporation.
12 (2) The purpose for which the corporation is formed.
13 (3) The names and addresses of the incorporators who
14 shall serve as directors and manage the affairs of the
15 corporation until its first annual meeting of members or
16 until their successors are elected and qualify.
17 (4) The number of directors, not less than three, to be
18 elected at the annual meetings of members.
19 (5) Subject to section 109 (relating to name of
20 commercial registered office provider in lieu of registered
21 office), the address, including street and number, if any, of
22 its registered office.
23 (6) The period of duration of the corporation, which may
24 be perpetual.
25 (7) The terms and conditions upon which persons will be
26 admitted to membership and retain membership in the
27 corporation, but, if expressly so stated, the determination
28 of these matters may be reserved to the directors by the
29 bylaws.
30 (8) Any provisions, not inconsistent with law, which the
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1 incorporators choose to insert for the regulation of the
2 business and affairs of the corporation.
3 (b) Cross references.--See section 134 (relating to
4 docketing statement) and Subchapter A of Chapter 53 (relating to
5 incorporation generally).
6 § 7307. Prohibition on use of words "electric cooperative."
7 The words "electric cooperative" shall not be used in the
8 corporate name of any domestic or foreign corporation for profit
9 or not-for-profit other than a corporation existing under this
10 chapter.
11 § 7308. Liberal construction.
12 All of the provisions of law applicable to electric
13 cooperative corporations shall be construed liberally. The
14 enumeration of any object, purpose, power, manner, method or
15 thing shall not be deemed to exclude like or similar objects,
16 purposes, powers, manners, methods or things. See section
17 7302(b) (relating to provisions complete in themselves).
18 SUBCHAPTER B
19 POWERS, DUTIES AND SAFEGUARDS
20 Sec.
21 7321. Special powers and limitations.
22 7322. Bylaws.
23 7323. Exemption of members from liability for debts of
24 corporation.
25 7324. Qualifications of members.
26 7325. Annual meeting of members.
27 7326. Voting by members.
28 7327. Certificates of membership.
29 7328. Quorum of members.
30 7329. Directors.
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1 7330. Nonprofit operation.
2 7331. Merger, consolidation, division or sale of assets.
3 7332. Dissolution.
4 7333. License fee; exemption from excise taxes.
5 7334. Exemption from jurisdiction of Public Utility Commission.
6 7335. Limited exemption from Securities Act.
7 § 7321. Special powers and limitations.
8 (a) General rule.--Each electric cooperative corporation
9 shall have power (in addition to or limitation of the powers
10 conferred by section 5502 (relating to general powers)):
11 (1) To generate, manufacture, purchase, acquire and
12 accumulate electric energy and to transmit, distribute, sell,
13 furnish and dispose of such electric energy to its members
14 only; and to construct, erect, purchase, lease as lessee and,
15 in any manner, acquire, own, hold, maintain, operate, sell,
16 dispose of, lease as lessor, exchange and mortgage plants,
17 buildings, works, machinery, supplies, equipment, apparatus
18 and transmission and distribution lines or systems necessary,
19 convenient or useful.
20 (2) To assist its members only to wire their premises
21 and install therein electrical and plumbing fixtures,
22 machinery, supplies, apparatus and equipment of any and all
23 kinds and character and, in connection therewith and for
24 those purposes, to purchase, acquire, lease, sell,
25 distribute, install and repair electrical and plumbing
26 fixtures, machinery, supplies, apparatus and equipment of any
27 and all kinds and character and to receive, acquire, endorse,
28 pledge, hypothecate and dispose of notes, bonds and other
29 evidences of indebtedness.
30 (3) To furnish to other corporations organized under
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1 this chapter, or to the members thereof, electric energy,
2 wiring facilities, electrical and plumbing equipment and
3 services convenient or useful.
4 (4) In connection with the acquisition, construction,
5 improvement, operation or maintenance of its lines, to use
6 any highway or any right-of-way, easement or other similar
7 property right owned or held by the Commonwealth or any
8 political subdivision thereof.
9 (5) To have and exercise the power of eminent domain for
10 the purpose and in the manner provided by the condemnation
11 laws of this Commonwealth relating to public utility
12 corporations for acquiring private property for public use,
13 such right to be paramount except as to property of the
14 Commonwealth or of any political subdivision thereof or any
15 public utility corporation, other than one engaged in
16 furnishing electric energy to the public, except that the
17 right of eminent domain shall exist in order to cross the
18 lines of any public utility not furnishing electric energy if
19 the crossing is effected in such manner as not to interfere
20 with the service lines or the service of the public utility.
21 (6) To fix, regulate and collect rates, fees, rents or
22 other charges for electric energy and any other facilities,
23 supplies, equipment or services furnished by the corporation.
24 (7) To accept gifts or grants of money, services or
25 property, real or personal.
26 (8) To do and perform, either for itself or its members
27 or for any other corporation, or for the members thereof, any
28 and all acts and things and to have and exercise any and all
29 powers as may be necessary, convenient or appropriate to
30 effectuate the purpose for which the corporation is
19900S1761B2510 - 273 -
1 incorporated.
2 (b) Enumeration unnecessary.--It shall not be necessary to
3 set forth in the articles of the corporation the powers
4 enumerated in this chapter.
5 § 7322. Bylaws.
6 The power to make, alter or repeal the bylaws of an electric
7 cooperative corporation shall be vested in the board of
8 directors. The bylaws may contain any provisions for the
9 regulation and management of the affairs of the corporation, not
10 inconsistent with law or the articles.
11 § 7323. Exemption of members from liability for debts of
12 corporation.
13 A member shall not be liable for the debts of an electric
14 cooperative corporation to an amount exceeding the sums
15 remaining unpaid on his membership fee, but nothing in this
16 chapter shall be construed to relieve any member from the
17 payment of any debt due by him to the corporation.
18 § 7324. Qualifications of members.
19 All persons in rural areas proposed to be served by an
20 electric cooperative corporation, who are not receiving central
21 station service, shall be eligible to FOR membership in the <--
22 corporation. No person other than the incorporators shall be,
23 become or remain a member of the corporation unless the person
24 uses or agrees to use electric energy or, as the case may be,
25 the facilities, supplies, equipment and services furnished by
26 the corporation. A corporation existing under this chapter may
27 become a member of another such corporation and may avail itself
28 fully of the facilities and services thereof.
29 § 7325. Annual meeting of members.
30 (a) Time of annual meeting.--An annual meeting of the
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1 members of an electric cooperative corporation shall be held at
2 such time as may be provided in the bylaws.
3 (b) Call of special meetings.--Special meetings of the
4 members may be called by:
5 (1) the president;
6 (2) the board of directors;
7 (3) petition signed by not less than one-tenth of all of
8 the members; or
9 (4) such other officers or persons as may be provided in
10 the bylaws.
11 (c) Notice of meetings.--Written notice of every meeting of
12 members shall be delivered not less than ten nor more than 30
13 days before the date of the meeting. If mailed, the notice shall
14 be deemed to be delivered when deposited in the United States
15 mails in a sealed envelope, addressed to the member at his
16 address as it appears on the records of the corporation, with
17 postage thereon prepaid.
18 § 7326. Voting by members.
19 Each member present shall be entitled to one and only one
20 vote on each matter submitted to a vote at a meeting of members
21 of an electric cooperative corporation, but voting by proxy or
22 by mail may be provided for in the bylaws.
23 § 7327. Certificates of membership.
24 When a member of an electric cooperative corporation has paid
25 the membership fee in full, a certificate of membership shall be
26 issued to the member. Memberships in the corporation and the
27 certificates shall be nontransferable. The certificate of
28 membership shall be surrendered to the corporation upon the
29 resignation, expulsion or death of the member.
30 § 7328. Quorum of members.
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1 Unless otherwise provided in the bylaws, a majority of the
2 members present, in person or represented by proxy, shall
3 constitute a quorum for the transaction of business at a meeting
4 of members of an electric cooperative corporation, but, if
5 voting by mail is provided for in the bylaws, members so voting
6 shall be counted as if present.
7 § 7329. Directors.
8 (a) General rule.--The business and affairs of an electric
9 cooperative corporation shall be managed under the direction of
10 a board of not less than three directors who shall be natural
11 persons of full age. All directors shall be members.
12 (b) Vacancies.--Any vacancy occurring in the board and any
13 directorship to be filled shall be filled, as provided in the
14 bylaws, by persons who shall serve until directors may be
15 regularly elected.
16 § 7330. Nonprofit operation.
17 (a) General rule.--Each electric cooperative corporation
18 shall be operated without profit to its members, but the rates,
19 fees, rents or other charges for electric energy and any other
20 facilities, supplies, equipment or services furnished by the
21 corporation shall be sufficient at all times:
22 (1) To pay all operating and maintenance expenses
23 necessary or desirable for the prudent conduct of its
24 business and the principal of and interest on the obligations
25 issued or assumed by the corporation in the performance of
26 the purpose for which it was organized.
27 (2) For the creation of reserves.
28 (b) Disposition of revenues.--The revenues of the
29 corporation shall be devoted, first, to the payment of operating
30 and maintenance expenses and the principal and interest on
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1 outstanding obligations and, thereafter, to such reserves for
2 improvement, new construction, depreciation and contingencies as
3 the board may, from time to time, prescribe.
4 (c) Patronage distributions.--Revenues not required for the
5 purposes set forth in subsection (b) shall be returned, from
6 time to time, to the members on a pro rata basis, according to
7 the amount of business done with each during the period, either
8 in cash, in abatement of current charges for electric energy or
9 otherwise, as the board determines, but the return may be made
10 by way of general rate reduction to members if the board so
11 elects.
12 § 7331. Merger, consolidation, division or sale of assets.
13 (a) Merger, consolidation or division.--Any two or more
14 electric cooperative corporations may merge, consolidate or
15 divide but only if the surviving or resulting corporation is a
16 corporation existing under this chapter. Every merger,
17 consolidation or division shall be proposed by the adoption by
18 the board of directors of a resolution approving the plan of
19 merger, consolidation or division and directing that the plan be
20 submitted to a vote of the members entitled to vote thereon at a
21 regular or special meeting of the members.
22 (b) Sale of assets.--An electric cooperative corporation may
23 sell, lease, lease-sell, exchange or otherwise dispose of all or
24 substantially all of its assets only when authorized by the
25 affirmative vote of two-thirds of all the members of the
26 corporation.
27 (1) The plan of asset transfer shall set forth the terms
28 and conditions of the sale, lease, exchange or other
29 disposition or may authorize the board of directors to fix
30 any or all of the terms and conditions, including the
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1 consideration to be received by the corporation therefor.
2 (2) Prior to submission for consideration by the members
3 of the corporation, the board of directors of the corporation
4 shall first give all other domestic electric cooperative
5 corporations an opportunity to submit competing proposals.
6 Such opportunity shall be in the form of a written notice to
7 such corporations, which notice shall be attached to a copy
8 of the proposal which the corporation has already received.
9 Such corporations shall be given not less than 30 days during
10 which to submit competing proposals, and the actual minimum
11 period within which proposals are to be submitted shall be
12 stated in the written notice given to them.
13 (3) Within 30 days after expiration of the notice period
14 set by the board of directors under paragraph (2), written
15 notice of the special meeting to consider and take action on
16 the plan of asset transfer and expressing in detail each of
17 the proposals shall be given to each member of the
18 corporation. The special meeting shall not be held sooner
19 than 30 days after the giving of such notice to the members.
20 (4) After a plan of asset transfer has been authorized
21 by the members, the board of directors, in its discretion,
22 may abandon the sale, lease, lease-sale, exchange or other
23 disposition, subject to the rights of third parties under any
24 contracts relating thereto, without further action or
25 approval by the members.
26 § 7332. Dissolution.
27 An electric cooperative corporation may dissolve only when
28 authorized by the affirmative vote of two-thirds of all the
29 members of the corporation. Any assets remaining after all
30 liabilities or obligations of the corporation have been
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1 satisfied or discharged upon dissolution shall be distributed
2 pro rata among the members of the corporation at the time of the
3 filing of the certificate of dissolution.
4 § 7333. License fee; exemption from excise taxes.
5 Electric cooperative corporations subject to this chapter
6 shall pay annually, on or before July 1, to the Department of
7 Revenue a fee of $10 for each 100 members, or fraction thereof,
8 but shall be exempt from all other State taxes of whatsoever
9 kind or nature.
10 § 7334. Exemption from jurisdiction of Public Utility
11 Commission.
12 Except as provided in Subchapter C (relating to
13 unincorporated area certified territory), all electric
14 cooperative corporations subject to this chapter shall be exempt
15 in any and all respects from the jurisdiction and control of the
16 Pennsylvania Public Utility Commission.
17 § 7335. Limited exemption from Securities Act.
18 Whenever any electric cooperative corporation subject to this
19 chapter has borrowed money from any Federal agency, the
20 obligations issued to secure the payment of the money shall be
21 exempt from the provisions of the act of December 5, 1972
22 (P.L.1280, No.284), known as the Pennsylvania Securities Act of
23 1972, nor shall the provisions of that act apply to the issuance
24 of membership certificates.
25 SUBCHAPTER C
26 UNINCORPORATED AREA CERTIFIED TERRITORY
27 Sec.
28 7351. Application of subchapter.
29 7352. Definitions.
30 7353. Geographical areas.
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1 7354. Boundaries of certified territories; hearings.
2 7355. Obligations and rights within certified territory; new
3 electric-consuming facilities.
4 7356. Borderline service.
5 7357. Effect of incorporation, annexation or consolidation.
6 7358. Enforcement of compliance by commission.
7 7359. Expenses.
8 § 7351. Application of subchapter.
9 (a) General rule.--This subchapter shall apply only to the
10 establishment of boundaries of certified territory between
11 retail electric suppliers where one supplier is an electric
12 cooperative corporation and the other supplier is subject to the
13 jurisdiction of the Pennsylvania Public Utility Commission for
14 rates, terms and conditions for electric service.
15 (b) Municipal corporations.--Nothing contained in this
16 subchapter shall in any respect affect any of the rights,
17 privileges or obligations of any municipal corporation
18 furnishing retail electric service.
19 § 7352. Definitions.
20 The following words and phrases when used in this subchapter
21 shall have the meanings given to them in this section unless the
22 context clearly indicates otherwise:
23 "Certified territory." An unincorporated area as certified
24 pursuant to section 7354 (relating to boundaries of certified
25 territories; hearings).
26 "Commission." The Pennsylvania Public Utility Commission of
27 the Commonwealth.
28 "Electric-consuming facilities." Everything that utilizes
29 electric energy from a central station source.
30 "Existing distribution line." An electric line of a design
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1 voltage of 35 kV phase to phase or less which on July 30, 1975:
2 (1) was located in an unincorporated area; and
3 (2) was or had been used for retail electric service.
4 "Hearing." A hearing by the commission pursuant to
5 reasonable notice to all affected retail electric suppliers.
6 "Retail electric service." Electric service furnished to a
7 consumer for ultimate consumption, but not including wholesale
8 electric energy furnished by an electric supplier to another
9 electric supplier for resale.
10 "Retail electric supplier." Any person, exclusive of a
11 municipal corporation, engaged in the furnishing of retail
12 electric service. The term shall apply only to a retail electric
13 supplier which is an electric cooperative corporation and to a
14 retail electric supplier which is subject to the jurisdiction of
15 the commission for rates, terms and conditions for electric
16 service and has a mutual boundary in an unincorporated area with
17 an electric cooperative corporation.
18 "Unincorporated area." A geographical area outside the
19 corporate limits of cities and boroughs.
20 § 7353. Geographical areas.
21 It is hereby declared to be in the public interest that, to
22 encourage the orderly development of retail electric service in
23 unincorporated areas, to avoid wasteful duplication of
24 distribution facilities, to avoid unnecessary encumbering of the
25 landscape of the Commonwealth, to prevent the waste of materials
26 and natural resources, to minimize inconvenience, diminished
27 efficiency and higher costs in serving the consumer and
28 otherwise for the public convenience and necessity, the
29 Commonwealth is divided into geographical areas, establishing
30 the unincorporated areas within which each retail electric
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1 supplier is to provide retail electric service on an exclusive
2 basis.
3 § 7354. Boundaries of certified territories; hearings.
4 (a) Exclusive territories.--Except as otherwise provided in
5 this section, a retail electric supplier shall not furnish
6 retail electric service in the certified territory of another
7 retail electric supplier.
8 (b) Establishment of boundaries.--Except as otherwise
9 provided in this section, the boundaries of the certified
10 territory of each retail electric supplier in any unincorporated
11 area are hereby set as a line or lines substantially equidistant
12 between its existing distribution lines and the nearest existing
13 distribution lines of any other retail electric supplier in
14 every direction with the result that there is hereby certified
15 to each retail electric supplier such unincorporated area which
16 in its entirety is located substantially in closer proximity to
17 one of its existing distribution lines than the nearest existing
18 distribution line of any other retail electric supplier.
19 (c) Maps of certified territories.--On or before July 30,
20 1976, or, when requested in writing by a retail electric
21 supplier and for good cause shown, such further time as the
22 Pennsylvania Public Utility Commission may fix by order, each
23 retail electric supplier shall file with the commission a map or
24 maps showing all of its existing distribution lines as of July
25 30, 1975. The commission shall prepare or order to be prepared
26 and filed in the manner and form prescribed by the commission
27 within six months thereafter a map or maps of uniform scale to
28 show, accurately and clearly, the boundaries of the certified
29 territory of each retail electric supplier as established under
30 subsection (a) and shall issue such map or maps of certified
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1 territory to each retail electric supplier.
2 (d) Commission certification of service territories.--In
3 each unincorporated area, where the commission determines that
4 the existing distribution lines of two or more retail electric
5 suppliers are so intertwined or located that subsection (a)
6 cannot reasonably be applied, the commission shall, after
7 hearing, certify the service territory or territories for the
8 retail electric suppliers so as to promote the legislative
9 policy stated in section 7353 (relating to geographical areas).
10 (e) Examination and correction of maps.--Each retail
11 electric supplier shall have the right to examine the maps of
12 other retail electric suppliers filed with the commission
13 pursuant to this subchapter, and, if any errors are observed,
14 any retail electric supplier may informally petition the
15 commission for a conference of the affected parties to resolve
16 the alleged error. The petitioner shall serve a copy of the
17 petition by certified mail on the retail electric supplier whose
18 map is alleged to contain the error. The commission shall
19 arrange a conference as promptly as practicable after receipt of
20 the petition and shall give notice thereof to all retail
21 electric suppliers affected by the alleged error. If the alleged
22 error is not corrected to the satisfaction of any affected
23 retail electric supplier, the supplier may petition the
24 commission for a hearing, and the hearing shall be granted by
25 the commission as promptly as practicable. Upon completion by
26 the commission of a map or maps showing the boundaries of the
27 certified territory of a retail electric supplier as established
28 under subsection (a), other retail electric suppliers shall have
29 the right to examine the map or maps and, if any errors exist in
30 location of boundary lines, any retail electric supplier
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1 aggrieved thereby may informally petition the commission for a
2 conference to resolve the issue of the alleged incorrect
3 location of boundary. The procedure shall be as specified in
4 this section for resolution of alleged errors in the maps
5 supplied by any retail electric supplier.
6 (f) Adjustment of certified territories.--After the initial
7 establishment of the certified territory of each retail electric
8 supplier, two or more retail electric suppliers may, from time
9 to time, jointly apply to the commission for adjustment of their
10 adjoining certified territories, and, if the commission finds
11 that the adjustment is consistent with the purposes of this
12 subchapter and its standards, the commission shall approve the
13 adjustment and, to the extent required, shall prepare or cause
14 to be prepared revised maps in accordance with subsection (c) to
15 reflect the adjustment.
16 § 7355. Obligations and rights within certified territory; new
17 electric-consuming facilities.
18 (a) Service within certified territory.--Except as otherwise
19 provided in this section, each retail electric supplier shall be
20 obligated (upon receipt of an application in accordance with its
21 tariffs, rules, regulations or bylaws) and shall have the
22 exclusive right to furnish retail electric service to all
23 electric-consuming facilities located within its certified
24 territory and shall not furnish, make available, render or
25 extend its retail electric service to a consumer for use in
26 electric-consuming facilities located within the certified
27 territory of another retail electric supplier. Any retail
28 electric supplier may extend its facilities through the
29 certified territory of another retail electric supplier if the
30 extension is necessary for the supplier to connect any of its
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1 facilities or to serve its consumers within its own certified
2 territory, but any such extension shall not be deemed to be an
3 existing distribution line.
4 (b) Service to new electric-consuming facilities.--Except as
5 provided in subsections (c) and (e), any new electric-consuming
6 facility located in an unincorporated area which has not as yet
7 been included in a map issued by the Pennsylvania Public Utility
8 Commission pursuant to section 7354(c) (relating to maps of
9 certified territories) or certified pursuant to section 7354(d)
10 (relating to commission certification of service territories)
11 shall be furnished retail electric service by the retail
12 electric supplier which has an existing distribution line in
13 closer proximity to the electric-consuming facility than is the
14 nearest existing distribution line of any other retail electric
15 supplier. Any disputes under this subsection shall be resolved
16 by the commission.
17 (c) Correction of inadequate service.--If the commission,
18 after hearing, determines that the retail electric service being
19 furnished or proposed to be furnished by a retail electric
20 supplier to an electric-consuming facility is inadequate and is
21 not likely to be made adequate, the commission may authorize
22 another retail electric supplier to furnish retail electric
23 service to that facility.
24 (d) Electric-consuming facilities served by another retail
25 electric supplier.--Except as provided in subsection (c), no
26 retail electric supplier shall furnish, make available, render
27 or extend retail electric service to any electric-consuming
28 facility to which the service is being lawfully furnished by
29 another retail electric supplier on July 30, 1975, or to which
30 retail electric service is lawfully commenced thereafter in
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1 accordance with this section by another retail electric
2 supplier.
3 (e) Extension of service.--The provisions of this subchapter
4 shall not preclude any retail electric supplier from extending
5 its service after July 30, 1975, to its own property and
6 facilities but any facilities involved in the extension shall
7 not be deemed an existing distribution line.
8 § 7356. Borderline service.
9 Notwithstanding the establishment of certified territories
10 pursuant to this subchapter and the obligations and rights to
11 furnish service within the territory, a retail electric supplier
12 may request another retail electric supplier to render service
13 to one or more electric-consuming facilities where, in the
14 judgment of the requesting retail electric supplier, it would be
15 more economical or otherwise in the public interest for the
16 other retail electric supplier to do so and to enter into a
17 contract for that purpose with the other retail electric
18 supplier.
19 § 7357. Effect of incorporation, annexation or consolidation.
20 After July 30, 1975, the inclusion by incorporation,
21 consolidation or annexation of any part of the certified
22 territory of a retail electric supplier within the boundaries of
23 any city or borough shall not in any respect impair or affect
24 the rights of the retail electric supplier to continue and
25 extend electric service at retail throughout any part of its
26 certified territory.
27 § 7358. Enforcement of compliance by commission.
28 Upon proceedings brought by an interested person or by action
29 of the Pennsylvania Public Utility Commission, the commission
30 shall have the jurisdiction to enforce compliance with this
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1 subchapter and shall have jurisdiction to prohibit the
2 furnishing of retail electric service by any retail electric
3 supplier except in its certified territory or territories or
4 where lawfully serving and, in connection with the enforcement
5 and prohibition, to exercise all powers granted by this
6 subchapter or otherwise to the commission.
7 § 7359. Expenses.
8 (a) General rule.--The expenses of the Pennsylvania Public
9 Utility Commission in administering this subchapter shall be
10 assessed by the commission against the affected retail electric
11 suppliers on the following basis:
12 (1) Expenses which relate to the preparation or review
13 of maps to establish the certified territory of a single
14 retail electric supplier in any county or other area where
15 there is no other retail electric supplier shall be assessed
16 solely to such single retail electric supplier.
17 (2) Expenses which relate to the preparation or review
18 of maps to establish the certified territories of two or more
19 retail electric suppliers in any county or other area where
20 there are two or more retail electric suppliers shall be
21 assessed in equal shares among such retail electric
22 suppliers.
23 (3) Expenses which relate to the consideration and
24 disposition of alleged errors pursuant to section 7354(e)
25 (relating to examination and correction of maps) and the
26 consideration and disposition of proposed adjustments
27 pursuant to section 7354(f) (relating to adjustment of
28 certified territories) shall be assessed in equal shares
29 among the retail electric suppliers affected thereby.
30 (4) Expenses which relate to the enforcement by the
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1 commission of compliance with this subchapter shall be
2 assessed in equal shares against the retail electric supplier
3 or suppliers to which an order of enforcement is directed. If
4 the enforcement proceedings were initiated by a retail
5 electric supplier or suppliers and if no order of enforcement
6 is issued by the commission, the expenses shall be assessed
7 in equal shares against the retail electric supplier or
8 suppliers initiating the proceedings.
9 (5) Any other expenses of the commission shall be
10 assessed by the commission in equal shares among the retail
11 electric suppliers that are subject to this subchapter.
12 (b) Estimated expenses.--The commission may, if it deems
13 such action appropriate, assess expenses on the basis of
14 estimates made by it with appropriate adjustment or credit after
15 final determination of the expenses. appropriate adjustment or
16 credit after final determination of the expenses.
17 CHAPTER 75
18 COOPERATIVE AGRICULTURAL ASSOCIATIONS
19 Subchapter
20 A. Preliminary Provisions
21 B. Powers, Duties and Safeguards
22 SUBCHAPTER A
23 PRELIMINARY PROVISIONS
24 Sec.
25 7501. Short chapter TITLE of chapter. <--
26 7502. Application of chapter.
27 7503. Definitions.
28 7504. Policy.
29 7505. Number and qualifications of incorporators.
30 7506. Purposes.
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1 7507. Articles of incorporation.
2 § 7501. Short chapter TITLE of chapter. <--
3 This chapter shall be known and may be cited as the
4 Cooperative Agricultural Association Law of 1990.
5 § 7502. Application of chapter.
6 (a) General rule.--Except as otherwise provided in
7 subsections (b) and (c), this chapter applies to and the word
8 "association" in this chapter means a corporation with or
9 without capital stock incorporated under any of the following:
10 (1) The act of June 12, 1919 (P.L.466, No.238), relating
11 to cooperative agricultural associations without capital
12 stock.
13 (2) The act of April 30, 1929 (P.L.885, No.394),
14 relating to cooperative agricultural associations with
15 capital stock.
16 (3) The act of June 12, 1968 (P.L.173, No.94), known as
17 the Cooperative Agricultural Association Act.
18 (4) This chapter.
19 (b) Acceptance of chapter.--Any other domestic corporation
20 for profit or corporation not-for-profit incorporated under any
21 prior statute relating to cooperative corporations may become an
22 association subject to this chapter by filing in the Department
23 of State a certificate of election of cooperative agricultural
24 association status which shall be executed by the corporation
25 and shall set forth:
26 (1) The name of the corporation and, subject to section
27 109 (relating to name of commercial registered office
28 provider in lieu of registered address), the address,
29 including street and number, if any, of its registered
30 office.
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1 (2) The statute under which the corporation was
2 incorporated and the date of incorporation.
3 (3) A statement that the members or shareholders of the
4 corporation have elected, by a majority vote of the members
5 or shareholders present and voting at a meeting called for
6 that purpose at which a quorum is present, to accept the
7 provisions of this chapter for the government and regulation
8 of the affairs of the corporation.
9 (c) Foreign corporations.--This chapter shall apply to and
10 the word "association" in this chapter shall include a foreign
11 corporation for profit or corporation not-for-profit
12 incorporated with or without capital stock under any general or
13 special statute as a cooperative agricultural association for
14 the mutual benefit of its members, shareholders, patrons and
15 producers. A foreign association shall not transact business as
16 an association in this Commonwealth unless permitted to do so by
17 this chapter, and any violation of this provision may be
18 enjoined upon the application of any domestic association or
19 qualified foreign association.
20 § 7503. Definitions.
21 The following words and phrases when used in this chapter
22 shall have the meanings given to them in this section unless the
23 context clearly indicates otherwise:
24 "Agricultural products." Includes all livestock and
25 livestock products, dairy and dairy products, poultry and
26 poultry products, horticultural, floricultural and viticultural
27 products, forestry and forestry products, seeds, nuts, mushrooms
28 and bee products and any and all kinds of farm products.
29 "Board." The board of directors of an association.
30 "Delegate." A member elected in the manner provided by
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1 section 7531(b) (relating to election by districts) to represent
2 a local group of members, and having the powers and duties
3 specified in the bylaws.
4 "Department." The Department of Agriculture of the
5 Commonwealth.
6 "Engaging in agriculture." Includes engaging in dairying,
7 livestock raising, poultry raising, furbearing animal raising,
8 horticulture, floriculture, viticulture, forestry, beekeeping,
9 seed growing, nut growing, mushroom growing and engaging in any
10 and all kinds of farming and other allied occupations.
11 "Member." The holder of a membership in an association
12 without capital stock or the holder of voting shares in an
13 association organized with capital stock.
14 "Patron." A person using the facilities of an association
15 for the marketing of agricultural products or a person using the
16 facilities of an association for the purchase of supplies or the
17 rendering of services.
18 "Producer." A person engaging in agriculture.
19 "Supplies." Includes any and all types of supplies,
20 machinery and equipment used or consumed by persons engaging in
21 agriculture.
22 § 7504. Policy.
23 (a) General rule.--It is the policy of this Commonwealth, as
24 one means of improving the economic position of agriculture, to
25 encourage the organization of producers of agricultural products
26 into effective cooperative agricultural associations under the
27 control of the producers for their mutual benefit, and to that
28 end this chapter shall be liberally construed. Where applicable
29 to this chapter and to Chapter 71 (relating to preliminary
30 provisions), Subpart B of Part II (relating to business
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1 corporations) and Subpart C of Part II (relating to nonprofit
2 corporations) shall be construed, wherever possible, consistent
3 with law applicable to cooperative agricultural associations in
4 general.
5 (b) Associations not in restraint of trade.--
6 (1) No association complying with this chapter shall be
7 deemed to be a conspiracy, or a combination in restraint of
8 trade, or an illegal monopoly, or be deemed to have been
9 formed for the purpose of lessening competition or fixing
10 prices arbitrarily, nor shall the contracts between the
11 association and its producers, or any agreements authorized
12 in this chapter, be construed as an unlawful restraint of
13 trade, or as a part of a conspiracy or combination to
14 accomplish an improper or illegal purpose or act.
15 (2) An association may acquire, exchange, interpret and
16 disseminate past, present and prospective crop, market,
17 statistical, economic and other similar information relating
18 to the business of the association either directly or through
19 an agent created or selected by it or by other associations
20 acting in conjunction with it.
21 (3) An association may advise its members in respect to
22 the adjustment of their current and prospective production of
23 agricultural commodities and its relation to the prospective
24 volume of consumption, selling prices and existing or
25 potential surplus to the end that every market may be served
26 from the most convenient productive areas under a program of
27 orderly marketing that will assure adequate supplies without
28 undue enhancement of prices or the accumulation of any undue
29 surplus of agricultural products.
30 § 7505. Number and qualifications of incorporators.
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1 Five or more individuals of full age engaging in agriculture
2 or two or more cooperative agricultural associations may
3 incorporate an association. If an association is incorporated by
4 individuals, at least three of the individuals shall be
5 residents of this Commonwealth. If an association is
6 incorporated by cooperative agricultural associations, at least
7 one of the associations shall be a domestic association.
8 § 7506. Purposes.
9 An association may be incorporated under this chapter for the
10 purpose of engaging in any cooperative activity for producers of
11 agricultural products in connection with:
12 (1) Producing, assembling, marketing, buying, selling,
13 bargaining or contracting for agricultural products, or
14 harvesting, preserving, drying, processing, manufacturing,
15 blending, canning, packing, ginning, grading, storing,
16 warehousing, handling, transporting, shipping or utilizing
17 such products, or manufacturing or marketing the by-products
18 thereof.
19 (2) Manufacturing, processing, storing, transporting,
20 delivering, handling, buying for or furnishing supplies to
21 its members and patrons.
22 (3) Performing or furnishing business, educational,
23 recreational or other services, including the services of
24 labor, buildings, machinery, equipment, trucks, trailers and
25 tankers, or any other services connected with the purposes
26 set forth in paragraphs (1) and (2) on a cooperative basis.
27 (4) Financing any of the activities set forth in
28 paragraphs (1) through (3).
29 § 7507. Articles of incorporation.
30 Articles of incorporation of an association incorporated
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1 under this chapter shall comply with the applicable provisions
2 of this part except that, if organized without capital stock,
3 the articles shall state whether the property rights and
4 interests of each member are equal or unequal and, if unequal,
5 the priorities of those rights and interests.
6 SUBCHAPTER B
7 POWERS, DUTIES AND SAFEGUARDS
8 Sec.
9 7521. Special powers and limitations.
10 7522. Records of salary or other payments.
11 7523. Members.
12 7524. Issuance of shares.
13 7525. Sale, transfer or redemption of shares.
14 7526. Termination of membership.
15 7527. Voting by proxy or mail.
16 7528. Meetings.
17 7529. Fundamental changes.
18 7530. Bylaws.
19 7531. Directors.
20 7532. Removal of directors.
21 7533. Officers.
22 7534. Marketing arrangements.
23 7535. Patronage distributions.
24 7536. Audit of operations.
25 7537. Contract assignments to association.
26 7538. Exemption from tax on capital stock and indebtedness.
27 § 7521. Special powers and limitations.
28 (a) General rule.--Each association shall have power (in
29 addition to or limitation of the powers conferred by section
30 1502 (relating to general powers) or 5502 (relating to general
19900S1761B2510 - 294 -
1 powers)):
2 (1) To act as agent, broker or attorney-in-fact for its
3 members and patrons and for any subsidiary or affiliated
4 person.
5 (2) To hold chapter for its members and patrons and for
6 subsidiary and affiliated persons to property handled or
7 managed by the association on their behalf.
8 (3) In furtherance of association purposes, to make
9 loans or advances to its members and patrons or to subsidiary
10 and affiliated persons or their members.
11 (4) To establish and accumulate reserves and surplus to
12 capital and such other funds as may be authorized by the
13 articles of association or the bylaws.
14 (5) To issue membership certificates and to foster
15 membership in the association and to solicit patrons by
16 advertising or by educational or other lawful means.
17 (6) To issue and to sell common and preferred stock.
18 (7) To own shares of the capital stock of, to hold
19 membership in and to hold bonds or other obligations of other
20 persons engaged in any related activity or engaged in
21 producing, manufacturing, warehousing or marketing any of the
22 products handled by the association or engaged in financing
23 its activities or those of its members.
24 (8) To deal in products of and handle machinery,
25 equipment, supplies and perform services for nonmembers to an
26 amount not greater in annual value than such as are dealt in,
27 handled or performed for or on behalf of its members.
28 (b) Enumeration unnecessary.--It shall not be necessary to
29 set forth in the articles of the association the powers
30 enumerated in this chapter.
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1 § 7522. Records of salary or other payments.
2 Every association shall keep a record of all salaries, per
3 diem payments or other remuneration paid to each officer and
4 director by the association in addition to remuneration received
5 for agricultural commodities marketed through the association.
6 § 7523. Members.
7 An association shall admit to membership only persons who are
8 engaging in agriculture, including both tenants and landlords
9 receiving a share of the crop, and cooperative agricultural
10 associations of such producers who agree to patronize the
11 association in accordance with the uniform terms prescribed by
12 it, and only such persons shall be regarded as eligible members
13 of an association. The bylaws may prescribe additional
14 qualifications for membership but shall not enlarge the class
15 eligible for membership specified in this section.
16 § 7524. Issuance of shares.
17 (a) General rule.--Every association without capital stock
18 shall issue a certificate of membership to each member. Every
19 association with capital stock shall issue a certificate of
20 common shares to each member certifying the number of shares of
21 stock held by him. An association shall issue common shares or a
22 membership certificate only to persons eligible for membership
23 upon such terms and conditions as shall be provided in the
24 bylaws. Fractional shares may be issued.
25 (b) Voting rights.--Each eligible member shall be entitled
26 to only one vote on each question that may be presented at any
27 meeting of the members regardless of the number of shares or
28 amount of membership capital owned by him.
29 (c) Preferred stock.--An association may issue preferred
30 shares to any person upon such terms and conditions as shall be
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1 provided in the bylaws. The preferred shares shall carry no
2 voting rights other than as provided by section 7529(a)(3)
3 (relating to fundamental changes).
4 (d) Consideration.--No association shall issue a certificate
5 of membership, and no certificate for common shares shall be
6 issued until fully paid for, but promissory notes may be
7 accepted by the association as full or partial payment. The
8 association shall hold the membership certificate or shares as
9 security for the payment of the note, but such retention as
10 security shall not affect the right of the member to vote and
11 hold office.
12 (e) Evidence of equity in assets.--The association may, from
13 time to time, issue to any patron a certificate or other
14 evidence of the equity of the patron in any fund, capital
15 investment or other asset of the association. The certificate or
16 other evidence of equity may bear interest at a rate not in
17 excess of two points under the average treasury bill rate for
18 the 12 months preceding the date on which the payment is made
19 and may be transferred only to the association or to such other
20 person as may be approved by the association.
21 (f) Dividends.--Dividends may be paid on any shares and
22 dividends on preferred shares may be cumulative if so provided
23 in the articles. An association shall have a lien on all of its
24 issued shares and dividends declared or accrued thereon for all
25 indebtedness of the holders thereof to the association if
26 provision therefor is stated on the face of the share
27 certificate.
28 § 7525. Sale, transfer or redemption of shares.
29 (a) General rule.--The common shares of an association may
30 be transferred only with the consent of the association and on
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1 the books of the association and then only to persons eligible
2 to own shares in the association. No purported assignment or
3 transfer of the shares shall pass to any ineligible person any
4 right or privilege on account of the shares or any vote or voice
5 in the management or affairs of the association.
6 (b) Redemption or conversion.--In the event a holder of
7 common shares has done no business with an association for a
8 period of 12 months or in the event the board of directors of an
9 association finds that any of the common shares has come into
10 the hands of any person who is not eligible for membership or
11 that the holder thereof has ceased to be an eligible member, the
12 holder shall have no rights or privileges on account of the
13 shares or vote or voice in the management or the affairs of the
14 association (other than the right to participate in accordance
15 with law in case of dissolution and to receive the book or par
16 value of the shares, whichever is less, in the event of its sale
17 or transfer as provided in this subsection), and the association
18 shall have the right at its option:
19 (1) to redeem the shares at their book or par value,
20 whichever is less;
21 (2) to require the transfer of any such shares at such
22 book or par value, whichever is less, to any person eligible
23 to hold the shares; or
24 (3) to require the holder of any such shares to convert
25 the shares into preferred shares of equal value.
26 In exercising its right to redeem or to require the transfer or
27 conversion of shares, if the holder fails to deliver the
28 certificate evidencing the shares for cancellation or transfer,
29 an association may cancel the certificate on its books and issue
30 a new certificate for common or preferred shares, as the case
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1 may be, to the party entitled thereto.
2 (c) Preferred shares.--The preferred shares of an
3 association may be transferred only on the books of the
4 association, and the bylaws may provide that the association
5 shall have the option, at any time, to redeem the preferred
6 shares at par value, plus declared or accrued dividends.
7 (d) Notice on certificates.--Any restriction or option which
8 an association places upon the transfer or sale of any of its
9 outstanding shares, and any association option retained thereon,
10 shall be printed on each share certificate.
11 (e) Force majeure.--A member shall not lose his membership
12 in the association under this section by his failure to do
13 business with it if the failure is due to an act of God unless
14 the period of time involved is at least 24 months.
15 § 7526. Termination of membership.
16 (a) General rule.--Under the terms and conditions prescribed
17 in the bylaws, a member of an association without capital stock
18 shall lose his membership and his right to vote if he ceases to
19 belong to the class eligible for membership or has done no
20 business with an association for a period of 12 months.
21 (b) Valuation of and payment for membership.--After a member
22 has notified an association without capital stock of his
23 withdrawal or after the adoption of a resolution by the board
24 terminating his membership, the board shall appraise the value
25 in money of his membership interest in the association and shall
26 determine and fix the manner in which the association shall pay
27 him the value of his interest unless the member, with the
28 consent of the association, transfers his certificate of
29 membership. Certificates of membership in an association without
30 capital stock shall not be transferred without the consent of
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1 the association.
2 (c) Force majeure.--A member shall not lose his membership
3 in the association under this section by his failure to do
4 business with it if the failure is due to an act of God unless
5 the period of time involved is at least 24 months.
6 § 7527. Voting by proxy or mail.
7 (a) General rule.--Unless otherwise provided in the bylaws,
8 no member may vote by proxy or by mail. No unrevoked proxy shall
9 be valid more than 11 months from the date of its execution. If
10 voting by mail is permitted, absent members may, under rules
11 prescribed by the bylaws, be permitted to vote on specific
12 questions by written ballot prepared by the association and sent
13 by mail to or deposited with the secretary or other designated
14 officer of the association.
15 (b) Action on marketing programs.--Except for day to day
16 operating decisions relating to existing programs, no
17 association shall vote for its members on any new programs or
18 substantially modified proposals other than those regulated by
19 Federal or State agencies affecting existing marketing or
20 marketing development programs or amendments thereto unless it
21 has either first obtained approval of the delegates or conducted
22 a mail poll of its membership, and in such later event apprised
23 the members of their rights to cast a vote and method of voting
24 under the program and notified its membership of the results and
25 its intentions at least five days prior to casting its vote. If
26 proxy voting is allowed by the bylaws of the association, the
27 proxy shall be valid only for the particular date and the
28 specific issue for which the vote is called.
29 § 7528. Meetings.
30 There shall be at least one meeting of members or delegates
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1 each year. Annual and special membership or delegate meetings
2 shall be governed by the bylaws.
3 § 7529. Fundamental changes.
4 (a) General rule.--An association, by action of its members
5 or delegates, may amend its articles of incorporation in the
6 manner provided by the applicable provisions of this part except
7 that:
8 (1) No amendment shall be adopted without the
9 affirmative vote of two-thirds of the members or delegates
10 voting thereon.
11 (2) No amendment affecting the priority or preferential
12 rights of any outstanding stock shall be adopted without the
13 affirmative vote of two-thirds of the holders of the
14 outstanding stock affected.
15 (3) Any association not having capital stock may convert
16 into an association with capital stock by amending its
17 articles to set forth a description of the shares of each
18 class which are to be issued and a statement of the voting
19 rights, preferences, limitations and relative rights granted
20 to or imposed upon the shares of each class but only if the
21 conversion is proposed by three-fourths of the board of
22 directors.
23 (b) Procedure.--Written notice shall, not less than 15 days
24 before the meeting of members or delegates called for the
25 purpose of considering the proposed amendment or any other
26 fundamental change, be given to each member or shareholder of
27 record. A notice of an amendment under subsection (a)(3) shall
28 set forth, in addition to the information otherwise required by
29 the appropriate provisions of this part, a complete description
30 of the shares proposed to be issued upon the conversion and the
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1 manner of carrying the conversion into effect.
2 (c) Post-approval report.--Whenever an amendment of the
3 articles of an association is approved, the association shall
4 notify each member within 30 days after the filing of articles
5 of amendment by sending to each member a copy of the filed
6 amendment and, in the case of a conversion, a complete
7 description of the shares issued by the association.
8 § 7530. Bylaws.
9 (a) General rule.--The bylaws may provide for the following
10 matters:
11 (1) The time, place and manner of calling and conducting
12 meetings of the members or delegates and the number of
13 members or delegates (which may be less than a majority) that
14 shall constitute a quorum.
15 (2) The manner of voting and the conditions upon which
16 members or delegates may vote at general and special
17 meetings.
18 (3) Subject to any provision thereon in the articles of
19 association and in this chapter, the number, qualifications,
20 eligibility requirements, manner of nomination, duties and
21 terms of office of directors and officers, the time of their
22 election and mode and manner of giving notice thereof.
23 (4) The time, place and manner for calling and holding
24 meetings of the directors and any executive committee and the
25 number that shall constitute a quorum.
26 (5) Rules consistent with law and the articles of
27 association for the management of the association, the
28 establishment of any election districts, the making of
29 contracts, the issuance, redemption and transfer of shares,
30 the relative rights, duties, interests and preferences of
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1 members and shareholders and the mode, manner and effect of
2 expulsion of a member.
3 (6) Any other provisions deemed necessary or proper to
4 carry out the purposes of the association.
5 (7) Penalties for violations of the bylaws.
6 (b) Procedure.--Bylaws authorized to be made by the board of
7 directors may be amended or repealed and new bylaws may be
8 adopted by the members or delegates. Delegates may prescribe
9 that any bylaw made by them shall not be amended or repealed by
10 the directors, and members may provide that any bylaw made by
11 them shall not be amended or repealed by either the directors or
12 the delegates. The association shall notify each member of a
13 proposed change in the bylaws by sending to each member, at
14 least 15 days prior to any vote on the proposed change, a copy
15 of the proposed bylaw along with the time, date, place and
16 manner of voting for the proposed changes. Members may amend or
17 repeal bylaws adopted by the directors or the delegates by
18 filing with the secretary of the association a petition signed
19 by 25% of the voting membership and setting forth the text of
20 the proposed change. The secretary shall call a special meeting
21 or special vote of the association within 30 days of the receipt
22 of the petition. When a special meeting is called, at least 10%
23 of the voting membership shall be present to change the bylaws.
24 Whenever a proposed bylaw change is approved, the association
25 shall mail each member a copy of the approved bylaw within 30
26 days of the approval.
27 § 7531. Directors.
28 (a) General rule.--The business and affairs of the
29 association shall be managed under the direction of a board of
30 not less than five directors who shall be natural persons of
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1 full age. All directors shall be members. The first directors
2 shall serve until the first annual meeting of the association at
3 which time their successors shall be elected by the members of
4 the association. Thereafter, a director shall hold office for a
5 term of not less than one year nor more than three years and
6 until his successor has been elected and qualified. Every
7 election for a director shall be by secret ballot. A director
8 may succeed himself.
9 (b) Election by districts.--The bylaws may provide that the
10 territory in which the association has members shall be divided
11 into districts and that the directors shall be elected according
12 to such districts, either directly or by district delegates
13 elected by the members in that district. In such case, the
14 bylaws shall specify or the board of directors shall determine
15 the number of directors to be elected by each district and the
16 manner and method of dividing the directors and of districting
17 and redistricting of the territory in which the association has
18 members. The board of directors may use such standards as are
19 reasonable for assigning directors and districting and
20 redistricting the territory in which the association has
21 members. The bylaws or the board of directors may provide for
22 dividing districts into locals and for the election of district
23 delegates at local meetings of members. The bylaws shall
24 prescribe the procedures by which districts shall elect
25 directors. The board of directors shall hear and decide any
26 controversy arising out of a district election and its decisions
27 shall be incontestable except for fraud. In any case in which
28 the election of directors is by districts, the board shall fill
29 a vacancy with a person who resides in or is a member of a local
30 in the district in which the vacancy exists.
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1 (c) Classified board.--If the bylaws so provide, the
2 directors of an association may be classified in respect to the
3 time for which they severally hold office. In such case, each
4 class shall be as nearly equal in number as possible, the term
5 of office of at least one class shall expire in each year, and
6 the members of a class shall not be elected for a shorter period
7 than one year or for a longer period than three years. If, at
8 any meeting, directors of more than one class are to be elected,
9 each class of directors to be elected shall be elected in a
10 separate election.
11 (d) Educational program.--The Department of Agriculture, in
12 cooperation with the College of Agriculture of The Pennsylvania
13 State University, shall develop and implement an educational
14 program relating to the powers, duties, functions and
15 responsibilities of directors of associations. The Secretary of
16 Agriculture shall appoint an advisory council consisting of nine
17 individuals, including members and directors of associations,
18 two association managers and other interested individuals, who
19 shall advise the department on the development of the
20 educational program. Two members of the advisory council shall
21 be managers of associations. In addition, the department shall
22 furnish to each association director, free of charge, when first
23 elected as a director, an updated copy of this chapter and
24 annually thereafter any amendments or replacements thereof.
25 § 7532. Removal of directors.
26 A director may be removed from office by the affirmative vote
27 of not less than a majority of the members present and voting at
28 any regular or special meeting called for that purpose or, where
29 the bylaws provide for the election of directors by districts,
30 by the affirmative vote of not less than a majority of the
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1 members or delegates residing in or representing the district
2 from which he was elected. The bylaws shall provide for the
3 filing of charges, the giving of notice thereof, an opportunity
4 to be heard and the procedures under which a director may be
5 removed.
6 § 7533. Officers.
7 The board shall elect a president, a secretary and a
8 treasurer and may elect one or more vice presidents and any
9 other officers as may be authorized in the bylaws. The president
10 and at least one of the vice presidents must be members. Any two
11 of the offices of vice president, secretary and treasurer may be
12 combined in one person.
13 § 7534. Marketing arrangements.
14 (a) General rule.--An association and its members may make
15 and execute contracts requiring the members to obtain all or any
16 part of specific services from the association or to sell or
17 deliver all or any part of their specified agricultural products
18 to or through the association or any facilities to be created by
19 the association. The contract may provide that the association
20 may sell or resell the products sold or delivered by its
21 members, with or without taking chapter thereto, and pay over to
22 its members the resale price, after deducting all necessary
23 overhead costs, expenses, valuation reserves, interest,
24 dividends on common and preferred shares and such deductions for
25 capital and other purposes as may be specified in the contract
26 or bylaws of an association. Each marketing or service contract
27 shall contain a provision which shall specify a reasonable
28 period in each year during which any contracting member of an
29 association, upon giving notice as prescribed in the contract,
30 may terminate the contract.
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1 (b) Enforcement.--The bylaws or the marketing or service
2 contract may provide:
3 (1) For applying patronage refunds or savings allocated
4 to any member or other patron toward the payment for
5 liquidated damages specified in the contract to be paid to an
6 association by the member or other patron upon the breach by
7 him of any provision of the marketing or service contract.
8 (2) That the member will pay all costs, premiums for
9 bonds, expenses and fees in case any action is brought upon
10 the contract by the association. Any such provision shall be
11 valid and enforceable in the courts of this Commonwealth.
12 (3) That the association shall have the option to redeem
13 the voting shares at book value or par value, whichever is
14 lower, plus declared dividends, or the membership
15 certificate, whenever any contract between the association
16 and a member has been canceled in accordance with the terms
17 or conditions of the contract or by reason of breach of the
18 contract by the member.
19 (c) Injunction.--In the event of any such breach or
20 threatened breach of the marketing contract by a member, the
21 association shall be entitled to an injunction to prevent
22 further breach of the contract and to specific performance
23 thereof. Pending the adjudication of the action, and upon filing
24 a verified complaint showing the breach or threatened breach and
25 upon filing a sufficient bond, the association shall be entitled
26 to a temporary restraining order and preliminary injunction
27 against the member. The right to an injunction shall be in
28 addition to the remedy provided in subsection (b).
29 (d) Inducing breach; spreading false reports.--Any person
30 who knowingly induces any member of an association to breach his
19900S1761B2510 - 307 -
1 marketing contract with the association shall be liable to the
2 association for the full amount of damages sustained by it by
3 reason of the breach, and any person who maliciously and
4 knowingly spreads false reports about the finances or management
5 of the association shall be liable to the association in an
6 action for the actual damage which it may sustain by reason of
7 the false reports and punitive damages. The association shall be
8 entitled to an injunction against any such person to prevent
9 further injury to the association. In any action brought by an
10 association pursuant to this subsection, the association shall
11 be entitled to, in addition to any other recovery or remedy,
12 reasonable attorney fees involved in such matter.
13 § 7535. Patronage distributions.
14 (a) General rule.--The net proceeds or savings of an
15 association shall be apportioned, distributed and paid
16 periodically on the basis of patronage to those persons entitled
17 to receive them, at such times and in such manner as the bylaws
18 shall provide. The bylaws may provide that the net proceeds or
19 savings may be restricted to members or may be made at the same
20 or a different rate for member and nonmember patrons. The bylaws
21 may contain any reasonable provisions for the apportionment and
22 charging of net losses except that no member shall thereby
23 become liable for the debts of the association beyond any money
24 or other property delivered by the member to the association.
25 The bylaws may provide that any distribution to a nonmember
26 eligible for membership may be credited to the nonmember until
27 the amount thereof equals the value of a membership certificate
28 or a common share of an association.
29 (b) Method of disbursement.--The apportionment, distribution
30 and payment of net proceeds or savings required by subsection
19900S1761B2510 - 308 -
1 (a) may be in cash, credits, capital shares, certificates of
2 indebtedness, revolving fund certificates, letters of advice or
3 other securities or certificates issued by an association or by
4 any affiliated domestic or foreign association. Apportionment
5 and distribution of its net proceeds or savings or losses may be
6 separately determined for, and be based upon the patronage of,
7 single or multiple pools or particular departments of an
8 association, or as to particular commodities, supplies or
9 services, or such apportionment and distribution may be based
10 upon classification of patronage according to the type thereof.
11 (c) Minimum participation.--An association may provide in
12 its bylaws the minimum amount of any single annual patronage
13 transaction which shall be taken into account for the purpose of
14 participation in allocation and distribution of net proceeds or
15 savings or net losses under this section.
16 (d) Method of accounting.--For the purposes of this section,
17 net proceeds or savings or net losses shall be computed in
18 accordance with generally accepted accounting principles
19 applicable to cooperative associations, and after deducting from
20 gross proceeds or savings all costs and expenses of operation
21 and any dividends paid upon capital stock and interest paid upon
22 certificates or other evidence of equity in any fund, capital
23 investment or other assets of an association.
24 § 7536. Audit of operations.
25 (a) General rule.--At the close of each fiscal year, a
26 complete certified audit of the operations of the association
27 shall be made by a qualified certified public accountant or by a
28 qualified public accountant, employed by the board of directors,
29 the written report of whom shall include the balance sheet,
30 operating statement, commissions, salaries and other
19900S1761B2510 - 309 -
1 remunerations of managers and officers and other proper
2 information and shall be submitted to the members at the next
3 regular meeting. Within six months after the expiration of the
4 fiscal year for which made, the secretary of the association
5 shall file a copy of the certified audit in the Department of
6 Agriculture upon a form prescribed by the department. The
7 secretary of the association shall also include in the yearly
8 audit report to the department a list of the current officers
9 and directors and their addresses.
10 (b) Exceptions.--The annual audit of an association with
11 annual gross sales of $100,000 or less may be performed by an
12 audit committee of three or more members of the association
13 appointed by the board, at least one of whom shall be a member
14 of the board of directors. The members of the committee need not
15 be certified public accountants or public accountants.
16 (c) Enforcement.--Any association which fails, within 120
17 days from the close of the fiscal year, to file with the
18 department the certified audit required by subsection (a) shall
19 be notified by certified mail by the department that the
20 certified audit must be filed within 60 days from the date of
21 mailing of the notice and that, upon failure to file the
22 certified audit within the time so limited, the department will
23 file in the Department of State a statement of dissolution under
24 this subsection. If the certified audit is not filed in the
25 department within such 60-day period, the department shall file
26 in the Department of State, with respect to each such defaulting
27 association, a statement of dissolution which shall identify the
28 association. Upon the filing of the statement, the articles of
29 the association shall be deemed forfeited for failure to comply
30 with the provisions of this section. However, the forfeiture
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1 shall not prejudice the rights of creditors and members in and
2 to any property or assets of or belonging to the association.
3 The department shall annually, on or before April 1 of each
4 year, furnish each existing association and make public a
5 listing of the status of existing associations. Any association
6 which has so automatically forfeited its articles shall be
7 reinstated as an association under this chapter if the unfiled
8 certified audit is submitted to the department within 90 days
9 after such automatic forfeiture or within any extension thereof
10 granted by the department, which shall thereupon file in the
11 Department of State with respect to the association a notice of
12 withdrawal of statement of dissolution stating that the
13 association has complied with the provisions of this subsection.
14 In such event, no statement of revival or new articles of
15 incorporation need be filed in the Department of State, and the
16 association shall resume its status as a subsisting corporation.
17 The department shall review such yearly certified audits and
18 issue such reports and recommendations to each member of the
19 board of directors of the association as the department deems
20 necessary.
21 (d) Confidentiality.--No person shall, without the consent
22 or authorization of the association, except for official
23 purposes or in obedience to judicial process, make or permit any
24 disclosure whereby any information contained in a certified
25 audit may be identified as having been furnished by the
26 association. No person shall knowingly exercise or attempt to
27 exercise any powers, privileges or franchises for an
28 association, given by this chapter, while the articles of the
29 association are forfeit unless that person is, and discloses
30 that he is, acting to reinstate the good standing of the
19900S1761B2510 - 311 -
1 association under this chapter or is acting to wind up the
2 affairs of the association. A person violating the prohibitions
3 set forth in this subsection commits a misdemeanor of the third
4 degree.
5 (e) Withdrawal.--A certified audit shall not be withdrawn
6 without the approval of the board of directors.
7 § 7537. Contract assignments to association.
8 If any contract authorized by a cooperative contains an
9 assignment to the association of any part or all of funds due or
10 to become due the member during the life of the contract for any
11 product produced or to be produced by him or for any services
12 performed or to be performed in producing any product, any
13 person who accepts or receives the product from the member is
14 bound by the assignment after receiving written notice from the
15 association and the member of the amount and duration of the
16 assignment. However, as to any seasonal crop, if no funds are
17 paid or become payable by any person under such an assignment
18 for a period of two consecutive years during the life of the
19 contract, thereafter the assignment shall not be binding upon
20 any person who receives or accepts the product from the member
21 until the assignment is reaffirmed by the member in writing and
22 written notice thereof is given by the association or the
23 member. Any such reaffirmation shall continue to be effective
24 during the life of the contract until another lapse of two
25 consecutive years occurs.
26 § 7538. Exemption from tax on capital stock and indebtedness.
27 No State or local tax shall be levied or placed upon the
28 capital stock of an association or upon any scrip, bonds,
29 certificates or other evidences of indebtedness issued by such
30 association. The association shall not be required to file in
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1 the Department of Revenue, or with any other State or local
2 official of this Commonwealth, the reports relative to such
3 taxes as are or may be required of corporations not exempt from
4 the payment of such taxes.
5 § 7701. Short chapter TITLE of chapter. <--
6 This chapter shall be known and may be cited as the Workers'
7 Cooperative Corporation Law of 1988.
8 § [7701] 7702. Definitions.
9 * * *
10 § [7702] 7703. Corporations.
11 (a) Members and purpose.--Corporations, productive and
12 distributive, may be incorporated under this chapter, upon
13 compliance with its requirements, by five or more farmers,
14 mechanics, laborers or other persons who have incorporated
15 themselves together by written articles under section [7703]
16 7704 (relating to articles of incorporation) for the purpose of
17 carrying on agricultural, horticultural, mining, quarrying,
18 building, mechanical, manufacturing or commercial business; for
19 the purpose of manufacturing, cultivating, raising, trading or
20 dealing in goods, wares, merchandise, chattels, grains,
21 vegetables, roots, fruits and other produce or animals; or for
22 the purpose of buying, selling, holding, leasing or improving
23 lands, tenements or buildings.
24 * * *
25 § [7703] 7704. Articles of incorporation.
26 * * *
27 (b) [Approval] Filing of articles.--The articles of
28 incorporation[, signed by each of the incorporators, together
29 with any filing fee required to be paid,] shall be [delivered
30 to] filed in the department. [If the department finds that the
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1 articles comply with section 7704 (relating to content of
2 article) and that all required fees have been paid, it shall
3 approve the articles of incorporation; and a copy of the
4 articles shall be recorded in the bureau.] Upon the [approval]
5 filing of the articles of incorporation, the corporation's
6 existence begins. See section 134 (relating to docketing
7 statement).
8 (c) Evidence of incorporation.--The articles of
9 incorporation as [approved] filed in the department are
10 conclusive evidence of the fact that the corporation has been
11 [organized] incorporated; but proceedings may be instituted by
12 the Commonwealth to dissolve, wind up and terminate a
13 corporation which should not have been incorporated or which has
14 been incorporated by means of fraud or misrepresentation or
15 without substantial good faith compliance with the conditions
16 prescribed by this chapter as precedent to incorporation.
17 [§ 7704. Content of articles.]
18 (d) Content of articles.--The articles of incorporation
19 shall be signed by the persons originally associating themselves
20 together and shall state distinctly:
21 (1) The name by which the corporation shall be known,
22 which may not be the same as, or confusingly similar to, the
23 name of an association or corporation existing under the law
24 of the Commonwealth, the name of a foreign or alien
25 association or corporation authorized to transact business in
26 this Commonwealth, or a corporate name reserved or registered
27 as provided by law.
28 (2) [The place in this Commonwealth where the principal
29 office is to be located.] Subject to section 109 (relating to
30 name of commercial registered office provider in lieu of
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1 registered address), the address, including street and
2 number, if any, of its initial registered office in this
3 Commonwealth.
4 (3) A brief statement:
5 (i) of the purpose or purposes for which the
6 corporation is incorporated, which may consist of a
7 statement that the corporation has unlimited powers to
8 engage in any lawful act concerning any business for
9 which corporations may be incorporated under this
10 chapter; and
11 (ii) that the corporation is incorporated under this
12 [act] chapter.
13 (4) A description of the capital stock of each class
14 which is to be issued; a statement of the preferences,
15 qualifications, limitations, restrictions and special or
16 relative rights granted to or imposed upon the shares of each
17 class of capital stock; the total authorized capital stock;
18 the number of shares into which the capital stock is divided;
19 and the par value of each share of capital stock.
20 (5) The amount of capital that will be actually paid in
21 before commencing business.
22 (6) The terms on which individuals may become members.
23 (7) The number of directors, which may not be less than
24 five, constituting the initial board of directors and the
25 names and addresses of the persons who are to serve as
26 directors until the first annual meeting of the members or
27 until their successors are elected and take office.
28 (8) Other matters as may be deemed proper and necessary.
29 (9) The term of its existence, which shall be either
30 perpetual or for a fixed term of years.
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1 (10) The name and post office address of each of the
2 incorporators; a statement of the number of shares subscribed
3 to by each, which must be at least one; and the class of
4 shares to which each subscribes.
5 § 7720. Amendments of articles.
6 * * *
7 (b) Delivery and [recordation] filing.--Amendments to the
8 articles of incorporation[, signed by two authorized officers of
9 the corporation, together with a required filing fee,] shall be
10 [delivered to] filed in the department. [If the department finds
11 that the amendments to the articles comply with the law and that
12 all the required fees have been paid, it shall approve the
13 amendments to the articles of incorporation, and a copy of the
14 amended articles shall be recorded in the bureau.] Upon
15 [approval] the filing of amendments to the articles, they shall
16 become effective. See section 134 (relating to docketing
17 statement).
18 * * *
19 § 7721. Bylaws.
20 * * *
21 (b) Content.--The bylaws may provide for the following
22 matters:
23 (1) The time, place and manner of calling and conducting
24 meetings of the members and the number of members that
25 constitute a quorum.
26 (2) The manner of voting and the conditions upon which
27 members may vote at general or special meetings.
28 (3) Subject to provision in the articles of
29 incorporation and in this [act] chapter, the number,
30 qualifications, eligibility requirements, manner of
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1 nomination, duties and terms of office of directors and
2 officers; the time of their election; and mode and manner of
3 giving notice of election.
4 (4) The time, place and manner for calling and holding
5 meetings of the directors and executive committees and the
6 number that constitutes a quorum.
7 (5) Rules consistent with law and the articles of
8 incorporation for the management of the corporation; the
9 making of contracts; the issuance, redemption and transfer of
10 stock; the relative rights, duties, interests and preferences
11 of members and stockholders; and the mode, manner and effect
12 of termination of a member.
13 (6) Any other provisions deemed necessary or proper to
14 carry out the purposes of the corporation.
15 (7) Penalties for violations of the bylaws.
16 § 7726. Exemption from tax on capital stock and indebtedness.
17 No State or local tax may be levied or placed upon a
18 corporation's capital stock or upon bonds, certificates or other
19 evidences of indebtedness issued by a corporation. A corporation
20 is not required to file with the Department of Revenue or with
21 any other State or local official the reports relative to such
22 taxes as are required of corporations not exempt from payment of
23 the taxes.
24 § [7726] 7727. Applicability.
25 (a) General rule.--This chapter shall apply to domestic
26 corporations incorporated under this chapter [on or after the
27 effective date of this chapter].
28 * * *
29 § 8102. Interchangeability of partnership and corporate forms
30 of organization.
19900S1761B2510 - 317 -
1 * * *
2 (b) Exceptions.--Subsection (a) shall not:
3 (1) Affect any law relating to the taxation of
4 partnerships or corporations.
5 (2) Apply to a banking institution, credit union,
6 insurance corporation or savings association, unless the laws
7 relating thereto expressly contemplate the conduct of the
8 regulated business in partnership form.
9 (3) Permit a partnership to provide full limited
10 liability for all of the investors therein or otherwise fail
11 to preserve the intrinsic differences between the partnership
12 and corporate forms.
13 § 8103. Continuation of certain limited partnerships.
14 (a) Scope.--This section shall apply to any domestic limited
15 partnership that elects to be governed by this section. The
16 election, or a termination of the election, may be effected in
17 the manner provided in section 8701(a) (relating to application
18 of chapter).
19 (b) General rule.--The action under section 8571(a)(4)
20 (relating to nonjudicial dissolution) to elect to continue the
21 business of a limited partnership to which this section applies
22 or to appoint one or more replacement general partners of the
23 partnership, or both, may be effected by less than all, but not
24 less than a majority in interest, of the partners.
25 § 8503. Definitions.
26 The following words and phrases when used in this chapter
27 shall have the meanings given to them in this section unless the
28 context clearly indicates otherwise:
29 * * *
30 "Court." Subject to any inconsistent general rule prescribed
19900S1761B2510 - 318 -
1 by the Supreme Court of Pennsylvania:
2 (1) the court of common pleas of the judicial district
3 embracing the county where the registered office of the
4 limited partnership is or is to be located; or
5 (2) where a limited partnership results from a merger,
6 consolidation or other transaction without establishing a
7 registered office in this Commonwealth or withdraws as a
8 foreign limited partnership, the court of common pleas in
9 which venue would have been laid immediately prior to the
10 transaction or withdrawal.
11 * * *
12 § 8511. Certificate of limited partnership.
13 (a) General rule.--In order to form a limited partnership, a
14 certificate of limited partnership must be executed and filed in
15 the Department of State. The certificate shall set forth:
16 * * *
17 (4) If a partner's interest in the limited partnership
18 is to be evidenced by a certificate of partnership interest,
19 a statement to that effect.
20 (5) Any other matters the partners determine to include
21 therein. A provision included in the certificate of limited
22 partnership pursuant to this paragraph shall be deemed to be
23 a provision of the partnership agreement for purposes of any
24 provision of this chapter that refers to a rule as set forth
25 in the partnership agreement.
26 * * *
27 (C) DUTIES OF RECORDERS OF DEEDS.--EACH RECORDER OF DEEDS <--
28 SHALL CONTINUE TO KEEP OPEN FOR PUBLIC INSPECTION THE RECORD OF
29 LIMITED PARTNERSHIP CERTIFICATES RECORDED UNDER THE STATUTES
30 SUPPLIED BY THIS CHAPTER AND BY PRIOR LAW THE CUSTODY OF WHICH
19900S1761B2510 - 319 -
1 HAS NOT BEEN TRANSFERRED TO THE DEPARTMENT PURSUANT TO SECTION
2 140 (RELATING TO CUSTODY AND MANAGEMENT OF ORPHAN CORPORATE AND
3 BUSINESS RECORDS).
4 (d) Transitional provision.--A limited partnership formed
5 under prior law shall not be required to set forth in its
6 certificate of limited partnership a registered office or the
7 business address of each general partner until such time as it
8 first amends its certificate of limited partnership under this
9 chapter.
10 [(d)] (e) Cross references.--* * *
11 § 8512. Amendment of certificate.
12 * * *
13 (b) Events requiring amendment.--An amendment to a
14 certificate of limited partnership shall be filed upon the
15 occurrence of any of the following events:
16 (1) A change in the name of the limited partnership.
17 (2) The admission of a new general partner.
18 (3) The withdrawal of a general partner.
19 [(4) The continuation of the business under section 8571
20 (relating to nonjudicial dissolution) after an event of
21 withdrawal of a general partner.]
22 * * *
23 § 8516. Liability for false statement in certificate.
24 (a) General rule.--If any certificate of limited partnership
25 or certificate of amendment or cancellation contains a
26 materially false statement OR FAILS TO STATE A MATERIAL FACT <--
27 REQUIRED TO BE STATED THEREIN, one who suffers loss by
28 reasonable reliance on the statement OR FAILURE TO STATE A <--
29 MATERIAL FACT may recover damages for the loss from:
30 (1) any person who executes the certificate, or causes
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1 another to execute it on his behalf, and knew, and any
2 general partner who knew or should have known, the
3 [statement] CERTIFICATE to be [false] INACCURATE in any <--
4 material respect at the time the certificate was executed;
5 and
6 (2) any general partner who thereafter knows or should
7 have known that any arrangement or other fact described in
8 the certificate has changed, making the [statement] <--
9 CERTIFICATE inaccurate in any material respect within a <--
10 sufficient time before the [statement] CERTIFICATE was relied <--
11 upon reasonably to have enabled that general partner to
12 cancel or amend the certificate, or to file an application
13 for its cancellation or amendment under section 8515
14 (relating to execution by judicial act).
15 (b) Cross reference.--See section 8511(d) (relating to
16 transitional provision).
17 § 8545. Merger and consolidation of limited partnerships
18 authorized.
19 * * *
20 (c) Business trusts and other associations.--The provisions
21 of this subchapter applicable to domestic and foreign limited
22 partnerships shall also be applicable to a merger or
23 consolidation with or into a domestic or foreign corporation,
24 business trust, general partnership or other association. The
25 surviving or resulting entity in such a merger or consolidation
26 may be a corporation, partnership, business trust or other
27 association. Except as otherwise provided by law in this or any
28 other state, the powers and duties vested in and imposed upon
29 the general partners and limited partners in this subchapter
30 shall be exercised and performed by the group of persons under
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1 the direction of whom the business and affairs of the
2 corporation, business trust or other association are managed and
3 the holders or owners of shares or other interests in the
4 corporation, business trust or other association, respectively,
5 irrespective of the names by which the managing group and the
6 holders or owners of shares or other interests are designated.
7 The units into which the shares or other interests in the
8 corporation, business trust or other association are divided
9 shall be deemed to be partnership interests for the purposes of
10 applying the provisions of this subchapter to a merger or
11 consolidation involving the corporation, business trust or other
12 association.
13 § 8558. Liability upon return of contribution.
14 * * *
15 (b) Unlawful distributions.--If a partner has received the
16 return of any part of his contribution in violation of the
17 partnership agreement or this chapter, he is liable to the
18 limited partnership for a period of [four] two years thereafter
19 for the amount of the contribution wrongfully returned.
20 * * *
21 § 8562. Assignment of partnership interest.
22 * * *
23 (b) Certificate of partnership interest.--The [partnership
24 agreement] certificate of limited partnership may provide that a
25 partner's interest in a limited partnership may be evidenced by
26 a certificate of partnership interest issued by the limited
27 partnership and may also provide for the assignment or transfer
28 of any partnership interest represented by such a certificate
29 and make other provisions with respect to such certificates. See
30 13 Pa.C.S. § 8102 (relating to definitions and index of
19900S1761B2510 - 322 -
1 definitions).
2 * * *
3 § 8571. Nonjudicial dissolution.
4 (a) General rule.--A limited partnership is dissolved and
5 its affairs shall be wound up upon the happening of the first to
6 occur of the following:
7 * * *
8 (4) An event of withdrawal of a general partner unless
9 at the time there is at least one other general partner and
10 the written provisions of the partnership agreement permit
11 the business of the limited partnership to be carried on by
12 the remaining general partner and that partner does so. The
13 limited partnership is not dissolved and is not required to
14 be wound up by reason of any event of withdrawal if, within
15 180 days after the withdrawal, all partners [(except as
16 provided in subsection (c))] agree in writing to continue the
17 business of the limited partnership or to the appointment of
18 one or more replacement general partners.
19 (5) Entry of an order of judicial dissolution under
20 section 8572 (relating to judicial dissolution).
21 * * *
22 (c) [Modification by agreement.--If the partnership
23 agreement so provides in writing, the action under subsection
24 (a)(4) to elect to continue the business of the limited
25 partnership or to appoint one or more replacement general
26 partners, or both, may be effected by less than all, but not
27 less than a majority in interest, of the partners.
28 (d)] Cross references.--See sections 8103 (relating to
29 continuation of certain limited partnerships) and 8512(b)
30 (relating to events requiring amendment).
19900S1761B2510 - 323 -
1 § 8575. Survival of remedies and rights after dissolution.
2 (a) General rule.--The dissolution of a limited partnership
3 shall not eliminate or impair any remedy available to or against
4 the limited partnership or its partners for any right or claim
5 existing, or liability incurred, prior to the dissolution, if an
6 action thereon is brought on behalf of:
7 (1) the limited partnership within the time otherwise
8 limited by law; or
9 (2) any other person before or within [four] two years
10 after the date of the dissolution or within the time
11 otherwise limited by law, whichever is less.
12 The actions may be prosecuted against and defended by the
13 limited partnership under the name of the limited partnership.
14 * * *
15 § 8701. Scope and definition.
16 (a) Application of chapter.--This chapter applies to a
17 general or limited partnership formed under the laws of this
18 Commonwealth that elects to be governed by this chapter. Any
19 partnership that desires to elect to be governed by this
20 chapter, or to amend or terminate the election, shall file in
21 the Department of State a statement of election, amendment or
22 termination, as the case may be, which shall be signed by a
23 general partner and shall set forth:
24 (1) The name of the partnership.
25 (2) The location of the principal place of business.
26 (3) The name of each [member] general partner of the
27 partnership as of the date of the statement.
28 (4) A statement that the partnership elects to be
29 governed by this chapter or that the election to be governed
30 by this chapter shall be amended or terminated, as the case
19900S1761B2510 - 324 -
1 may be.
2 (5) If the election is to be made or terminated, a
3 statement that the election or termination has been
4 authorized by at least a majority in interest of the
5 partners.
6 Upon the filing of the statement of election, amendment or
7 termination in the department, the election to be governed by
8 this chapter shall be effective, amended or terminated, as the
9 case may be.
10 * * *
11 § 9102. Funeral and similar benefits.
12 Members of unincorporated associations paying [periodical]
13 periodic or funeral benefits shall not be individually liable
14 for the payment of [periodical] periodic or funeral benefits or
15 other similar liabilities of the association. The liabilities
16 shall be payable only out of the treasury of the association.
17 § 9501. Application and effect of chapter.
18 (a) General rule.--
19 (1) [This] Unless the context clearly indicates
20 otherwise, this chapter shall apply to and the words
21 "business trust" in this chapter shall mean [a business] AN <--
22 ASSOCIATION ORGANIZED AS A trust:
23 [(1)] (i) Hereafter established under the laws of
24 this Commonwealth.
25 [(2)] (ii) Whose deed of trust or other organic
26 document states, by amendment or otherwise, that the
27 trust exists subject to the provisions of this chapter,
28 in the case of a business trust heretofore established
29 under the laws of this Commonwealth or heretofore or
30 hereafter established under the laws of any other
19900S1761B2510 - 325 -
1 jurisdiction.
2 (2) The words "business trust" in this chapter shall not
3 include:
4 (i) A trust contemplated by section 1768 (relating
5 to voting trusts and other agreements among shareholders)
6 or any similar provision of law.
7 (ii) A trust for creditors.
8 (iii) A mortgage, deed of trust or other indenture
9 or similar instrument or agreement under which debt
10 securities are outstanding or to be issued.
11 (iv) A trust for the benefit of one or more
12 investors with respect to a lease of real or personal
13 property, unless the instrument creating the trust is
14 filed under this chapter.
15 * * *
16 § 9502. Creation of business trusts.
17 A business trust may be created in real or personal property,
18 or both, with power in the trustee or a majority of the
19 trustees:
20 (1) To receive title to, hold, buy, sell, exchange,
21 transfer and convey real and personal property for the use of
22 the business trust.
23 (2) To take, receive, invest or disburse the receipts,
24 earnings, rents, profits or returns from the trust estate.
25 (3) To carry on and conduct any lawful business
26 designated in the deed or other instrument of trust, and
27 generally to do any lawful act in relation to such trust
28 property that any individual owning the same absolutely might
29 do.
30 (4) To merge with another business trust or other
19900S1761B2510 - 326 -
1 association, to divide or to engage in any other fundamental
2 or other transaction contemplated by the deed or other
3 instrument of trust.
4 § 9503. Documentation of trust.
5 (a) General rule.--A business trust shall not be valid
6 unless created by deed of trust or other written instrument
7 subscribed by one or more individuals, associations or other
8 entities [and filed in the Department of State]. The trustees of
9 a business trust shall promptly cause the instrument or any
10 amendment thereof, except an amendment solely effecting or
11 reflecting the substitution of or other change in the trustees,
12 to be filed in the Department of State. The failure to effect
13 the filing shall not affect the validity of a business trust. A
14 trustee who violates the requirements of this subsection shall
15 be liable for a civil penalty in the amount of $1,000 payable to
16 the department.
17 * * *
18 (C) AMENDMENT.--THE INSTRUMENT MAY BE AMENDED IN THE MANNER <--
19 AND TO THE EXTENT PROVIDED THEREIN OR BY THE TRUSTEE OR A
20 MAJORITY OF THE TRUSTEES, IF NOT OTHERWISE PROVIDED THEREIN. THE
21 AMENDMENT SHALL BE EVIDENCED BY A WRITTEN INSTRUMENT SUBSCRIBED
22 BY ONE OR MORE AUTHORIZED PERSONS ON BEHALF OF THE BUSINESS
23 TRUST. THE INSTRUMENT OF AMENDMENT, IF REQUIRED BY SUBSECTION
24 (A), SHALL BE FILED IN THE DEPARTMENT AND:
25 (1) IF THE ORIGINAL DEED OF TRUST OR OTHER INSTRUMENT
26 WAS FILED IN THE DEPARTMENT UNDER SUBSECTION (A), SHALL
27 BECOME EFFECTIVE UPON FILING OR SUCH LATER DATE AND TIME, IF
28 ANY, AS MAY BE SET FORTH IN THE INSTRUMENT OF AMENDMENT; OR
29 (2) IN ANY OTHER CASE, SHALL BECOME EFFECTIVE AS SET
30 FORTH IN THE INSTRUMENT OF AMENDMENT.
19900S1761B2510 - 327 -
1 (d) Duration.--The instrument creating a business trust
2 shall specify the period of its duration, which [shall not
3 exceed 21 years from its creation or from its last extension,
4 whichever is later. A beneficiary of a business trust who
5 objects to the extension of the term of existence of a business
6 trust and who complies with the provisions of Subchapter D of
7 Chapter 15 (relating to dissenters rights) shall be entitled to
8 the rights and remedies therein provided. The date of the
9 adoption of the amendment to the instrument changing the term of
10 existence shall be deemed to be the effective date of the plan,
11 the beneficiaries who make written demand shall be deemed to be
12 the dissenting shareholders, and the trust shall be deemed the
13 corporation for the purposes of that subchapter.] may be
14 perpetual. The rule against perpetuities or analogous principles
15 shall not be applicable to a business trust.
16 * * *
17 § 9505. SUCCESSION OF TRUSTEES. <--
18 AN INSTRUMENT MAY PROVIDE FOR THE SUCCESSION [TO ANY] OF
19 TITLE TO THE TRUST PROPERTY TO A SUCCESSOR TRUSTEE, IN CASE OF
20 THE DEATH, RESIGNATION, REMOVAL OR INCAPACITY OF [SUCH] ANY
21 TRUSTEE. IN THE CASE OF ANY SUCH SUCCESSION, THE TITLE TO THE
22 TRUST PROPERTY SHALL AT ONCE VEST IN THE SUCCEEDING TRUSTEE.
23 § 9506. Liability of trustees and beneficiaries.
24 (a) General rule.--Liability to third parties for any act,
25 omission or obligation of a trustee of a business trust when
26 acting in such capacity shall extend to [the whole of the trust
27 estate or so much thereof] so much of the trust estate as may be
28 necessary to discharge such liability, but personal liability
29 shall not attach to the trustee or the beneficiaries of the
30 trust for any such act, omission or liability. An obligation of
19900S1761B2510 - 328 -
1 a trust based upon a writing may be limited to a specific fund
2 or other identified pool or group of assets of the trust.
3 (b) Standards and immunities.--[The] EXCEPT AS OTHERWISE <--
4 PROVIDED IN THE INSTRUMENT GOVERNING THE TRUST, THE provisions
5 of [Subchapter B of Chapter 5 (relating to indemnification and
6 corporate directors' liability)] Subchapters B (relating to
7 fiduciary duty) and D (relating to indemnification) of Chapter
8 17 shall be applicable to [trustees] REPRESENTATIVES of a <--
9 business trust.
10 § 9507. Foreign business trusts.
11 A business trust organized under any laws other than those of
12 this Commonwealth shall be subject to Subchapters B (relating to
13 qualification) and C (relating to powers, duties and
14 liabilities) of Chapter 41, as if it were a foreign business
15 corporation, EXCEPT THAT A QUALIFIED FOREIGN BUSINESS TRUST <--
16 SHALL ENJOY THE SAME RIGHTS AND PRIVILEGES AS A DOMESTIC
17 BUSINESS TRUST, BUT NO MORE, AND EXCEPT AS OTHERWISE PROVIDED BY
18 LAW, SHALL BE SUBJECT TO THE SAME LIABILITIES, RESTRICTIONS,
19 DUTIES AND PENALTIES NOW IN FORCE OR HEREAFTER IMPOSED UPON
20 DOMESTIC BUSINESS TRUSTS, TO THE SAME EXTENT AS IF IT WERE A
21 DOMESTIC BUSINESS TRUST.
22 DIVISION II
23 INSURANCE CORPORATIONS
24 Section 201. Definition of term "insurance corporation."
25 As used in this division, the term "insurance corporation"
26 means any domestic insurance company of any of the classes
27 described in section 201 or 701(3) of the act of May 17, 1921
28 (P.L.682, No.284), known as The Insurance Company Law of 1921,
29 or incorporated under the acts of April 28, 1903 (P.L.329,
30 No.259), April 20, 1927 (P.L.317, No.190), June 24, 1939
19900S1761B2510 - 329 -
1 (P.L.686, No.320), June 20, 1947 (P.L.687, No.298), June 28,
2 1951 (P.L.941, No.184), July 15, 1957 (P.L.929, No.401), or any
3 similar act relating to the incorporation or reincorporation of
4 limited life insurance companies. The term does not include any
5 of the following:
6 (1) A hospital plan corporation subject to 40 Pa.C.S.
7 Ch. 61 (relating to hospital plan corporations).
8 (2) A professional health service corporation subject to
9 40 Pa.C.S. Ch. 63 (relating to professional health services
10 plan corporations).
11 (3) A fraternal benefit society subject to the act of
12 July 29, 1977 (P.L.105, No.38), known as the Fraternal
13 Benefit Society Code.
14 (4) A health maintenance organization subject to the act
15 of December 29, 1972 (P.L.1701, No.364), known as the Health
16 Maintenance Organization Act.
17 Section 202. Corporate powers.
18 (a) General rule.--No insurance corporation shall transact
19 any other business other than that specified in its original or
20 amended articles of incorporation or charter or authorized by
21 statute regulating the business of the corporation.
22 (b) Ancillary activities.--With the prior approval of the
23 Insurance Department, an insurance corporation may,
24 independently of its insurance business and in addition to
25 authority conferred by any other statute regulating the business
26 of the corporation, provide services of the kinds it performs in
27 the normal conduct of the business for which it is incorporated,
28 including, but not limited to, consultative, administrative,
29 investment, actuarial, loss prevention, data processing,
30 accounting, claims and collection services. The Insurance
19900S1761B2510 - 330 -
1 Department shall take into account the effect of the provision
2 of such services on the insurance business of the corporation
3 and the risks inherent in the provision of such services by the
4 corporation.
5 (c) Subsidiaries.--Subsections (a) and (b) shall not affect
6 the power of an insurance corporation to hold, own and control
7 subsidiaries engaged in other businesses as authorized by law.
8 Section 203. Authorization to do business.
9 No insurance corporation incorporated after (in printing this
10 act in the Laws of Pennsylvania the Legislative Reference Bureau
11 shall insert here, in lieu of this statement, the effective date
12 of this division) shall have power to engage in the business of
13 insurance until it shall have received a certificate from the
14 Insurance Department authorizing the corporation to commence
15 business.
16 Section 204. Amendment of articles.
17 (a) General rule.--Any amendment of the articles of
18 incorporation or charter of any insurance corporation that may
19 be effected only by action or with the approval of the
20 shareholders or members (other than an amendment authorizing or
21 creating a new class or series of shares or increasing the
22 authorized number of any previously authorized class or series
23 of shares) shall become effective only if approved by the
24 Insurance Department. See 15 Pa.C.S. § 103 (relating to
25 subordination of title to regulatory laws).
26 (b) Amendments not requiring approval of Insurance
27 Department.--The Department of State shall forward to the
28 Insurance Department a copy of any amendment of the articles of
29 incorporation or charter of any insurance corporation that
30 becomes effective without the approval of the Insurance
19900S1761B2510 - 331 -
1 Department.
2 (c) Reduction in capital stock.--The capital stock of an
3 insurance corporation shall not be reduced below the minimum
4 amount of capital stock required by law for the formation of the
5 corporation.
6 Section 205. Other fundamental transactions.
7 (a) General rule.--Any plan of merger, consolidation,
8 exchange, asset transfer, division or conversion of any
9 insurance corporation, any recapitalization or voluntary
10 dissolution of any insurance corporation or any issuance of
11 shares by any insurance corporation in exchange for shares of
12 another insurance company shall become effective only if
13 approved by the Insurance Department. See 15 Pa.C.S. § 103
14 (relating to subordination of title to regulatory laws).
15 (b) Standards.--A share exchange or similar transaction
16 shall be approved if it is in accordance with law and the terms
17 and conditions are fair. A reduction in capital stock shall be
18 approved if it is in accordance with law and consistent with the
19 interests of the policyholders and creditors. A merger or
20 consolidation of a title insurance company or the acquisition of
21 substantially all the assets or stock of a title insurance
22 company or abstract company by a title insurance company shall
23 be approved if it is in accordance with law, not inequitable to
24 the shareholders of any title insurance or abstract company
25 involved and will not substantially reduce the security of and
26 service to be rendered to policyholders of the domestic title
27 insurance company in this Commonwealth or elsewhere. Any other
28 transaction subject to subsection (a) shall be approved if it is
29 in accordance with law and not injurious to the interests of the
30 policyholders and creditors.
19900S1761B2510 - 332 -
1 (c) Approval of compensation.--No director, officer, agent
2 or employee of any title insurance company or abstract company
3 party to any merger, consolidation or acquisition subject to
4 subsection (a) shall receive any fee, commission, compensation
5 or other valuable consideration whatsoever for in any manner
6 aiding, promoting or assisting therein except as set forth in
7 the terms of the transaction submitted to the Insurance
8 Department for approval.
9 (d) Transactions with foreign corporations.--Any foreign
10 insurance company participating in or resulting from any
11 transaction subject to subsection (a) shall engage in the
12 transaction only with the approval of the insurance supervising
13 officials of the jurisdiction in which such foreign insurance
14 company is incorporated or is to be incorporated. A change in
15 domicile of an insurance corporation to another jurisdiction may
16 be effected only with the consent of the Insurance Department. A
17 foreign insurance company that is a surviving or resulting
18 corporation in any transaction subject to subsection (a) shall
19 not be deemed to hold a certificate of authority to do an
20 insurance business within this Commonwealth solely by reason of
21 the approval by the Insurance Department and consummation of the
22 transaction.
23 (e) Mergers of stock and mutual insurance companies.--A
24 mutual insurance company shall not merge or consolidate with an
25 insurance corporation organized on a stock share basis.
26 (f) Dissolution of mutual companies.--Assets of mutual life
27 insurance companies, derived from a health and accident
28 business, other than those properly credited to the members or
29 policyholders on policies covering such business, and the assets
30 of mutual companies, other than mutual life companies, which may
19900S1761B2510 - 333 -
1 not be properly credited to policyholders and members, shall be
2 escheated to the Commonwealth upon the dissolution of such
3 companies.
4 (g) Definition.--As used in this section, the term
5 "recapitalization" includes any reduction in stated capital and
6 excludes any new or additional share authorization for which
7 approval by the Insurance Department is not required by section
8 204 of this act.
9 Section 206. Increases in capital stock.
10 Within 30 days after any increase in the capital stock of an
11 insurance corporation, the corporation shall report the increase
12 to the Insurance Department on a form for that purpose
13 prescribed by regulation by the department.
14 Section 207. Administrative procedure.
15 (a) General rule.--Every application for a certificate of
16 authority or other approval by the Insurance Department under
17 this division shall be made to the department in writing and
18 shall be in such form as the procedural regulations of the
19 department may require.
20 (b) Standards for approval.--A certificate of authority or
21 other approval under this division shall be issued by order of
22 the department only if and when the department shall find and
23 determine that the application complies with the provisions of
24 this division and the procedural regulations of the department
25 thereunder.
26 (c) Procedure before department.--For the purpose of
27 enabling the department to make the finding or determination
28 required by subsection (b), the department shall afford
29 reasonable notice and opportunity for hearing, which shall be
30 public, and, before or after any such hearing, it may make such
19900S1761B2510 - 334 -
1 inquiries, audits and investigations, and may require the
2 submission of such supplemental studies and information, as it
3 may deem necessary or proper to enable it to reach a finding or
4 determination. The department, in granting a certificate of
5 authority or other approval, may impose such conditions as it
6 may deem to be just and reasonable. In every case the department
7 shall make a finding or determination in writing, stating
8 whether or not the application has been approved, and, if it has
9 been approved in part only, specifying the part which has been
10 approved and the part which has been denied. Any holder of a
11 certificate of authority or other approval, exercising the
12 authority conferred thereby, shall be deemed to have waived any
13 and all objections to the terms and conditions of such
14 certificate or other approval.
15 (d) Judicial review.--Orders of the department upon an
16 application for a certificate of authority or other approval
17 under this section shall be subject to judicial review in the
18 manner and within the time provided or prescribed by law.
19 Section 208. Existing powers preserved.
20 Nothing in this act shall impair the power of any insurance
21 corporation to transact business to the same extent as if this
22 act had not been enacted.
23 DIVISION III
24 CONFORMING AMENDMENTS
25 Section 301. Amendment of Title 13.
26 Sections 9103(f) and 9403 of Title 13 are amended to read:
27 § 9103. Perfection of security interests in multiple state
28 transactions.
29 * * *
30 (f) Uncertificated securities.--
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1 (1) Except as provided in paragraph (2), the law
2 (including the conflict of laws rules) of the jurisdiction of
3 organization of the issuer governs the perfection and the
4 effect of perfection or nonperfection of a security interest
5 in uncertificated securities.
6 (2) In the case of a registered corporation as defined
7 in 15 Pa.C.S. § 2502 (relating to registered corporation
8 status), which has a class OR SERIES, OR ANY PART THEREOF, of <--
9 uncertificated securities listed on the New York Stock
10 Exchange or the American Stock Exchange, the law ([including]
11 excluding the conflict of laws rules) of the jurisdiction in
12 which those exchanges are located governs the perfection and
13 the effect of perfection or nonperfection of a security
14 interest in such uncertificated securities.
15 § 9403. What constitutes filing; duration of filing; effect of
16 lapsed filing; duties of filing officer.
17 * * *
18 (g) Filing fees.--See 15 Pa.C.S. § 153 (relating to fee
19 schedule).
20 Section 302. Enactment of Title 17.
21 The Pennsylvania Consolidated Statutes is amended by adding a
22 title to read:
23 TITLE 17
24 CREDIT UNIONS
25 Chapter
26 1. Preliminary Provisions
27 3. Incorporation
28 5. Corporate Powers, Duties and Safeguards
29 7. Members, Directors and Officers
30 9. Amendment of Articles
19900S1761B2510 - 336 -
1 11. Conversion, Merger and Consolidation
2 13. Dissolution
3 15. Out-of-State Credit Unions
4 CHAPTER 1
5 PRELIMINARY PROVISIONS
6 Sec.
7 101. Short title of title.
8 102. Application of title.
9 103. Definitions.
10 104. Prohibition on use of words "credit union," etc.
11 § 101. Short title of title.
12 This title shall be known and may be cited as the Credit
13 Union Code.
14 § 102. Application of title.
15 This title applies to and the term "credit union" in this
16 title means a cooperative corporation incorporated under any of
17 the following:
18 (1) The act of May 26, 1933 (P.L.1076, No.260), referred
19 to as the Credit Union Act.
20 (2) The act of September 20, 1961 (P.L.1548, No.658),
21 known as the Credit Union Act.
22 (3) This title.
23 § 103. Definitions.
24 The following words and phrases when used in this title shall
25 have the meanings given to them in this section unless the
26 context clearly indicates otherwise:
27 "Activity." A transaction by a member on a loan, share
28 account, share draft account or certificate or a verbal or
29 written communication between the member and the credit union in
30 which the member indicates an awareness or interest in funds
19900S1761B2510 - 337 -
1 deposited by the member in the credit union.
2 "Branch." A subsidiary office of the credit union which is
3 capable of offering the same or approximately the same level of
4 service to members that can be found at the principal office of
5 the credit union. The term includes a branch credit union,
6 branch office, branch agency, additional office other than a
7 service facility and branch place of business.
8 "Department." The Department of Banking of the Commonwealth.
9 "Federal credit union." A credit union organized in
10 accordance with the provisions of the Federal Credit Union Act
11 (48 Stat. 1216, 12 U.S.C. § 1751 et seq.).
12 "Out-of-State credit union." A credit union incorporated
13 under the laws of another state.
14 "Service facility." A subsidiary office of the credit union
15 which is not capable of offering the same or approximately the
16 same level of service that can be found at the principal office
17 of the credit union.
18 "Volunteer." An individual who receives no compensation.
19 Reasonable health, accident and similar insurance protection and
20 the reimbursement of reasonable expenses incurred in the
21 discharge of the duties of the volunteer's position are not
22 compensation.
23 § 104. Prohibition on use of words "credit union," etc.
24 (a) General rule.--Only a credit union subject to this
25 title, a Federal credit union or a corporation organized in
26 accordance with a state credit union statute, may assume and use
27 the words "credit union" in its name or title, or operate in the
28 manner of a credit union.
29 (b) Penalties.--Any person, other than a credit union
30 subject to this title, a Federal credit union, a corporation
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1 organized in accordance with a state credit union statute, or an
2 association of credit unions, who violates subsection (a) by
3 using a name or title containing the words "credit union" or any
4 other derivation thereof or so representing itself in its
5 advertising, or otherwise conducting business as a credit union
6 shall, for each offense, be subject to a penalty levied by the
7 Department of Banking which shall be not less than $1,000, nor
8 more than $10,000. The officers of a corporation shall be liable
9 for such penalty if the offense is committed by a corporation.
10 This section shall be enforced by the department.
11 (c) Civil action.--In addition, WITHIN 30 DAYS AFTER THE <--
12 DEPARTMENT HAS RECEIVED NOTICE OF AN ALLEGED VIOLATION OF THIS
13 SECTION, THE DEPARTMENT SHALL DETERMINE WHETHER A VIOLATION OF
14 THIS SECTION EXISTS. AFTER THE DEPARTMENT HAS MADE ITS
15 DETERMINATION a credit union, Federal credit union, out-of-State
16 credit union or an association of these institutions, may
17 institute a civil action arising out of a violation of this
18 section.
19 CHAPTER 3
20 INCORPORATION
21 Sec.
22 301. Purposes.
23 302. Number and qualifications of incorporators.
24 303. Articles of incorporation.
25 304. Department of Banking consideration of articles.
26 305. Bylaws.
27 § 301. Purposes.
28 (a) General rule.--A credit union may be incorporated under
29 this title for the purpose of promoting thrift among its
30 members, creating a source of credit for such members at
19900S1761B2510 - 339 -
1 reasonable rates of interest and providing an opportunity for
2 its members to use and control their own money on a democratic
3 basis in order to improve their economic and social condition.
4 (b) Central or corporate credit unions.--A central or
5 corporate credit union formed primarily to serve other credit
6 unions, including Federal credit unions and out-of-State credit
7 unions, may be incorporated under this title and shall be
8 subject to all provisions of this title not inconsistent with
9 provisions specifically applicable to central or corporate
10 credit unions. The purposes for which a central or corporate
11 credit union may be incorporated are:
12 (1) To accumulate and prudently manage the liquidity of
13 its member credit unions through interlending and investment
14 services.
15 (2) To act as an intermediary for credit union funds
16 between members and other corporate credit unions.
17 (3) To obtain liquid funds from other credit union
18 organizations, financial intermediaries and other sources.
19 (4) To foster and promote, in cooperation with other
20 state, regional and national corporate credit unions and
21 credit union organizations or associations, the economic
22 security, growth and development of member credit unions.
23 § 302. Number and qualifications of incorporators.
24 (a) General rule.--A credit union may be incorporated
25 pursuant to the provisions of this title, by seven or more
26 incorporators. Such incorporators shall be natural persons of
27 full age, the majority of whom are residents of this
28 Commonwealth and who have a common bond of association as
29 provided in section 701 (relating to membership).
30 (b) Central or corporate credit unions.--A central or
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1 corporate credit union may be incorporated, pursuant to the
2 provisions of this title, by 15 or more credit unions chartered
3 under the laws of the United States or of any state, which have
4 agreed to purchase shares in the credit union in amounts not
5 less than the minimum specified in the bylaws.
6 § 303. Articles of incorporation.
7 Articles of incorporation shall be signed by each of the
8 incorporators. The articles of incorporation shall set forth:
9 (1) The name of the proposed credit union, which shall
10 contain the words "credit union."
11 (2) The class of services to be performed by the credit
12 union, which services shall be within the scope of activities
13 of such associations as set forth in this title.
14 (3) The principal place where its business is to be
15 transacted, which shall be within this Commonwealth.
16 (4) The term for which it is to exist, which may be
17 perpetual.
18 (5) The par value of its shares.
19 (6) The names and post office addresses of the
20 incorporators, and the number of shares subscribed by each.
21 (7) The names and residences of each of the first
22 directors, not less than five in number, who shall serve
23 until the first annual meeting of the credit union, and the
24 name and residence of the treasurer.
25 (8) The common bond of membership.
26 (9) Any provision, not inconsistent with law, which the
27 incorporators may choose to insert for the regulation of the
28 business and the internal affairs of the credit union.
29 § 304. Department of Banking consideration of articles.
30 (a) General rule.--The articles of incorporation and two
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1 copies of the proposed bylaws for the general governance of the
2 credit union shall be presented to the Department of Banking,
3 together with such reasonable fees as shall be established, by
4 the department, for such examination and such investigation as
5 it may deem necessary to ascertain:
6 (1) Whether the character and general fitness of the
7 incorporators, directors, and the treasurer named in the
8 articles of incorporation is satisfactory.
9 (2) Whether the character and number of the group
10 proposed to be served affords reasonable promise of
11 sufficient support for the enterprise so as to make the
12 establishment of the proposed credit union economically
13 advisable.
14 (3) Whether the incorporators, directors and group
15 proposed to be served have a common bond of association as
16 provided in section 701 (relating to membership).
17 (4) Whether the proposed credit union unduly encroaches
18 upon the field of membership of any other credit union.
19 (5) Whether the application is in proper form and within
20 the purpose of this title.
21 (6) Whether the savings of members paid for shares will
22 be insured by the National Credit Union Administration or
23 other share insurance fund approved by the department.
24 Nonprofit corporations created by specific legislation of any
25 state to insure share accounts or depository accounts of
26 credit unions shall not be subject to regulation by the
27 Department of Insurance or to the laws of the Commonwealth
28 concerning insurance.
29 Within 60 days after receipt of the articles, the department
30 shall, upon the basis of the facts disclosed by the application
19900S1761B2510 - 342 -
1 and its investigation, either approve or disapprove the
2 articles.
3 (b) Approval action.--If the department approves the
4 articles, it shall endorse its approval thereon and forward the
5 articles to the Department of State. The Department of State
6 shall, upon the receipt of the articles, file the same. Upon the
7 filing of the article of incorporation, the corporate existence
8 of the credit union shall begin. The articles of incorporation
9 as filed in the Department of State are conclusive evidence of
10 the fact that the credit union has been incorporated.
11 (c) Disapproval action.--If the Department of Banking
12 disapproves the articles, it shall return them to the
13 incorporators, stating in detail its reasons for doing so.
14 (d) Cross reference.--See 15 Pa.C.S. § 134 (relating to
15 docketing statement).
16 § 305. Bylaws.
17 (a) General rule.--The original bylaws of a credit union
18 shall be adopted by the incorporators of the credit union and
19 copies thereof shall be transmitted to the Department of Banking
20 along with the articles of incorporation as provided in this
21 chapter.
22 (b) Amendments.--Thereafter, bylaws may be amended either by
23 two-thirds of the members present and voting or a majority of
24 the board of directors at any regular or special meeting of the
25 credit union, or of the board of directors, as the case may be,
26 if notice thereof is given and a quorum is established in
27 accordance with the bylaws.
28 (c) Restrictions on board of directors.--The board of
29 directors shall not amend any bylaws fixing their
30 qualifications, classification, term of office or compensation.
19900S1761B2510 - 343 -
1 (d) Review by members.--Whenever the board of directors
2 amends the bylaws, written notice thereof shall be given to the
3 members prior to the next meeting of the members or within 90
4 days after such action by the board of directors, whichever is
5 sooner, and such action by the board of directors shall be <--
6 subject to the power of the members at their next. ANY AMENDMENT <--
7 TO THE BYLAWS ADOPTED BY THE BOARD OF DIRECTORS MAY BE REPEALED
8 OR AMENDED BY THE MEMBERS AT A meeting held at least ten days
9 after the mailing of the notice thereof, to change or repeal <--
10 such bylaw or amendment.
11 CHAPTER 5
12 CORPORATE POWERS, DUTIES AND SAFEGUARDS
13 Sec.
14 501. Powers.
15 502. Powers of central or corporate credit unions.
16 503. Regulation by Department of Banking.
17 504. Fiscal year.
18 505. Capital and shares.
19 506. Joint accounts.
20 507. Minority and trust accounts.
21 508. Estate accounts.
22 509. Entrance fees. 509. FEES AND CHARGES. <--
23 510. Loan interest, fees and penalties. <--
24 511. Power to borrow.
25 512. Loans.
26 513. Reserves.
27 514. Dividends.
28 515. Rights and liabilities of terminating members.
29 516. Adverse claims.
30 517. Taxation.
19900S1761B2510 - 344 -
1 § 501. Powers.
2 (a) General rule.--A credit union shall have the following
3 general powers:
4 (1) To continue as a corporation for the time specified
5 in its articles of incorporation subject to 15 Pa.C.S. § 501
6 (relating to reserved power of General Assembly).
7 (2) To maintain and defend judicial proceedings in its
8 corporate name.
9 (3) To adopt and use a corporate seal, and alter the
10 same at pleasure.
11 (4) To grant allowances or pensions to officers,
12 directors and employees for faithful and long-continued
13 services and, after the death of the officer, director or
14 employee either while in the service of the corporation or
15 after retirement, pensions or allowances may be granted or
16 continued to their dependents. The allowances to dependents
17 shall be reasonable in amount and paid only for a limited
18 time and, unless part of an employee benefit plan or
19 employment contract in effect at the time of retirement or
20 death of the officer, director or employee, shall not exceed
21 in total the amount of the compensation paid to the officer,
22 director or employee during the 12 months preceding
23 retirement or death.
24 (5) To have and exercise all of the powers and means
25 necessary to effect the purpose or purposes for which the
26 credit union is organized.
27 (b) Special powers.--Except as set forth in subsection (c),
28 a credit union shall have the following special powers:
29 (1) To receive the savings of its members as payments,
30 representing equity on shares, share draft accounts and share
19900S1761B2510 - 345 -
1 certificates.
2 (2) To make loans to members and to participate in loans
3 to credit union members, including members of any Federal
4 credit union or credit union chartered under the laws of any
5 state, jointly with such other credit unions, credit union
6 organizations or State or Federally chartered and regulated
7 depository institutions, if the institution which originates
8 such a loan shall be legally required to retain an interest
9 of at least 10% of the outstanding balance of the loan. NO <--
10 LOAN MAY BE MADE TO ANY MEMBER IF, UPON THE MAKING OF THAT
11 LOAN, THE MEMBER WOULD BE INDEBTED TO THE CREDIT UNION UPON
12 LOANS MADE TO HIM IN AN AGGREGATE AMOUNT WHICH WOULD EXCEED
13 10% OF THE CREDIT UNION'S UNIMPAIRED CAPITAL.
14 (3) To make loans to any cooperative society or
15 societies, or other organization or organizations, which have
16 membership in the credit union.
17 (4) To make purchase money mortgage loans to members
18 secured by mortgages which are first liens on improved real
19 property situated within the United States, the improvement
20 being an established dwelling house for not more than four
21 families which is owned by the member of the credit union
22 making the mortgage and occupied or to be occupied, in whole
23 or in part, by such member. Purchase money mortgages shall
24 not exceed 90% of the fair market value of the property,
25 except that shares of the credit union owned by the mortgagor
26 may be assigned or pledged as additional collateral security
27 for the mortgage loan and, in such event, the mortgage loan
28 granted upon such property may be increased by the withdrawal
29 value of the additional pledged shares to an amount not to
30 exceed a maximum total mortgage loan of 100% of the fair
19900S1761B2510 - 346 -
1 market value of such real property and the credit union may
2 release this additional collateral whenever the mortgage loan
3 meets all of the requirements of this title and could be made
4 legally at the time of release without the requirement of
5 additional collateral. Purchase money mortgage loans shall be
6 amortized by approximately equal payments sufficient in
7 amount to pay all interest and effect full repayment of
8 principal within a period not in excess of 30 years. Purchase
9 money mortgage loans on any one property shall not exceed 90%
10 of the fair market value of the property, except as provided
11 in this subsection, or 5% of the paid-in capital of the
12 credit union, whichever is lesser. The aggregate total of
13 mortgage loans shall not exceed 50% of the paid-in capital of
14 the credit union. Without regard to the limitations as to the
15 amount and term of a purchase money mortgage loan or the
16 aggregate amount of all mortgage loans set forth in this
17 paragraph, a credit union may grant any mortgage loan which
18 is insured or guaranteed, in whole or in part, by the United
19 States or any instrumentality thereof, or if there is a
20 commitment to so insure or guarantee.
21 (5) To make loans to credit unions organized under the
22 laws of this Commonwealth or under the laws of any state or
23 under the laws of the United States. In the case of central
24 or corporate credit unions, the aggregate amount outstanding
25 on all such loans shall not exceed 25% of the unimpaired
26 capital of the lending credit union.
27 (6) To deposit its funds in insured state banks, bank
28 and trust companies, savings banks, national banking
29 associations, savings associations, Federal saving and loan
30 associations, insured credit unions and insured Federal
19900S1761B2510 - 347 -
1 credit unions and central-type credit union organizations.
2 (7) To invest its funds in the following investments:
3 (i) Securities, obligations or other instruments of
4 or fully guaranteed as to principal and interest by the
5 United States or any agency thereof or in any trust
6 established for investing directly or collectively in the
7 same.
8 (ii) Bonds or other interest-bearing obligations of
9 the Commonwealth or any political subdivision thereof or
10 an authority which has been created as a body corporate
11 and politic under any law of this Commonwealth.
12 (iii) Shares of any building and loan, savings and <--
13 loan association or credit union, organized under the
14 laws of this Commonwealth, or of any Federal savings and
15 loan association or Federal credit union, to the extent
16 to which the withdrawal or repurchase value of such
17 shares is insured by any agency of the United States or
18 any other insurer approved by the Department of Banking.
19 (iv) Bonds and notes of the Pennsylvania Housing
20 Agency created by the act of December 3, 1959 (P.L.1688,
21 No.621), known as the Housing Finance Agency Law.
22 (v) Capital stock, obligations or other securities
23 of any service corporation organized under the laws of
24 this Commonwealth or under the laws of any other state
25 and duly qualified to do business in this Commonwealth,
26 if the entire capital stock of such corporation is
27 available for purchase only by credit unions, organized
28 and existing under the laws of this Commonwealth and by
29 Federal credit unions or association of credit unions. A
30 complete description of the service corporation and its
19900S1761B2510 - 348 -
1 activities must be furnished to the department and its
2 approval obtained by the credit union before investing in
3 such corporation. No credit union may make an investment
4 in a service corporation if its then aggregate
5 outstanding investments under this subparagraph would
6 exceed 1% of its assets.
7 The provisions of this paragraph shall not apply to any <--
8 investments lawfully owned by a credit union on February 20,
9 1990.
10 (VI) OBLIGATIONS ISSUED BY BANKS FOR COOPERATIVES, <--
11 FEDERAL LAND BANKS, FEDERAL INTERMEDIATE CREDIT BANKS OR
12 ANY CORPORATION DESIGNATED IN 31 U.S.C. § 9101(3)
13 (RELATING TO DEFINITIONS) AS A "WHOLLY OWNED GOVERNMENT
14 CORPORATION."
15 (VII) OBLIGATIONS, PARTICIPATIONS OR OTHER
16 INSTRUMENTS OF OR ISSUED BY, OR FULLY GUARANTEED AS TO
17 PRINCIPAL AND INTEREST BY, THE FEDERAL NATIONAL MORTGAGE
18 ASSOCIATION OR THE GOVERNMENT NATIONAL MORTGAGE
19 ASSOCIATION.
20 (VIII) MORTGAGES, OBLIGATIONS OR OTHER SECURITIES
21 WHICH ARE OR EVER HAVE BEEN SOLD BY THE FEDERAL HOME LOAN
22 MORTGAGE CORPORATION PURSUANT TO 12 U.S.C. § 1454
23 (RELATING TO PURCHASE AND SALE OF MORTGAGES; RESIDENTIAL
24 MORTGAGES; CONVENTIONAL MORTGAGES; TERMS AND CONDITIONS
25 OF SALE OR OTHER DISPOSITION; AUTHORITY TO ENTER INTO,
26 PERFORM, AND CARRY OUT TRANSACTIONS) OR 1455 (RELATING TO
27 OBLIGATIONS AND SECURITIES OF THE CORPORATION).
28 (IX) OBLIGATIONS OR OTHER INSTRUMENTS OR SECURITIES
29 OF THE STUDENT LOAN MARKETING ASSOCIATION.
30 (X) PARTICIPATION CERTIFICATES EVIDENCING BENEFICIAL
19900S1761B2510 - 349 -
1 INTERESTS IN OBLIGATIONS, OR IN THE RIGHT TO RECEIVE
2 INTEREST AND PRINCIPAL COLLECTIONS THEREFROM, WHICH
3 OBLIGATIONS HAVE BEEN SUBJECTED BY ONE OR MORE GOVERNMENT
4 AGENCIES TO A TRUST OR TRUSTS FOR WHICH ANY EXECUTIVE
5 DEPARTMENT, AGENCY OR INSTRUMENTALITY OF THE UNITED
6 STATES (OR THE HEAD THEREOF) HAS BEEN NAMED TO ACT AS
7 TRUSTEE.
8 (XI) BANKERS' ACCEPTANCES ISSUED BY STATE BANKS,
9 BANK AND TRUST COMPANIES AND SAVINGS BANKS, AND NATIONAL
10 BANKING ASSOCIATIONS THE ACCOUNTS OF WHICH ARE FEDERALLY
11 INSURED.
12 BEFORE MAKING THE INVESTMENTS DESCRIBED IN SUBPARAGRAPHS (VI)
13 THROUGH (XI), A CREDIT UNION SHALL OBTAIN THE PRIOR WRITTEN
14 APPROVAL OF THE DEPARTMENT.
15 (8) To borrow money subject to the limitations set forth
16 in this title.
17 (9) To make, amend, alter and repeal bylaws not
18 inconsistent with law, for the regulation of its affairs and
19 the conduct and management of the credit union. Immediately
20 upon the adoption of the bylaws, or any additions thereto, or
21 any alteration, amendment or repeal thereof, notice of such
22 fact and a copy of such bylaws or such alteration, amendment
23 or repeal, shall forthwith be sent to the department. The
24 department shall, within 60 days after receipt thereof, have
25 the power to disapprove, for any reasonable cause stated in
26 writing, any such bylaw or any such alteration, amendment or
27 repeal thereof, but the bylaw, alteration, amendment or
28 repeal shall be effective until the department disapproves it
29 and gives notice thereof to the credit union.
30 (10) To hold, purchase, mortgage, alter, improve and
19900S1761B2510 - 350 -
1 sell such real property, and furniture and fixtures to be
2 used therein, as the purposes of the credit union require and
3 which the credit union occupies or intends to occupy for the
4 transaction of its business or partly so occupies and partly
5 leases to others, except that, without the prior written
6 approval of the department, the cost, at the time of
7 acquisition, of such real property and furniture and fixtures
8 therein shall not exceed in the aggregate 50% of the
9 unimpaired surplus and undivided earnings of the credit union
10 or 5% of its unimpaired capital up to $1,000,000, plus 3% of
11 its capital over $1,000,000, whichever is greater. Further a <--
12 credit union with the prior written approval of the
13 department shall generally have the power to sell any of its
14 assets and to purchase the assets of another credit union or
15 Federal credit union.
16 (11) To purchase group insurance at reasonable rates on
17 the lives of its members in an amount not to exceed the
18 respective shares balances of such members.
19 (12) To act as an issuing agent of the United States
20 Treasury for the sale, issuance and redemption of United
21 States Savings Bonds to its members.
22 (13) To invest its funds in shares and become members of
23 any insured central-type credit union organized under the
24 laws of the United States or under the laws of this
25 Commonwealth in which such investments are specifically
26 authorized by the board of directors of the State credit
27 union making the investment.
28 (14) To receive payments on shares and deposits from
29 other credit unions and Federal credit unions. As used in
30 this paragraph, the term "deposit" means a type of time or
19900S1761B2510 - 351 -
1 demand account in which the credit union incurs a debt to the
2 depositor.
3 (15) To receive payments on shares which may be issued
4 at varying dividend rates, share certificates which may be
5 issued at varying dividend rates and maturities and share
6 draft accounts from members or nonmember units of Federal,
7 state or local governments, including any officer, employee
8 or agent of the United States, any state or any political
9 subdivision thereof, or any territory or possession of the
10 United States having official custody of public funds and
11 lawfully investing such funds in a credit union.
12 (16) TO SELL FEDERAL FUNDS TO A BANK OR INSTITUTION <--
13 WHOSE ACCOUNTS ARE FEDERALLY INSURED, PROVIDED THAT THE
14 INTEREST OR OTHER CONSIDERATION RECEIVED FROM THE FINANCIAL
15 INSTITUTION IS AT THE MARKET RATE FOR FEDERAL FUNDS
16 TRANSACTION AND THAT THE TRANSACTION HAS A MATURITY OF ONE OR
17 MORE BUSINESS DAYS OR THE CREDIT UNION IS ABLE TO REQUIRE
18 REPAYMENT AT ANY TIME.
19 (17) WITH THE PRIOR WRITTEN APPROVAL OF THE DEPARTMENT,
20 TO SELL ALL OR A PART OF ITS ASSETS AND TO ASSIGN ITS
21 LIABILITIES AND CAPITAL TO ANOTHER CREDIT UNION, FEDERAL
22 CREDIT UNION OR OUT-OF-STATE CREDIT UNION. FURTHER, A CREDIT
23 UNION WITH PRIOR WRITTEN APPROVAL OF THE DEPARTMENT SHALL
24 HAVE THE POWER TO PURCHASE ALL OR PART OF THE ASSETS, AND TO
25 ASSUME THE LIABILITIES AND CAPITAL OF A CREDIT UNION, FEDERAL
26 CREDIT UNION OR OUT-OF-STATE CREDIT UNION.
27 (c) Southern Africa investments.--No funds of a credit union
28 shall be invested in any stock or obligation of any corporation
29 doing business, either by itself or through any subsidiary or
30 affiliate, in the Republic of South Africa or Namibia. This
19900S1761B2510 - 352 -
1 prohibition shall have prospective effect from February 20,
2 1990, and shall not affect existing investments.
3 § 502. Powers of central or corporate credit unions.
4 (a) General rule.--A central or corporate credit union shall
5 have the general power to enjoy the powers and privileges of any
6 other credit union incorporated under this title in addition to
7 those powers enumerated in this section, or otherwise granted to
8 corporate or central credit unions, regardless of any
9 limitations or restrictions found elsewhere in this title.
10 (b) Special powers.--A central or corporate credit union
11 shall have the following special powers to:
12 (1) Accept shares or deposits in any form from its
13 members, any credit union chartered under the laws of the
14 United States or of any state, including central or corporate
15 credit unions, and credit union organizations and
16 associations.
17 (2) Make loans to its members, any credit union
18 chartered under the laws of the United States or of any
19 state, including central or corporate credit unions, and
20 credit union organizations or associations.
21 (3) Buy and sell any form of marketable debt obligations
22 of domestic or foreign corporations or of Federal, state or
23 local government units.
24 (4) Borrow from any source without limitations, accept
25 demand deposits from any source and issue notes and
26 debentures.
27 (5) Acquire or sell the assets and assume the
28 liabilities of a member and to enter into agreements with any
29 credit union organized under the laws of the United States or
30 any state to discount or purchase loans made pursuant to
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1 government guaranteed loan programs or real estate loans made
2 by any credit union or any obligations of the United States
3 or any agency thereof held by any credit union.
4 § 503. Regulation by Department of Banking.
5 (a) General rule.--Credit unions shall be under the
6 supervision of the Department of Banking. The department is
7 hereby authorized and empowered to issue general rules and
8 regulations and specific orders for the protection of members of
9 credit unions, for insuring the conduct of the business of
10 credit unions on a safe and sound basis and for the effective
11 enforcement of this title. Credit unions shall report to the
12 department as often as may be required by it and at least
13 annually on blanks supplied by the department for that purpose.
14 Supplementary reports may be required by the department from
15 time to time. Credit unions shall be examined as often as may be
16 required by the department and at least annually, and the
17 department may use such other methods of assuring itself of the
18 condition of the credit unions as it shall deem advisable. The
19 cost of all such examinations and inspections shall be paid by
20 the credit union. A credit union shall also pay annually its
21 proportionate share of the overhead expense of the department
22 determined by regulation of the department. For failure to file
23 reports when due, unless excused for cause, a credit union shall
24 pay to the department $5 for each day of its delinquency.
25 (b) Suspension of personnel.--If, in the opinion of the
26 department, a director, officer or committee member of a credit
27 union has committed a violation of a statute, regulation or
28 cease and desist order which has become final or has engaged in
29 an unsafe or unsound practice involving the credit union or has
30 breached a fiduciary duty and if the department determines that
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1 the credit union has suffered or will suffer substantial
2 financial loss or other damage or that the interests of its
3 members could be seriously prejudiced by reason of the
4 violation, practice or breach, the department may suspend the
5 director, officer or committee member upon written notice,
6 pending a hearing to determine whether removal is required. The
7 notice shall contain a statement of the facts constituting
8 grounds for removal and shall indicate a time and place for a
9 hearing. The hearing shall be fixed for a date between 30 and 60
10 days from the date of service of notice, unless an earlier or
11 later date is set by the department at the request of the
12 director, officer or committee member.
13 (c) Seizure of credit union.--If the department determines
14 that a credit union is:
15 (1) violating any of the provisions of this title or any
16 rule or regulation of the department issued under and within
17 the authority of this title;
18 (2) conducting its business in an unsafe manner;
19 (3) in an unsafe and unsound condition to transact its
20 business; or
21 (4) insolvent;
22 the department may serve written notice of its intention to take
23 possession of the credit union. If the condition continues for a
24 period of 15 days after the giving of such notice, the
25 department may, in its discretion, take possession of the
26 business and property of the credit union and retain possession
27 until such time as the condition predicating such action is
28 remedied or until the affairs of the credit union are finally
29 liquidated. The department may take similar action if any report
30 is not filed within a period of 15 days after it is due. Any
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1 person aggrieved by the action of the department in taking
2 possession of a credit union may appeal, whereupon the matter
3 shall be set down for hearing de novo IN ACCORDANCE WITH THE <--
4 PROCEDURES SET FORTH AT 10 PA. CODE CH. 3 (RELATING TO HEARINGS
5 AND CONFERENCES).
6 (d) Exchange of reports of examination.--Whenever the shares
7 of a credit union are insured by the National Credit Union Share
8 Insurance Fund or any other share insurance fund approved by the
9 department, the department is authorized to furnish to the
10 Administrator of the National Credit Union Administration or to
11 any other approved insurer any reports of examination made by
12 the department under this section. If a Pennsylvania credit
13 union conducts business in another state through the
14 establishment and operation of additional branch offices and
15 service facilities under section 904 (relating to place of
16 business), the department is authorized to furnish to the
17 financial regulatory agency of that state reports of examination
18 made by the department for the particular credit union.
19 § 504. Fiscal year.
20 The fiscal year of all credit unions shall end on December 31
21 of each year.
22 § 505. Capital and shares.
23 (a) General rule.--The capital of a credit union shall
24 consist of the payments that have been made to it on shares.
25 (b) Automatic lien.--The credit union shall have an
26 automatic lien on the shares OR SHARE CERTIFICATES of a member <--
27 for any sum due it from such member or for any loan endorsed by
28 him.
29 (c) Share transfer restriction.--Shares of a credit union
30 shall be transferable only to other members of the credit union.
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1 (d) Share insurance required.--The shares representing the
2 savings of members shall be insured in such amounts as provided
3 by the National Credit Union Administration or other share
4 insurance fund approved by the Department of Banking to insure
5 the shares of credit unions. A credit union that has not
6 obtained share account insurance from the National Credit Union
7 Administration or other share insurance fund approved by the
8 department may not, without the prior written approval of the
9 department, accept payments from its members for the purchase of
10 shares.
11 § 506. Joint accounts.
12 (a) General rule.--Whenever shares of a credit union shall
13 be issued in the names of two or more persons, the credit union
14 shall not pay any dividends or earnings thereon, or the
15 repurchase value thereof, except upon proper receipt,
16 acquittance, or other action as the case may be, of all of such
17 persons, unless at the time of subscribing to the shares, or at
18 a subsequent time, all the parties agree to a different
19 arrangement, and give the credit union written notice thereof.
20 (b) Payments to less than all joint owners.--Whenever any
21 share accounts of a credit union shall be issued in the names of
22 two or more persons, and such share accounts shall have been
23 subscribed for under an arrangement with the credit union
24 whereby the dividends thereon, or the repurchase value thereof,
25 may be paid upon receipt, acquittance, or other action, as the
26 case may be, of either or any of such persons, the credit union
27 may pay such dividends or repurchase value upon such receipt,
28 acquittance, or other action, as the case may be, of either or
29 any of such persons, pursuant to the arrangement provided for in
30 this section, notwithstanding the fact that one or more of the
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1 other persons may be dead and the credit union has notice
2 thereof.
3 (c) Revocation of agency.--The co-owner of a joint account
4 may, with consent of the credit union, give said credit union
5 written notice not to honor any or all requests for withdrawal
6 of shares of any other co-owner of the joint account.
7 (d) Spousal accounts.--This section, except subsection (c),
8 shall not be construed to affect share accounts in the names of
9 a husband and his wife.
10 § 507. Minority and trust accounts.
11 (a) General rule.--Shares may be issued and payments on
12 subscribed shares received in the name of a minor, or in trust,
13 in such manner as the bylaws may provide.
14 (b) Transactions with minors.--Whenever shares of a credit
15 union shall be issued in the name of any minor 12 years of age
16 or older, the credit union may pay the dividends or earnings
17 thereon, as well as the withdrawal value of such shares, to such
18 minor, without the assent of his parent or guardian. The
19 receipt, acquittance, or other action required by the credit
20 union to be taken by the minor shall be binding upon such minor
21 with like effect as if such minor were of full age and shall be
22 a valid release to the credit union. The parent or guardian of
23 such minor shall not, in his capacity as parent or guardian,
24 have the power to attach, or in any manner transfer, any shares
25 issued to or in the name of such minor.
26 (c) Transactions with trustees.--Whenever shares of a credit
27 union shall be issued to any person describing himself in
28 subscribing for such shares as trustee for any person or
29 persons, and no other notice of the existence and terms of a
30 valid trust than such description shall have been given to the
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1 credit union, the dividends or earnings on such shares, as well
2 as the withdrawal value of such shares, shall, in the event of
3 the death of the person so described as trustee, be paid to the
4 person or persons for whose benefit the shares were stated to
5 have been subscribed if, at the time of payment, such
6 beneficiary is 16 years of age or older. Payment may be made to
7 any such beneficiary who is 16 years of age or older, under the
8 same conditions as if such shares had been originally subscribed
9 for by him. If there are two or more beneficiaries named on any
10 such shares, the credit union shall, in the absence of written
11 notice to the contrary, make payment to such of the
12 beneficiaries as may survive the trustee, in equal portions. The
13 receipt or acquittance of any such beneficiary or beneficiaries
14 for payments made in accordance with this section shall be a
15 full, complete and valid release of the credit union from any
16 further liability for the amounts so paid.
17 § 508. Estate accounts.
18 (a) General rule.--In the absence of a written agreement or
19 document to the contrary, the assets in the account of a
20 deceased member shall be considered part of the estate of the
21 deceased member. In the absence of such an agreement or document
22 and except for a release of such assets under existing law, the
23 credit union shall, upon learning of the death of the member,
24 freeze the assets in the account of the member, and shall not
25 permit deposits or withdrawals to be made in the account without
26 receiving authorization by a court-recognized representative of
27 the estate for deposits or withdrawals. Until the credit union
28 receives the authorization, it may, if its bylaws so provide,
29 close the account of the deceased member and transfer the funds
30 to unclaimed shares. The payment of the funds of the deceased
19900S1761B2510 - 359 -
1 member to the estate of the deceased member shall release the
2 credit union from liability for the amounts paid.
3 (b) Establishment of account by personal representative.--A
4 court-recognized representative of the estate of a deceased
5 member may open an account with the credit union for the deposit
6 and withdrawal of the funds of the estate, whether or not the
7 representative is a member, if the deceased member was in good
8 standing at the time of death. The payment of the funds of the
9 estate to the estate of the deceased member shall release the
10 credit union from liability for the amounts paid. If a court-
11 recognized representative of an estate is a member of the credit
12 union, the representative may open a separate account with the
13 credit union for the deposit and withdrawal of funds of the
14 estate, whether or not the decedent was a member of the credit
15 union. The payment of the funds of the estate to the estate
16 shall release the credit union from liability for the amounts
17 paid.
18 § 509. Entrance fees. § 509. FEES AND CHARGES. <--
19 (A) ENTRANCE FEES.--A credit union may charge an entrance
20 fee of an amount, not in excess of $1, as may be provided by the
21 bylaws.
22 (B) FEES IN CONNECTION WITH LOANS.--A CREDIT UNION MAY <--
23 COLLECT FEES PAID TO PUBLIC OFFICIALS, ACTUAL FEES NECESSARY TO
24 SECURE COLLATERAL, FEES REQUIRED TO BE CHARGED BY GOVERNMENT
25 AGENCIES AND REASONABLE ATTORNEY FEES. FURTHERMORE, IN
26 CONNECTION WITH REAL ESTATE LOANS, A CREDIT UNION MAY COLLECT
27 CHARGES AND FEES NECESSARY TO SELL THE LOANS TO ANY AGENCY OR
28 INSTRUMENTALITY OF THE FEDERAL GOVERNMENT OR A CORPORATION WHICH
29 ENGAGES IN THE BUSINESS OF PURCHASING MORTGAGE LOANS.
30 (C) FEES IN CONNECTION WITH COLLECTORS OR OUTSIDE COLLECTION
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1 AGENCIES.--A CREDIT UNION MAY COLLECT FEES PAID TO OUTSIDE
2 COLLECTORS OR OUTSIDE COLLECTION AGENCIES, PROVIDED THE
3 AGGREGATE OF SUCH COLLECTION FEES DOES NOT EXCEED 20% OF THE
4 OUTSTANDING LOAN BALANCE.
5 (D) OTHER FEES.--A CREDIT UNION MAY ADDITIONALLY CHARGE FEES
6 FOR OTHER SERVICES TO ITS MEMBERS, PROVIDED THAT THE FEES
7 CHARGED WILL BE FOR THE ACTUAL COST OF THE RESPECTIVE SERVICES
8 PROVIDED BY THE CREDIT UNION.
9 (E) LATE PAYMENT CHARGES.--A CREDIT UNION MAY COLLECT LATE
10 PAYMENT CHARGES NOT IN EXCESS OF 5% OF THE PRINCIPAL AND
11 INTEREST DUE ON ANY INSTALLMENT PAYMENT OF A LOAN THAT IS MORE
12 THAN 15 DAYS DELINQUENT.
13 § 510. Loan interest, fees and penalties. <--
14 (a) General rule.--Interests INTEREST rates on loans made by <--
15 a credit union to its members shall not exceed 15% per annum,
16 when calculated on the unpaid principal balances. Interest shall
17 be computed for the actual number of days which have elapsed at
18 the time of payment, except that interest for mortgage loans may
19 be paid according to a preauthorized amortization schedule.
20 (b) Procedure for increase in rates.--Before any credit
21 union shall charge any higher rate than that authorized in
22 subsection (a), it shall obtain approval for such higher rate
23 from at least two-thirds of the board of directors of the credit
24 union and such higher approved rate shall then apply only to
25 loans made by the credit union thereafter. Members shall be
26 notified in writing of the action of the board of directors not
27 later than the next regular mailing of members account
28 statements, which is at least 20 days subsequent to the action
29 of the board.
30 (c) Closing and collection fees.--No other charges or fines <--
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1 in connection with loans shall be collected other than fees to
2 public officials, actual fees necessary to secure collateral,
3 fees required to be charged by government agencies and
4 reasonable fees of attorneys and outside collectors or outside
5 collection agencies, if the aggregate of such collection fees
6 does not exceed 20% of the outstanding loan balance.
7 (d) Late payment charges.--A credit union may also collect
8 late payment charges not in excess of 5% of the principal and
9 interest due on any installment payment of a loan that is more
10 than 15 days delinquent.
11 (e) (C) Penalty for overcharge.--The taking, receiving, <--
12 reserving or charging interest greater than allowed by this
13 section shall be deemed a forfeiture of the entire interest on
14 the loan, except when such overcharge is the result of a
15 clerical error in computation. In case an interest greater than
16 that which is allowed by this section has been paid, the
17 borrower may within six months after payment recover from the
18 credit union the entire amount of interest paid, except when
19 such overcharge is the result of a clerical error in computation
20 in which case only the excess interest paid may be recovered.
21 (f) (D) Additional powers of certain insured credit <--
22 unions.--A credit union insured by a share insurance fund other
23 than the National Credit Union Share Insurance Fund may make any
24 loan authorized by this title, at such interest, finance charge,
25 rate and terms as a credit union insured by the National Credit
26 Union Share Insurance Fund, except that the authority permitted
27 under this subsection shall not apply to the extension of credit
28 for the purchase of goods and services through the issuance and
29 use of credit cards.
30 § 511. Power to borrow.
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1 (a) General rule.--A credit union may borrow from any source
2 a sum not exceeding 50% of its capital, surplus and undivided
3 earnings for the purpose of meeting the demand for loans to
4 members or for the purpose of meeting demands for share
5 withdrawals.
6 (b) Exception.--A credit union shall not borrow for the
7 purpose of making investments authorized by section 501(b)(7)
8 (relating to powers).
9 § 512. Loans.
10 Except as otherwise provided in this title, a credit union
11 may make loans to its members only. Loans must be made subject
12 to the conditions contained in the bylaws. A borrower may repay
13 his loan, in whole or in part, any day the office of the credit
14 union is open for business. No director, officer or member of
15 any committee may obtain a loan from the credit union in which
16 he holds office on terms, rates or conditions more favorable
17 than those granted to any other member or endorse a loan granted
18 by the credit union in which he holds office.
19 § 513. Reserves.
20 (a) General rule.--At the end of each accounting period the
21 gross income shall be determined. From this amount, there shall
22 be set aside, as a regular reserve against losses on loans and
23 against such other losses as may be specified by the Department
24 of Banking, sums in accordance with the following schedule:
25 (1) A credit union in operation for more than four years
26 and having assets of $500,000 or more shall set aside:
27 (i) 10% of gross income until the regular reserve
28 shall equal 4% of the total of outstanding loans and risk
29 assets; then
30 (ii) 5% of gross income until the regular reserve
19900S1761B2510 - 363 -
1 shall equal 6% of the total of outstanding loans and risk
2 assets.
3 (2) A credit union in operation less than four years or
4 having assets of less than $500,000 shall set aside:
5 (i) 10% of gross income until the regular reserve
6 shall equal 7.5% of the total of the outstanding loans
7 and risk assets; then
8 (ii) 5% of gross income until the regular reserve
9 shall equal 10% of the total of outstanding loans and
10 risk assets.
11 (3) Whenever the regular reserve falls below the stated
12 percentage of the total of outstanding loans and risk assets,
13 it shall be replenished by regular contributions in such
14 amounts as may be needed to maintain the stated reserve
15 goals.
16 (4) All entrance fees collected shall be set aside in
17 the regular reserve fund.
18 (5) The regular reserve fund thus established shall not
19 be loaned out to members and shall be deposited as authorized
20 in section 501(b)(6) (relating to powers) or invested in such
21 investments as are authorized by section 501(b)(7). The
22 regular reserve fund shall belong to the credit union and
23 shall not be distributed except in case of liquidation. The
24 board of directors shall decide the loans which are to be
25 charged off against the regular reserve fund, except that the
26 Department of Banking may at the time of examination of a
27 credit union recommend for charge-off such loans which in its
28 opinion are unsound, which loans shall be charged against the
29 regular reserve fund within 60 days of the receipt of such
30 recommendation from the department. Any amount received from
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1 the repayment of a loan after it has been charged off against
2 the regular reserve fund shall be credited back to the fund.
3 (6) The directors are authorized, after the required
4 reserve has been provided for, to make additional transfers
5 from undivided earnings to a contingent reserve for other
6 anticipated losses and expenses, but the members at the
7 annual meeting may retransfer any part or all of such
8 contingent reserve to the undivided earnings account.
9 (b) Changes in reserve requirement.--The department may
10 decrease the reserve requirement set forth in subsection (a)
11 when in its opinion such a decrease is necessary or desirable.
12 The department may also require special reserves to protect the
13 interests of members either by regulation or for an individual
14 credit union in any special case.
15 § 514. Dividends.
16 (a) General rule.--The board of directors of a credit union
17 or the members on recommendation of the board of directors,
18 whichever the bylaws provide, may declare dividends to be paid
19 on all shares and share certificates from the net earnings and
20 undivided earnings at such intervals and for such periods as the
21 board of directors may authorize and after provision for the
22 required reserves. Within the discretion of the board of
23 directors, payments on all shares which are made within the
24 first ten days of a month may be entitled to dividends for the
25 full month in which such payment is made. Dividends may be added
26 to the credit of the members share accounts, paid in cash, or
27 partially credited to share accounts and partially paid in cash,
28 at the option of the board of directors.
29 (b) Inactive accounts.--A share account may be transferred
30 to a special account if, for at least six years, there has been
19900S1761B2510 - 365 -
1 no activity by the owner of the account and all written
2 communications from the credit union to the owner of the account
3 have been returned to the credit union with no forwarding
4 address. After the transfer the credit union may cease paying
5 dividends on the transferred account and may cease sending
6 notices to the owner. A member whose account has been
7 transferred may reclaim the funds from the credit union at any
8 time prior to the time the account is escheated. After escheat
9 reclaiming is governed by Article XIII.1 of the act of April 9,
10 1929 (P.L.343, No.176), known as The Fiscal Code.
11 § 515. Rights and liabilities of terminating members.
12 All amounts paid on shares of an expelled or withdrawing
13 member, with any dividends accredited thereto to the date
14 thereof, shall, as funds become available and after deducting
15 all amounts due from the member to the credit union, be paid to
16 him. The credit union may require 60 days' notice of intention
17 to withdraw shares. Withdrawing or expelled members shall have
18 no further rights in the credit union, but they shall not by
19 such withdrawal or expulsion be released from any remaining
20 liability to the credit union.
21 § 516. Adverse claims.
22 (a) General rule.--Notice to a credit union or Federal
23 credit union of an adverse claim against shares standing in the
24 name of any member shall not be effectual to cause the credit
25 union or Federal credit union to recognize such adverse claim,
26 unless the adverse claimant shall procure either an attachment
27 or proper restraining order against the credit union or Federal
28 credit union from a court of competent jurisdiction in a cause
29 of action therein instituted by him, wherein the member or his
30 legal representative is made a party in the manner provided by
19900S1761B2510 - 366 -
1 law, or unless he shall execute to the credit union or Federal
2 credit union in form, and with sureties acceptable to it a bond
3 indemnifying the credit union or Federal credit union from any
4 liability, loss, damages, costs and expenses arising from the
5 recognition of such adverse claim.
6 (b) Exception.--This section shall not apply in any instance
7 where the person in whose name the shares are held is a trustee
8 for such adverse claimant, and the facts constituting such
9 relationship, as well as the facts showing reasonable cause of
10 belief on the part of the claimant that such trustee is about to
11 misappropriate the shares, are made to appear by verified
12 statement of such claimant.
13 § 517. Taxation.
14 A credit union incorporated under or subject to this title
15 shall be deemed an institution for savings, and its assets,
16 together with all the accumulation therein, shall not be subject
17 to taxation except as to real estate owned by it. The shares of
18 a credit union shall not be subject to a capital stock bonus tax
19 or a stock transfer tax when issued by the corporation.
20 CHAPTER 7
21 MEMBERS, DIRECTORS AND OFFICERS
22 Sec.
23 701. Membership.
24 702. Meetings.
25 703. Voting rights and procedures.
26 704. Notice to members.
27 705. Expulsion and withdrawal.
28 706. Election of directors and credit and supervisory
29 committee members.
30 707. Duties of directors generally.
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1 708. Officers.
2 709. Compensation of directors and officers.
3 710. Executive committee.
4 711. Procedures for approving service by certain persons.
5 712. Indemnification and exoneration from liability of
6 directors and officers.
7 713. Loan procedures.
8 714. Annual examination.
9 715. Actions by members to enforce a secondary right.
10 § 701. Membership.
11 (a) General rule.--Credit union organizations shall be
12 limited to groups having a potential membership of 200 500 or <--
13 more adult persons and having a common bond of association
14 within a well defined community or rural district by reason of
15 occupation or of membership in a religious congregation or
16 fraternal or labor organization or residence within a well
17 defined community or rural district. A credit union may also
18 retain its original field of membership and, additionally,
19 include in its field of membership other occupational groups, as
20 well as like associational groups having a common bond with the
21 original field of membership, with insufficient number of
22 members to form or conduct the affairs of a separate credit
23 union, if the existing credit union obtains prior permission
24 from the Department of Banking. The membership of a credit union
25 shall be limited to and consist of the incorporators of the
26 credit union and such other persons, having the common bond of
27 association, set forth in the articles of incorporation, as have
28 been duly admitted members, have paid the entrance fee as
29 provided in the bylaws and own and retain one or more shares.
30 Organizations composed principally of the same group as the
19900S1761B2510 - 368 -
1 credit union membership may be members. Employes of credit
2 unions may be members of such credit unions.
3 (b) Family members.--Persons who are members of the
4 immediate family of a member of the credit union may be elected
5 to membership.
6 (c) Trust and joint tenancy deposits.--Shares may be issued
7 in trust for or in joint tenancy with the right of survivorship
8 with any person designated by the credit union member, but no
9 joint tenant or beneficiary of a trust shall be permitted to
10 vote, obtain a loan, or hold office, unless he is within the
11 field of membership and is a qualified member in his own right.
12 (d) Continuation of membership.--Any member who leaves or
13 has left the field of membership and has not withdrawn all of
14 his share account shall not cease to be a member of the credit
15 union by reason thereof, and he shall have all of the rights and
16 obligations of membership including, but not limited to, the
17 right to retain and to add to his share account, and the right
18 to vote. Upon leaving the field of membership, the provisions of
19 this subsection shall apply to persons who have become members
20 of the credit union solely by reason of the provisions of
21 subsection (b), but the provisions of subsection (c) shall not
22 be affected by this subsection.
23 (e) Spouse of deceased member.--The unremarried widow or
24 widower of a deceased member may become a member of the credit
25 union.
26 § 702. Meetings.
27 The annual meeting shall be held at the time, place and in
28 the manner indicated in the bylaws. Special meetings may also be
29 held in the manner provided in the bylaws.
30 § 703. Voting rights and procedures.
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1 At all meetings a member shall have but one vote,
2 irrespective of his shareholdings. There shall be no voting by
3 proxy, but any member, other than a natural person, may cast its
4 vote through an agent duly delegated and appointed agent in
5 writing.
6 § 704. Notice to members.
7 (a) General rule.--All written notices required by this
8 title to be given to members shall be delivered in person to
9 each member or mailed to each member at the address for such
10 member appearing on the records of the credit union.
11 (b) Notice of changes in fees, charges or policies.--Each
12 new member to a credit union shall be provided with written
13 notice by the respective credit union listing any fees, service
14 charges or policies regarding the transfer of funds to
15 noninterest bearing accounts. A new member and each existing
16 member shall subsequently be provided with similar written
17 notice if there is a change by the credit union in the amount or
18 type of fees or service charges or a change in the policy
19 regarding the transfer of funds to noninterest bearing accounts.
20 The credit union shall also provide such information to any
21 member upon request by that member.
22 § 705. Expulsion and withdrawal.
23 (a) Expulsion.--A member may be expelled:
24 (1) by a vote of a majority of the members present at a
25 regular or a special meeting called to consider the matter,
26 at which a quorum, as provided in the bylaws, is present, but
27 only after a hearing after due notice to the member of the
28 time and place of the meeting and of the reason or reasons
29 for such proposed expulsion; or
30 (2) by a vote of a two-thirds majority of the board of
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1 directors present at a regular or special meeting called to
2 consider the matter if:
3 (i) the board has given the member notice of the
4 meeting and of the reason for proposed expulsion;
5 (ii) there is a quorum, as provided in the bylaws,
6 present at the meeting; and
7 (iii) there is a hearing on the matter at the
8 meeting.
9 (b) Withdrawal.--Any member may withdraw from the credit
10 union at any time, but notice of withdrawal may be required.
11 § 706. Election of directors and credit and supervisory
12 committee members.
13 (a) General rule.--At the organization meeting and at all
14 subsequent annual meetings, the credit union members shall elect
15 from the membership of the credit union a board of directors of
16 not less than five members, a credit committee of not less than
17 three members if the bylaws so provide, and a supervisory
18 committee of not less than three nor more than five members if
19 the bylaws so provide, all to hold office for such terms
20 respectively, as the bylaws provide and until successors are
21 duly qualified. IF PERMITTED BY THE BYLAWS THE ELECTION MAY BE <--
22 CONDUCTED BY MAIL BALLOT. A member shall not serve on more than
23 one of the committees. Not more than one member of the board,
24 who shall not be the treasurer or an assistant treasurer, may
25 serve as a member of the credit committee. A member of the board
26 of directors, treasurer or an assistant treasurer may not serve
27 on the supervisory committee.
28 (b) Report to department.--A statement in writing of the
29 names and addresses of the members of the board and the
30 committees and the officers shall be filed with the Department
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1 of Banking within ten days after their election and
2 qualification. For failure to file such statements when due,
3 unless excused for cause, the credit union shall pay to the
4 department $5 for each day of its delinquency.
5 § 707. Duties of directors generally.
6 The directors of a credit union shall have general management
7 of the affairs of the credit union and are specifically
8 required:
9 (1) To act on applications for membership.
10 (2) To determine interest rates on loans.
11 (3) To fix the amount of the surety bond which shall be
12 required of all officers and employees handling money which
13 amount shall be not less than the minimum schedule
14 established by the Department of Banking.
15 (4) To declare dividends or recommend dividends as
16 provided in the bylaws.
17 (5) To transmit or cause to be transmitted to the
18 members all proposed amendments to the bylaws.
19 (6) If the bylaws provide for appointed credit or
20 supervisory committees, to appoint individuals to serve on
21 the credit committee or the supervisory committee and to fill
22 vacancies in the board and in the credit committee until
23 successors are duly chosen and qualified.
24 (7) To determine the maximum individual share holdings
25 and, subject to the limitations contained in this title, the
26 maximum individual loan which can be made with or without
27 security.
28 (8) To have charge of investments, first mortgage loans
29 and loans to other credit unions and Federal credit unions
30 but not loans to members which are under the supervision of
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1 the credit committee as otherwise provided in this title. The
2 board may, however, delegate, to the credit committee, the
3 authority to approve some or all first mortgage loans and, to
4 an investment committee or qualified individual, the
5 authority to make all or some investments, if the board first
6 establishes guidelines and standards for the approval and
7 making of such loans and investments in accordance with the
8 policies of the board of directors.
9 (9) To fix the amount of compensation of directors,
10 officers, committee members, the loan officer and employees.
11 (10) To determine whether, to what extent, and to what
12 class or classes of borrowers, if any, an interest refund is
13 to be made in any dividend period. Any such interest refund
14 shall be paid in proportion to the interest paid by each
15 borrower within any class during that dividend period. No
16 interest refund may be authorized unless a share dividend at
17 the rate of not less than 5% has been declared from the
18 earnings of that dividend period.
19 (11) To appoint alternate credit committee members as
20 needed to serve during incapacity or absence of the credit
21 committee members.
22 § 708. Officers.
23 At their organizational meeting and within 30 days following
24 each annual meeting of the members, the directors shall elect,
25 from their own number, either a president and one or more vice
26 presidents or a chairman and one or more vice chairmen; a
27 treasurer; and a secretary. The same individual may be both
28 treasurer and secretary. The directors may appoint one or more
29 assistant treasurers. The directors may appoint a membership
30 officer from among the members of the credit union, other than
19900S1761B2510 - 373 -
1 the treasurer, an assistant treasurer, or a loan officer. The
2 directors may employ an officer in charge of operations, who
3 shall be under the direction and control of the board or of the
4 treasurer, as determined by the board of directors. The
5 membership officer or the officer in charge shall have the
6 authority to approve applications for membership under such
7 conditions as the directors may prescribe. The membership
8 officer or officer in charge so authorized shall submit to the
9 directors at each monthly meeting a list of approved or pending
10 applications for membership received since the previous monthly
11 meeting, together with such other related information as the
12 bylaws or the board may require.
13 § 709. Compensation of directors and officers.
14 A member of the board of directors and members of the credit
15 committee and the supervisory committee may be compensated if
16 the credit union paid a dividend of not less than 3% from the
17 earnings of the last preceding year. The Department of Banking
18 may prohibit or regulate the payment of compensation of
19 directors, committee members, and officers, exclusive of the
20 treasurer, if it deems such compensation excessive or if, in its
21 opinion, the financial condition of the credit union is not such
22 as to warrant the payment of such compensation.
23 § 710. Executive committee.
24 The directors may appoint from their own number an executive
25 committee of not less than three directors, who may be
26 authorized to act for the board in all respects, subject to such
27 conditions and limitations as prescribed by the board.
28 § 711. Procedures for approving service by certain persons.
29 (a) General rule.--No person who has been convicted of a
30 misdemeanor or a felony involving dishonesty, breach of trust or
19900S1761B2510 - 374 -
1 violation of this title or corresponding provisions of prior law
2 may serve as an officer, director, committee member or employee
3 of a credit union unless the person:
4 (1) in the case of an officer, director or committee
5 member seeking office, has the unanimous approval of the
6 nominating committee of the credit union;
7 (2) in the case of an employee, has the approval of the
8 officer in charge of operations;
9 (3) in the case of an officer, including an officer in
10 charge of operations, director or committee member seeking
11 office, has the unanimous approval of the board of directors
12 of the credit union; or
13 (4) in the case of an employee, other than an officer in
14 charge of operations, has the approval of the board of
15 directors by a vote of at least two-thirds of the board of
16 directors.
17 (b) Disclosure statement.--Every officer, director,
18 committee member and employee shall sign a sworn statement
19 disclosing whether he has ever been convicted of a misdemeanor
20 or a felony involving dishonesty, breach of trust or violation
21 of this title or corresponding provisions of prior law.
22 § 712. Indemnification and exoneration from liability of
23 directors and officers.
24 (a) Indemnification.--A credit union shall be governed by
25 the provisions of 15 Pa.C.S. Ch. 17 Subch. D (relating to
26 indemnification).
27 (b) Exoneration from liability of volunteer officers.--
28 Volunteer officers of Federal, State and out-of-State credit
29 unions shall be entitled to the protection and rights set forth
30 in 15 Pa.C.S. § 513 (relating to personal liability of
19900S1761B2510 - 375 -
1 directors) if the membership adopts a bylaw to that effect.
2 (c) Standard of care and personal liability of directors.--
3 See 15 Pa.C.S. §§ 512 (relating to standard of care and
4 justifiable reliance) and 513.
5 § 713. Loan procedures.
6 (a) Credit committee.--If the bylaws provide for a credit
7 committee, the credit committee shall have the supervision of
8 all loans to members other than first mortgage loans, except to
9 the extent approval of such mortgage loans has been delegated to
10 the credit committee, and loans to other credit unions and
11 Federal credit unions.
12 (b) Conflict of interest.--No credit committee member, loan
13 officer or director of a credit union shall vote on the granting
14 of any loan in which such official or a member of his or her
15 immediate family has a beneficial interest.
16 (c) Applications.--Applications for loans shall be in
17 writing on a form prepared or approved for that purpose by the
18 credit committee or, in the absence of a credit committee, by
19 either the board of directors or a person delegated by the board
20 of directors; and all applications shall set forth the purpose
21 for which the loan is desired, the security, if any, offered,
22 and such other data as may be required. Within the meaning of
23 this section, a pledge of shares in the credit union or the
24 endorsement of a note may be deemed security.
25 (d) Approval by credit committee..--If the bylaws provide
26 for a credit committee, at least a majority of the members of
27 the credit committee shall pass on all loans, and no loan shall
28 be approved unless it is approved by a majority of the members
29 of the credit committee present and voting, unless the credit
30 committee has appointed one or more loan officers, and delegated
19900S1761B2510 - 376 -
1 to such person the power to approve loans, share withdrawals of
2 amounts previously pledged as security for a loan, releases and
3 substitutions of security, within limits specified by the
4 committee. The credit committee shall meet as often as may be
5 necessary after due notice to each member.
6 (e) Approval by loan officer.--If the bylaws do not provide
7 for a credit committee, the board of directors shall appoint a
8 loan officer and delegate the powers of the credit committee
9 under subsection (d) to the loan officer.
10 (f) Reports.--Each loan officer shall furnish to the credit
11 committee or, in the absence of a credit committee, to the board
12 of directors a record of each loan approved or not approved by
13 such person within seven days of the date of the filing of the
14 application therefor.
15 (g) Procedure in absence of loan officer.--All loans not
16 approved by a loan officer shall be acted upon by the credit
17 committee or, in the absence of a credit committee, by the board
18 of directors or a director designated by the board of directors.
19 (h) Restrictions.--No individual shall have authority to
20 disburse funds of the credit union for any loan which has been
21 approved by such individual in his or her capacity as loan
22 officer. Not more than one member of the credit committee may be
23 appointed as loan officer.
24 § 714. Annual examination.
25 (a) Supervisory committee.--If the bylaws of the credit
26 union provide for a supervisory committee, the duties of the
27 supervisory committee shall be as follows:
28 (1) To make at least an annual examination of the
29 affairs of the credit union. The committee shall submit a
30 report to the board of directors and to the members at the
19900S1761B2510 - 377 -
1 next annual meeting of the credit union.
2 (2) By unanimous vote, if it deems such action to be
3 necessary to the proper conduct of the affairs of the credit
4 union, to suspend any officer, director, or member of any
5 committee other than the supervisory committee. In such
6 event, the committee shall call the members of the credit
7 union together, within ten days of the suspension, to act on
8 such suspension. The members at the meeting called for this
9 purpose may sustain such suspension or remove such person
10 from office, or may reinstate such person.
11 (3) By majority vote, the supervisory committee may call
12 a special meeting of the members to consider any matter
13 submitted to it by the committee. The committee shall fill
14 vacancies in its own membership unless otherwise provided in
15 the bylaws.
16 (b) Default by supervisory committee.--Whenever the
17 supervisory committee fails to make the examinations, or reports
18 as provided in subsection (a)(1), the board of directors shall
19 remove from office the members of the supervisory committee and
20 appoint a new committee to make such examinations, or the board
21 may employ the services of a public accountant to make such
22 examinations. The charges for the services of such public
23 accountants shall be paid by the credit union. If the board of
24 directors under such circumstances fails or refuses to act, the
25 Department of Banking may, in addition to its other powers,
26 remove the members of the supervisory committee and issue an
27 order on the board of directors requiring such examinations to
28 be made by a public accountant at the expense of the credit
29 union.
30 (c) Examination by public accountant.--If the bylaws do not
19900S1761B2510 - 378 -
1 provide for a supervisory committee, the board shall employ the
2 services of a public accountant to make examinations under
3 subsections (a) and (b). The charges for the services of the
4 public accountant shall be paid by the credit union.
5 § 715. Actions by members to enforce a secondary right.
6 (a) General rule.--In any action brought to enforce a
7 secondary right on the part of one or more members against any
8 officer or director or former officer or director of a credit
9 union, because the corporation refuses to enforce rights which
10 may properly be asserted by it, the plaintiff or plaintiffs must
11 aver and it must be made to appear that the plaintiff or each
12 plaintiff was a member of the corporation at the time of the
13 transaction of which he complains or that his membership
14 devolved upon him by operation of law from a person who was a
15 member at that time.
16 (b) Security for costs.--In any such action instituted or
17 maintained by a holder or holders of less than 5% of the
18 outstanding share accounts of the credit union, the credit union
19 in whose right the action is brought shall be entitled, at any
20 stage of the proceedings, to require the plaintiff or plaintiffs
21 to give security for the reasonable expenses, including attorney
22 fees, which may be incurred by it in connection therewith and
23 for which it may become liable pursuant to section 712(a)
24 (relating to indemnification) (but only insofar as relates to <--
25 mandatory indemnification in actions by or in the right of the
26 corporation, CORPORATION), to which security the corporation <--
27 shall have recourse in such amount as the court having
28 jurisdiction shall determine upon the termination of the action.
29 The amount of the security may, from time to time, be increased
30 or decreased in the discretion of the court having jurisdiction
19900S1761B2510 - 379 -
1 of the action upon showing that the security provided has or may
2 become inadequate or excessive.
3 CHAPTER 9
4 AMENDMENT OF ARTICLES
5 Sec.
6 901. Procedure for amendment of articles.
7 902. Articles of amendment.
8 903. Filing and review of articles of amendment.
9 904. Place of business.
10 § 901. Procedure for amendment of articles.
11 The articles of incorporation may be amended at any regular
12 or special meeting of the credit union, if written notice of the
13 meeting and of the proposed amendment or amendments is furnished
14 each member at least ten days prior to the meeting at which such
15 amendment or amendments will be considered. Notwithstanding
16 statutory provisions to the contrary, the articles of
17 incorporation may alternatively be amended by the members
18 through mail ballot voting as provided in the bylaws. Amendments
19 to the articles of incorporation must be approved by a majority
20 of the members present at any meeting at which the amendments
21 are considered or, in the case of a mail ballot, by a majority
22 of the members responding by mail ballot. The proposed
23 amendments shall be acted upon only in the event a quorum of the
24 members, as provided in the bylaws, is present or, in the case
25 of a mail ballot vote, a number of returned mail ballots equal
26 to the quorum of the members, as provided in the bylaws, exists.
27 § 902. Articles of amendment.
28 The articles of amendment shall be signed by an officer of
29 the credit union, and shall set forth:
30 (1) The name and principal place of business of the
19900S1761B2510 - 380 -
1 credit union.
2 (2) The amendment or amendments as adopted by the
3 members.
4 (3) The date of the meeting at which the amendment, or
5 amendments, was adopted.
6 (4) That notice of the meeting at which the amendment,
7 or amendments, was considered, was given to each member as
8 provided in this title.
9 (5) That at the meeting at which the amendment, or
10 amendments, was considered, a quorum of the members was
11 present as provided in the bylaws.
12 (6) That the amendment, or amendments, was approved by a
13 majority of the members voting.
14 § 903. Filing and review of articles of amendment.
15 (a) General rule.--Articles of amendment shall be filed with
16 the Department of Banking. If the department finds that the
17 articles of amendment conform to law, it shall endorse its
18 approval thereon and forward the articles of amendment to the
19 Department of State. Upon receipt of the articles of amendment,
20 the Department of State shall file the same.
21 (b) Cross reference.--See 15 Pa.C.S. § 134 (relating to
22 docketing statement).
23 § 904. Place of business.
24 (a) Change in principal place of business.--A credit union
25 may change its place of business upon the filing of a statement
26 of change of principal place of business with the Department of
27 State and the Department of Banking.
28 (b) Branch offices and service facilities.--If a credit
29 union gives the Department of Banking prior written notification
30 and, in the case of branch offices, receives prior approval from
19900S1761B2510 - 381 -
1 the department, it may establish and maintain, at locations
2 other than its principal place of business, additional branch
3 offices and service facilities to furnish services to its
4 members.
5 (c) Cross reference.--See 15 Pa.C.S. § 134 (relating to
6 docketing statement).
7 CHAPTER 11
8 CONVERSION, MERGER AND CONSOLIDATION
9 Sec.
10 1101. Conversion into Federal credit union.
11 1102. Conversion from Federal credit union.
12 1103. Merger and consolidation authorized.
13 1104. Adoption of plan.
14 1105. Articles of merger or consolidation.
15 1106. SUPERVISORY MERGERS OR CONSOLIDATIONS BY DEPARTMENT OF <--
16 BANKING.
17 § 1101. Conversion into Federal credit union.
18 (a) General rule.--A credit union may be converted into a
19 Federal credit union by complying with the following
20 requirements:
21 (1) The proposition for such conversion shall first be
22 approved by a majority vote of the directors of the credit
23 union who shall also set a date for the vote thereon by the
24 members. The vote of the members shall be conducted at a
25 meeting held on such date or by written ballot to be filed on
26 or before such date. Written notice of the proposition and of
27 the date set for the vote shall be given each member not more
28 than 30 nor less than ten days prior to such date. Approval
29 of the proposition shall be by the affirmative vote of a
30 majority of the members, in person or in writing.
19900S1761B2510 - 382 -
1 (2) A statement of the result of the vote, certified by
2 an officer of the credit union shall be filed with the
3 Department of Banking within ten days after the vote is
4 taken.
5 (3) Promptly after the vote is taken and in no event
6 later than 90 days thereafter, if the proposition for
7 conversion was approved, the credit union shall take such
8 action as may be necessary under the applicable laws of the
9 United States to make it a Federal credit union, and within
10 ten days after receipt of the Federal credit union charter,
11 it shall file a copy of the charter thus issued with the
12 Department of State which shall furnish a copy thereof to the
13 Department of Banking. Upon such filing with the Department
14 of State, the credit union shall no longer be subject to any
15 of the provisions of this title. The successor Federal credit
16 union shall be vested with all of the assets and shall
17 continue to be responsible for all of the obligations of the
18 credit union thus converted to the same extent as though the
19 conversion had not taken place.
20 (b) Cross reference.--See 15 Pa.C.S. § 134 (relating to
21 docketing statement).
22 § 1102. Conversion from Federal credit union.
23 (a) General rule.--A Federal credit union may be converted
24 into a credit union subject to the provisions of this title by:
25 (1) Complying with all Federal requirements requisite to
26 enabling it to convert to a credit union or to cease being a
27 Federal credit union.
28 (2) Filing with the Department of Banking proof of
29 compliance with such Federal requirements in form
30 satisfactory to the department.
19900S1761B2510 - 383 -
1 (3) Filing with the department articles of conversion
2 which shall set forth:
3 (i) The proposed name of the converted credit union.
4 (ii) The exact location of the principal place of
5 business of the credit union into which the Federal
6 credit union plans to become converted.
7 (iii) The number, names and addresses of the persons
8 to be the first directors of the converted credit union.
9 (iv) All other statements required by this title to
10 be set forth in original articles of incorporation in the
11 case of the formation of a credit union in so far as such
12 information is applicable to a Federal credit union
13 proposing to become converted into a credit union.
14 (b) Department of Banking review.--Immediately upon the
15 receipt of the articles of conversion, the department shall
16 conduct such examination as may be deemed necessary to ascertain
17 from the best sources of information at its command:
18 (1) Whether the name of the proposed credit union
19 conforms with the requirements of law for the name of a
20 credit union, and whether it is the same as one already
21 adopted or reserved by another person, or is so similar
22 thereto that it is likely to mislead the public.
23 (2) Whether the conversion is made for legitimate
24 purposes.
25 (3) Whether the interests of members and creditors are
26 adequately protected.
27 (4) Whether the proposed credit union meets all of the
28 requirements of this title and violates none of its
29 prohibitions applicable to a credit union incorporated under
30 this title.
19900S1761B2510 - 384 -
1 (5) Whether the Federal credit union has complied with
2 the requirements of the laws of the United States as they
3 relate to the conversion of a Federal credit union into a
4 credit union.
5 Within 60 days after receipt of the articles of conversion, the
6 Department of Banking shall, upon the basis of the facts
7 disclosed by its investigation, either approve or disapprove
8 such articles.
9 (c) Approval action.--If the department approves the
10 articles, it shall register its approval thereon and shall
11 forward them to the Department of State for filing. Immediately
12 upon receipt of the approved articles of conversion, the
13 Department of State shall file the articles. The conversion
14 shall become effective immediately upon such filing and the
15 converted credit union shall have all the rights, privileges,
16 immunities and franchises of the Federal credit union, except
17 that it shall not thereafter acquire authority to engage in any
18 business or exercise any right which is forbidden to a credit
19 union when originally incorporated under this title.
20 (d) Disapproval action.--If the Department of Banking
21 disapproves the articles of conversion, it shall return them to
22 the Federal credit union desiring to become converted into a
23 credit union stating in detail its reasons for so doing.
24 (e) Cross reference.--See 15 Pa.C.S. § 134 (relating to
25 docketing statement).
26 § 1103. Merger and consolidation authorized.
27 (a) General rule.--A credit union subject to this title may
28 merge or consolidate with other credit unions, with Federal
29 credit unions, with out-of-State credit unions, or with a
30 combination of other credit unions, Federal credit unions and
19900S1761B2510 - 385 -
1 out-of-State credit unions to form a credit union, Federal
2 credit union or out-of-State credit union.
3 (b) Approvals and conditions.--Before merging or
4 consolidating, the credit unions involved must obtain prior
5 approval from the Department of Banking. In the case of a merger
6 or consolidation with a Federal credit union, the merger or
7 consolidation shall be made pursuant to Federal law in addition
8 to the provisions of this title. In the case of a merger or
9 consolidation with an out-of-State credit union, the merger or
10 consolidation shall be made pursuant to the credit union law of
11 the state of incorporation of the out-of-State credit union or,
12 if credit unions incorporated in different states are involved,
13 pursuant to the credit union laws of the various states of
14 incorporation of the out-of-State credit unions in addition to
15 the provisions of this title.
16 § 1104. Adoption of plan.
17 (a) General rule.--The board of directors of each of the
18 credit unions, Federal credit unions or out-of-State credit
19 unions which desire to merge or consolidate shall, by resolution
20 adopted by at least a majority of all the members of each board,
21 approve a plan of merger or consolidation setting forth the
22 terms and conditions of the merger or consolidation and the mode
23 of carrying the same into effect, the manner and basis of
24 converting the shares of each credit union, Federal credit union
25 or out-of-State credit union into shares or other securities or
26 obligations of the surviving or new credit union, Federal credit
27 union or out-of-State credit union, and such other details and
28 provisions as are deemed necessary. Except where the approval of
29 the members is not required, the board of directors shall direct
30 that the plan be submitted to a vote of the members of such
19900S1761B2510 - 386 -
1 credit union, Federal credit union or out-of-State credit union
2 entitled to vote thereon at an annual or special meeting of the
3 members to be held on not less than 15 days prior written notice
4 thereof given to each member of record, which notice shall state
5 the place, day, hour and purpose of the meeting and shall have,
6 included therein or enclosed therewith, a copy or summary of the
7 plan of merger or consolidation.
8 (b) Domestic approval.--The plan of merger or consolidation,
9 to form a surviving or new credit union, Federal credit union or
10 out-of-State credit union, shall be adopted upon receiving, if
11 the credit union is not the surviving institution, the
12 affirmative vote of at least a majority of the members voting
13 thereon or upon receiving, if the credit union is the surviving
14 institution, the affirmative vote of at least a majority of the
15 board of directors voting thereon.
16 (c) Federal or out-of-State approval.--The plan of merger or
17 consolidation shall be authorized, adopted or approved by each
18 of the merging or consolidating Federal credit unions and out-
19 of-State credit unions in accordance with applicable Federal or
20 State law.
21 § 1105. Articles of merger or consolidation.
22 (a) General rule.--Upon the adoption, pursuant to the
23 provisions of this chapter, of the plan of merger or
24 consolidation by the credit unions, Federal credit unions and
25 out-of-State credit unions desiring to merge or consolidate,
26 articles of merger or consolidation shall be executed by each
27 credit union, Federal credit union and out-of-State credit union
28 by a duly authorized officer of each credit union, Federal
29 credit union and out-of-State credit union, and shall set forth:
30 (1) The name and exact location of the principal place
19900S1761B2510 - 387 -
1 of business of the surviving or new credit union, Federal
2 credit union or out-of-State credit union.
3 (2) The time and place of the meeting of the board of
4 directors at which the plan of merger or consolidation was
5 proposed and, except where approval of the members is not
6 required, the time and place of the meeting of the members of
7 each credit union, Federal credit union and out-of-State
8 credit union at which the plan of merger or consolidation was
9 authorized, adopted or approved, the kind and period of
10 notice given to the members, and the total vote by which the
11 plan was authorized, adopted or approved.
12 (3) In the case of a merger into a surviving credit
13 union, any changes desired to be made in the articles of the
14 surviving credit union, or, in the case of a consolidation
15 into a new credit union, all of the statements required by
16 this title to be set forth in the original articles in the
17 case of the formation of a credit union.
18 (4) The number, names and addresses of the persons to be
19 the first directors of the surviving or new credit union,
20 Federal credit union or out-of-State credit union.
21 (5) The plan of merger or consolidation.
22 (b) Department of Banking review.--The articles of merger or
23 consolidation shall be filed with the Department of Banking
24 which, immediately upon receipt thereof, shall conduct such
25 investigation as may be deemed necessary to ascertain from the
26 best sources at its command:
27 (1) Whether, if the articles are articles of
28 consolidation, the name of the proposed new credit union,
29 Federal credit union or out-of-State credit union conforms
30 with the requirements of law for the name of a credit union,
19900S1761B2510 - 388 -
1 and whether it is the same as one already adopted or reserved
2 by another corporation or person, or is so similar thereto
3 that it is likely to mislead the public.
4 (2) Whether, if the merger or consolidation includes one
5 or more Federal credit unions, all requirements of the laws
6 of the United States pertaining thereto have been complied
7 with.
8 (3) Whether the interests of members and creditors are
9 adequately protected.
10 (4) Whether the credit unions including the surviving or
11 new credit union, have met all of the requirements of this
12 title and have violated none of its prohibitions applicable
13 to a credit union incorporated under this title.
14 (5) Whether, if the merger or consolidation includes an
15 out-of-State credit union, there is compliance with the
16 applicable requirements of the law of the state of
17 incorporation of the out-of-State credit union.
18 Within 60 days after receipt of the articles of merger or
19 consolidation, the Department of Banking shall, upon the basis
20 of the facts disclosed by its investigation, either approve or
21 disapprove such articles.
22 (c) Approval action.--If the department approves the
23 articles, it shall register its approval thereon and shall
24 forthwith forward them to the Department of State for filing;
25 and immediately upon receipt thereof, the Department of State
26 shall file the articles.
27 (d) Effect of merger or consolidation.--The merger or
28 consolidation shall become effective immediately upon such
29 filing and the surviving or new credit union, Federal credit
30 union or out-of-State credit union shall be vested with all the
19900S1761B2510 - 389 -
1 assets and shall have all the rights, privileges, immunities and
2 franchises and shall be responsible for all the obligations of
3 the merging or consolidating credit unions, Federal credit
4 unions and out-of-State credit unions; but otherwise, if such
5 surviving or new credit union shall be a Federal credit union or
6 an out-of-State credit union, upon such filing by the Department
7 of State, the surviving or new Federal credit union or out-of-
8 State credit union shall no longer be subject to the provisions
9 of this title other than, in the case of an out-of-State credit
10 union, Chapter 15 (relating to out-of-State credit unions).
11 (e) Disapproval action.--If the Department of Banking shall
12 disapprove the articles, it shall return them to the credit
13 union, Federal credit union or out-of-State credit union from
14 which they were received, stating the reasons for such
15 disapproval.
16 (f) Cross reference.--See 15 Pa.C.S. § 134 (relating to
17 docketing statement).
18 § 1106. SUPERVISORY MERGERS OR CONSOLIDATIONS BY DEPARTMENT OF <--
19 BANKING.
20 NOTWITHSTANDING ANY OTHER PROVISION OF THIS ACT, THE
21 DEPARTMENT OF BANKING MAY REQUIRE A MERGER OR CONSOLIDATION OF A
22 CREDIT UNION WHICH IS INSOLVENT OR IS IN DANGER OF INSOLVENCY
23 WITH ANY OTHER CREDIT UNION, FEDERAL CREDIT UNION OR OUT-OF-
24 STATE CREDIT UNION OR MAY AUTHORIZE A CREDIT UNION TO PURCHASE
25 ANY OF THE ASSETS OF, OR ASSUME ANY OF THE LIABILITIES AND
26 CAPITAL OF, ANY OTHER CREDIT UNION, FEDERAL CREDIT UNION OR OUT-
27 OF-STATE CREDIT UNION IF THE DEPARTMENT IS SATISFIED THAT:
28 (1) AN EMERGENCY REQUIRING EXPEDITIOUS ACTION EXISTS
29 WITH RESPECT TO SUCH A CREDIT UNION;
30 (2) OTHER ALTERNATIVES ARE NOT REASONABLY AVAILABLE; AND
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1 (3) THE PUBLIC INTEREST WOULD BEST BE SERVED BY APPROVAL
2 OF SUCH MERGER, CONSOLIDATION, PURCHASE OR ASSUMPTION.
3 CHAPTER 13
4 DISSOLUTION
5 Sec.
6 1301. Dissolution authorized.
7 1302. Approval of voluntary dissolution.
8 1303. Dissolution proceedings.
9 1304. Department of Banking supervision.
10 § 1301. Dissolution authorized.
11 Any credit union may elect to dissolve voluntarily and wind
12 up its affairs in the manner provided in this chapter. However,
13 if it shall appear to the Department of Banking, upon an
14 examination of the business, assets and affairs of the credit
15 union, that its assets will probably be insufficient to pay in
16 full its members and creditors, it shall take possession of the
17 business and property of the credit union and retain possession
18 until its affairs are finally liquidated.
19 § 1302. Approval of voluntary dissolution.
20 (a) General rule.--The procedure for voluntary dissolution
21 shall be as follows:
22 (1) A plan of dissolution, setting forth in detail the
23 number of liquidating trustees, which shall be one, three or
24 five, to be elected by the members, the amount of the bond
25 which shall be supplied by each of the liquidating trustees,
26 and the powers, duties and compensation of such trustees,
27 shall be adopted by a vote of at least two-thirds of all
28 directors of the credit union.
29 (2) A meeting of the membership shall be called for the
30 purpose of acting on the plan of dissolution. Written notice
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1 setting forth the date and purpose of such meeting shall be
2 furnished each member at least ten days prior to the date of
3 the meeting. The plan of dissolution shall be adopted upon
4 the affirmative vote of a majority of the entire membership
5 of the credit union in person or by written ballot.
6 (3) Upon approval of the plan, the members shall
7 forthwith proceed to elect the number of liquidating trustees
8 provided for in the plan of dissolution. If more than one
9 liquidating trustee is to be elected, each member shall have
10 the right to multiply his vote by the number of trustees to
11 be elected and cast the whole number of such votes for one
12 candidate or distribute them among two or more candidates.
13 The candidates receiving the highest number of votes up to
14 the number of liquidating trustees to be chosen shall be
15 elected.
16 (4) A certificate of election to dissolve signed by a
17 duly authorized officer of the credit union shall be executed
18 and delivered to the Department of Banking. The certificate
19 shall set forth:
20 (i) The name of the credit union.
21 (ii) The exact location of its place of business.
22 (iii) The names and addresses of its officers and
23 directors.
24 (iv) The number of directors voting for, and the
25 number voting against, the proposed plan of voluntary
26 dissolution.
27 (v) The total number of members and the number of
28 members voting for, and the number voting against, the
29 proposed plan of voluntary dissolution.
30 (vi) The names and addresses of the proposed
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1 liquidating trustees and the number of votes received by
2 every candidate for the position of liquidating trustee.
3 (vii) The amount of the bond required to be supplied
4 by each trustee.
5 (viii) A verified statement by each of the proposed
6 liquidating trustees stating that he is willing to serve
7 as liquidating trustee, subject to the provisions of this
8 chapter and to the terms of the proposed plan of
9 voluntary dissolution, that he will, so far as the duty
10 devolves upon him, diligently and honestly liquidate the
11 affairs of the credit union, and will not knowingly
12 violate or permit to be violated any of the provisions of
13 this chapter or of the proposed plan of voluntary
14 liquidation.
15 (ix) The proposed plan of voluntary dissolution.
16 (b) Department of Banking review.--Upon receipt of the
17 certificate of election to dissolve, the Department of Banking
18 shall conduct an examination or an investigation, or take such
19 other action as it deems necessary, to determine whether to
20 approve the plan of voluntary dissolution. If the department
21 determines that the plan of voluntary dissolution does not
22 prejudice the interests of members or creditors, it shall
23 endorse its approval on the certificate of election to dissolve
24 and send it to the Department of State for filing. If the
25 Department of Banking disapproves the plan, it shall return the
26 certificate to the credit union stating in detail its reasons
27 for doing so.
28 (c) Effect of filing certificate.--Upon the filing by the
29 Department of State of the certificate of election to dissolve,
30 the Department of State shall furnish a copy thereof to the
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1 Department of Banking and the credit union. Upon such filing,
2 the credit union shall cease to transact its business and the
3 liquidating trustee or trustees shall commence the liquidation
4 of the credit union. The liquidating trustee or trustees shall
5 thereafter be authorized to carry out, in his own name or in
6 their own names as liquidating trustee or trustees of the credit
7 union, the powers granted to him or them by the plan of
8 voluntary dissolution and may sue and be sued for the purpose of
9 determining and enforcing the debts due the credit union and its
10 obligations.
11 (d) Cross reference.--See 15 Pa.C.S. § 134 (relating to
12 docketing statement).
13 § 1303. Dissolution proceedings.
14 (a) Collection and distribution of assets.--The liquidating
15 trustee or trustees shall proceed in the manner provided by the
16 Department of Banking to gather the assets, determine the
17 liabilities, and distribute the assets of the credit union until
18 its affairs are fully adjusted and wound up. Under this section
19 the department shall set forth the order of the distribution of
20 the assets. The provisions of this section on distribution of
21 assets apply whether the dissolution is voluntary or
22 involuntary.
23 (b) Proof of claims.--The liquidating trustee or trustees
24 shall notify all creditors and members appearing on the records
25 of the association, by notice sent to or given at the address
26 appearing for such creditor or member on the records or, if no
27 address appears there, at the last known address of the creditor
28 or member, of the amount which the records show to be due such
29 member or creditor. The liquidating trustee or trustees shall
30 also advertise, for three successive weeks in a newspaper of
19900S1761B2510 - 394 -
1 general circulation and in a legal newspaper, if any, in the
2 county in which the credit union is located, that the credit
3 union is liquidating pursuant to a plan of voluntary
4 liquidation. The advertisement shall set forth a date not less
5 than 90 days after the date of the first published advertisement
6 before which all creditors or members must present their claims,
7 under oath or affirmation, to the trustee or trustees or be
8 bound by the amount shown on the records of the credit union to
9 be due them. Thereafter all claims shall be permanently barred.
10 (c) Limitation period.--Any claim which is rejected or
11 disallowed by the trustee or trustees shall be barred unless an
12 action is brought thereon within 90 days after mailing of the
13 notice of rejection or disallowance.
14 § 1304. Department of Banking supervision.
15 The Department of Banking shall continue to supervise the
16 credit union, in the hands of the liquidating trustee or
17 trustees, until the liquidation is complete and the affairs of
18 the credit union are fully settled.
19 § 1305. Articles of dissolution.
20 (a) General rule.--When in the opinion of the Department of
21 Banking the liquidation of a credit union is complete and its
22 affairs are fully settled, the Department of Banking shall
23 execute and file in the Department of State articles of
24 dissolution, which shall set forth:
25 (1) The name of the credit union.
26 (2) The statute under which the credit union was
27 incorporated and the date of incorporation.
28 (3) A statement that the liquidation of the credit union
29 is complete and its affairs are fully settled.
30 (b) Filing procedures.--A certificate or statement provided
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1 for by 15 Pa.C.S. § 139 (relating to tax clearance of certain
2 fundamental transactions) shall not be required and the
3 Department of State shall not charge a fee in connection with
4 the filing of articles of dissolution under this section. See 15
5 Pa.C.S. § 134 (relating to docketing statement).
6 (c) Effect.--Upon the filing of the articles of dissolution
7 in the Department of State, the existence of the credit union
8 shall cease.
9 CHAPTER 15
10 OUT-OF-STATE CREDIT UNIONS
11 Sec.
12 1501. Authorization to do business.
13 1502. Covenants by applicant.
14 1503. Supervision by Department of Banking.
15 1504. Revocation of authorization to do business.
16 § 1501. Authorization to do business.
17 (a) General rule.--A credit union organized in another state
18 may conduct business as a credit union in this Commonwealth with
19 the approval of the Department of Banking as long as a credit
20 union chartered under the laws of this Commonwealth is permitted
21 to do business in the state in which the credit union is
22 organized.
23 (b) Findings.--To grant approval the department must find
24 that the out-of-State credit union:
25 (1) Is a credit union organized under a statute similar
26 to this title.
27 (2) Is financially solvent.
28 (3) Has required account insurance acceptable to the
29 department.
30 (4) Is effectively examined and supervised by the
19900S1761B2510 - 396 -
1 regulatory authority of the state in which it is organized.
2 (5) Needs to conduct business in this Commonwealth to
3 adequately serve its members in this Commonwealth.
4 § 1502. Covenants by applicant.
5 To conduct business in this Commonwealth, an out-of-State
6 credit union must agree to:
7 (1) Grant loans at rates not higher than those permitted
8 for credit unions incorporated under this title.
9 (2) Comply with the same consumer protection provisions
10 that apply to credit unions incorporated under this title.
11 (3) Accept service of process as contemplated by 42
12 Pa.C.S. § 5301(a)(2)(i) (relating to persons).
13 § 1503. Supervision by Department of Banking.
14 (a) General rule.--The Department of Banking may examine an
15 out-of-State credit union:
16 (1) to the same extent that a Pennsylvania credit union
17 is examined by the regulatory agency with jurisdiction over
18 credit unions in the state in which the out-of-State credit
19 union is incorporated; or
20 (2) pursuant to an agreement between the department and
21 the regulatory agency with jurisdiction over credit unions in
22 the state in which the out-of-State credit union is
23 incorporated.
24 (b) Reports of other examinations.--The department may
25 require, as a condition for permitting an out-of-State credit
26 union to operate or to continue to operate in this Commonwealth,
27 that the regulatory agency with jurisdiction over the out-of-
28 State credit union furnish reports of examination regarding the
29 out-of-State credit union to the department.
30 § 1504. Revocation of authorization to do business.
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1 The Department of Banking may revoke the approval of an out-
2 of-State credit union to conduct business as a credit union in
3 this Commonwealth if the department makes any of the following
4 findings:
5 (1) The out-of-State credit union no longer meets the
6 requirements of section 1501 (relating to authorization to do
7 business).
8 (2) The out-of-State credit union has violated
9 Pennsylvania statutes or regulations or orders of the
10 department.
11 (3) The out-of-State credit union has engaged in a
12 pattern of unsafe or unsound credit union practices.
13 (4) Continued operation by the out-of-State credit union
14 is likely to have a substantially adverse impact on the
15 financial, economic or other interests of residents of this
16 Commonwealth served by the out-of-State credit union.
17 Section 303. Amendment of Title 20.
18 Sections 726 and 727 of Title 20 are amended to read:
19 § 726. Venue of nonprofit corporations.
20 Except as otherwise [specifically provided in Part III of
21 Title 15 (relating to corporations not-for-profit)] prescribed
22 by general rules, in exercising the jurisdiction [conferred upon
23 orphans' court divisions by rules of judicial administration] of
24 the court over the property or affairs of a [nonprofit] domestic
25 or foreign nonprofit corporation, the venue shall be in the
26 county where the registered office of the corporation is located
27 or deemed to be located for venue purposes or, in the absence of
28 a registered office within this Commonwealth, in a county where
29 any property held or controlled by the nonprofit corporation is
30 located.
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1 § 727. Venue of cemetery companies.
2 Except as otherwise [specifically] provided in [Part III of]
3 Title [15] 9 (relating to [corporations not-for-profit)] burial
4 grounds) or prescribed by general rules, in exercising the
5 jurisdiction [conferred upon orphans' court divisions by rules
6 of judicial administration] of the court over the property or
7 affairs of a domestic or foreign cemetery company in matters
8 relating to burial grounds or to property held for the burial of
9 the dead or for the care or adornment of burial grounds, the
10 venue shall be in the county where the burial ground, or any
11 part thereof is located or, in the absence of any involved
12 burial grounds within this Commonwealth, in a county where any
13 property held or controlled by the cemetery company is located.
14 Section 304. Amendment of Title 22.
15 Section 501(a) of Title 22 is amended to read:
16 § 501. Appointment by nonprofit corporations.
17 (a) Appointment authorized.--Any nonprofit corporation, as
18 defined in [Part III of Title] 15 Pa.C.S. Pt.II Subpt. C
19 (relating to nonprofit corporations [not-for-profit])
20 maintaining a cemetery or any buildings or grounds open to the
21 public, or organized for the prevention of cruelty to children
22 or aged persons or animals, or one or more of such purposes, may
23 apply to the court of common pleas of the county of the
24 registered office of the corporation for the appointment of such
25 persons as the corporation may designate to act as policemen for
26 the corporation. The court, upon such application, may by order
27 [and decree] appoint such persons, or as many of them as it may
28 deem proper and necessary, to be such policemen.
29 * * *
30 Section 305. Amendment of Title 24.
19900S1761B2510 - 399 -
1 Title 24 is amended by adding parts to read:
2 PART I
3 PRELIMINARY PROVISIONS
4 Chapter
5 1. General Provisions
6 CHAPTER 1
7 GENERAL PROVISIONS
8 Sec.
9 102. Definitions.
10 § 102. Definitions.
11 Subject to additional definitions contained in subsequent
12 provisions of this title which are applicable to specific
13 provisions of this title, the following words and phrases when
14 used in this title shall have the meanings given to them in this
15 section unless the context clearly indicates otherwise:
16 "Certificate of authority." An instrument in writing issued
17 by the department authorizing a person to engage in this
18 Commonwealth in the business or occupation specified in the
19 instrument.
20 "Department." The Department of Education of the
21 Commonwealth.
22 "State board." The State Board of Education of the
23 Commonwealth.
24 PART III
25 HIGHER EDUCATION
26 Chapter
27 65. Private Colleges, Universities and Seminaries
28 CHAPTER 65
29 PRIVATE COLLEGES, UNIVERSITIES AND SEMINARIES
30 Sec.
19900S1761B2510 - 400 -
1 6501. Applicability of chapter.
2 6502. State board to prescribe standards.
3 6503. Certification of institutions.
4 6504. Fundamental changes.
5 6505. Power to confer degrees.
6 6506. Visitation of institutions and revocation of authority.
7 6507. Institution names to be approved by department.
8 6508. Restraining use of term "college," "university" or
9 "seminary."
10 6509. Penalty for violation of chapter.
11 § 6501. Applicability of chapter.
12 (a) General rule.--This chapter applies to, and the word
13 "institution" in this chapter means, any institution which
14 applies to itself, either as part of its name or in any other
15 manner, the designation of "college," "university" or "seminary"
16 in such a way as to give the impression that it is an
17 educational institution conforming to the standards and
18 qualifications prescribed by the State board. Nothing is this
19 chapter shall be construed to expand the powers of the State
20 board with respect to any institution heretofore existing.
21 (b) Exceptions.--Notwithstanding subsection (a), this
22 chapter does not apply to any:
23 (1) Incorporated or unincorporated theological seminary
24 without power to confer degrees.
25 (2) Public instrumentality subject to the policy
26 supervision and direction of the State board.
27 § 6502. State board to prescribe standards.
28 (a) General rule.--The State board shall prescribe standards
29 and qualifications for all institutions entitled to apply to
30 themselves the designation of "college," "university" or
19900S1761B2510 - 401 -
1 "seminary."
2 (b) Minimum standards.--No institution shall be authorized
3 to confer degrees in the arts, pure and applied science,
4 philosophy, literature, law, medicine and theology, or any of
5 them, unless it has:
6 (1) A minimum protective endowment of at least $500,000,
7 beyond all indebtedness and assets invested in buildings and
8 apparatus for the exclusive purpose of promoting instruction,
9 except that, in the case of tax-supported institutions or
10 those maintained by religious or other eleemosynary
11 organizations, financial support or contributed services
12 equivalent in value to the endowment herein specified may be
13 substituted for such endowment.
14 (2) A faculty consisting of at least eight regular
15 professors who devote all their time to the instruction of
16 its higher education classes, unless the institution is
17 devoted to a specific subject in the arts, archaeology,
18 literature or science (medical and law schools excepted), in
19 which case the faculty shall consist of at least three
20 regular professors who devote all their time to the
21 instruction in the special branch for which the institution
22 is established, and two or more instructors or fellows in the
23 particular branch, who shall be provided to assist in the
24 instruction to be given the students for the promotion of
25 original investigation and in the development and growth of
26 the special branch of science to which such institution may
27 be devoted.
28 § 6503. Certification of institutions.
29 (a) General rule.--No person shall apply to itself, either
30 as part of its name or in any other manner, the designation of
19900S1761B2510 - 402 -
1 "college," "university" or "seminary" in such a way as to give
2 the impression that it is an educational institution conforming
3 to the standards and qualifications prescribed by the State
4 board unless it shall have received from the department a
5 certificate of authority authorizing the institution to use such
6 designation, and, if the institution is authorized to confer
7 degrees, specifying the degrees which the institution is
8 authorized to confer.
9 (b) Exemptions.--Subsection (a) does not apply to:
10 (1) Any:
11 (i) Nonprofit corporation incorporated with the
12 approval of the department or the former Department of
13 Public Instruction under the former provisions of
14 sections 211 and 312 of the Nonprofit Corporation Law of
15 1933, or otherwise incorporated with the power to confer
16 degrees under corresponding provisions of prior law.
17 (ii) Foreign nonprofit corporation that received a
18 certificate of authority as a qualified foreign
19 corporation from the Department of State with the
20 approval of the department or the former Department of
21 Public Instruction under the former provisions of section
22 902(4) of the Nonprofit Corporation Law of 1933, or
23 otherwise admitted to do business with the power to
24 confer degrees under corresponding provisions of prior
25 law.
26 For the purposes of this chapter, such a corporation shall be
27 deemed to be a holder of a certificate of authority issued
28 under this section authorizing the conferring of those
29 degrees that the institution was authorized by law to confer
30 immediately prior to the effective date of this chapter.
19900S1761B2510 - 403 -
1 (2) Any corporation incorporated prior to September 1,
2 1937, the corporate name of which, or any unincorporated
3 person then conducting any educational institution, the trade
4 or fictitious name of which, included the designation
5 "college" or "university."
6 (c) Form of application.--Every application for a
7 certificate of authority under this section shall be made to the
8 department in writing and shall be in such form and contain such
9 information as the regulations of the department may require.
10 (d) Standards for issuance of certificate.--A certificate of
11 authority shall be issued by order of the department only if and
12 when the department finds and determines that:
13 (1) The application complies with the provisions of this
14 chapter, the regulations of the department thereunder, and
15 the standards and qualifications for institutions prescribed
16 by the State board thereunder.
17 (2) The courses of instruction, the standards of
18 admission to the institution and the composition of the
19 faculty appear to be sufficient and to conform to the
20 requirements of this chapter.
21 (3) The educational needs of the particular locality in
22 which the institution is to be situated and of the
23 Commonwealth at large are likely to be furthered by the
24 granting of the application.
25 (e) Procedure.--For the purpose of enabling the department
26 to make the finding or determination required by subsection (d),
27 the department shall, by publication of notice in the
28 Pennsylvania Bulletin, afford reasonable opportunity for
29 hearing, which shall be public, and, before or after any such
30 hearing, it may make such inquiries, audits and investigations,
19900S1761B2510 - 404 -
1 and may require the submission of such supplemental studies and
2 information, as it may deem necessary or proper to enable it to
3 reach a finding or determination. The department, in issuing a
4 certificate of authority, may impose such conditions as it may
5 deem to be just and reasonable. In every case the department
6 shall make a finding or determination in writing, stating
7 whether or not the application has been approved, and, if it has
8 been approved in part only, specifying the part which has been
9 approved and the part which has been denied. Any holder of a
10 certificate of authority, exercising the authority conferred
11 thereby, shall be deemed to have waived any and all objections
12 to the terms and conditions of such certificate.
13 (f) Judicial review.--Orders of the department upon an
14 application for a certificate of authority under this section
15 shall be subject to judicial review in the manner and within the
16 time provided or prescribed by law.
17 § 6504. Fundamental changes.
18 (a) General rule.--It is unlawful for any institution
19 holding a certificate of authority under this chapter
20 authorizing the conferring of degrees to amend its articles of
21 incorporation, to merge or consolidate with any other
22 corporation or to divide or convert without first securing the
23 approval of the department with respect thereto.
24 (b) Form of application.--Every application for approval of
25 a fundamental change under this section shall be made to the
26 department in writing and shall be in such form and shall
27 contain such information as the department shall require.
28 (c) Standards for approval.--The amendment of articles,
29 merger, consolidation, division or conversion shall be approved
30 by order of the department only if and when the department finds
19900S1761B2510 - 405 -
1 and determines that such fundamental change conforms to law,
2 including the regulations of the department under this chapter,
3 and the standards and qualifications for institutions prescribed
4 by the State board thereunder, and will result in an institution
5 which, under the then current provisions of this chapter and
6 standards and qualifications for institutions of the State board
7 thereunder, would be eligible to receive a certificate of
8 authority as an institution.
9 (d) Procedure.--The proceedings before the department shall
10 be subject to the provisions of section 6503(e) (relating to
11 procedure).
12 (e) Judicial review.--Orders of the department upon an
13 application for approval under this section shall be subject to
14 judicial review in the manner and within the time provided or
15 prescribed by law.
16 § 6505. Power to confer degrees.
17 A nonprofit corporation as defined in Title 15 (relating to
18 corporations and unincorporated associations) which receives a
19 certificate of authority under this chapter authorizing the
20 conferring of degrees may confer baccalaureate degrees in the
21 arts, science, philosophy or literature, but only upon students
22 who have completed a college or university course normally
23 covering four years, or such other degrees at the associate,
24 baccalaureate or advanced level as may be specified in the
25 certificate of authority. The qualifications of admission to
26 these four-year courses, or to advanced classes in these
27 courses, shall be not less than four years of academic or high
28 school preparation, or its equivalent, and shall be subject to
29 the standards promulgated by the State board.
30 § 6506. Visitation of institutions and revocation of authority.
19900S1761B2510 - 406 -
1 (a) General rule.--Any institution holding a certificate of
2 authority under this chapter authorizing the conferring of
3 degrees shall be subject to visitation and inspection by
4 representatives of the department. If any such institution shall
5 fail to maintain the standards and qualifications prescribed by
6 the State board under this chapter the department may, after
7 notice to the institution and opportunity for hearing, suspend
8 or revoke the certificate of authority of the institution.
9 (b) Judicial review.--Orders of the department in any
10 proceeding relating to the suspension or revocation of a
11 certificate of authority of an institution under this section
12 shall be subject to judicial review in the manner and within the
13 time provided or prescribed by law.
14 § 6507. Institution names to be approved by department.
15 The Department of State shall not approve any corporate name
16 or register any assumed or fictitious or other name including
17 the words "college," "university" or "seminary" used in such a
18 way as to give the impression that the proprietor of such name
19 is an educational institution conforming to the standards and
20 qualifications prescribed by the State board, unless the
21 application for incorporation, qualification or change of name
22 or the application for registration is accompanied by a
23 certificate from the department that the corporation or proposed
24 corporation or the person or persons applying for registration
25 are entitled to use such designation.
26 § 6508. Restraining use of term "college," "university" or
27 "seminary."
28 Upon the application of the Attorney General, any court
29 having jurisdiction shall, in a proper case where a violation of
30 this chapter is shown, grant an injunction restraining the use
19900S1761B2510 - 407 -
1 of the designation of "college," "university" or "seminary."
2 § 6509. Penalty for violation of chapter.
3 A person who violates this chapter commits a summary offense.
4 Section 306. Amendment of Title 42.
5 (a) Subchapter F of Chapter 83 of Title 42, including any
6 amendments enacted by the present General Assembly, is repealed.
7 (b) Title 42 is amended by adding a section to read:
8 § 8332.5. Corporate representatives.
9 (a) General rule.--The liability of an individual shall be
10 limited to the extent expressly provided by or pursuant to Title
11 15 (relating to corporations and unincorporated associations).
12 See 15 Pa.C.S. Ch. 5 Subch. B (relating to fiduciary duty and
13 indemnification), Ch. 17 Subch. B (relating to fiduciary duty)
14 and Ch. 57 Subch. B (relating to fiduciary duty).
15 (b) Certain governmental corporations.--An individual who is
16 a director, officer or employee of a governmental corporation
17 and who is not entitled to immunity under Chapter 85 (relating
18 to matters affecting government units) may assert any applicable
19 immunity under 15 Pa.C.S. Ch. 57 Subch. B (relating to fiduciary
20 duty) to the same extent as if the governmental corporation were
21 a nonprofit corporation which had elected the maximum immunity
22 available under such subchapter.
23 Section 307. Amendment of Title 54.
24 Section 311(f) of Title 54 is amended to read:
25 § 311. Registration.
26 * * *
27 (f) Required approvals.--The fictitious name shall not
28 contain:
29 (1) The words "college," "university" or "seminary" when
30 used in such a way as to imply that the entity is an
19900S1761B2510 - 408 -
1 educational institution conforming to the standards and
2 qualifications prescribed by the State Board of Education
3 unless there is submitted a certificate from the Department
4 of Education certifying that the entity is entitled to use
5 such designation.
6 (2) The words "engineer" or "engineering" or "surveyor"
7 or "surveying" or any other word implying that any form of
8 the practice of engineering or surveying, as defined in the
9 act of May 23, 1945 (P.L.913, No.367), known as the
10 ["]Professional Engineers Registration Law,["] is provided
11 unless at least one of the parties to the registration has
12 been properly registered with the State Registration Board
13 for Professional Engineers and there is submitted to the
14 department a certificate from the board to that effect.
15 (3) The words "bank," "banking," "banker" or "trust" or
16 any other word implying that the entity is a bank, bank and
17 trust company, savings bank, private bank or trust company,
18 as defined in the act of November 30, 1965 (P.L.847, No.356),
19 known as the ["]Banking Code of 1965,["] unless approved by
20 the Department of Banking.
21 (4) The word "cooperative" or any abbreviation thereof
22 unless it is subject to 15 Pa.C.S. Pt. II Subpt. D (relating
23 to cooperative corporations) [or a statute thereby saved from
24 repeal].
25 (5) The words "architect" or "architecture" or any other
26 word implying that any form of the practice of architecture
27 as defined in the act of December 14, 1982 (P.L.1227,
28 No.281), known as the Architects Licensure Law, is provided
29 unless at least one of the parties to the registration has
30 been properly registered with the Architects Licensure Board
19900S1761B2510 - 409 -
1 in the practice of architecture and there is submitted to the
2 department a certificate from the board to that effect.
3 (6) The words "credit union" or any other words implying
4 that the entity is a credit union as defined in 17 Pa.C.S. §
5 102 (relating to application of title), unless approved by
6 the Department of Banking.
7 (7) THE WORDS "ANNUITY," "ASSURANCE," "BENEFICIAL," <--
8 "BOND," "CASUALTY," "ENDOWMENT," "FIDELITY," "FRATERNAL,"
9 "GUARANTY," "INDEMNITY," "INSURANCE," "INSURER,"
10 "REASSURANCE," "REINSURANCE," "SURETY" OR "TITLE" WHEN USED
11 IN SUCH A WAY AS TO IMPLY THAT THE ENTITY IS ENGAGED IN THE
12 BUSINESS OF WRITING INSURANCE OR REINSURANCE AS PRINCIPAL OR
13 ANY OTHER WORDS OF LIKE PURPORT UNLESS THERE IS SUBMITTED A
14 CERTIFICATE FROM ANOTHER JURISDICTION CERTIFYING THAT THE
15 ENTITY IS DULY LICENSED THEREIN AS AN INSURANCE COMPANY OR A
16 CERTIFICATE FROM THE INSURANCE DEPARTMENT CERTIFYING THAT IT
17 HAS NO OBJECTION TO THE USE BY THE ENTITY OF SUCH
18 DESIGNATION.
19 (8) THE WORDS "ELECTRIC COOPERATIVE" UNLESS IT IS
20 SUBJECT TO 15 PA.C.S. CH. 73 (RELATING TO ELECTRIC
21 COOPERATIVE CORPORATIONS).
22 (7) (9) Any word or phrase not permitted by law to be <--
23 filed under this chapter without governmental consent unless
24 there is submitted to the department written evidence of such
25 consent.
26 * * *
27 Section 308. Amendment of Title 69.
28 The heading of Title 69 is amended to read:
29 TITLE 69
30 [SAVING AND VALIDATING PROVISIONS]
19900S1761B2510 - 410 -
1 SAVINGS ASSOCIATIONS
2 Section 309. Conforming cross references in unconsolidated
3 statutes.
4 (a) Insurance Company Law.--References in the following act
5 enacted prior to July 1, 1971 (see 1 Pa.C.S. § 1937 (relating to
6 references to statutes and regulations)), to section 337.5 of
7 the act of May 17, 1921 (P.L.682, No.284), known as The
8 Insurance Company Law of 1921, shall be deemed to be a reference
9 to section 205 of this act and 15 Pa.C.S. § 1924(b)(1)(ii) and
10 such act is repealed to the extent inconsistent with this
11 subsection: section 337.6 of the act of May 17, 1921 (P.L.682,
12 No.284), known as The Insurance Company Law of 1921.
13 (b) Professional Association Act.--References in the
14 following act enacted prior to July 1, 1971 (see 1 Pa.C.S. §
15 1937 (relating to references to statutes and regulations)), to
16 the act of August 7, 1961 (P.L.941, No.416), known as the
17 Professional Association Act, shall be deemed to be a reference
18 to 15 Pa.C.S. Ch. 93 (relating to professional associations) and
19 such act is repealed to the extent inconsistent with this
20 subsection: sections 2, 8.4 and 8.6 of the act of May 26, 1947
21 (P.L.318, No.140), known as The C.P.A. Law.
22 (c) Electric Cooperative Corporation Act.--References in the
23 following act enacted prior to July 1, 1971 (see 1 Pa.C.S. §
24 1937 (relating to references to statutes and regulations)), to
25 the act of June 21, 1937 (P.L.1969, No.389), known as the
26 Electric Cooperative Corporation Act, shall be deemed to be a
27 reference to 15 Pa.C.S. Ch. 73 Subchs. A (relating to
28 preliminary provisions) and B (relating to powers, duties and
29 safeguards) and such act is repealed to the extent inconsistent
30 with this subsection: sections 2471.1(b) and 2472.2(k) of the
19900S1761B2510 - 411 -
1 act of February 1, 1966 (1965 P.L.1656, No.581), known as The
2 Borough Code, added by section 1 of the act of December 30, 1982
3 (P.L.1465, No.333).
4 DIVISION IV
5 MISCELLANEOUS PROVISIONS
6 Section 401. Repeals.
7 (a) Except as otherwise expressly provided in this
8 subsection, the following acts and parts of acts are repealed:
9 Act of May 5, 1899 (P.L.253, No.148), entitled "An act to
10 allow Medical Colleges of the Commonwealth of Pennsylvania to
11 confer diplomas in public health."
12 Subparagraphs (ii) through (ix) of section 618-A of the act
13 of April 9, 1929 (P.L.177, No.175), known as The Administrative
14 Code of 1929. NOTWITHSTANDING 1 PA.C.S. § 1952 (RELATING TO <--
15 EFFECT OF SEPARATE AMENDMENTS ON CODE PROVISIONS ENACTED BY SAME
16 GENERAL ASSEMBLY), THIS ACT SHALL CONTROL OVER ANY OTHER ACT OF
17 THE PRESENT GENERAL ASSEMBLY WHICH RELATES TO THE SUBJECT MATTER
18 OF 15 PA.C.S. CH. 1 SUBCH. C (RELATING TO DEPARTMENT OF STATE
19 AND UCC FEES).
20 Act of May 5, 1933 (P.L.289, No.105), known as the Nonprofit
21 Corporation Law of 1933.
22 Act of May 7, 1937 (P.L.585, No.150), entitled, as amended,
23 "An act prohibiting the use of the designation of "college" by
24 any institution not conforming to the standards of a college
25 prescribed by the State Board of Education; and providing for
26 injunctions, and penalties."
27 Act of June 21, 1937 (P.L.1969, No.389), known as the
28 Electric Cooperative Corporation Act.
29 Section 513 of the act of December 14, 1967 (P.L.746,
30 No.345), known as the Savings Association Code of 1967.
19900S1761B2510 - 412 -
1 Act of June 12, 1968 (P.L.173, No.94), known as the
2 Cooperative Agricultural Association Act.
3 Last sentence of section 403(a)(3) of the act of March 4,
4 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
5 ACT OF JULY 12, 1972 (P.L.769, NO.182), ENTITLED "AN ACT <--
6 RELATING TO CERTAIN DOCUMENTS, PRESCRIBING THE FEES FOR THE
7 DEPARTMENT OF STATE AND CERTAIN PUBLIC OFFICERS, PERMITTING THE
8 FILING OF CERTAIN DOCUMENTS APPROPRIATING THE EXCLUSIVE RIGHT TO
9 A CORPORATE NAME, REPEALING THE EXCISE TAX ON THE CAPITAL STOCK
10 OF DOMESTIC CORPORATIONS AND REPEALING INCONSISTENT ACTS."
11 Sections 3, 4 and 8 of the act of November 15, 1972
12 (P.L.1063, No.271), entitled "An act amending the act of
13 November 25, 1970 (P.L.707, No.230), entitled 'An act codifying
14 and compiling a part of the law of the Commonwealth,' adding
15 provisions relating to burial grounds, corporations, including
16 corporations not-for-profit, educational institutions, private
17 police, certain charitable or eleemosynary institutions, certain
18 nonprofit insurers, service of process on certain nonresident
19 persons, names, prescribing penalties and making repeals."
20 Act of July 30, 1975 (P.L.113, No.57), known as the Retail
21 Electric Supplier Unincorporated Area Certified Territory Act.
22 As much as reads "and acknowledge before an officer competent
23 to take acknowledgment of deeds," of the second sentence of
24 section 201 of the act of July 29, 1977 (P.L.105, No.38), known
25 as the Fraternal Benefit Society Code. If the Insurance
26 Commissioner shall approve under the act the incorporation,
27 merger, consolidation, conversion or division of any fraternal
28 benefit society or any other amendment of articles or other
29 fundamental change in the charter of any society under the act,
30 he shall deliver the papers relating thereto to the Department
19900S1761B2510 - 413 -
1 of State. The provisions of sections 204 and 205 of the act
2 shall not apply to any fraternal benefit society incorporated
3 under the provisions of the Nonprofit Corporation Law of 1972
4 prior to January 29, 1978. The provisions of the act shall
5 control over Title 15 of the Pennsylvania Consolidated Statutes
6 (relating to corporations and associations) as provided in 15
7 Pa.C.S. § 103 (relating to subordination of title to regulatory
8 laws).
9 Sections 105, 301 and 304(a)(6) and (b) of the act of
10 December 21, 1988 (P.L.1444, No.177), known as the General
11 Association Act of 1988.
12 (b) The following acts and parts of acts applicable to
13 insurance companies and corporations are repealed:
14 Act of November 27, 1865 (1866 P.L.1228, No.1119), entitled
15 "An act relating to the organization and meetings of certain
16 corporations, incorporated under the laws of this Commonwealth."
17 Act of April 15, 1869 (P.L.29, No.30), entitled "An act
18 requiring a majority of the directors or managers of
19 corporations to constitute a quorum."
20 Act of May 15, 1874 (P.L.186, No.118), entitled "An act to
21 authorize the issuing of letters patent to certain
22 corporations."
23 Act of June 17, 1887 (P.L.411, No.274), entitled "A further
24 supplement to an act, entitled 'An act to provide for the
25 incorporation and regulation of certain corporations,' approved
26 April twenty-ninth, one thousand eight hundred and seventy-four,
27 providing for the further regulation of such corporations."
28 Act of May 20, 1891 (P.L.101, No.77), entitled "An act
29 authorizing salaried officers of private or business
30 corporations to concurrently serve as directors therein."
19900S1761B2510 - 414 -
1 Act of April 19, 1901 (P.L.80, No.51), entitled "An act to
2 regulate the number of directors in corporations chartered under
3 the laws of this Commonwealth."
4 Act of July 2, 1901 (P.L.603, No.298), entitled "An act
5 authorizing corporations, organized for profit, to purchase,
6 hold, sell, assign, transfer, mortgage, pledge, or otherwise
7 dispose of, the shares of capital stock of, or any bonds,
8 securities or evidences of indebtedness created by, any other
9 corporation."
10 Act of March 5, 1903 (P.L.14, No.17), entitled "An act
11 concerning proxies, authorizing representation and voting of
12 shares of capital stock of corporations at meetings and
13 elections thereof."
14 Act of March 16, 1905 (P.L.42, No.26), entitled "An act
15 providing for the voting of shares of stock in corporations in
16 this Commonwealth, held by executors, administrators, guardians,
17 and trustees, and the manner of voting the same."
18 Act of May 28, 1913 (P.L.336, No.222), entitled "An act
19 authorizing corporations of this Commonwealth to declare, at any
20 time or times, dividends out of new profits; and prescribing the
21 time within which the same shall be paid."
22 Act of March 30, 1921 (P.L.54, No.28), entitled "An act
23 permitting corporations to change the date of their annual
24 meeting as fixed by its charter."
25 Sections 104, 106, 203, 204, 205 (except the second
26 sentence), 207, 208, 209, 210 (insofar as it prohibits the use
27 of shares without par value), 211, 213, 214, 301.2, 302, 303,
28 304, 305, 306, 307, first and second paragraphs of section 308,
29 sections 309, 310, 311, 312, 313, first paragraph and as much of
30 the first sentence of the second paragraph as reads as follows
19900S1761B2510 - 415 -
1 "provided for in the bylaws" of section 314, sections 315, 316,
2 322 (except subsections (d) and (e)), 323, 324, 325, 326, 327,
3 328, 329, 330, 331, 332, 333, 334, 335, 336, 337, 337.5, 338,
4 340, 341, 343, 344, 352, 355, 532, 607 (insofar as it prohibits
5 the use of shares without par value), 608, 751 and 752 of the
6 act of May 17, 1921 (P.L.682, No.284), known as The Insurance
7 Company Law of 1921. The provisions of The Insurance Company Law
8 of 1921 that have not been repealed by this act shall control
9 over the provisions of Title 15.
10 Act of March 15, 1923 (P.L.10, No.8), entitled "An act
11 relating to the recording of certificates of incorporation of
12 domestic corporations; providing for the recording of certified
13 copies thereof in certain cases; validating the recording of
14 such certified copies heretofore recorded; and making the record
15 of such certified copies competent evidence for all purposes."
16 Act of July 12, 1923 (P.L.1083, No.443), entitled "An act
17 authorizing corporations to issue stock at a price in excess of
18 the par value thereof."
19 Act of April 7, 1925 (P.L.183, No.131), entitled "An act
20 providing that certificates of association and articles of
21 incorporation or of any improvements, amendments, or alterations
22 thereto may be acknowledged and sworn or affirmed to before a
23 notary public or justice of the peace; validating such
24 acknowledgments made prior to the approval of this act."
25 Act of May 12, 1925 (P.L.615, No.329), entitled "An act
26 pertaining to corporations organized or doing business within
27 the Commonwealth; limiting the operation of their by-laws; and
28 providing for the execution of contracts, notes, mortgages, et
29 cetera, by such corporations."
30 Act of May 13, 1925 (P.L.679, No.368), entitled, as amended,
19900S1761B2510 - 416 -
1 "An act authorizing corporations to issue stock to their
2 employes and to employes of their subsidiaries, and authorizing
3 such an issue without first offering such shares to the
4 stockholders, subject to certain limitations."
5 Act of April 27, 1927 (P.L.404, No.260), entitled "An act
6 prohibiting corporations from pleading usury as a defense."
7 Act of April 26, 1929 (P.L.794, No.341), entitled "An act
8 relating to mutual fire insurance companies incorporated under
9 any general or special law of the Commonwealth of Pennsylvania;
10 empowering any such company to regulate the number of, and the
11 manner of nominating directors, managers, or trustees thereof;
12 and providing a method for fixing the time of annual meetings of
13 members of any such company."
14 Act of April 30, 1929 (P.L.903, No.401), entitled "An act
15 relating to corporations; providing methods of determining what
16 stockholders shall be entitled to vote at meetings, or to
17 receive dividends, or allotments of rights, or to exercise
18 rights; and the effect thereon of transfers of stock within
19 sixty days of any election or meeting."
20 Act of May 16, 1945 (P.L.594, No.249), entitled, as amended,
21 "An act authorizing and empowering any corporation for profit,
22 and any mutual insurance company, mutual savings bank, or other
23 corporation on a mutual plan heretofore or hereafter organized
24 under any general or special law of this Commonwealth, by action
25 of its board of directors to make contributions for public and
26 charitable purposes; and ratifying certain contributions."
27 Section 5 of the act of June 28, 1951 (P.L.941, No.184),
28 entitled "An act authorizing certain existing beneficial or
29 protective societies, heretofore incorporated, to reincorporate,
30 or to merge and reincorporate, as limited life insurance
19900S1761B2510 - 417 -
1 companies, for the purpose of making insurance upon the health
2 of individuals and against personal injury and disablement and
3 death, including endowment insurance; regulating such
4 corporations, and limiting the amounts for which such
5 corporations may issue policies."
6 Section 1 of the act of August 19, 1953 (P.L.1075, No.280),
7 entitled "An act authorizing corporations to grant stock
8 options, pensions and allowances, under certain circumstances;
9 and validating stock options, pensions and allowances heretofore
10 granted."
11 Act of August 14, 1963 (P.L.910, No.434), entitled "An act
12 authorizing certain domestic stock insurance companies to issue
13 stock having a par value of not less than one dollar per share,
14 and validating certain stock which any such corporation may
15 heretofore have been authorized to issue or issued."
16 (c) All acts and parts of acts relating to limited life
17 insurance companies are repealed insofar as inconsistent with
18 this act.
19 (d) The act of September 20, 1961 (P.L.1548, No.658), known
20 as the Credit Union Act, is repealed.
21 (e) All other parts of those acts which are specified in
22 this section and all other acts and parts of acts are repealed
23 insofar as they are in any manner inconsistent with this act.
24 Section 402. Preparation of act for printing.
25 In editing and preparing this act for printing in the Laws of
26 Pennsylvania, or pursuant to 1 Pa.C.S. Ch. 5 (relating to
27 official publication of the consolidated statutes), the Director
28 of the Legislative Reference Bureau shall insert the date of
29 enactment, pamphlet law page number and act number of this act
30 in the appropriate blanks of the enrolled bill version of this
19900S1761B2510 - 418 -
1 act, without obtaining the approvals or marking the notations
2 required under 1 Pa.C.S. § 1105 (relating to editing statutes
3 for printing).
4 Section 403. Transitional provision.
5 The Department of State is authorized to adopt and publish
6 one or more forms of temporary docketing statement under 15
7 Pa.C.S. § 134 (relating to docketing statement) and other
8 temporary forms necessary or appropriate for the implementation
9 of Title 15 (relating to corporations and unincorporated
10 associations) upon compliance with the requirements of Title 15
11 and Title 45 (relating to legal notices) only. Any such
12 temporary docketing statement or form shall automatically be
13 deemed withdrawn on December 31, 1991, unless, prior thereto, it
14 shall have been superseded by a permanent docketing statement or
15 form promulgated in the manner required by law.
16 Section 404. Effective dates and applicability.
17 (a) Effective dates.--This act shall take effect
18 immediately, except that:
19 (1) Subchapter C of Chapter 1 of Title 15 (relating to
20 Department of State and UCC fees) shall take effect on the
21 first day of the month following the month of enactment of
22 this act.
23 (2) 15 Pa.C.S. § 1702(c) and the amendments to 15
24 Pa.C.S. § 1924(b) shall be retroactive to October 1, 1989.
25 (3) The amendments to 15 Pa.C.S. § 5758(b) shall be
26 retroactive to February 13, 1972.
27 (4) 15 Pa.C.S. § 1901(2) §§ 135(C)(2) AND 1901(A)(2) and <--
28 Chapters 73 and 75 of Title 15 shall take effect in four
29 months.
30 (5) The amendments to Chapter 77 of Title 15 shall be
19900S1761B2510 - 419 -
1 retroactive to June 19, 1989.
2 (6) The amendments to 15 Pa.C.S. § 8562(b) shall take
3 effect in four months and shall not apply to any certificate
4 of partnership interest issued or issuable on the effective
5 date of such amendments.
6 (7) Title 17 (relating to credit unions) and section
7 401(d) of this act shall take effect in two months.
8 (8) The expansion of the scope of Subpart B of Part II
9 of Title 15 to include insurance corporations as defined in
10 section 201 and all related changes in law affecting
11 insurance corporations, including the repeals provided in
12 section 401(b), shall take effect in six months.
13 (b) Applicability.--The provisions of Title 15 that are
14 derived from former 42 Pa.C.S. Ch. 83 Subch. F (relating to
15 corporate directors' liability):
16 (1) shall not be construed to repeal or otherwise affect
17 or impair 15 Pa.C.S. § 1728 (relating to interested directors
18 or officers; quorum) or 2538 (relating to approval of
19 transactions with interested shareholders) or 42 Pa.C.S. §
20 8332.2 (relating to officer, director, or trustee of
21 nonprofit organization negligence standard); and
22 (2) shall not apply to:
23 (i) any actions filed prior to January 27, 1987, nor
24 to any breach of performance of duty or any failure of
25 performance of duty by any director or officer of a
26 business corporation occurring prior to that date; or
27 (ii) any actions filed against or any breach of
28 performance of duty or any failure of performance of duty
29 by any director or officer of any other domestic
30 corporation for profit or not-for-profit occurring prior
19900S1761B2510 - 420 -
1 to the date that such corporation first became or becomes
2 subject to former 42 Pa.C.S. Ch. 83 Subch. F or 15
3 Pa.C.S. Ch. 5 Subch. B (relating to indemnification and
4 corporate directors' liability).
5 SOURCE NOTES
6 Section 102: The provisions repealed by this section are
7 supplied by this act as follows:
8 Official Superseding
9 Citation Provision
10 15 Pa.C.S. §511(a) 15 Pa.C.S. §§512(a), (b), 5712(a), (b)
11 (b) 15 Pa.C.S. §§516(a), 5716(a)
12 (c) 15 Pa.C.S. §§516(b), 5716(b)
13 (d) 15 Pa.C.S. §§515(a), (b), 517, 5715(a),
14 (b), 5717
15 (e) 15 Pa.C.S. §§515(c), 5715(c)
16 (f) 15 Pa.C.S. §§515(d), 5715(d)
17 (g) 15 Pa.C.S. §§511(b), 5711(b)
18 (h) 15 Pa.C.S. §§515(e), 5715(e)
19 (i) 15 Pa.C.S. Omitted <--
20 15 Pa.C.S. §512(a) 15 Pa.C.S. §§513(a), 5713(a)
21 (b) 15 Pa.C.S. §§513(b), 5713(b)
22 15 Pa.C.S. §513 15 Pa.C.S. §§518, 5718
23 15 Pa.C.S. §1721(a) 15 Pa.C.S. §1721
24 (b) 15 Pa.C.S. §1712(a), (b)
25 (c) 15 Pa.C.S. §1716(a)
26 (d) 15 Pa.C.S. §1716(b)
27 (e) 15 Pa.C.S. §§1715(a), (b), 1717
28 (f) 15 Pa.C.S. §1715(c)
19900S1761B2510 - 421 -
1 (g) 15 Pa.C.S. §1715(d)
2 (h) 15 Pa.C.S. §1713
3 (i) 15 Pa.C.S. §1714
4 (j) 15 Pa.C.S. §1711
5 (k) 15 Pa.C.S. §1715(e)
6 (l) Omitted
7 15 Pa.C.S. §1732(c) 15 Pa.C.S. §1712(c)
8 15 Pa.C.S. §1770 15 Pa.C.S. §2538
9 15 Pa.C.S. §2701(a) 15 Pa.C.S. §2701(a)
10 (b) 15 Pa.C.S. §2701(b)
11 (c) 15 Pa.C.S. §§2702, 2703
12 15 Pa.C.S. §2702(a) 15 Pa.C.S. §2704(a)
13 (b) 15 Pa.C.S. §2704(b)
14 15 Pa.C.S. §2703(a) 15 Pa.C.S. §2704(b)
15 (b) 15 Pa.C.S. §2705
16 15 Pa.C.S. §2704 15 Pa.C.S. §2704(c)
17 15 Pa.C.S. §2711 15 Pa.C.S. §2721
18 15 Pa.C.S. §2712 15 Pa.C.S. §2722
19 15 Pa.C.S. §2721 15 Pa.C.S. §2711
20 15 Pa.C.S. §2722 15 Pa.C.S. §2712
21 15 Pa.C.S. §5303 15 Pa.C.S. §5303
22 15 Pa.C.S. §5305 15 Pa.C.S. §5305
23 15 Pa.C.S. §5702.1 15 Pa.C.S. §5702(d), (e), (f)
24 15 Pa.C.S. §5721 15 Pa.C.S. §5721
25 15 Pa.C.S. §5974.1 Omitted
26 15 Pa.C.S. §5974.2 Omitted
27 15 Pa.C.S. §7301 15 Pa.C.S. Ch.73
28 15 Pa.C.S. §7501 15 Pa.C.S. Ch.75
29 The source notes for the amended or added provisions of Title 15
30 are as follows:
19900S1761B2510 - 422 -
1 15 Pa.C.S. §102: The last sentence of the definition of
2 "association" is new. Definitions of "corporation for profit"
3 and "corporation not-for-profit" patterned after 15 Pa.C.S.
4 §1103. Definitions of "credit union" and "insurance corporation"
5 conformed to new 17 Pa.C.S. §102 and 15 Pa.C.S. §3102,
6 respectively. THE DEFINITIONS OF "ELECTING PARTNERSHIP" AND <--
7 "REPRESENTATIVE" ARE REQUIRED BY 15 PA.C.S. §§8103 AND 9506,
8 RESPECTIVELY.
9 15 Pa.C.S. §105: Subsection (a) is derived from act of July
10 12, 1972 (P.L.769, No.182) (former 71 P.S. §803.1 et seq.).
11 15 PA.C.S. §109: THE PROVISIONS OF 15 PA.C.S. §§108 AND 109 <--
12 ARE CLARIFIED BY PROVIDING FOR THE FILING UNDER THE LATTER
13 SECTION OF A STATEMENT OF TERMINATION OF COMMERCIAL REGISTERED
14 OFFICE.
15 15 Pa.C.S. §131: Conforming change.
16 15 Pa.C.S. §133: Reference to Title 13 in the first sentence
17 of subsection (a) and the balance of subsection (a) are new.
18 15 Pa.C.S. §134: Reference in second sentence of subsection
19 (a) to execution of docketing statement changed to submission of
20 the docketing statement.
21 15 Pa.C.S. §135: Paragraphs (a)(7) and (c)(2) and subsection
22 (d) are new. The amendment to paragraph (c)(1) deletes redundant
23 language. See 15 Pa.C.S. §131.
24 15 Pa.C.S. §136: Provision in subsection (a) permitting a
25 person filing a document to request that it be filed at a later
26 date omitted in light of subsection (c). Reference in paragraph
27 (b)(2) to submission of evidence that a name has been reserved
28 is new. Last sentence of paragraph (b)(2) is new.
29 15 Pa.C.S. §139: Paragraphs (2) and (3) are new.
30 15 Pa.C.S. §140: New.
19900S1761B2510 - 423 -
1 15 Pa.C.S. §151: Subsection (a) is patterned after act of
2 July 1, 1978 (P.L.700, No.124), §101 (63 P.S. §1401-101).
3 Subsection (b) is derived from act of July 12, 1972 (P.L.769,
4 No.182), §1 (former 71 P.S. §803.1).
5 15 Pa.C.S. §152: Definition of "ancillary transaction" is a
6 generalization of act of July 12, 1972 (P.L.769, No.182), §2
7 (former 71 P.S. §803.2). Definition of "Bureau Augmentation
8 Account" is patterned after act of July 1, 1978 (P.L.800,
9 No.124), §301 (63 P.S. §1401-301).
10 15 Pa.C.S. §153: Derived generally from act of July 12, 1972
11 (P.L.769, No.182), §§3 through 5 (former 71 P.S. §§803.3 through
12 803.5). Subsection (a)(13) is a reenactment of act of December
13 21, 1988 (P.L.1444, No.177), §105 (15 P.S. §20105). Subsection
14 (a)(14) is substantially a reenactment of former 15 Pa.C.S.
15 §152(h) (first sentence).
16 15 Pa.C.S. §154: Subsections (a) and (b) are derived from
17 act of July 12, 1972 (P.L.769, No.182), §6 (former 71 P.S.
18 §803.6). Subsection (c) is patterned after, inter alia, act of
19 December 27, 1974 (P.L.995, No.326), §13(e) (63 P.S.
20 §485.13(e)), as added by act of May 9, 1986 (P.L.166, No.54),
21 §1.
22 15 Pa.C.S. §155: Subsection (a) is patterned after act of
23 July 1, 1978 (P.L.700, No.124), §301 (63 P.S. §1401-301).
24 Subsection (b) is patterned after act of July 3, 1987 (P.L.459,
25 No.9A), §1005 and similar food and forage provisions of prior
26 general appropriation acts.
27 15 Pa.C.S. §161: Section renumbered from former §151 to
28 conform to new 15 Pa.C.S. Subch. 1C. Exclusion in subsection (e)
29 of associations that may be domesticated under 15 Pa.C.S. §6161
30 is new. Requirement in subsection (f) that associations be
19900S1761B2510 - 424 -
1 foreign ALIEN is new. <--
2 15 Pa.C.S. §162: Section renumbered from former §152 to
3 conform to new 15 Pa.C.S. Subch. 1C. Subparagraphs (b)(1)(ii)
4 and (b)(3)(ii) are new. Conforming changes to section numbers in
5 cross references in subsections (b)(2) and (f)(2). The first
6 clause of subsection (d)(2) is new. Title of filings changed.
7 Provision in subsection (e) on filing documents by telecopy or
8 other similar means omitted as supplied by 15 Pa.C.S. §135(d).
9 Paragraph (f)(2) is new. Filing fee in subsection (h) deleted as
10 supplied by new 15 Pa.C.S. §153(a)(14).
11 15 Pa.C.S. §511: Subsection (a) is derived from former 15
12 Pa.C.S. Subch. 5B. Subsection (b) is a reenactment of former 15
13 Pa.C.S. §511(g), except that business corporations and nonprofit
14 corporations are excluded from the scope of the section. Compare
15 15 Pa.C.S. §§1711 and 5711.
16 15 Pa.C.S. §512: Subsections (a) and (b) are a reenactment
17 of former 15 Pa.C.S. §511(a), except that business corporations
18 and nonprofit corporations are excluded from the scope of the
19 section. Subsection (c) is patterned after former 15 Pa.C.S.
20 §1732(c). Compare 15 Pa.C.S. §§1712 and 5712.
21 15 Pa.C.S. §513: Substantially a reenactment of former 15
22 Pa.C.S. §512, except that business corporations and nonprofit
23 corporations are excluded from the scope of the section. Compare
24 15 Pa.C.S. §§1713 and 5713.
25 15 Pa.C.S. §514: New. Patterned after 15 Pa.C.S. §§1714 and
26 5714.
27 15 Pa.C.S. §515: Substantially a reenactment of former 15
28 Pa.C.S. §511(d) (except last two sentences), (e), (f) and (h)
29 except that business corporations and nonprofit corporations are
30 excluded from the scope of the section. Compare 15 Pa.C.S.
19900S1761B2510 - 425 -
1 §§1715 and 5715.
2 15 Pa.C.S. §516: Reenactment of former 15 Pa.C.S. §511(b)
3 and (c) except that business corporations and nonprofit
4 corporations are excluded from the scope of the section. Compare
5 15 Pa.C.S. §§1716 and 5716.
6 15 Pa.C.S. §517: Derived from last two sentences of former
7 15 Pa.C.S. §511(d). Business corporations and nonprofit
8 corporations are excluded from the scope of the section and the
9 section is extended to the alternative standard. Compare 15
10 Pa.C.S. §§1717 and 5717.
11 15 Pa.C.S. §518: Substantially a reenactment of former 15
12 Pa.C.S. §513, except that business corporations and nonprofit
13 corporations are excluded from the scope of the section.
14 15 Pa.C.S. §521: Section made inapplicable to insurance
15 corporations. See 15 Pa.C.S. §1102, and Division II and section
16 401(b) of the act of , 1990 (P.L. , No. ), known
17 as the GAA Amendments Act. Section also made inapplicable to
18 credit unions. See 17 Pa.C.S. §501(a)(4).
19 15 Pa.C.S. §522: Section made inapplicable to insurance
20 corporations. See 15 Pa.C.S. §1102, and Division II and section
21 401(b) of the act of , 1990 (P.L. , No. ), known
22 as the GAA Amendments Act. Section also made inapplicable to
23 credit unions. See 17 Pa.C.S. §712(a).
24 15 Pa.C.S. §523: Section made inapplicable to insurance
25 corporations. See 15 Pa.C.S. §1102, and Division II and section
26 401(b) of the act of , 1990 (P.L. , No. ), known
27 as the GAA Amendments Act. Section also made inapplicable to
28 credit unions. See 15 Pa.C.S. §715.
29 15 Pa.C.S. §1102: Former subsection (c)(3) deleted, making
30 insurance corporations subject to 15 Pa.C.S. Subpart IIB. See
19900S1761B2510 - 426 -
1 Division II and section 401(b) of the act of , 1990
2 (P.L. , No. ), known as the GAA Amendments Act.
3 15 Pa.C.S. §1103: Definition of "credit union" conformed to
4 15 Pa.C.S. §7902. Definition of "distribution" clarified with
5 respect to issuance of options, rights or warrants and upstream
6 guarantees. Definition of "entitled to vote" clarified. Citation
7 in definition of "foreign insurance corporation" corrected.
8 Definitions of "insurance corporation" and "qualified foreign
9 business corporation" conformed to 15 Pa.C.S. §1102. Provision
10 on exchange of shares for other securities or obligations in
11 definition of "reclassification" is new. Definitions of
12 "Exchange Act," "Internal Revenue Code of 1986," "Investment
13 Company Act of 1940," "mutual insurance company," "relax" and
14 "Securities Act of 1933" are new.
15 15 Pa.C.S. §1104: Section references conformed to new 15
16 Pa.C.S. Subch. 1C, and reference to 15 Pa.C.S. §140 added.
17 References to 15 Pa.C.S. §§511-513 omitted.
18 15 Pa.C.S. §1106: Conforming changes made to subsection
19 (b)(3). Subsection (b)(4) is new.
20 15 Pa.C.S. §1108: Section renumbered from former §1107.
21 15 Pa.C.S. §1109: Section renumbered from former §1108.
22 15 Pa.C.S. §1110: Derived from act of March 4, 1971 (P.L.6,
23 No.2), §403(a)(3)(last sentence) (72 P.S. §7403(a)(3)(last
24 sentence)). Compare new 15 Pa.C.S. §5110.
25 15 Pa.C.S. §1303: References added in subsection (b)(1) to
26 filings that have not yet become effective. Reference in
27 subsection (b)(1) to limited partnership filings that block
28 corporate names limited to those filed in the Department of
29 State. Provision in subsection (b)(1)(i)(B) that failure to make
30 a required filing in the Department of State for three years
19900S1761B2510 - 427 -
1 makes name available omitted. Name of document evidencing
2 consent of an association to use of similar name changed to
3 "statement." Subsection (c)(1)(iii) conformed to the inclusion
4 of insurance corporations within the scope of Subpart IIB, and
5 patterned in part after former 15 Pa.C.S. §2121(b). See 15
6 Pa.C.S. §1102, and Division II and section 401(b) of the act of
7 , 1990 (P.L. , No. ), known as the GAA Amendments
8 Act. Subsection (c)(1)(v) is new.
9 15 Pa.C.S. §1306: Subsection (b) is new. Subsection (c)
10 redesignated from last sentence of subsection (a).
11 15 Pa.C.S. §1504: References to a contrary provision of the
12 articles and to subsection (d) and 15 Pa.C.S. §§1713 and 1725
13 added in subsection (b). Rule of subsection (d) conformed to 15
14 Pa.C.S. §1914(e).
15 15 Pa.C.S. §1505: Reference to 15 Pa.C.S. §1713 substituted
16 for references to 15 Pa.C.S. §§512 and 1721(e) and 42 Pa.C.S.
17 §8364.
18 15 Pa.C.S. §1508: Former subsection (d) deleted. As to new
19 subsection (d), see 15 Pa.C.S. §1306(a)(8). Subsection (e) is
20 new.
21 15 Pa.C.S. §1510: Subsection (b) and definition of
22 "affiliate" in subsection (c) are new.
23 15 Pa.C.S. §1521: Last sentence of subsection (b)(1)(i) is
24 new. Test for a distribution under subsection (b)(3) limited to
25 15 Pa.C.S. §1551(b)(2). Requirement that a provision of the
26 articles conferring a specifically enforceable right to a
27 distribution refer to subsection (b)(3) made optional if an
28 express reference to specific enforceability is set forth.
29 15 Pa.C.S. §1524: Reference to use of shares or other
30 securities or obligations of the issuing corporation as
19900S1761B2510 - 428 -
1 consideration for shares added in subsection (a)(1). Exception
2 as to subsection (e) added in subsection (c). Date changed in
3 subsection (e) to conform to general effective date of the
4 General Association Act of 1988.
5 15 Pa.C.S. §1525: Reference in subsection (c) to 15 Pa.C.S.
6 Subch. 17B substituted for reference to 15 Pa.C.S. §1721. Rule
7 of subsection (e) limited to shares sold pursuant to a plan.
8 Required vote in subsection (e) conformed to vote required
9 generally. Cf. 15 Pa.C.S. §1757(a).
10 15 Pa.C.S. §1528: Reference to 15 Pa.C.S. §1524(d) added in
11 subsection (d). Subsection (f) amended to require provision
12 creating uncertificated shares to be in the articles rather than
13 the bylaws. But see new 15 Pa.C.S. §1914(c)(2)(iv).
14 15 Pa.C.S. §1530: Subsection (b) is new. Former subsections
15 (b) and (c) relating to preexisting preemptive rights omitted.
16 15 Pa.C.S. §1551: Effect of a provision on par value
17 clarified in subsection (a). Factors that the board may consider
18 when applying the test of subsection (b)(2) clarified in
19 subsection (c). Date of distribution clarified in subsection
20 (d). Subsection (e) conformed to Revised Model Business
21 Corporation Act §6.40(f) (1984). Subsection (g) is new.
22 15 Pa.C.S. §1553: References in subsection (a) to 15 Pa.C.S.
23 §§1712 and 1713 substituted for references to 15 Pa.C.S.
24 §1721(b) and (e). Subsection (e) is new. Cf. 15 Pa.C.S.
25 §1306(a)(8).
26 15 Pa.C.S. §1554: Subsection (c) clarified. Subsection (d)
27 is new.
28 15 Pa.C.S. §1571: References to 15 Pa.C.S. §§2705(c) and
29 7104(b)(3) added in subsection (a) and conforming change made in
30 subsection (e). Rule of subsection (b)(2) limited to situations
19900S1761B2510 - 429 -
1 in which subsection (b)(1) applies to conform to other
2 exceptions to the availability of dissenters rights (e.g. 15
3 Pa.C.S. §2537). Subsection (b)(2)(iii) is new. Subsection (f) is
4 new. Cf. 15 Pa.C.S. §1306(a)(8).
5 15 Pa.C.S. §1572: The last two sentences of the definition
6 of "corporation" are new.
7 15 Pa.C.S. §1576: References to timely action added in
8 subsection (a).
9 15 Pa.C.S. §1577: Subsections (c) and (d) clarified.
10 15 Pa.C.S. §1578: Subsection (b) clarified.
11 15 Pa.C.S. §1701: Subsection (b) is new. Compare 15 Pa.C.S.
12 §1306(a)(8).
13 15 Pa.C.S. §1702: Subsection (a) clarified. Final exception
14 in subsection (b) regarding a required notice that has not been
15 given is new. Subsections (c) and (d) are new.
16 15 Pa.C.S. §1703: First sentence of subsection (b) limited
17 to regular meetings. Second sentence of subsection (b) limited
18 to special meetings.
19 15 Pa.C.S. §1704: Requirement in first sentence of
20 subsection (c) that a notice comply with the express
21 requirements of Subpart IIB is new. The second sentence of
22 subsection (c) is new and is intended to make clear that State
23 law does not duplicate the disclosure requirements of 18 CFR
24 §240.10b-5. Compare Stroud v. Milliken Enterprises, Inc., 552
25 A.2d 476 (Del. 1989).
26 15 Pa.C.S. §1705: Omission of requirement in subsection (a)
27 that waiver of notice of special meeting of shareholders specify
28 the general nature of the business to be transacted patterned
29 after Delaware General Corporation Law §229.
30 15 Pa.C.S. §1708: Reference to a contrary bylaw is new.
19900S1761B2510 - 430 -
1 15 Pa.C.S. §1711: Reenactment of former 15 Pa.C.S. §1721(j),
2 except that subsections (b)(2) and (c) are new. Compare 15
3 Pa.C.S. §§511 and 5711.
4 15 Pa.C.S. §1712: Subsections (a) and (b) are substantially
5 a reenactment of former 15 Pa.C.S. §1721(b). Compare 15 Pa.C.S.
6 §§512 and 5712. Subsection (c) is a reenactment of former 15
7 Pa.C.S. §1732(c). Compare 15 Pa.C.S. §§512(c) and 5712(c).
8 15 Pa.C.S. §1713: Reenactment of former 15 Pa.C.S. §1721(h),
9 except the last sentence of subsection (b) which is new. Compare
10 15 Pa.C.S. §§513 and 5713.
11 15 Pa.C.S. §1714: Substantially a reenactment of former 15
12 Pa.C.S. §1721(i) except that the provision is limited to
13 directors generally competent to act. Compare 15 Pa.C.S. §§514
14 and 5714.
15 15 Pa.C.S. §1715: Reenactment of former 15 Pa.C.S. §1721(e),
16 (f), (g) and (k). Compare 15 Pa.C.S. §§515 and 5715.
17 15 Pa.C.S. §1716: Reenactment of former 15 Pa.C.S. §1721(c)
18 and (d). Compare 15 Pa.C.S. §§516 and 5716.
19 15 Pa.C.S. §1717: Derived from last two sentences of former
20 15 Pa.C.S. §1721(e), which are extended to alternative standard.
21 Compare 15 Pa.C.S. §§517 and 5717.
22 15 Pa.C.S. §1721: The last sentence is new. Former
23 subsections (b) through (l) omitted as supplied by 15 Pa.C.S.
24 §§1711-1717.
25 15 Pa.C.S. §1722: Subsection (b) is new.
26 15 Pa.C.S. §1723: Subsection (b) is new.
27 15 Pa.C.S. §1724: Reference in subsection (b) to a contrary
28 provision of the articles is new.
29 15 Pa.C.S. §1725: The last sentence of subsection (a) is
30 derived from act of May 5, 1933 (P.L.364, No.106) §403 (first
19900S1761B2510 - 431 -
1 sentence) (former 15 P.S. §1403 (first sentence)). Reference to
2 type of classified board clarified in subsection (b)(2). Cross
3 reference in subsection (d) to 15 Pa.C.S. §1758(c) is new.
4 15 Pa.C.S. §1726: Subsection (a)(5) is new. Reference in
5 subsection (c) to 15 Pa.C.S. Subch. 17F substituted for
6 reference to 15 Pa.C.S. Subch. 17E. Subsection (e) is new.
7 15 Pa.C.S. §1732: Former subsection (c) omitted as supplied
8 by 15 Pa.C.S. §1712(c). Subsection (c) is new.
9 15 Pa.C.S. §1746: Reference to 15 Pa.C.S. §2538 in
10 subsection (a) substituted for reference to repealed section.
11 The last sentence of subsection (b) is new. Compare 15 Pa.C.S.
12 §1306(a)(8). Former subsection (d) omitted.
13 15Pa.C.S. §1747: Former subsection (b) omitted.
14 15 Pa.C.S. §1755: Reference to contrary provision of the
15 articles in second sentence of subsection (a) is new. Subsection
16 (d) is new.
17 15 Pa.C.S. §1756: Reference to 15 Pa.C.S. §3124 in
18 subsection (c) is new.
19 15 Pa.C.S. §1757: Provision on class vote in subsection (a)
20 is new.
21 15 Pa.C.S. §1758: Last sentence of subsection (a) amended to
22 provide enabling legislation for restrictions of the type
23 regulated by Rule 19c-4(d) under the Securities Exchange Act of
24 1934 (17 CFR 240.19c-4(d)). Availability of voting by ballot
25 limited to situations where it is required by vote of the
26 shareholders.
27 15 Pa.C.S. §1759: The second sentence of subsection (b) is
28 patterned in part after Tex. Bus. Corp. Act §2.29. Subsection
29 (e) is new.
30 15 Pa.C.S. §1763: Provisions on record date for determining
19900S1761B2510 - 432 -
1 shareholders entitled to call a special meeting or to propose an
2 amendment of the articles added in subsection (b)(2).
3 15 Pa.C.S. §1765: Subsection (b) is new.
4 15 Pa.C.S. §1766: Provision restricting implementation of
5 subsection (b) to the articles in the case of a registered
6 corporation deleted to conform to amended 15 Pa.C.S. §2524.
7 15 Pa.C.S. §1767: Introductory clause added and reference to
8 15 Pa.C.S. §1981 corrected in subsection (a). Subsections
9 (b)(2), (d) and (e) are new.
10 15 Pa.C.S. §1770: Omitted.
11 15 Pa.C.S. §1791: Cross reference in subsection (b) changed
12 from 15 Pa.C.S. §4145 to 15 Pa.C.S. §3138.
13 15 Pa.C.S. §1792: Cross reference in subsection (c) changed
14 from 15 Pa.C.S. §4145 to 15 Pa.C.S. §3138.
15 15 Pa.C.S. §1793: Cross reference in subsection (c) changed
16 from 15 Pa.C.S. §4145 to 15 Pa.C.S. §3138.
17 15 Pa.C.S. §1901: Subsection (a)(2) is new.
18 15 Pa.C.S. §1903: Reference to "debtor" substituted for
19 "bankrupt" in subsection (a). The last three sentences of
20 subsection (b) and subsection (c) are derived from act of May 5,
21 1933 (P.L.364, No.106) §320 (former 15 P.S. §1320).
22 15 Pa.C.S. §1905: References to dissolution of the
23 corporation and approval by the board are new. Reference to
24 consent of shareholders added.
25 15 Pa.C.S. §1906: Reference in subsection (a) to a provision
26 of the articles restricting the use of special treatment is new.
27 References to groups clarified in subsection (a)(1)(i) and (b).
28 Subsection (d)(2) and(3) are new.
29 15 Pa.C.S. §1911: Reference to special treatment added in
30 subsection (a)(4). Subsection (c) is new.
19900S1761B2510 - 433 -
1 15 Pa.C.S. §1912: Cross reference to 15 Pa.C.S. §1106(b)(4)
2 added in subsection (a).
3 15 Pa.C.S. §1914: References to preemptive rights and
4 cumulative voting in subsection (b)(2) are new. Former paragraph
5 (b)(3) omitted. Subsection (c)(2)(iv) is new. Reference in
6 subsection (e) to a provision in a bylaw adopted by the
7 shareholders changed to a provision in the articles.
8 15 Pa.C.S. §1921: The application of subsection (c) to share
9 exchanges, the requirement in subsection (c) that a domestic
10 business corporation be a party or resulting entity and the last
11 two sentences of subsection (c) are new.
12 15 Pa.C.S. §1922: Reference to special treatment in
13 subsection (a)(4) clarified. Reference in subsection (d) to a
14 partnership, business trust or other association that approves a
15 plan is new.
16 15 Pa.C.S. §1923: Restriction in subsection (a) on
17 furnishing a copy of 15 Pa.C.S. Subch. 15D to classes or series
18 entitled to dissent is new.
19 15 Pa.C.S. §1924: Required vote in subsection (a) conformed
20 to 15 Pa.C.S. §1914(a). Applicability of subsection (b)(1)(i)
21 clarified.
22 15 Pa.C.S. §1931: Subsection (b)(2) clarified. Use of
23 special treatment in connection with a division clarified in
24 subsection (b)(4). Subsection (h) is new (compare 15 Pa.C.S.
25 §1952(h)).
26 15 Pa.C.S. §1952: Reference to special treatment in
27 subsection (a)(5) clarified. Application of subsection (h) to
28 proposal of division clarified. Date changed in subsection (h)
29 to conform to general effective date of the General Association
30 Act of 1988.
19900S1761B2510 - 434 -
1 15 Pa.C.S. §1954: Former subparagraph (4)(ii) omitted.
2 15 Pa.C.S. §1957: Subsection (g) is new.
3 15 Pa.C.S. §1962: Reference to special treatment in
4 subsection (a)(3) clarified.
5 15 Pa.C.S. §1972: Section divided into two subsections.
6 15 Pa.C.S. §1974: Required vote in subsection (a) conformed
7 to 15 Pa.C.S. §1914(a).
8 15 Pa.C.S. §2101: Subsection (a)(3) is new. See 15 Pa.C.S.
9 §1102, and Division II and section 401(b) of the act of
10 , 1990 (P.L. , No. ), known as the GAA Amendments
11 Act.
12 15 Pa.C.S. §2105: Subsection (c) is new.
13 15 Pa.C.S. §2121: Cross reference in subsection (b)
14 substituted for provision transferred to 15 Pa.C.S.
15 §1303(c)(1)(iii).
16 15 Pa.C.S. §2301: Applicability of subsection (d) conformed
17 to effective date of 15 Pa.C.S. Ch.23.
18 15 Pa.C.S. §2304: Citation for Securities Act of 1933
19 omitted in subsection (a).
20 15 Pa.C.S. §2309: Name of document filed under subsection
21 (a)(1) changed to "statement."
22 15 Pa.C.S. §2334: Subsection (b)(1)(iii) clarified.
23 15 Pa.C.S. §2502: Last sentence of paragraph (1) and
24 references to management companies are new.
25 15 Pa.C.S. §2524: Subsection (a) clarified. Compare 15
26 Pa.C.S. §1766(b).
27 15 Pa.C.S. §2525: New.
28 15 Pa.C.S. §2526: New. <--
29 15 Pa.C.S. §2538: Derived from former 15 Pa.C.S. §1770, as
30 added by the act of December 21, 1988 (P.L.1444, No.177).
19900S1761B2510 - 435 -
1 15 Pa.C.S. §2541: Subsection (a)(2) is amended and (a)(3) is
2 new.
3 15 Pa.C.S. §2543: Subsection (b)(2)(iv)-(vi) and (3) are
4 new.
5 15 Pa.C.S. §2552: Definition of "Exchange Act" transferred
6 to 15 Pa.C.S. §1103.
7 15 Pa.C.S. §2554: Paragraph (1) expanded to cover share
8 exchanges and divisions.
9 15 Pa.C.S. §2561: Reference in subsection (b)(2)(iii) to
10 adoption of an articles amendment at any time that the
11 corporation is not a registered corporation described in section
12 2502(1)(i) is new. Subsections (b)(2)(i)(A)(II), (b)(2)(i)(B),
13 (b)(2)(ii), (b)(5)(xi) AND (XII) and (d)(4) are new. Reference <--
14 in subsection (e) to 15 Pa.C.S. §2565 substituted for reference
15 to 15 Pa.C.S. §2564.
16 15 Pa.C.S. §2562: Reference in paragraph (2) of definition
17 of "disinterested shares" to 15 Pa.C.S. §2565(c) substituted for
18 reference to 15 Pa.C.S. §2564(c). Definition of "Exchange Act"
19 omitted as supplied by 15 Pa.C.S. §1103. Reference in definition
20 of "proxy solicitation" to 15 Pa.C.S. §2563(b)(3) substituted
21 for reference to 15 Pa.C.S. §2562.1(b)(3).
22 15 Pa.C.S. §2563: Section renumbered from former §2562.1.
23 Reference in subsection (a)(1) to 15 Pa.C.S. §2564 substituted
24 for reference to 15 Pa.C.S. §2563. Subsection (b)(4) is new.
25 15 Pa.C.S. §2564: Section renumbered from former §2563.
26 15 Pa.C.S. §2565: Section renumbered from former §2564.
27 Section number cross references conformed to renumbering of
28 Subchapter 25G.
29 15 Pa.C.S. §2566: Section renumbered from former §2565.
30 Reference in subsection (a)(8) to 15 Pa.C.S. §2564 substituted
19900S1761B2510 - 436 -
1 for reference to 15 Pa.C.S. §2563.
2 15 Pa.C.S. §2567: Section renumbered from former §2566.
3 Section number cross references conformed to renumbering of
4 Subchapter 25G.
5 15 Pa.C.S. §2568: Section renumbered from former §2567.
6 15 Pa.C.S. §2571: Reference in subsection (b)(2)(iii) to
7 adoption of an articles amendment at any time that the
8 corporation is not a registered corporation described in section
9 2502(1)(i) is new. Subsection (b)(2)(i)(A)(II), (b)(2)(i)(B),
10 (b)(2)(ii), (b)(6)(iii) and (8) are new.
11 15 Pa.C.S. §2573: Reference in definition of "proxy
12 solicitation" to 15 Pa.C.S. §2574(b)(3) substituted for
13 reference to 15 Pa.C.S. §2573.1(b)(3).
14 15 Pa.C.S. §2574: Section renumbered from former §2573.1.
15 Subsection (c) is new.
16 15 Pa.C.S. §2575: Section renumbered from former §2574.
17 15 Pa.C.S. §2576: Section renumbered from former §2575.
18 15 Pa.C.S. §2581: Section number cross references in
19 definition of "control-share approval" conformed to renumbering
20 of Subchapter 25G and in 15 Pa.C.S. §2561(b)(2).
21 15 Pa.C.S. §2701: Derived from former 15 Pa.C.S. §2701(a)
22 and (b). Subsection (c) patterned in part after 15 Pa.C.S.
23 §2501(c).
24 15 Pa.C.S. §2702: Derived from former 15 Pa.C.S. §2701(c).
25 15 Pa.C.S. §2703: New.
26 15 Pa.C.S. §2704: Derived from former 15 Pa.C.S. §§2702,
27 2703(a) and 2704.
28 15 Pa.C.S. §2705: Derived from former 15 Pa.C.S. §2703(b).
29 15 Pa.C.S. §2711: Subsection (a) is substantially a
30 reenactment of former 15 Pa.C.S. §2721. Subsection (b) is new.
19900S1761B2510 - 437 -
1 15 Pa.C.S. §2712: Reenactment of former 15 Pa.C.S. §2722.
2 15 Pa.C.S. §2721: Derived from former 15 Pa.C.S. §2711. Cf.
3 15 Pa.C.S. §2701(c).
4 15 Pa.C.S. §2722: Substantially a reenactment of former 15
5 Pa.C.S. §2712.
6 15 Pa.C.S. §2923: Reference to beneficial ownership added in
7 subsection (a). Former subsection (b) omitted.
8 15 Pa.C.S. §3101: Patterned after 15 Pa.C.S. §2901.
9 15 Pa.C.S. §3102: Derived from 15 Pa.C.S. §1103 ("insurance
10 corporation").
11 15 Pa.C.S. §3121: Derived from act of May 17, 1921 (P.L.682,
12 No.284), §303 (former 40 P.S. §423).
13 15 Pa.C.S. §3122: Compare act of May 17, 1921 (P.L.682,
14 No.284), §421 (former 40 P.S. §591).
15 15 Pa.C.S. §3131: Derived from act of May 17, 1921 (P.L.682,
16 No.284), §308 (former 40 P.S. §429). Subsection (b) also derived
17 from act of May 17, 1921 (P.L.682, No.284), §208 (former 40 P.S.
18 §388).
19 15 Pa.C.S. §3132: Derived from act of May 17, 1921 (P.L.682,
20 No.284), §314 (former 40 P.S. §437).
21 15 Pa.C.S. §3133: Derived from act of May 17, 1921 (P.L.682,
22 No.284), §§304 and 322(b) (former 40 P.S. §§424 and 445(b)).
23 15 Pa.C.S. §3134: Derived from act of May 17, 1921 (P.L.682,
24 No.284), §303 (former 40 P.S. §423).
25 15 Pa.C.S. §3135: Patterned after act of May 5, 1933
26 (P.L.364, No.106) §504A (former 15 P.S. §1504(A). Derived from
27 act of March 5, 1903 (P.L.14, No.17) (15 P.S. §429). See also
28 act of March 28, 1820 (P.L.169, No.113), §1.
29 15 Pa.C.S. §3136: Derived from act of May 17, 1921 (P.L.682,
30 No.284), §303 (former 40 P.S. §423).
19900S1761B2510 - 438 -
1 15 Pa.C.S. §3137: New.
2 15 Pa.C.S. §3138: New.
3 15 Pa.C.S. §4101: Reference to insurance corporations
4 deleted from subsection (a). Applicability of subsection (b)(1)
5 clarified. Former subsection (c) omitted. See 15 Pa.C.S. §1102,
6 and Division II and section 401(b) of the act of ,
7 1990 (P.L. , No. ), known as the GAA Amendments Act.
8 15 Pa.C.S. §4121: Subsection (c) is new. See 15 Pa.C.S.
9 §1102, and Division II and section 401(b) of the act of
10 , 1990 (P.L. , No. ), known as the GAA Amendments
11 Act.
12 15 Pa.C.S. §4123: Reference to 15 Pa.C.S. §1306(c)(1)(iii)
13 in subsection (a) deleted. The requirement in subsection
14 (b)(1)(i) that a name be otherwise available and subsection
15 (b)(2) are new.
16 15 Pa.C.S. §4125: Requirement that Department of State issue
17 a certificate of authority to do business deleted.
18 15 Pa.C.S. §4126: Requirement that Department of State issue
19 an amended certificate of authority to do business deleted.
20 15 Pa.C.S. §4128: Subsection (c) is new. See 15 Pa.C.S.
21 §1102, and Division II and section 401(b) of the act of ,
22 1990 (P.L. , No. ), known as the GAA Amendments Act.
23 15 Pa.C.S. §4129: Requirement in subsection (a)(5) that
24 application for termination of authority state that official
25 publication of notice has been effected is new.
26 15 Pa.C.S. §4142: Subsection (c) is new.
27 15 Pa.C.S. §4146: Applicability of 15 Pa.C.S. §1782 limited
28 to actions or proceedings brought in the courts of this
29 Commonwealth.
30 15 Pa.C.S. §4161: Renunciation of original charter made
19900S1761B2510 - 439 -
1 optional in subsection (b)(6).
2 15 PA.C.S. §5102: SUBSECTION (B) PATTERNED AFTER 15 PA.C.S. <--
3 §1102(B). SUBSECTION (C) IS INTENDED AS A RESTATEMENT OF
4 EXISTING LAW.
5 15 Pa.C.S. §5103: The following definitions are new: "act,"
6 "corporation for profit," "corporation not-for-profit," "court,"
7 "department," "domestic corporation for profit," "domestic
8 corporation not-for-profit," "foreign corporation for profit,"
9 "foreign corporation not-for-profit," "foreign nonprofit
10 corporation" CORPORATION," "FRATERNAL BENEFIT SOCIETY" and <--
11 "relax." Definition of "articles" patterned after 15 Pa.C.S.
12 §1103.
13 15 Pa.C.S. §5104: Section references conformed to new 15
14 Pa.C.S. Subch. 1C. References to former 15 Pa.C.S. §§511-513
15 omitted. References to §§140 and 2552 added.
16 15 Pa.C.S. §5110: Derived from act of November 15, 1972
17 (P.L.1063, No.271), §8 (15 Pa.C.S.A. §101 note).
18 15 Pa.C.S. §5301: Reference to a purpose of fraternal
19 benefit omitted in subsection (a). Subsection (b) is new.
20 15 Pa.C.S. §5303: Patterned after 15 Pa.C.S. §1303.
21 15 Pa.C.S. §5305: Patterned after 15 Pa.C.S. §1305.
22 15 Pa.C.S. §5306: Patterned after 15 Pa.C.S. §1306, except
23 that articles are not permitted to relax or be inconsistent with
24 the statute.
25 15 Pa.C.S. §5311: Patterned after 15 Pa.C.S. §1311.
26 15 Pa.C.S. §5341: Patterned after 15 Pa.C.S. §1341.
27 15 Pa.C.S. §5502: Patterned after 15 Pa.C.S. §1502.
28 15 Pa.C.S. §5504: Patterned after 15 Pa.C.S. §1504.
29 15 Pa.C.S. §5505: Patterned after 15 Pa.C.S. §1505.
30 15 Pa.C.S. §5507: Patterned after 15 Pa.C.S. §1507.
19900S1761B2510 - 440 -
1 15 Pa.C.S. §5701: Cross reference to 15 Pa.C.S. §5707(a) is
2 new.
3 15 Pa.C.S. §5702: Subsections (a), (b) and (c) are patterned
4 after 15 Pa.C.S. §1702. Subsections (d), (e) and (f) are derived
5 from former 15 Pa.C.S. §5702.1.
6 15 Pa.C.S. §5703: Patterned after 15 Pa.C.S. §1703.
7 15 Pa.C.S. §5704: Patterned after 15 Pa.C.S. §1704.
8 15 Pa.C.S. §5705: Patterned after 15 Pa.C.S. §1705.
9 15 Pa.C.S. §5706: Patterned after 15 Pa.C.S. §1706.
10 15 Pa.C.S. §5707: Patterned after 15 Pa.C.S. §1707.
11 15 Pa.C.S. §5708: Patterned after 15 Pa.C.S. §1708.
12 15 Pa.C.S. §5711: Reenactment of former 15 Pa.C.S. §511(g),
13 limited to nonprofit corporations. Compare new 15 Pa.C.S. §§511
14 and 1711.
15 15 Pa.C.S. §5712: Subsections (a) and (b) are a reenactment
16 of former 15 Pa.C.S. §511(a), limited to nonprofit corporations.
17 Compare new 15 Pa.C.S. §§512 and 1712. Subsection (c) is
18 patterned after former 15 Pa.C.S. §1732(c). Compare new 15
19 Pa.C.S. §1712(c).
20 15 Pa.C.S. §5713: Reenactment of former 15 Pa.C.S. §512,
21 limited to nonprofit corporations. Compare new 15 Pa.C.S. §§513
22 and 1713.
23 15 Pa.C.S. §5714: Patterned after former 15 Pa.C.S. §1721(i)
24 and limited to directors generally competent to act. Compare new
25 15 Pa.C.S. §§514 and 1714.
26 15 Pa.C.S. §5715: Substantially a reenactment of former 15
27 Pa.C.S. §511(d) (except last two sentences), (e), (f) and (h),
28 limited to nonprofit corporations. Compare new 15 Pa.C.S. §§515
29 and 1715.
30 15 Pa.C.S. §5716: Reenactment of former 15 Pa.C.S. §511(b)
19900S1761B2510 - 441 -
1 and (c), limited to nonprofit corporations. Compare new 15
2 Pa.C.S. §§516 and 1716.
3 15 Pa.C.S. §5717: Derived from last two sentences of former
4 15 Pa.C.S. §511(d), limited to nonprofit corporations and
5 extended to alternative standard. Compare new 15 Pa.C.S. §§517
6 and 1717.
7 15 Pa.C.S. §5721: Patterned after 15 Pa.C.S. §1721.
8 15 Pa.C.S. §5732: Patterned after 15 Pa.C.S. §1732.
9 15 Pa.C.S. §5734: Scope of section expanded to cover members
10 of an other body individually and to incorporate law applicable
11 to directors generally.
12 15 Pa.C.S. §5741: Patterned after 15 Pa.C.S. §1741.
13 15 Pa.C.S. §5742: Patterned after 15 Pa.C.S. §1742.
14 15 Pa.C.S. §5743: Patterned after 15 Pa.C.S. §1743.
15 15 Pa.C.S. §5744: Patterned after 15 Pa.C.S. §1744.
16 15 Pa.C.S. §5745: Patterned after 15 Pa.C.S. §1745.
17 15 Pa.C.S. §5746: Patterned after 15 Pa.C.S. §1746.
18 15 Pa.C.S. §5747: Patterned after 15 Pa.C.S. §1747.
19 15 Pa.C.S. §5748: Patterned after 15 Pa.C.S. §1748.
20 15 Pa.C.S. §5749: Patterned after 15 Pa.C.S. §1749.
21 15 Pa.C.S. §5750: Patterned after 15 Pa.C.S. §1750.
22 15 Pa.C.S. §5758: The first sentence of subsection (b) is
23 new and is intended to overrule Spaches SPARKES v. Wright, 547 <--
24 A.2d 415 (Pa. Super. 1988). The amendments to subsection (b) are
25 made retroactive to February 13, 1972, by section 404(b)(3) of
26 the act of , 1990 (P.L. , No. ), known as the GAA
27 Amendments Act, without affecting any judgments that become
28 final prior to the enactment of that act. The last sentence of
29 subsection (b) is new.
30 15 Pa.C.S. §5901: Patterned after 15 Pa.C.S. §1901.
19900S1761B2510 - 442 -
1 15 Pa.C.S. §5902: Patterned after 15 Pa.C.S. §1902.
2 15 Pa.C.S. §5903: Patterned after 15 Pa.C.S. §1903.
3 15 Pa.C.S. §5905: Patterned after 15 Pa.C.S. §1905.
4 15 Pa.C.S. §5915: Patterned after 15 Pa.C.S. §1915.
5 15 Pa.C.S. §5916: Patterned after 15 Pa.C.S. §1916.
6 15 Pa.C.S. §5926: Patterned after 15 Pa.C.S. §1926.
7 15 Pa.C.S. §5954: Patterned after 15 Pa.C.S. §1954.
8 15 Pa.C.S. §5963: Patterned after 15 Pa.C.S. §1963.
9 15 Pa.C.S. §5971: Patterned after 15 Pa.C.S. §1971.
10 15 Pa.C.S. §5972: Patterned after 15 Pa.C.S. §1972.
11 15 Pa.C.S. §5973: Patterned after 15 Pa.C.S. §1973.
12 15 Pa.C.S. §5974: Patterned after 15 Pa.C.S. §1974.
13 15 Pa.C.S. §5974.1: Omitted.
14 15 Pa.C.S. §5974.2: Omitted.
15 15 Pa.C.S. §5975: Patterned after 15 Pa.C.S. §1975.
16 15 Pa.C.S. §5976: Patterned after 15 Pa.C.S. §1976.
17 15 Pa.C.S. §5977: Patterned after 15 Pa.C.S. §1977.
18 15 Pa.C.S. §5978: Patterned after 15 Pa.C.S. §1978.
19 15 Pa.C.S. §5979: Patterned after 15 Pa.C.S. §1979.
20 15 Pa.C.S. §5989: Patterned after 15 Pa.C.S. §1989.
21 15 Pa.C.S. §5991: Patterned after 15 Pa.C.S. §1991.
22 15 Pa.C.S. §5992: Patterned after 15 Pa.C.S. §1992.
23 15 Pa.C.S. §5993: Patterned after 15 Pa.C.S. §1993.
24 15 Pa.C.S. §5994: Patterned after 15 Pa.C.S. §1994.
25 15 Pa.C.S. §5995: Patterned after 15 Pa.C.S. §1995.
26 15 Pa.C.S. §5996: Patterned after 15 Pa.C.S. §1996.
27 15 Pa.C.S. §5997: Patterned after 15 Pa.C.S. §1997.
28 15 Pa.C.S. §5998: Patterned after 15 Pa.C.S. §1998.
29 15 PA.C.S. §6101: PATTERNED AFTER 15 PA.C.S. §4101. <--
30 SUBSECTION (C) IS INTENDED AS A CONTINUATION OF EXISTING LAW.
19900S1761B2510 - 443 -
1 15 Pa.C.S. §6121: Patterned after 15 Pa.C.S. §4121.
2 15 Pa.C.S. §6122: Patterned after 15 Pa.C.S. §4122.
3 15 Pa.C.S. §6123: Patterned after 15 Pa.C.S. §4123.
4 15 Pa.C.S. §6124: Patterned after 15 Pa.C.S. §4124.
5 15 Pa.C.S. §6125: Patterned after 15 Pa.C.S. §4125.
6 15 Pa.C.S. §6126: Patterned after 15 Pa.C.S. §4126.
7 15 Pa.C.S. §6127: Patterned after 15 Pa.C.S. §4127.
8 15 Pa.C.S. §6128: Patterned after 15 Pa.C.S. §4128.
9 15 Pa.C.S. §6129: Patterned after 15 Pa.C.S. §4129.
10 15 Pa.C.S. §6130: Patterned after 15 Pa.C.S. §4130.
11 15 Pa.C.S. §6131: Patterned after 15 Pa.C.S. §4131.
12 15 Pa.C.S. §6144: Patterned after 15 Pa.C.S. §4144.
13 15 Pa.C.S. §6145: Reference in subsection (c)(11) to 15
14 Pa.C.S. Subch. 57G substituted for reference to 15 Pa.C.S.
15 Subch. 57F.
16 15 Pa.C.S. §6161: Patterned after 15 Pa.C.S. §4161.
17 15 Pa.C.S. §6162: Patterned after 15 Pa.C.S. §4162.
18 15 Pa.C.S. §7102: Subsections (b)(2)(ii) and (d) are new.
19 The reference to Title 17 in subsection (c) is new.
20 15 Pa.C.S. §7103: Subsection (b) conformed to new 15 Pa.C.S.
21 §7307.
22 15 Pa.C.S. §7104: New.
23 15 Pa.C.S. §7105: New.
24 15 Pa.C.S. §7106: New.
25 15 Pa.C.S. §7107: New.
26 15 Pa.C.S. §7301: Subsection (a) is derived from act of June
27 21, 1937 (P.L.1969, No.389), §1 (15 P.S. §12401). Subsection (b)
28 is derived from the act of July 30, 1975 (P.L.113, No.57), (15
29 P.S. §3277).
30 15 Pa.C.S. §7302: Subsection (a) is new. Subsection (b) is
19900S1761B2510 - 444 -
1 derived from act of June 21, 1937 (P.L.1969, No.389), §38 (15
2 P.S. §12438).
3 15 Pa.C.S. §7303: Derived from act of June 21, 1937
4 (P.L.1969, No.389), §2 (15 P.S. §12402). The balance of the
5 definition of "person" appears in 1 Pa.C.S. §1991.
6 15 Pa.C.S. §7304: Derived from act of June 21, 1937
7 (P.L.1969, No.389), §5 (15 P.S. §12405).
8 15 Pa.C.S. §7305: Reenactment of act of June 21, 1937
9 (P.L.1969, No.389), §3 (15 P.S. §12403).
10 15 Pa.C.S. §7306: Derived from act of June 21, 1937
11 (P.L.1969, No.389), §6(a) (15 P.S. §12406(a)).
12 15 Pa.C.S. §7307: Substantially a reenactment of act of June
13 21, 1937 (P.L.1969, No.389), §7 (15 P.S. §12407).
14 15 Pa.C.S. §7308: Derived from act of June 21, 1937
15 (P.L.1969, No.389), §36 (15 P.S. §12436). No corresponding
16 provision is considered necessary for new Title 15 in general
17 because of the applicability of 1 Pa.C.S. §1928. This section is
18 not intended to imply that any other section of new Title 15 is
19 not to be construed liberally.
20 15 Pa.C.S. §7321: Derived from act of June 21, 1937
21 (P.L.1969, No.389), §§4 and 6(b) (15 P.S. §§12404 and 12406(b)).
22 The requirement of prior law for approval of the members after
23 60 days' notice for the authorization of debt is eliminated in
24 view of the repeal in 1956 of former section 7 of Article 16 of
25 the Constitution of 1874. Balance of former section 4 supplied
26 by 15 Pa.C.S. §5502.
27 15 Pa.C.S. §7322: Reenactment of act of June 21, 1937
28 (P.L.1969, No.389), §11 (15 P.S. §12411).
29 15 Pa.C.S. §7323: Substantially a reenactment of act of June
30 21, 1937 (P.L.1969, No.389), §12 (15 P.S. §12412).
19900S1761B2510 - 445 -
1 15 Pa.C.S. §7324: Reenactment of act of June 21, 1937
2 (P.L.1969, No.389), §13 (15 P.S. §12413).
3 15 Pa.C.S. §7325: Derived from act of June 21, 1937
4 (P.L.1969, No.389), §§14 and 15 (15 P.S. §§12414 and 12415).
5 Balance of sections supplied by 15 Pa.C.S. §§5704 and 5755.
6 15 Pa.C.S. §7326: Reenactment of act of June 21, 1937
7 (P.L.1969, No.389), §16 (15 P.S. §12416).
8 15 Pa.C.S. §7327: Reenactment of act of June 21, 1937
9 (P.L.1969, No.389), §17 (15 P.S. §12417).
10 15 Pa.C.S. §7328: Derived from act of June 21, 1937
11 (P.L.1969, No.389), §18 (15 P.S. §12418). Reference to the
12 bylaws is added.
13 15 Pa.C.S. §7329: Derived from act of June 21, 1937
14 (P.L.1969, No.389), §§19, 20 and 21 (15 P.S. §§12419, 12420 and
15 12421). Balance of sections supplied by 15 Pa.C.S. §§5721, 5722,
16 5724, 5725(a) and 5730.
17 15 Pa.C.S. §7330: Reenactment of act of June 1, 1937
18 (P.L.1969, No.389), §26 (15 P.S. §12426).
19 15 Pa.C.S. §7331: Derived from act of June 21, 1937
20 (P.L.1969, No.389), §§28 and 29.1 (15 P.S. §§12428 and 12429a).
21 Balance of sections supplied by 15 Pa.C.S. Ch. 59C.
22 15 Pa.C.S. §7332: Derived from act of June 21, 1937
23 (P.L.1969, No.389), §29 (15 P.S. §12429). Balance of section
24 supplied by 15 Pa.C.S. Ch. 59F.
25 15 Pa.C.S. §7333: Substantially a reenactment of act of June
26 21, 1937 (P.L.1969, No.389), §31 (15 P.S. §12431).
27 15 Pa.C.S. §7334: Derived from act of June 21, 1937
28 (P.L.1969, No.389), §32 (15 P.S. §12432).
29 15 Pa.C.S. §7335: Derived from act of June 21, 1937
30 (P.L.1969, No.389), §33 (15 P.S. §12433). The reference to the
19900S1761B2510 - 446 -
1 act of December 5, 1972 (P.L.1280, No.284) (70 P.S. §1-101 et
2 seq.) is added.
3 15 Pa.C.S. §7351: Derived from act of July 30, 1975
4 (P.L.113, No.57), §§1.1 and 9 (15 P.S. §§3277.1 and 3285).
5 15 Pa.C.S. §7352: Derived from act of July 30, 1975
6 (P.L.113, No.57), §2 (15 P.S. §3278). The definition of
7 "association or cooperative corporation" is supplied by 15
8 Pa.C.S. §7302.
9 15 Pa.C.S. §7353: Reenactment of act of July 30, 1975
10 (P.L.113, No.57), §3 (15 P.S. §3279).
11 15 Pa.C.S. §7354: Substantially a reenactment of act of July
12 30, 1975 (P.L.113, No.57), §4 (15 P.S. §3280).
13 15 Pa.C.S. §7355: Substantially a reenactment of act of July
14 30, 1975 (P.L.113, No.57), §5 (15 P.S. §3281).
15 15 Pa.C.S. §7356: Reenactment of act of July 30, 1975
16 (P.L.113, No.57), §6 (15 P.S. §3282).
17 15 Pa.C.S. §7357: Reenactment of act of July 30, 1975
18 (P.L.113, No.57), §7 (15 P.S. §3283).
19 15 Pa.C.S. §7358: Substantially a reenactment of act of July
20 30, 1975 (P.L.113, No.57), §8 (15 P.S. §3284).
21 15 Pa.C.S. §7359: Substantially a reenactment of act of July
22 30, 1975 (P.L.113, No.57), §10 (15 P.S. §3286).
23 15 Pa.C.S. §7501: Derived from act of June 12, 1968
24 (P.L.173, No.94), §1 (15 P.S. §12101).
25 15 Pa.C.S. §7502: Derived from act of June 12, 1968
26 (P.L.173, No.94), §§4, 5 and 33 (15 P.S. §§12104, 12105 and
27 12133).
28 15 Pa.C.S. §7503: Derived from act of June 12, 1968
29 (P.L.173, No.94), §4 (15 P.S. §12104). The definition of
30 "person" appears in 1 Pa.C.S. §1991. The definitions of
19900S1761B2510 - 447 -
1 "delegate" and "department" are added.
2 15 Pa.C.S. §7504: Derived from act of June 12, 1968
3 (P.L.173, No.94), §§2 and 3 (15 P.S. §§12102 and 12103). The
4 last clause of the first sentence of subsection (a) is not
5 intended to imply that any other section of new Title 15 is not
6 to be construed liberally. No provision for liberal construction
7 is considered necessary for Title 15 in general because of the
8 applicability of 1 Pa.C.S. §1928.
9 15 Pa.C.S. §7505: Derived from act of June 12, 1968
10 (P.L.173, No.94), §8 (15 P.S. §12108). Requirement of prior law
11 for Pennsylvania citizenship changed to the requirement set
12 forth in the text.
13 15 Pa.C.S. §7506: Substantially a reenactment of act of June
14 12, 1968 (P.L.173, No.94), §9 (15 P.S. §12109).
15 15 Pa.C.S. §7507: Derived from act of June 12, 1968
16 (P.L.173, No.94), §10 (15 P.S. §12110). Balance of section
17 supplied by the provisions of Part II of Title 15 made
18 applicable by this section. See 15 Pa.C.S. §§1306 and 5306.
19 15 Pa.C.S. §7521: Derived from act of June 12, 1968
20 (P.L.173, No.94), §12 (15 P.S. §12112). See 15 Pa.C.S. §§1502
21 and 5502.
22 15 Pa.C.S. §7522: Derived from act of June 12, 1968
23 (P.L.173, No.94), §12.2(a) (last sentence) (15 P.S. §12112.2(a)
24 (last sentence)). Balance of section supplied by 15 Pa.C.S.
25 §§1508 and 5508.
26 15 Pa.C.S. §7523: Substantially a reenactment of act of June
27 12, 1968 (P.L.173, No.94), §13 (15 P.S. §12113).
28 15 Pa.C.S. §7524: Derived from act of June 12, 1968
29 (P.L.173, No.94), §14 (15 P.S. §12114). The first clause of
30 subsection (f) is patterned in general after Ohio Rev. Code Ann.
19900S1761B2510 - 448 -
1 §1729.10(F) (Page Supp. 1981). Although payment of a dividend in
2 excess of 8% will not be a violation of this section, payment of
3 such a dividend by a corporation not organized on the one
4 member/one vote principle may fail to qualify for the antitrust
5 exemptions contained in the Capper-Volstead Act, 7 U.S.C. §291.
6 Provisions on the form of membership and share certificates are
7 supplied by 15 Pa.C.S. §§1528 and 5753. Provision on preemptive
8 rights is supplied by 15 Pa.C.S. §1530.
9 15 Pa.C.S. §7525: Substantially a reenactment of act of June
10 12, 1968 (P.L.173, No.94), §15 (15 P.S. §12115). Reference to
11 the board of directors in subsection (a) is omitted as supplied
12 by 15 Pa.C.S. §1502(c).
13 15 Pa.C.S. §7526: Substantially a reenactment of act of June
14 12, 1968 (P.L.173, No.94), §16 (15 P.S. §12116).
15 15 Pa.C.S. §7527: Derived from act of June 12, 1968
16 (P.L.173, No.94), §18 (15 P.S. §12118). Provisions on proxy
17 voting are supplied by 15 Pa.C.S. §§1759 and 5759.
18 15 Pa.C.S. §7528: Derived from act of June 12, 1968
19 (P.L.173, No.94), §19 (15 P.S. §12119). Provisions on
20 organizational meeting of incorporators and notice of meetings
21 of members or delegates are supplied, respectively, by 15
22 Pa.C.S. §§1320 and 5320 and 15 Pa.C.S. §§1704 and 5704.
23 15 Pa.C.S. §7529: Derived from act of June 12, 1968
24 (P.L.173, No.94), §§20 and 29 (15 P.S. §§12120 and 12129). See
25 15 Pa.C.S. Chs. 19 and 59.
26 15 Pa.C.S. §7530: Substantially a reenactment of act of June
27 12, 1968 (P.L.173, No.94), §21 (15 P.S. §12121). See 15 Pa.C.S.
28 §1504 and 5504.
29 15 Pa.C.S. §7531: Derived from act of June 12, 1968
30 (P.L.173, No.94), §§22(a), (c), (d) and 27(d) (15 P.S.
19900S1761B2510 - 449 -
1 §§12122(a), (c), (d) and 12127(d)). Provisions of former
2 subsection 22(b) are supplied by 15 Pa.C.S. §§1703, 1724, 1725,
3 1727, 5703, 5724, 5725 and 5727. Compare 15 Pa.C.S. §5754.
4 15 Pa.c.S. §7532: Reenactment of act of June 12, 1968
5 (P.L.173, No.94), §24(a) (15 P.S. §12124(a)). Provision for the
6 removal of officers is supplied by 15 Pa.C.S. §§1733 and 5733.
7 15 Pa.C.S. §7533: Reenactment of act of June 12, 1968
8 (P.L.173, No.94), §23 (15 P.S. §12123).
9 15 Pa.C.S. §7534: Substantially a reenactment of act of June
10 12, 1968 (P.L.173, No.94), §25 (15 P.S. §12125).
11 15 Pa.C.S. §7535: Substantially a reenactment of act of June
12 12, 1968 (P.L.173, No.94), §§17 and 26 (15 P.S. §§12117 and
13 12126). See 15 Pa.C.S. §§1526 and 5553. Reference in subsection
14 (a) to "money or other property delivered by the member to the
15 association" is intended to include patronage, capital retains,
16 reserves, surplus to capital and all other proceeds attributable
17 thereto.
18 15 Pa.C.S. §7536: Derived from act of June 12, 1968
19 (P.L.173, No.94), §27(a), (b), (c) and (e) (15 P.S. §12127(a),
20 (b), (c) and (e)).
21 15 Pa.C.S. §7537: Substantially a reenactment of act of June
22 12, 1968 (P.L.173, No.94), §28 (15 P.S. §12128), except that the
23 last sentence is omitted as obsolete.
24 15 Pa.C.S. §7538: Substantially a reenactment of act of June
25 12, 1968 (P.L.173, No.94), §30 (15 P.S. §12130).
26 15 Pa.C.S. §7701: New.
27 15 Pa.C.S. §7702: Section renumbered from former 15 Pa.C.S.
28 §7701.
29 15 Pa.C.S. §7703: Section renumbered from former 15 Pa.C.S.
30 §7702.
19900S1761B2510 - 450 -
1 15 Pa.C.S. §7704: Section renumbered from former 15 Pa.C.S.
2 §7703. Provisions on approval of articles deleted in subsections
3 (b) and (c). Subsection (d) is derived from former 15 Pa.C.S.
4 §7704.
5 15 Pa.C.S. §7720: References to recording and approval of
6 amendments deleted in subsection (b). Reference to 15 Pa.C.S.
7 §134 in subsection (b) is new.
8 15 Pa.C.S. §7721: Reference to chapter in subsection (b)(3)
9 is new.
10 15 Pa.C.S. §7726: Patterned after 15 Pa.C.S. §7538.
11 15 Pa.C.S. §7727: Section renumbered from former 15 Pa.C.S.
12 §7726. Reference to June 19, 1989 in subsection (a) is new.
13 15 Pa.C.S. §8102: Reference to credit union in subsection
14 (b)(2) is new.
15 15 Pa.C.S. §8103: Derived from former 15 Pa.C.S. §8571.
16 15 Pa.C.S. §8503: Reference to merger, consolidation or
17 other transaction in paragraph (2) of the definition of "court"
18 is new.
19 15 Pa.C.S. §8511: Subsections (a)(4) and (d), AND THE <--
20 REFERENCE TO 15 PA.C.S. §140 IN SUBSECTION (C), are new.
21 15 Pa.C.S. §8512: Former subsection (b)(4) deleted.
22 15 Pa.C.S. §8516: SUBSECTION (A) IS CLARIFIED. Subsection <--
23 (b) is new.
24 15 Pa.C.S. §8545: References in subsection (c) to business
25 trusts clarified. The last sentence of subsection (c) is new.
26 15 Pa.C.S. §8558: Period of limitations in subsection (b)
27 reduced from four years. Cf. 15 Pa.C.S. §1553(d).
28 15 Pa.C.S. §8562: Subsection (b) amended to require
29 authorization of certificated partnership interests to be in
30 certificate of limited partnership. See section 404(b)(3) of the
19900S1761B2510 - 451 -
1 act of , 1990 (P.L. , No. ), known as the GAA Amendments
2 Act. Cross reference in subsection (b) to 13 Pa.C.S. §8102 is
3 new.
4 15 Pa.C.S. §8571: Former subsection (c) (and cross reference
5 thereto in subsection (a)) omitted as supplied by new 15 Pa.C.S.
6 §8103. Cross reference to 15 Pa.C.S §8103 added.
7 15 Pa.C.S. §8575: Period of limitations in subsection (a)(2)
8 reduced from four years. Compare 15 Pa.C.S. §1979(a)(2).
9 15 Pa.C.S. §8701: Limited partners removed from scope of
10 subsection (a)(3).
11 15 Pa.C.S. §9102: Typographical correction.
12 15 Pa.C.S. §9501: Subsection (a)(2) is new and is intended
13 as a clarification of existing law.
14 15 Pa.C.S. §9502: Paragraph (4) is new.
15 15 Pa.C.S. §9503: Provisions on filing of instrument in
16 subsection (a) are new. A CONFORMING AMENDMENT IS MADE TO <--
17 SUBSECTION (C). Permissible period of duration in subsection (d)
18 extended to in perpetuity and the Rule Against Perpetuities made
19 inapplicable. See Howe v. Morse, 174 Mass 491 at 503-4, 55 N.E.
20 213 at 214 (1899).
21 15 PA.C.S. §9505: THE SECTION IS CLARIFIED. <--
22 15 Pa.C.S. §9506: Ability to limit liabilities of a trust to
23 specified assets of the trust clarified in subsection (a). Cross
24 references in subsection (b) substituted for prior reference to
25 15 Pa.C.S. Subch.5B AND THE SCOPE OF THE SUBSECTION IS EXTENDED <--
26 TO OFFICERS, EMPLOYEES AND AGENTS.
27 15 Pa.C.S. §9507: New. LAST CLAUSE PATTERNED AFTER 15 <--
28 PA.C.S. §4142(A).
29 Section 201: New.
30 Section 202: Subsection (a) patterned after N.J.S.A. 17:18-
19900S1761B2510 - 452 -
1 8. Subsection (b) is patterned in part after N.J.S.A. 17B:18-
2 43(b), except for requirement of prior approval by the Insurance
3 Department. Subsection (c) is derived from act of May 17, 1921
4 (P.L.682, No.284) §§405.2(b) and 603 (40 P.S. §§505.2(b) and
5 723).
6 Section 203: Derived from act of May 17, 1921 (P.L.682,
7 No.284) §§211 (last clause) and 754(2) (40 P.S. §§401 (last
8 clause) and 910-54(2)).
9 Section 204: Subsection (a) derived from act of May 17, 1921
10 (P.L.682, No.284) §§322 and 325 (40 P.S. §§445 and 448).
11 Subsection (b) is new. Subsection (c) is substantially a
12 reenactment of act of May 17, 1921 (P.L.682, No.284) §327 (40
13 P.S. §450).
14 Section 205: Subsection (a) is a generalization of act of
15 May 17, 1921 (P.L.682, No.284) §§331, 333, 337.5(c), 338, 751
16 and 752 (40 P.S. §§454, 456, 459.5(c), 460, 910-51 and 910-52)
17 except that in the case of voluntary dissolution review by the
18 Insurance Department is substituted for review by the Attorney
19 General. Subsection (b) derived from act of May 17, 1921
20 (P.L.682, No.284) §§331, 333, 337.5(c), 751 and 752 (40 P.S.
21 §§454, 456, 459.5(c), 910-51 and 910-52). Subsection (c) derived
22 from act of May 17, 1921 (P.L.682, No.284) §§751 and 752 (40
23 P.S. §§910-51 and 910-52). Subsection (d) derived from act of
24 May 17, 1921 (P.L.682, No.284), §337 (40 P.S. §459a). Subsection
25 (e) is derived from act of May 17, 1921 (P.L.682, No.284), §332
26 (last sentence) (40 P.S. §455 (last sentence)). Subsection (f)
27 derived from act of May 17, 1921 (P.L.682, No.284), §338 (sixth
28 sentence) (40 P.S. §460 (sixth sentence)). Section 337.6 of the
29 act of May 17, 1921 (P.L.682, No.284) (40 P.S. §459.6) has not
30 been repealed and will continue to apply independently of the
19900S1761B2510 - 453 -
1 provisions of section 205.
2 Section 206: Derived from act of May 17, 1921 (P.L.682,
3 No.284), §325 (40 P.S. §448).
4 Section 207: Patterned after 40 Pa.C.S. §6102(c)-(f).
5 Section 208: New. Intended to preserve the regulatory status
6 of entities such as limited life insurance companies and mutual
7 fire insurance companies incorporated under special acts.
8 Section 301: New. THE INTENTION OF THIS PROVISION IS TO <--
9 INCORPORATE BY REFERENCE, AND THEREBY TO RELY TEMPORARILY ON,
10 ALL ASPECTS OF NEW YORK LAW RELATING TO THE TRANSFER OF
11 UNCERTIFICATED SHARES WITH RESPECT TO THE TRANSFER OF
12 UNCERTIFICATED SHARES OF PENNSYLVANIA DOMESTIC CORPORATIONS
13 PENDING THE ENACTMENT IN PENNSYLVANIA OF REVISED UNIFORM
14 COMMERCIAL CODE ARTICLE 8.
15 Section 302: The source notes for new Title 17 are as
16 follows:
17 17 Pa.C.S. §101: Derived from act of September 20, 1961
18 (P.L.1548, No.658), §1 (15 P.S. §12301).
19 17 Pa.C.S. §102: Derived from act of September 20, 1961
20 (P.L.1548, No.658), §2 (15 P.S. §12302).
21 17 Pa.C.S. §103: Derived from act of September 20, 1961
22 (P.L.1548, No.658), §§2 and 30 (15 P.S. §§12302 and 12330).
23 17 Pa.C.S. §104: Substantially a reenactment of the act of
24 September 20, 1961 (P.L.1548, No.658), §30 (15 P.S. §12330), <--
25 EXCEPT FIRST SENTENCE OF SUBSECTION (C) WHICH IS NEW.
26 17 Pa.C.S. §301: Substantially a reenactment of first and
27 last paragraphs of act of September 20, 1961 (P.L.1548, No.658),
28 §2 (15 P.S. §12302).
29 17 Pa.C.S. §302: Substantially a reenactment of act of
30 September 20, 1961 (P.L.1548, No.658), §3A (15 P.S. §12303A).
19900S1761B2510 - 454 -
1 17 Pa.C.S. §303: Reenactment of act of September 20, 1961
2 (P.L.1548, No.658), §3B (15 P.S. §12303B), except that the
3 requirement of an acknowledgment of the articles of
4 incorporation is deleted.
5 17 Pa.C.S. §304: Substantially a reenactment of act of
6 September 20, 1961 (P.L.1548, No.658), §3C, D and E (15 P.S.
7 §12303C, D and E), except that the requirement that the
8 Department of State issue a certificate of incorporation is
9 deleted and the filing of the articles by the department
10 constitutes conclusive evidence of the fact of incorporation.
11 17 Pa.C.S. §305: Reenactment of act of September 20, 1961
12 (P.L.1548, No.658), §11 (15 P.S. §12311), EXCEPT THAT SUBSECTION <--
13 (D) HAS BEEN CLARIFIED.
14 17 Pa.C.S. §501: Substantially a reenactment of act of
15 September 20, 1961 (P.L.1548, No.658), §5A, B and B.1 (15 P.S.
16 §12305A, B and B.1), except subsection (a)(4) which is derived
17 from 15 Pa.C.S. §521 AND SUBSECTION (B)(7)(VI)-(XI) AND <--
18 SUBSECTION (B)(16) AND (17) WHICH ARE NEW.
19 17 Pa.C.S. §502: Substantially a reenactment of act of
20 September 20, 1961 (P.L.1548, No.658), §5C and D (15 P.S.
21 §12305C and D).
22 17 Pa.C.S. §503: Reenactment SUBSTANTIALLY A REENACTMENT of <--
23 act of September 20, 1961 (P.L.1548, No.658), §7 (15 P.S.
24 §12307).
25 17 Pa.C.S. §504: Reenactment of act of September 20, 1961
26 (P.L.1548, No.658), §8 (15 P.S. §12308).
27 17 Pa.C.S. §505: Substantially a reenactment of act of
28 September 20, 1961 (P.L.1548, No.658), §15 (15 P.S. §12315).
29 Obsolete matter deleted.
30 17 Pa.C.S. §506: Reenactment of act of September 20, 1961
19900S1761B2510 - 455 -
1 (P.L.1548, No.658), §16 (15 P.S. §12316).
2 17 Pa.C.S. §507: Reenactment of act of September 20, 1961
3 (P.L.1548, No.658), §17 (15 P.S. §12317).
4 17 Pa.C.S. §508: Substantially a reenactment of act of
5 September 20, 1961 (P.L.1548, No.658), §17D, E and F.
6 SUBSECTIONS (B) THROUGH (E) ARE NEW. <--
7 17 Pa.C.S. §509: Reenactment SUBSECTION (A) IS A REENACTMENT <--
8 of act of September 20, 1961 (P.L.1548, No.658), §18 (15 P.S.
9 §12318).
10 17 Pa.C.S. §510: Substantially a reenactment of act of
11 September 20, 1961 (P.L.1548, No.658), §19 (15 P.S. §12319), <--
12 EXCEPT THAT THE LAST TWO SENTENCES OF §19C HAVE BEEN OMITTED.
13 17 Pa.C.S. §511: Reenactment of act of September 20, 1961
14 (P.L.1548, No.658), §20 (15 P.S. §12320).
15 17 Pa.C.S. §512: Reenactment of act of September 20, 1961
16 (P.L.1548, No.658), §21 (15 P.S. §12321).
17 17 Pa.C.S. §513: Reenactment of act of September 20, 1961
18 (P.L.1548, No.658), §22 (15 P.S. §12322).
19 17 Pa.C.S. §514: Reenactment of act of September 20, 1961
20 (P.L.1548, No.658), §23 (15 P.S. §12323).
21 17 Pa.C.S. §515: Reenactment of act of September 20, 1961
22 (P.L.1548, No.658), §24 (third through last sentences) (15 P.S.
23 §12324 (third through last sentences)).
24 17 Pa.C.S. §516: Reenactment of act of September 20, 1961
25 (P.L.1548, No.658), §29 (15 P.S. §12329), except that a verified
26 statement is substituted for an affidavit.
27 17 Pa.C.S. §517: Substantially a reenactment of act of
28 September 20, 1961 (P.L.1548, No.658), §31 (15 P.S. §12331).
29 17 Pa.C.S. §701: Reenactment of act of September 20, 1961
30 (P.L.1548, No.658), §6 (15 P.S. §12306), EXCEPT THAT THE SIZE OF <--
19900S1761B2510 - 456 -
1 A MINIMUM POTENTIAL MEMBERSHIP GROUP HAS BEEN INCREASED.
2 17 Pa.C.S. §702: Reenactment of act of September 20, 1961
3 (P.L.1548, No.658), §9 (first and second sentences) (15 P.S.
4 §12309 (first and second sentences)).
5 17 Pa.C.S. §703: Reenactment of act of September 20, 1961
6 (P.L.1548, No.658), §9 (third and fourth sentences) (15 P.S.
7 §12309 (third and fourth sentences)).
8 17 Pa.C.S. §704: Reenactment of act of September 20, 1961
9 (P.L.1548, No.658), §26 (15 P.S. §12326).
10 17 Pa.C.S. §705: Reenactment of act of September 20, 1961
11 (P.L.1548, No.658), §24 (first and second sentences) (15 P.S.
12 §12324 (first and second sentences)).
13 17 Pa.C.S. §706: Reenactment of act of September 20, 1961
14 (P.L.1548, No.658), §10 (15 P.S. §12310), EXCEPT THE SECOND <--
15 SENTENCE OF SUBSECTION (A) WHICH IS NEW.
16 17 Pa.C.S. §707: Substantially a reenactment of act of
17 September 20, 1961 (P.L.1548, No.658), §12A (except first
18 through seventh sentences) (15 P.S. §12312A (except first
19 through seventh sentences)).
20 17 Pa.C.S. §708: Substantially a reenactment of act of
21 September 20, 1961 (P.L.1548, No.658), §12A (first through
22 seventh sentences) and B (first sentence) (15 P.S. §12312A
23 (first through seventh sentences) and §12312B (first sentence)).
24 17 Pa.C.S. §709: Reenactment of act of September 20, 1961
25 (P.L.1548, No.658), §12B (except first sentence) (15 P.S.
26 §12312B (except first sentence)).
27 17 Pa.C.S. §710: Reenactment of act of September 20, 1961
28 (P.L.1548, No.658), §12C (15 P.S. §12312C).
29 17 Pa.C.S. §711: Substantially a reenactment of act of
30 September 20, 1961 (P.L.1548, No.658), §12D.
19900S1761B2510 - 457 -
1 17 Pa.C.S. §712: Derived from 15 Pa.C.S. §522 and act of
2 September 20, 1961 (P.L.1548, No.658), §12E.
3 17 Pa.C.S. §713: Substantially a reenactment of act of
4 September 20, 1961 (P.L.1548, No.658), §13 (15 P.S. §12313).
5 17 Pa.C.S. §714: Reenactment of act of September 20, 1961
6 (P.L.1548, No.658), §14 (15 P.S. §12314).
7 17 Pa.C.S. §715: Derived from 15 Pa.C.S. §523.
8 17 Pa.C.S. §901: Reenactment of act of September 20, 1961
9 (P.L.1548, No.658), §4 (first through third sentences) (15 P.S.
10 §12304 (first through third sentences)).
11 17 Pa.C.S. §902: Reenactment of act of September 20, 1961
12 (P.L.1548, No.658), §4 (last sentence) (15 P.S. §12304 (last
13 sentence)), except only one signature is required and the
14 requirement of a verification is deleted.
15 17 Pa.C.S. §903: Reenactment of act of September 20, 1961
16 (P.L.1548, No.658), §4 (fourth sentence) (15 P.S. §12301 (fourth
17 sentence)), except that the requirement that the Department of
18 State issue a certificate of amendment is deleted.
19 17 Pa.C.S. §904: Substantially a reenactment of act of
20 September 20, 1961 (P.L.1548, No.658), §25 (15 P.S. §12325).
21 17 Pa.C.S. §1101: Substantially a reenactment of act of
22 September 20, 1961 (P.L.1548, No.658), §27A (15 P.S. §12327A),
23 except that a certificate of vote by any officer is substituted
24 for an affidavit of vote by two officers, including the
25 secretary.
26 17 Pa.C.S. §1102: Substantially a reenactment of act of
27 September 20, 1961 (P.L.1548, No.658), §27B (15 P.S. §12327B),
28 except that the requirement that the Department of State issue a
29 certificate of conversion is deleted.
30 17 Pa.C.S. §1103: Reenactment of act of September 20, 1961
19900S1761B2510 - 458 -
1 (P.L.1548, No.658), §27C (first sentence) (15 P.S. §12327C
2 (first sentence)).
3 17 Pa.C.S. §1104: Derived from act of September 20, 1961
4 (P.L.1548, No.658), §27C(1) (15 P.S. §12327C(1)). The absence of
5 a vote by members where the domestic credit union is the
6 surviving institution has been clarified, the reference to
7 Federal and out-of-State procedures has been patterned after 15
8 Pa.C.S. §1925, and the nomenclature "adopted" has been
9 substituted for "ratified."
10 17 Pa.C.S. §1105: Substantially a reenactment of act of
11 September 20, 1961 (P.L.1548, No.658), §27C(2), (3) and (4) (15
12 P.S. §12327C(2), (3) and (4)), except that the absence of a vote
13 by members where the domestic credit union is the surviving
14 institution is clarified, execution of the articles requires
15 only one signature, the requirements of affixation of a
16 corporate seal and that the Department of State issue a
17 certificate of merger or consolidation deleted, the continued
18 applicability of Chapter 15 (relating to out-of-State credit
19 unions) is clarified and the nomenclature "adopted" has been
20 substituted for "ratified."
21 17 PA.C.S. §1106: NEW. <--
22 17 Pa.C.S. §1301: Reenactment of act of September 20, 1961
23 (P.L.1548, No.658), §28A (15 P.S. §12328A).
24 17 Pa.C.S. §1302: Substantially a reenactment of act of
25 September 20, 1961 (P.L.1548, No.658), §28B (15 P.S. §12328B),
26 except that execution of the certificate requires only on
27 signature, the requirement of verification is deleted and
28 nomenclature "credit union" is substituted for "association."
29 17 Pa.C.S. §1303: Substantially a reenactment of act of
30 September 20, 1961 (P.L.1548, No.658), §28C (15 P.S. §12328C).
19900S1761B2510 - 459 -
1 The term "successive weeks" is defined in 1 Pa.C.S. §1909.
2 17 Pa.C.S. §1304: Reenactment of act of September 20, 1961
3 (P.L.1548, No.658), §28D (15 P.S. §12328D).
4 17 Pa.C.S. §1305: Patterned after 15 Pa.C.S. §1989.
5 17 Pa.C.S. §1501: Substantially a reenactment of act of
6 September 20, 1961 (P.L.1548, No.658), §31.1A. Compare 15
7 Pa.C.S. §4101(b)(1)(iii).
8 17 Pa.C.S. §1502: Substantially a reenactment of act of
9 September 20, 1961 (P.L.1548, No.658), §31.1B, except that a
10 reference to 42 Pa.C.S. §5301 is substituted for the former
11 practice of designating agents for service of process.
12 17 Pa.C.S. §1503: Substantially a reenactment of act of
13 September 20, 1961 (P.L.1548, No.658), §31.1C and D.
14 17 Pa.C.S. §1504: Substantially a reenactment of act of
15 September 20, 1961 (P.L.1548, No.658), §31.1E. The words "as a
16 credit union" added to make clear that a revocation under this
17 section does not operate as a revocation under 15 Pa.C.S. §4128
18 with respect to activities other than credit union activities.
19 Section 303: New.
20 Section 304: New.
21 Section 305: The source notes for new 24 Pa.C.S. Pts. I and
22 III are as follows:
23 24 Pa.C.S. §102: New.
24 24 Pa.C.S. §6501: Derived from act of May 5, 1933 (P.L.289,
25 No.105), §211 (15 P.S. §7211) and act of May 7, 1937 (P.L.585,
26 No.150), §2 (24 P.S. §2422).
27 24 Pa.C.S. §6502: Substantially a reenactment of act of May
28 5, 1933 (P.L.289, No.105), §312A (15 P.S. §7312A) and act of May
29 7, 1937 (P.L.585, No.150), §1 (24 P.S. §2421).
30 24 Pa.C.S. §6503: Derived from act of May 5, 1899 (P.L.253,
19900S1761B2510 - 460 -
1 No.148) (24 P.S. §§2491-92), act of May 5, 1933 (P.L.289,
2 No.105), §§211, 312 and 902(4) (15 P.S. §§7211, 7312 and
3 7902(4), act of May 7, 1937 (P.L.585, No.150), §2 (24 P.S.
4 §2422), and act of November 15, 1972 (P.L.1063, No.271), §3 (24
5 P.S. §2426).
6 24 Pa.C.S. §6504: Derived from act of November 15, 1972
7 (P.L.1063, No.271), §4 (24 P.S. §2427).
8 24 Pa.C.S. §6505: Substantially a reenactment of act of May
9 5, 1899 (P.L.253, No.148) (24 P.S. §§2491-92) and act of May 5,
10 1933 (P.L.289, No.105), §312B (15 P.S. §7312B).
11 24 Pa.C.S. §6506: Derived from act of May 5, 1933 (P.L.289,
12 No.105) §312C (15 P.S. §7312C).
13 24 Pa.C.S. §6507: Derived from act of May 7, 1937 (P.L.585,
14 No.150), §3 (24 P.S. §2423).
15 24 Pa.C.S. §6508: Derived from act of May 7, 1937 (P.L.585,
16 No.150), §4 (24 P.S. §2424).
17 24 Pa.C.S. §6509: Derived from act of May 7, 1937 (P.L.585,
18 No.150), §5 (24 P.S. §2425).
19 Section 306: New. The provisions repealed by subsection (a)
20 are supplied by the act as follows:
21 Official Superseding
22 Citation Provision
23 (unless otherwise noted) <--
24 42 Pa.C.S. §8361 Omitted
25 42 Pa.C.S. §8362 Omitted
26 42 Pa.C.S. §8363(a) 15 Pa.C.S. §§512(a), (b), 1712(a), (b),
27 5712(a)
28 (b) 15 Pa.C.S. §§516(a), 1716(a), 5716(a)
29 (c) 15 Pa.C.S. §§516(b), 1716(b), 5716(b)
30 42 Pa.C.S. §8364 15 Pa.C.S. §§513, 1713, 5713
19900S1761B2510 - 461 -
1 42 Pa.C.S. §8365 15 Pa.C.S. §§518, 1718, 5718
2 42 Pa.C.S. §8366 Bill §404(b)
3 42 Pa.C.S. §8367 Bill §404(b)
4 Section 307: New. 54 Pa.C.S. §311(f)(5) and (6), (6) AND (7) <--
5 are patterned after 15 Pa.C.S §1303(c)(2)(iv) and (c)(1)(v), <--
6 (C)(1)(III) AND (V), respectively.
7 Section 308: New.
8 Section 309: New. The unofficial citations of the statutes
9 affected by this section are as follows:
10 Unofficial
11 Act Section Citation
12 1921, No.284 337.6 40 P.S. §459.6
13 1947, No.140 2 63 P.S. §9.2
14 8.4 63 P.S. §9.8d
15 8.6 63 P.S. §9.8f
16 1966, (1965), No.581 2471.1(b) 53 P.S. §47471.1(b)
17 2471.2(k) 53 P.S. §47471.2(k)
18 DIVISION IV
19 Section 401(a): The provisions repealed by this subsection
20 are supplied by this act as follows (an asterisk indicates that
21 a provision is repealed in part):
22 Repealed Unofficial Superseding
23 Act Section Citation Provision of
24 Title 15
25 (unless otherwise noted)
26 1899, No.148 1 24 P.S. §2491 24 Pa.C.S. §§6503,
27 6505
28 2 24 P.S. §2492 24 Pa.C.S. §§6503,
29 6505
30 1929, No.175 618A* 71 P.S. § * Ch. 1C <--
19900S1761B2510 - 462 -
1 1929, NO.175 618A* 71 P.S. §240.18A* CH. 1C <--
2 1933, No.105 211 15 P.S. §7211 24 Pa.C.S. §6501
3 312A 15 P.S. §7312A 24 Pa.C.S. §6502
4 312B 15 P.S. §7312B 24 Pa.C.S. §6503
5 312C 15 P.S. §7312C 24 Pa.C.S. §6504
6 902(4) 15 P.S. §7902(4) 6123(a)
7 1937, No.150 1 24 P.S. §2421 24 Pa.C.S. §6502
8 2 24 P.S. §2422 24 Pa.C.S. §§6501,
9 6503
10 3 24 P.S. §2423 24 Pa.C.S. §6507
11 4 24 P.S. §2424 24 Pa.C.S. §6508
12 5 24 P.S. §2425 24 Pa.C.S. §6509
13 6 Repealer
14 1937, No.389 1 15 P.S. §12401 7301(a)
15 2 15 P.S. §12402 7303
16 3 15 P.S. §12403 7305
17 4 15 P.S. §12404 5502, 7321
18 5 15 P.S. §12405 7304
19 6(a) 15 P.S. §12406(a) 7306(a)
20 6(b) 15 P.S. §12406(b) 7321
21 7 15 P.S. §12407 7307
22 8 15 P.S. §12408 5318
23 9 15 P.S. §12409 5319
24 10 15 P.S. §12410 5320
25 11 15 P.S. §12411 7322
26 12 15 P.S. §12412 7323
27 13 15 P.S. §12413 7324
28 14 15 P.S. §12414 5704, 5755, 7325
29 15 15 P.S. §12415 5704, 7325(c)
30 16 15 P.S. §12416 7326
19900S1761B2510 - 463 -
1 17 15 P.S. §12417 7327
2 18 15 P.S. §12418 7328
3 19 15 P.S. §12419 5721, 5722, 7329(a)
4 20 15 P.S. §12420 5724, 5725, 5730,
5 7329(a)
6 21 15 P.S. §12421 7329(b)
7 22 15 P.S. §12422 5727
8 23 15 P.S. §12423 5703, 5705
9 23.1 15 P.S. §12423.1 511, 512, 5721
10 23.2 15 P.S. §12423.2 513, Subch. 57C
11 24 15 P.S. §12424 5732, 5733
12 25 15 P.S. §12425 5731
13 26 15 P.S. §12426 7330
14 27 15 P.S. §12427 Ch.59B
15 28 15 P.S. §12428 Ch.59C, 7331(a)
16 29 15 P.S. §12429 Ch.59F, 7332
17 29.1 15 P.S. §12429(a) 5930, 7331(b)
18 30 15 P.S. §12430 105
19 31 15 P.S. §12431 7333
20 32 15 P.S. §12432 7334
21 33 15 P.S. §12433 7335
22 34 15 P.S. §12434 Obsolete
23 35 15 P.S. §12435 Obsolete
24 36 15 P.S. §12436 7308
25 37 15 P.S. §12437 1 Pa.C.S. §1925
26 38 15 P.S. §12438 7302(b)
27 39 - Effective date
28 1967, No.345 513 7 P.S. §6020-73 522
29 1968, No.94 1 15 P.S. §12101 7501
30 2 15 P.S. §12102 7504
19900S1761B2510 - 464 -
1 3 15 P.S. §12103 7504
2 4 15 P.S. §12104 7502(a), 7503
3 5 15 P.S. §12105 7502
4 6 15 P.S. §12106 1 Pa.C.S. §1976
5 7 15 P.S. §12107 133, 135
6 8 15 P.S. §12108 7505
7 9 15 P.S. §12109 7506
8 10 15 P.S. §12110 1306, 5306, 7507
9 11 15 P.S. §12111 1308, 5308
10 12 15 P.S. §12112 1502, 5502, 7521
11 12.1 15 P.S. §12112.1 1741 et seq.
12 5741 et seq.
13 12.2 15 P.S. §12112.2 1508, 5508, 7522
14 13 15 P.S. §12113 7523
15 14(a) 15 P.S. §12114(a) 7524(a), (b), (c)
16 14(b) 15 P.S. §12114(b) 7524(d)
17 14(c) 15 P.S. §12114(c) 7524(e)
18 14(d) 15 P.S. §12114(d) 7524(a)
19 14(e) 15 P.S. §12114(e) 1528, 5753
20 14(f) 15 P.S. §12114(f) 7524(f)
21 14(g) 15 P.S. §12114(g) 1530
22 15 15 P.S. §12115 7525
23 16 15 P.S. §12116 7526
24 17 15 P.S. §12117 1526, 5553, 7535
25 18 15 P.S. §12118 1759, 5759, 7527
26 19 15 P.S. §12119 1310, 1704, 5310,
27 5704, 7528
28 20 15 P.S. §12120 7529
29 21 15 P.S. §12121 1504, 5504, 7530
30 22(a) 15 P.S. §12122(a) 7531(a)
19900S1761B2510 - 465 -
1 22(b) 15 P.S. §12122(b) 1703, 1724, 1725,
2 1727, 5703, 5724,
3 5725, 5727
4 22(c) 15 P.S. §12122(c) 7531(b)
5 22(d) 15 P.S. §12122(d) 7531(c)
6 23 15 P.S. §12123 7533
7 24(a) 15 P.S. §12124(a) 7532
8 24(b) 15 P.S. §12214(b) 1733, 5733
9 25 15 P.S. §12125 7534
10 26 15 P.S. §12126 7535
11 27(a) 15 P.S. §12127(a) 7536(a), (b)
12 27(b) 15 P.S. §12127(b) 7536(c)
13 27(c) 15 P.S. §12127(c) 7536(d)
14 27(d) 15 P.S. §12127(d) 7531(d)
15 27(e) 15 P.S. §12127(e) 7536(e)
16 28 15 P.S. §12128 7537
17 29 15 P.S. §12129 Chs.19, 59, 7529
18 30 15 P.S. §12130 7538
19 31 15 P.S. §12131 7102
20 32 - Repealed 1972
21 33 15 P.S. §12133 7502
22 34 15 P.S. §12134 Obsolete
23 35 15 P.S. §12135 1 Pa.C.S. §1925
24 36 - Effective date
25 1971, No.2 403
26 (a)(3)* 72 P.S. §7403(a)(3) 1110
27 1972, NO.182 1 71 P.S. §803.1 151(B) <--
28 2 71 P.S. §803.2 152
29 3 71 P.S. §803.3 153(A)
30 4 71 P.S. §803.4 153(C)
19900S1761B2510 - 466 -
1 5 71 P.S. §803.5 153(B)
2 6 71 P.S. §803.6 154(A), (B)
3 7 71 P.S. §803.7 OBSOLETE
4 8 71 P.S. §803.8 OMITTED
5 9 71 P.S. §803.9 OMITTED
6 10 - REPEALER
7 1972, No.271 3 15 Pa.C.S.A. §101 note 24 Pa.C.S. §6503
8 4 15 Pa.C.S.A. §101 note 24 Pa.C.S. §6504
9 8 15 Pa.C.S.A. §101 note 5110
10 1975, No.57 1 15 P.S. §3277 7301(b)
11 1.1 15 P.S. §3277.1 7351(a)
12 2 15 P.S. §3278 7352
13 3 15 P.S. §3279 7353
14 4 15 P.S. §3280 7354
15 5 15 P.S. §3281 7355
16 6 15 P.S. §3282 7356
17 7 15 P.S. §3283 7357
18 8 15 P.S. §3284 7358
19 9 15 P.S. §3285 7351(b)
20 10 15 P.S. §3286 7359
21 11 15 P.S. §3287 7302(b)
22 12 - Effective date
23 1977, No.38 201* 40 P.S. §1141-201* 5306
24 1988, No.177 105 15 P.S. §20105 153(a)(13)
25 301 15 P.S. §20301 Bill §403
26 304(a)(6)15 P.S. §20304(a)(6) 8103
27 304(b) 15 P.S. §20304(b) Bill §404(b)
28 Section 401(b): The provisions repealed by this subsection
29 are supplied by this act as follows (an asterisk indicates that
30 a provision is repealed in part):
19900S1761B2510 - 467 -
1 Repealed Unofficial Superseding
2 Act Section Citation Provision of
3 Title 15
4 (unless otherwise noted)
5 1865, No.1119 1 15 P.S. §424 1703(a), 1704(a)
6 1869, No.30 1 15 P.S. §405 1727(a)
7 1874, No.118 1 15 P.S. §103 1309
8 1887, No.274 1 15 P.S. §406 1724
9 2 - Validating
10 section
11 3 - Repealed 1959
12 1891, No.77 1 15 P.S. §408 1730
13 1901, No.51 1 15 P.S. §403 1723
14 15 P.S. §404 1723
15 1901, No.298 1 15 P.S. §110 1502
16 2 - Repealer
17 1903, No.17 1 15 P.S. §429 1759, 3135
18 2 - Repealer
19 1905, No.26 1 15 P.S. §428 1760, 1761
20 1913, No.222 1 15 P.S. §751 1551, 3122
21 2 - Repealer
22 1921, No.28 1 15 P.S. §422 1755
23 2 15 P.S. §423 1704
24 1921, No.284 104 40 P.S. §364 Omitted
25 106 40 P.S. §366 501(a)
26 203 40 P.S. §383 103, 1301, 1302,
27 1306, 1502, 1507(a),
28 Bill §§202, 203
29 204 40 P.S. §384 1303(c)(1)(iii)
30 and ICL §301.1
19900S1761B2510 - 468 -
1 205* 40 P.S. §385* 1306, 1521, 1523,
2 1524
3 207 40 P.S. §387 1306, 1502(a)(1)
4 208 40 P.S. §388 Subch. 17B, 3131,
5 Bill §203
6 209 40 P.S. §389 1524, 2103
7 210* 40 P.S. §400* 1306(a)(8)
8 211 40 P.S. §401 103, Subch.13A,
9 Bill §203
10 213 40 P.S. §403 Subch. 1A, 1308,
11 1309, 42 Pa.C.S.
12 Subch. 61A
13 214 40 P.S. §404 Omitted
14 301.2 40 P.S. §421.2 1521
15 302 40 P.S. §422 1521, 1523, 1524,
16 1528, 1529, 1530
17 303 40 P.S. §423 1502(a)(3), 1504,
18 3121, 3134, 3136
19 304 40 P.S. §424 Subch. 17A, 1755,
20 3133
21 305 40 P.S. §426 1756, 3134
22 306 40 P.S. §427 1760, 1764(b),
23 1765
24 307 40 P.S. §428 1760
25 308* 40 P.S. §429* 1722, 1723, 1724,
26 1725(b)(1),
27 1758(b), 3131
28 309 40 P.S. §432 1758, 1759, 1765
29 310 40 P.S. §433 1758(c)
30 311 40 P.S. §434 1755(b)(1), (c),
19900S1761B2510 - 469 -
1 1756(b)(1)
2 312 40 P.S. §435 1502(c), 1721,
3 1727, 1730
4 313 40 P.S. §436 1765
5 314* 40 P.S. §437* 1502(a)(16), 1732,
6 3132
7 315 40 P.S. §438 1502(a)(13)
8 316 40 P.S. §439 1502(a)(14)
9 322* 40 P.S. §445* Subch. 19B, §3133,
10 Sec. 102 §204
11 323 40 P.S. §446 Subchs. 15B, 19B
12 324 40 P.S. §447 Subchs. 15B, 17A,
13 17D, 19B
14 325 40 P.S. §448 1522, Subch. 19B,
15 Bill §206
16 326 40 P.S. §449 1525(e), 1530,
17 Bill §205
18 327 40 P.S. §450 Subch. 19B, Bill
19 §204(b)
20 328 40 P.S. §451 Subch. 19B, Bill
21 §204(b)
22 329 40 P.S. §452 Subch. 19B, Bill
23 §204(b)
24 330 40 P.S. §453 1758(b), 1763,
25 1764
26 331 40 P.S. §454 Subch. 19B, Bill
27 §205
28 332 40 P.S. §455 Subch. 19C, Bill
29 §205
30 333 40 P.S. §456 Subch. 19C, Bill
19900S1761B2510 - 470 -
1 §205
2 334 40 P.S. §457 1927, 1928, 1929
3 335 40 P.S. §458 42 Pa.C.S.
4 Subch. 61A
5 336 40 P.S. §459 Subch. 15D, 1930
6 337 40 P.S. §459a Subch. 19C, Bill
7 §205, 42 Pa.C.S.
8 §§5301(a)(2)(i),
9 5322
10 337.5 40 P.S. §459.5 1924(b)(1)(ii),
11 1931, Bill §205
12 338 40 P.S. §460 139, Subchs. 19F,
13 19H, Bill §205
14 340 40 P.S. §462 Ch. 41
15 341 40 P.S. §463 Ch. 41
16 343 40 P.S. §465 4141(b), GAA
17 §302(c)
18 344 40 P.S. §466 1502(a)(2)
19 352 40 P.S. §477 1911(a)(5), 1914
20 355 40 P.S. §477c 1502(a)(12), (19)
21 532 40 P.S. §672 Subch. 19B, 3133
22 Bill §204
23 607* 40 P.S. §727* 1306(a)(8)
24 608 40 P.S. §728 Omitted
25 751 40 P.S. §910-51 Subch. 19C, Bill
26 §§205, 206
27 752 40 P.S. §910-52 Subch. 15B, Bill
28 §§205, 206
29 1923, No.8 1 15 P.S. §905 Obsolete
30 2 15 P.S. §905 note Validating
19900S1761B2510 - 471 -
1 section
2 3 15 P.S. §906 42 Pa.C.S. §6103
3 42 Pa.C.S. §6104
4 1923, No.443 1 15 P.S. §601 1523
5 2 15 P.S. §602 1530(b)
6 3 - Repealer
7 1925, No.131 1 15 P.S. §102 Obsolete
8 2 - Validating
9 section
10 3 - Repealer
11 1925, No.329 1 15 P.S. §401 1505
12 2 15 P.S. §402 1506
13 1925, No.368 1 15 P.S. §701 1502(a), 1525,
14 1530
15 2 15 P.S. §702 Omitted
16 3 - Repealer
17 1927, No.260 1 41 P.S. §2 1510, 5510
18 2 - Repealer
19 1929, No.341 1 40 P.S. §430 1722, 1723
20 2 40 P.S. §431 1758(b)
21 3 40 P.S. §425 Subch. 17A, 1755,
22 3133
23 4 40 P.S. §425
24 note Omitted
25 5 - Repealer
26 1929, No.401 1 15 P.S. §411 1763
27 2 15 P.S. §412 1763
28 3 15 P.S. §413 1763
29 4 - Repealer
30 1945, No.249 1 15 P.S. §901 1502, 7 P.S.
19900S1761B2510 - 472 -
1 §6020-101,
2 7 P.S.
3 §201(a)(vii)
4 2 - Effective date
5 1951, No.184 5 40 P.S. §623.5 1704, 1723, 1724
6 1725, 1755
7 1953, No.280 1 15 P.S. §703 1525, 7 P.S.
8 §1409
9 1963, No.434 1 40 P.S. §553 1306(a)(8)
10 2 40 P.S. §554 Validating
11 provision
12 3 - Repealer
13 Section 401(c): New.
14 Section 401(d): The provisions repealed by this subsection
15 are supplied by this act as follows:
16 Repealed Unofficial Superseding
17 Act Section Citation Provision of
18 Title 17
19 1961, No.658 1 15 P.S. §12301 101
20 2 15 P.S. §12302 102, 103, 301
21 3A 15 P.S. §12303A 302
22 3B 15 P.S. §12303B 303
23 3C 15 P.S. §12303C 304
24 4 15 P.S. §12304 102
25 5A 15 P.S. §12305A 501(a)
26 5B 15 P.S. §12305B 501(b)
27 5C 15 P.S. §12305C 502(a)
28 5D 15 P.S. §12305D 502(b)
29 6 15 P.S. §12306 701
30 7 15 P.S. §12307 503
19900S1761B2510 - 473 -
1 8 15 P.S. §12308 504
2 9 15 P.S. §12309 702, 703
3 10 15 P.S. §12310 706
4 11 15 P.S. §12311 305
5 12A 15 P.S. §12312A 707, 708
6 12B 15 P.S. §12312B 708, 709
7 12C 15 P.S. §12312C 710
8 13 15 P.S. §12313 713
9 14 15 P.S. §12314 714
10 15 15 P.S. §12315 505
11 16 15 P.S. §12316 506
12 17 15 P.S. §12317 507
13 18 15 P.S. §12318 509
14 19 15 P.S. §12319 510
15 20 15 P.S. §12320 511
16 21 15 P.S. §12321 512
17 22 15 P.S. §12322 513
18 23 15 P.S. §12323 514(a)
19 24 15 P.S. §12324 515, 705
20 25 15 P.S. §12325 904
21 26 15 P.S. §12326 704
22 27A 15 P.S. §12327A 1101
23 27B 15 P.S. §12327B 1102
24 27C 15 P.S. §12327C 1103, 1104, 1105
25 28A 15 P.S. §12328A 1301
26 28B 15 P.S. §12328B 1302
27 28C 15 P.S. §12328C 1303
28 28D 15 P.S. §12328D 1304
29 29 15 P.S. §12329 516
30 30 15 P.S. §12330 103, 104
19900S1761B2510 - 474 -
1 31 15 P.S. §12331 517
2 32 15 P.S. §12332 Repealer
3 33 15 P.S. §12333 Effective date
4 Section 401(e): New.
5 Section 402: New. Patterned after section 303 of the act of
6 December 21, 1988 (P.L.1444, No.177), known as the General
7 Association Act of 1988.
8 Section 403: Derived from section 301 of the act of December
9 21, 1988 (P.L.1444, No.177), known as the General Association
10 Act of 1988.
11 Section 404: New.
G26L15DGS/19900S1761B2510 - 475 -