See other bills
under the
same topic
PRINTER'S NO. 1895
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1398
Session of
2015
INTRODUCED BY A. HARRIS, THOMAS, MACKENZIE, STAATS, MILLARD,
LONGIETTI, GIBBONS, ROZZI, McGINNIS, GREINER, BARBIN, COHEN,
MILNE, MARSICO, PETRI, DeLISSIO, DAVIDSON, JAMES, PEIFER,
DAY, GROVE, FARRY, ELLIS, BENNINGHOFF, P. COSTA, F. KELLER,
R. BROWN, D. PARKER, KORTZ AND EVERETT, JUNE 24, 2015
REFERRED TO COMMITTEE ON COMMERCE, JUNE 24, 2015
AN ACT
Amending Titles 15 (Corporations and Unincorporated
Associations) and 54 (Names) of the Pennsylvania Consolidated
Statutes, modernizing the law on limited liability
partnerships, general partnerships, limited partnerships and
limited liability companies; and making conforming changes
with respect to associations, corporations, unincorporated
nonprofit associations and business trusts by doing the
following:
As to general provisions, making conforming changes by
revising definitions.
As to corporations, making conforming changes by revising
provisions on distributions by business corporations and by
adding provisions on the use of special litigation committees
by business corporations and nonprofit corporations.
As to partnerships generally:
extensively revising provisions on:
interchangeability of partnership, limited
liability company and corporate forms of
organization; and
ownership of certain professional partnerships;
and
adding a provision on failure to observe formalities.
As to limited liability partnerships:
extensively revising provisions on:
scope;
definitions;
limitation on liability of partners;
extraterritorial application of subchapter;
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
foreign registered limited liability
partnerships; and
annual registration; and
adding provisions on:
distributions; and
dissolution.
As to general partnerships, repealing existing Chapter 83
and replacing it with a new Chapter 84 relating to:
general provisions;
nature of partnership;
relations of partners to persons dealing with
partnership;
relations of partners to each other and to
partnership;
transferable interests and rights of transferees and
creditors;
dissociation;
dissociation as partner if business not wound up; and
dissolution and winding up.
As to limited partnerships, repealing existing Chapter 85
and replacing it with a new Chapter 86 relating to:
general provisions;
formation and filings;
limited partners;
general partners;
contributions and distributions;
dissociation;
transferable interests and rights of transferees and
creditors;
dissolution and winding up; and
actions by partners.
As to limited liability companies, repealing existing
Chapter 89 and replacing it with a new Chapter 88 relating
to:
general provisions;
formation and filings;
relations of members and managers to persons dealing
with limited liability company;
relations of members to each other and to limited
liability company;
transferable interests and rights of transferees and
creditors;
dissociation;
dissolution and winding up; and
actions by members.
As to unincorporated nonprofit associations, making
conforming amendments by revising provisions on ownership and
transfer of property.
As to business trusts, making conforming changes by
revising provisions on application and effect of chapter and
liability of trustees and beneficiaries.
20150HB1398PN1895 - 2 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
As to names, revising provisions on register established.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definitions of "association," "general
partnership," "limited liability company" and "limited
partnership" in section 102(a) of Title 15 of the Pennsylvania
Consolidated Statutes, amended October 22, 2014 (P.L.2640,
No.172), are amended and the section is amended by adding
definitions to read:
§ 102. Definitions.
(a) Defined terms.--Subject to additional or inconsistent
definitions contained in subsequent provisions of this title
that are applicable to specific provisions of this title, the
following words and phrases when used in this title shall have,
unless the context clearly indicates otherwise, the meanings
given to them in this section:
* * *
"Association." A corporation, for profit or not-for-profit,
a partnership, a limited liability company, a business or
statutory trust, an entity or two or more persons associated in
a common enterprise or undertaking. The term does not include:
(1) a testamentary trust or an inter vivos trust as
defined in 20 Pa.C.S. § 711(3) (relating to mandatory
exercise of jurisdiction through orphans' court division in
general);
(2) an association or relationship that:
(i) is not a person that has:
(A) a legal existence separate from any interest
holder of the person; or
(B) the power to acquire an interest in real
20150HB1398PN1895 - 3 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
property in its own name; and
(ii) is not a partnership under the rules stated in
section [8312 (relating to rules for determining the
existence of partnership)] 8422(c) (relating to formation
of partnership) or a similar provision of the laws of
another jurisdiction;
(3) a decedent's estate; or
(4) a government or a governmental subdivision, agency
or instrumentality.
* * *
"Charitable purposes." The relief of poverty, the
advancement and provision of education, including postsecondary
education, the advancement of religion, the prevention and
treatment of disease or injury, including mental retardation and
mental disorders, governmental or municipal purposes and any
other purpose the accomplishment of which is recognized as
important and beneficial to the public.
* * *
"Debtor in bankruptcy." A person that is the subject of:
(1) an order for relief under 11 U.S.C. (relating to
bankruptcy) or a comparable order under a successor statute
of general application; or
(2) a comparable order under Federal, State or foreign
law governing insolvency.
* * *
"General partnership." [A domestic or foreign partnership as
defined in section 8311 (relating to partnership defined),
whether or not it is a limited liability partnership or electing
partnership.] Either of the following:
(1) A partnership as defined in section 8412 (relating
20150HB1398PN1895 - 4 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
to definitions).
(2) An association whose internal affairs are governed
by the laws of a jurisdiction other than this Commonwealth
which would be a partnership if its internal affairs were
governed by the laws of this Commonwealth.
* * *
"Limited liability company." [A domestic or foreign limited
liability company as defined in section 8903 (relating to
definitions and index of definitions).] Either of the following:
(1) A limited liability company as defined in section
8812 (relating to definitions).
(2) An association whose internal affairs are governed
by the laws of a jurisdiction other than this Commonwealth
which would be a limited liability company if its internal
affairs were governed by the laws of this Commonwealth.
* * *
"Limited partnership." [A domestic or foreign limited
partnership as defined in section 8503 (relating to definitions
and index of definitions), whether or not it is a limited
liability limited partnership or electing partnership.] Either
of the following:
(1) A limited partnership as defined in section 8612
(relating to definitions).
(2) An association whose internal affairs are governed
by the laws of a jurisdiction other than this Commonwealth
which would be a limited partnership if its internal affairs
were governed by the laws of this Commonwealth.
* * *
Section 2. Section 152 of Title 15, amended October 22, 2014
(P.L.2640, No.172), is amended to read:
20150HB1398PN1895 - 5 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
§ 152. Definitions.
The following words and phrases when used in this subchapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Ancillary transaction." Includes:
(1) preclearance of document;
(2) amendment of articles, charter, certificate or other
organic document, restatement of articles, charter,
certificate or other organic document;
(3) dissolution, cancellation or termination of an
association;
(3.1) rescission of dissolution;
(4) withdrawal by foreign association;
(5) withdrawal by a partner;
(5.1) statement or certificate of authority and denial
or negation of authority;
(6) any transaction similar to any item listed in
paragraphs (1) through [(5)] (5.1);
(6.1) withdrawal, abandonment or termination of a
document which has been delivered to the department for
filing but has not yet become effective; or
(7) delivery to the department for filing in, by or with
the department or the Secretary of the Commonwealth of any
articles, statements, proceedings, agreements or any similar
papers affecting associations under the statutes of this
Commonwealth for which a specific fee is not set forth in
section 153 (relating to fee schedule) or other applicable
statute.
Section 3. Sections 521, 522 and 523(a) of Title 15 are
amended to read:
20150HB1398PN1895 - 6 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
§ 521. Pensions and allowances.
A banking institution [or a savings association] may grant
allowances or pensions to officers, directors and employees for
faithful and long-continued services and, after the death of the
officer, director or employee either while in the service of the
corporation or after retirement, pensions or allowances may be
granted or continued to their dependents. The allowances to
dependents shall be reasonable in amount and paid only for a
limited time and, unless part of an employee benefit plan or
employment contract in effect at the time of retirement or death
of the officer, director or employee, shall not exceed in total
the amount of the compensation paid to the officer, director or
employee during the 12 months preceding retirement or death.
§ 522. Indemnification of authorized representatives.
A banking institution [or a savings association] shall be
governed by the provisions of Subchapter D of Chapter 17
(relating to indemnification).
§ 523. Actions by shareholders or members to enforce a
secondary right.
(a) General rule.--In any action brought to enforce a
secondary right on the part of one or more shareholders or
members against any officer or director or former officer or
director of a banking institution [or a savings association],
because the corporation refuses to enforce rights which may
properly be asserted by it, the plaintiff or plaintiffs must
aver and it must be made to appear that the plaintiff or each
plaintiff was a shareholder or was a member of the corporation
at the time of the transaction of which he complains or that his
stock or membership devolved upon him by operation of law from a
person who was a shareholder or member at that time.
20150HB1398PN1895 - 7 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
* * *
Section 4. Section 1551(b) of Title 15 is amended and the
section is amended by adding a subsection to read:
§ 1551. Distributions to shareholders.
* * *
(b) Limitation.--A distribution, including a distribution
under Subchapter F (relating to voluntary dissolution and
winding up) or H (relating to postdissolution provision for
liabilities) of Chapter 19, may not be made if, after giving
effect thereto:
(1) the corporation would be unable to pay its debts as
they become due in the usual course of its business; or
(2) the total assets of the corporation would be less
than the sum of its total liabilities plus (unless otherwise
provided in the articles) the amount that would be needed, if
the corporation were to be dissolved at the time as of which
the distribution is measured, to satisfy the preferential
rights upon dissolution of shareholders whose preferential
rights are superior to those receiving the distribution.
* * *
(d.1) Distribution in winding up.--In measuring the effect
of a distribution under Subchapter F or H of Chapter 19, the
liabilities of a dissolved corporation do not include any
liabilities for which adequate provision has been made or any
claim that has been barred under those subchapters.
* * *
Section 5. Sections 1781 and 1782 heading of Title 15 are
amended to read:
§ 1781. [(Reserved).] Derivative action.
(a) General rule.--Subject to section 1782 (relating to
20150HB1398PN1895 - 8 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
eligible derivative plaintiffs and security for costs) and
subsection (b), a shareholder may maintain a derivative action
to enforce a right of a business corporation only if:
(1) the shareholder first makes a demand on the board of
directors requesting that it cause the corporation to bring
an action to enforce the right, unless demand is excused
under subsection (b); and
(2) both:
(i) a special litigation committee is not appointed
under section 1783 (relating to special litigation
committee); and
(ii) the board does not bring the action within a
reasonable time.
(b) Prior demand excused.--
(1) A demand under subsection (a)(1) is excused only if
the shareholder makes a specific showing that irreparable
harm to the business corporation would otherwise result.
(2) If demand is excused under paragraph (1), demand
shall be made promptly after commencement of the action.
(c) Contents of demand.--A demand under this section shall
give notice with reasonable specificity of the essential facts
relied upon to support each of the claims made in the demand.
(d) Additional claims.--If a derivative action is commenced
after a demand has been made under this section and includes a
claim that was not fairly subsumed under the demand, a new
demand must be made with respect to that claim.
(e) Statute of limitations.--The making of a demand tolls
any applicable statute of limitations with respect to a claim
asserted in the demand until the later of the date:
(1) the shareholder making the demand is notified
20150HB1398PN1895 - 9 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
either:
(i) that the board of directors has decided not to
bring an action and not to appoint a special litigation
committee; or
(ii) of the determination under section 1783(e) of a
special litigation committee that has been appointed as
provided in section 1783; or
(2) the court determines under section 1783(f) either
to:
(i) enforce the determination of the special
litigation committee; or
(ii) allow the action to continue under the control
of the plaintiff.
(f) Certain provisions of articles ineffective.--This
section may not be relaxed by any provision of the articles.
§ 1782. [Actions against directors and officers] Eligible
derivative plaintiffs and security for costs.
* * *
Section 6. Title 15 is amended by adding sections to read:
§ 1783. Special litigation committee.
(a) General rule.--If a business corporation receives a
demand to bring an action to enforce a right of the corporation,
or if a derivative action is commenced before demand has been
made on the corporation, the corporation may appoint a special
litigation committee to investigate the claims asserted in the
demand or action and to determine on the basis of that
investigation whether pursuing any of the claims asserted is in
the best interests of the corporation. A committee may not be
appointed under this section if every shareholder of the
corporation is also a director of the corporation.
20150HB1398PN1895 - 10 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(b) Discovery stay.--If the corporation appoints a special
litigation committee and an action is commenced before the
committee has made a determination under subsection (e):
(1) On motion by the committee made in the name of the
corporation, except for good cause shown, the court shall
stay discovery for the time reasonably necessary to permit
the committee to complete its investigation.
(2) The time for the defendants to plead shall be tolled
until the process provided for under subsection (f) has been
completed.
(c) Composition of committee.--A special litigation
committee shall be composed of two or more individuals who:
(1) are not interested in the action;
(2) are capable as a group of objective judgment in the
circumstances; and
(3) may, but need not, be shareholders or directors.
(d) Appointment of committee.--A special litigation
committee may be appointed:
(1) by a majority of the directors not named as actual
or potential parties in the demand or action; or
(2) if all the directors are named as actual or
potential parties in the demand or action, by a majority of
the directors so named.
(e) Determination by committee.--After appropriate
investigation, a special litigation committee may determine that
it is in the best interests of the business corporation that:
(1) an action based on some or all the claims asserted
in the demand not be brought by the corporation but that the
corporation not object to an action being brought by the
party that made the demand;
20150HB1398PN1895 - 11 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(2) an action based on some or all of the claims
asserted in the demand be brought by the corporation;
(3) some or all of the claims asserted in the demand be
settled on terms approved by the committee;
(4) an action not be brought based on any of the claims
asserted in the demand;
(5) an action already commenced continue under the
control of:
(i) the plaintiff; or
(ii) the committee;
(6) some or all of the claims asserted in an action
already commenced be settled on terms approved by the
committee; or
(7) an action already commenced be dismissed.
(f) Court review and action.--If a special litigation
committee is appointed and an action is commenced before the
committee makes a determination under subsection (e):
(1) The business corporation shall file with the court
after the committee makes a determination under subsection
(e) a statement of the committee's determination and a report
supporting the determination. The corporation shall serve
each party with a copy of the determination and report. If
the corporation moves to file the report under seal, the
report shall be served on the parties subject to an
appropriate protective order agreed to by the parties or
ordered by the court.
(2) The corporation shall file with the court a motion,
pleading or notice consistent with the determination of the
committee under subsection (e).
(3) If the committee makes a determination described in
20150HB1398PN1895 - 12 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
subsection (e)(2), (3), (4), (5)(ii), (6) or (7), the court
shall determine whether the members of the committee met the
qualifications required under subsection (c)(1) and (2) and
whether the committee conducted its investigation and made
its recommendation in good faith, independently and with
reasonable care. If the court finds that the members of the
committee met the qualifications required under subsection
(c)(1) and (2) and that the committee acted in good faith,
independently and with reasonable care, the court shall
enforce the determination of the committee. Otherwise, the
court shall:
(i) dissolve any stay of discovery entered under
subsection (b);
(ii) allow the action to continue under the control
of the plaintiff; and
(iii) permit the defendants to file preliminary
objections and other appropriate motions and pleadings.
(g) Certain provisions of articles ineffective.--The
provisions of this section may not be varied by the articles.
§ 1784. Proceeds and expenses.
(a) Proceeds.--Except as provided in subsection (b):
(1) any proceeds or other benefits of a derivative
action, whether by judgment, compromise or settlement, belong
to the business corporation and not to the plaintiff; and
(2) if the plaintiff receives any proceeds, the
plaintiff shall remit them immediately to the corporation.
(b) Expenses.--If a derivative action is successful in whole
or in part, the court may award the plaintiff reasonable
expenses, including reasonable attorney fees and costs, from the
recovery of the business corporation.
20150HB1398PN1895 - 13 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(c) Certain provisions of articles ineffective.--This
section may not be relaxed by any provision of the articles.
Section 7. Section 1907 of Title 15 is amended to read:
§ 1907. Purpose of fundamental transactions.
A transaction under Chapter 3 (relating to entity
transactions) or this chapter does not require an independent
business purpose in order for the transaction to be lawful.
Section 8. The definition of "charitable purposes" in
section 5103(a) of Title 15 is amended to read:
§ 5103. Definitions.
(a) General definitions.--Subject to additional definitions
contained in subsequent provisions of this subpart that are
applicable to specific provisions of this subpart, the following
words and phrases when used in this subpart shall have the
meanings given to them in this section unless the context
clearly indicates otherwise:
* * *
["Charitable purposes." The relief of poverty, the
advancement and provision of education, including postsecondary
education, the advancement of religion, the prevention and
treatment of disease or injury, including mental retardation and
mental disorders, governmental or municipal purposes, and any
other purpose the accomplishment of which is recognized as
important and beneficial to the public.]
* * *
Section 9. Title 15 is amended by adding a section to read:
§ 5781. Derivative action.
(a) General rule.--Subject to section 5782 (relating to
eligible derivative plaintiffs and security for costs) and
subsection (b), a member may maintain a derivative action to
20150HB1398PN1895 - 14 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
enforce a right of a nonprofit corporation only if:
(1) the member first makes a demand on the board of
directors, requesting that it cause the corporation to bring
an action to enforce the right, unless demand is excused
under subsection (b); and
(2) both:
(i) a special litigation committee is not appointed
under section 5783 (relating to special litigation
committee); and
(ii) the board does not bring the action within a
reasonable time.
(b) Prior demand excused.--
(1) A demand under subsection (a)(1) is excused only if
the member makes a specific showing that irreparable harm to
the business corporation would otherwise result.
(2) If demand is excused under paragraph (1), demand
shall be made promptly after commencement of the action.
(c) Contents of demand.--A demand under this section shall
give notice with reasonable specificity of the essential facts
relied upon to support each of the claims made in the demand.
(d) Additional claims.--If a derivative action is commenced
after a demand has been made under this section and includes a
claim that was not fairly subsumed under the demand, a new
demand must be made with respect to that claim.
(e) Statute of limitations.--The making of a demand tolls
any applicable statute of limitations with respect to a claim
asserted in the demand until the later of the date:
(1) the member making the demand is notified either:
(i) that the board of directors has decided not to
bring an action and not to appoint a special litigation
20150HB1398PN1895 - 15 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
committee; or
(ii) of the determination under section 5783(e)
(relating to special litigation committee) of a special
litigation committee that has been appointed as provided
in section 5783; or
(2) the court determines under section 5783(f) either
to:
(i) enforce the determination of the special
litigation committee; or
(ii) allow the action to continue under the control
of the plaintiff.
Section 10. Section 5782 heading of Title 15 is amended to
read:
§ 5782. [Actions against directors, members of an other body
and officers] Eligible derivative plaintiffs and
security for costs.
* * *
Section 11. Title 15 is amended by adding sections to read:
§ 5783. Special litigation committee.
(a) General rule.--If a nonprofit corporation receives a
demand to bring an action to enforce a right of the corporation,
or if a derivative action is commenced before demand has been
made on the corporation, the corporation may appoint a special
litigation committee to investigate the claims asserted in the
demand or action and to determine on the basis of that
investigation whether pursuing any of the claims asserted is in
the best interests of the corporation.
(b) Discovery stay.--If the corporation appoints a special
litigation committee and an action is commenced before the
committee has made a determination under subsection (e):
20150HB1398PN1895 - 16 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(1) On motion by the committee made in the name of the
corporation, except for good cause shown, the court shall
stay discovery for the time reasonably necessary to permit
the committee to complete its investigation.
(2) The time for the defendants to plead shall be tolled
until the process provided for under subsection (f) has been
completed.
(c) Composition of committee.--A special litigation
committee shall be composed of two or more individuals who:
(1) are not interested in the action;
(2) are capable as a group of objective judgment in the
circumstances; and
(3) may, but need not, be members, directors or members
of an other body.
(d) Appointment of committee.--A special litigation
committee may be appointed:
(1) by a majority of the directors not named as actual
or potential parties in the demand or action; or
(2) if all the directors are named as actual or
potential parties in the demand or action, by a majority of:
(i) the members of an other body not named as
parties in the proceeding if the other body has the
authority to appoint a special litigation committee; or
(ii) the directors so named.
(e) Determination by committee.--After appropriate
investigation, a special litigation committee may determine that
it is in the best interests of the nonprofit corporation that:
(1) an action based on some or all of the claims
asserted in the demand not be brought by the corporation but
that the corporation not object to an action being brought by
20150HB1398PN1895 - 17 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
the party that made the demand:
(2) an action based on some or all of the claims
asserted in the demand be brought by the corporation;
(3) some or all of the claims asserted in the demand be
settled on terms approved by the committee;
(4) an action not be brought based on any of the claims
asserted in the demand;
(5) an action already commenced continue under the
control of:
(i) the plaintiff; or
(ii) the committee;
(6) some or all of the claims asserted in an action
already commenced be settled on terms approved by the
committee; or
(7) an action already commenced be dismissed.
(f) Court review and action.--If a special litigation
committee is appointed and an action is commenced before the
committee makes a determination under subsection (e):
(1) The nonprofit corporation shall file with the court
after the committee makes a determination under subsection
(e) a statement of the committee's determination and a report
supporting the determination. The corporation shall serve
each party with a copy of the determination and report. If
the corporation moves to file the report under seal, the
report shall be served on the parties subject to an
appropriate protective order agreed to by the parties or
ordered by the court.
(2) The corporation shall file with the court a motion,
pleading or notice consistent with the determination of the
committee under subsection (e).
20150HB1398PN1895 - 18 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(3) If the committee makes a determination described in
subsection (e)(2), (3), (4), (5)(ii), (6) or (7), the court
shall determine whether the members of the committee met the
qualifications required under subsection (c)(1) and (2) and
whether the committee conducted its investigation and made
its recommendation in good faith, independently and with
reasonable care. If the court finds that the members of the
committee met the qualifications required under subsection
(c)(1) and (2) and that the committee acted in good faith,
independently and with reasonable care, the court shall
enforce the determination of the committee. Otherwise, the
court shall:
(i) dissolve any stay of discovery entered under
subsection (b);
(ii) allow the action to continue under the control
of the plaintiff; and
(iii) permit the defendants to file preliminary
objections and other appropriate motions and pleadings.
§ 5784. Proceeds and expenses.
(a) Proceeds.--Except as provided in subsection (b):
(1) any proceeds or other benefits of a derivative
action, whether by judgment, compromise or settlement, belong
to the nonprofit corporation and not to the plaintiff; and
(2) if the plaintiff receives any proceeds, the
plaintiff shall remit them immediately to the corporation.
(b) Expenses.--If a derivative action is successful in whole
or in part, the court may award the plaintiff reasonable
expenses, including reasonable attorney fees and costs, from the
recovery of the nonprofit corporation.
Section 12. Sections 8102 and 8105 of Title 15 are amended
20150HB1398PN1895 - 19 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
to read:
§ 8102. Interchangeability of partnership, limited liability
company and corporate forms of organization.
(a) General rule.--Subject to any restrictions on a specific
line of business made applicable by section 103 (relating to
subordination of title to regulatory laws):
(1) Any business that may be conducted in a corporate
form may also be conducted as a partnership or a limited
liability company.
(2) A domestic or foreign partnership or limited
liability company may exercise any right, power, franchise or
privilege that a domestic or foreign corporation engaged in
the same line of business might exercise under the laws of
this Commonwealth, including powers conferred by section 1511
(relating to additional powers of certain public utility
corporations) or other provisions of law granting the right
to a duly authorized corporation to take or occupy property
and make compensation therefor.
(b) Exceptions.--Subsection (a) shall not:
(1) Affect any law relating to the taxation of
partnerships, limited liability companies or corporations.
(2) [Apply to a banking institution, credit union,
insurance corporation or savings association,] Authorize the
conduct of the business of banking or insurance unless the
laws relating thereto or this part expressly [contemplate]
permit the conduct of [the regulated] that business in
partnership or limited liability company form. See [section
8911 (relating to purposes).] sections 8620(b) (relating to
characteristics of limited partnership) and 8818(b) (relating
to characteristics of limited liability company).
20150HB1398PN1895 - 20 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(3) Except as otherwise provided by law, permit a
partnership to provide full limited liability for all of the
investors therein or otherwise fail to preserve the intrinsic
differences between the partnership and corporate forms.
§ 8105. Ownership of certain professional partnerships.
(a) General rule.--Except as otherwise provided by statute,
rule or regulation applicable to a particular profession, all of
the ultimate beneficial owners of the [partnership] interests in
a [partnership that renders one or more restricted professional
services shall] general partnership, limited partnership,
electing partnership or limited liability company, and all of
the governors of the entity, must be licensed persons[. As used
in this section, the term "restricted professional services"
shall have the meaning specified in section 8903 (relating to
definitions and index of definitions).] in the profession the
entity practices if the entity renders any of the following
professional services:
(1) chiropractic;
(2) dentistry;
(3) law;
(4) medicine and surgery;
(5) optometry;
(6) osteopathic medicine and surgery;
(7) podiatric medicine;
(8) public accounting;
(9) psychology; or
(10) veterinary medicine.
(b) Transitional provision.--Subsection (a) shall not apply
to a person that holds only a transferable interest that was
acquired before [the Legislative Reference Bureau shall insert
20150HB1398PN1895 - 21 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
here the effective date of this act].
Section 13. Title 15 is amended by adding a section to read:
§ 8106. Failure to observe formalities.
The failure of a limited liability partnership, limited
partnership, limited liability limited partnership, electing
partnership or limited liability company to observe formalities
relating to the exercise of its powers or management of its
activities and affairs is not a ground for imposing liability on
a partner, member or manager of the entity for a debt,
obligation or other liability of the entity.
Section 14. Chapter 82 heading of Title 15 is amended to
read:
CHAPTER 82
[REGISTERED] LIMITED LIABILITY PARTNERSHIPS AND
LIMITED LIABILITY LIMITED PARTNERSHIPS
Section 15. Chapter 82 Subchapter A heading of Title 15 is
amended to read:
SUBCHAPTER A
DOMESTIC [REGISTERED]
LIMITED LIABILITY PARTNERSHIPS AND
LIMITED LIABILITY LIMITED PARTNERSHIPS
Section 16. Section 8201 of Title 15 is amended to read:
§ 8201. Scope.
(a) Application of subchapter.--This subchapter applies to a
general or limited partnership formed under the laws of this
Commonwealth that registers under this section. Any partnership
that desires to register under this subchapter or to amend or
terminate its registration shall file in the Department of State
a statement of registration, amendment or termination, as the
case may be, which shall be signed by a general partner and
20150HB1398PN1895 - 22 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
shall set forth:
(1) The name of the partnership.
(2) Either:
(i) the address of the principal place of business
of the partnership, in the case of a general partnership;
or
(ii) subject to section 109 (relating to name of
commercial registered office provider in lieu of
registered address), the address, including street and
number, if any, of the registered office of the
partnership, in the case of a limited partnership.
(3) A statement that the partnership registers under
this subchapter or that the registration of the partnership
under this subchapter shall be amended or terminated, as the
case may be. If the statement relates to an amendment, the
amendment shall restate in full the statement of
registration.
(4) A statement that:
(i) the registration, amendment or termination has
been authorized by at least a majority in interest of the
partners[.]; and
(ii) in the case of a termination, the termination
has also been authorized by all of the general partners.
(b) Effect of filing.--Upon the filing of the statement of
registration, amendment or termination in the department, the
registration under this subchapter shall be effective, amended
or terminated, as the case may be. The effectiveness, amendment
or termination of the registration of a partnership under this
subchapter shall not be deemed to cause a dissolution of the
partnership.
20150HB1398PN1895 - 23 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(c) Effect of registration.--As long as the registration
under this subchapter is in effect, the partnership shall be
governed by the provisions of this subchapter and, to the extent
not inconsistent with this subchapter, Chapter [83] 84 (relating
to general partnerships) [and, if a limited partnership, in
addition, Chapter 85] or 86 (relating to limited partnerships).
Without limiting the generality of the foregoing, a domestic or
foreign [registered] limited liability partnership or limited
liability limited partnership shall be treated the same as if it
were not registered under this subchapter for purposes of:
(1) determining whether it is a permissible form of
entity in which to conduct the practice of a profession; or
(2) the imposition by the Commonwealth or any political
subdivision of any tax or license fee on or with respect to
any income, property, privilege, transaction, subject or
occupation.
(d) Continuation of registration.--If a [registered] limited
liability partnership or limited liability limited partnership
is dissolved and its business is continued without liquidation
of the partnership affairs, the registration under this
subchapter of the dissolved partnership shall continue to be
applicable to the partnership continuing the business, and it
shall not be necessary to make a new filing under this section
until such time, if any, as the registration is to be amended or
terminated.
(e) Prohibited termination.--A registration under this
subchapter may not be terminated while the partnership is a
[bankrupt as that term is defined in section 8903 (relating to
definitions and index of definitions)] debtor in bankruptcy. See
section 8221(f) (relating to annual registration).
20150HB1398PN1895 - 24 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(f) Alternative procedure.--In lieu of filing a statement of
registration as provided in subsection (a), a limited
partnership may register as a [registered] limited liability
limited partnership by including in its certificate of limited
partnership, either originally or by amendment, the statements
required by subsection (a)(3) and (4). To terminate its
registration, a limited partnership that uses the procedure
authorized by this subsection shall amend its certificate of
limited partnership to delete the statements required by this
subsection.
(g) Constructive notice.--Filing under this section shall
constitute constructive notice that the partnership is a
[registered] limited liability partnership or limited liability
limited partnership and that the partners are entitled to the
protections from liability provided by this subchapter.
(h) Approval of termination.--In addition to any required
approvals under the partnership agreement, the termination of a
statement of registration must be approved by the affirmative
vote or consent of all the general partners.
(i) Cross references.--See sections 134 (relating to
docketing statement) and 135 (relating to requirements to be met
by filed documents).
Section 17. The definitions of "foreign registered limited
liability partnership," "partner" and "registered limited
liability partnership" or "domestic registered limited liability
partnership" in section 8202 are amended and the section is
amended by adding a definition to read:
§ 8202. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
20150HB1398PN1895 - 25 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
context clearly indicates otherwise:
"Distribution." A transfer of money or other property from a
limited liability partnership to a person on account of a
transferable interest or in a person's capacity as a partner.
The term:
(1) includes:
(i) a redemption or other purchase by a partnership
of a transferable interest; and
(ii) a transfer to a partner in return for the
partner's relinquishment of any right to participate as a
partner in the management or conduct of the partnership's
business or to have access to records or other
information concerning the partnership's business ; and
(2) d oes not include:
(i) amounts constituting reasonable compensation for
present or past service or payments made in the ordinary
course of business under a bona fide retirement plan or
other bona fide benefits program;
(ii) the making of, or payment or performance on, a
guaranty or similar arrangement by a partnership for the
benefit of any or all of its partners;
(iii) a direct or indirect allocation or transfer
effected under Chapter 3 (relating to entity
transactions) with the approval of the members; or
(iv) a direct or indirect transfer of:
(A) a governance or transferable interest; or
(B) options, rights or warrants to acquire a
governance or transferable interest.
["Foreign registered limited liability partnership." A
partnership that has registered under a law of any jurisdiction
20150HB1398PN1895 - 26 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
other than this Commonwealth similar to this subchapter, whether
or not the partnership is required to register under section
8211 (relating to foreign registered limited liability
partnerships).]
"Partner." Includes a person who is or was a partner in a
[registered] limited liability partnership or limited liability
limited partnership at any time while the registration of the
partnership under this subchapter is or was in effect.
["Registered limited liability partnership" or "domestic
registered limited liability partnership." A partnership as to
which a registration under section 8201(a) (relating to scope)
is in effect.]
Section 18. Section 8204 of Title 15 is amended to read:
§ 8204. Limitation on liability of partners.
(a) General rule.--Except as provided in subsection (b), a
partner in a [registered] limited liability partnership or
limited liability limited partnership shall not be
[individually] liable directly or indirectly, whether by way of
indemnification, contribution, assessment or otherwise, [for
debts and obligations] under an order of court or in any other
manner for any debts, obligations or other liabilities of, or
chargeable to, the partnership, whether sounding in contract or
tort or otherwise, that arise [from any negligent or wrongful
acts or misconduct committed by another partner or other
representative of the partnership] while the registration of the
partnership under this subchapter is in effect.
(b) Exceptions.--
(2) Subsection (a) shall not affect the liability of a
partner:
(i) Individually for any negligent or wrongful acts
20150HB1398PN1895 - 27 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
or misconduct committed by [him or by any person under
his direct supervision and control] the partner.
(ii) For any debts [or], obligations or other
liabilities of the partnership:
[(A) arising from any cause other than those
specified in subsection (a); or]
(B) as to which the partner has agreed in
[writing] record form to be liable[.]; or
(C) that:
(I) arose before [the Legislative Reference
Bureau shall insert here the effective date of
this clause]; and
(II) did not arise from any negligent or
wrongful acts or misconduct committed by a
partner or other representative of the
partnership.
(iii) To the extent expressly undertaken in the
partnership agreement or the certificate of limited
partnership.
(3) Subsection (a) shall not affect in any way:
(i) the liability of the partnership itself for all
its debts [and obligations], obligations and other
liabilities;
(ii) the availability of the entire assets of the
partnership to satisfy its debts [and obligations],
obligations and other liabilities; or
(iii) any obligation undertaken by a partner in
writing to individually indemnify another partner of the
partnership or to individually contribute toward a
liability of another partner.
20150HB1398PN1895 - 28 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(c) Continuation of limited liability.--Neither the
termination of the registration of a partnership under this
subchapter nor the dissolution, winding up or termination of the
partnership shall affect the limitation on the liability of a
partner in the partnership under this section with respect to
[negligent or wrongful acts or misconduct occurring] debts,
obligations and other liabilities that arose while the
registration under this subchapter was in effect.
(d) Proper parties.--A partner in a limited liability
partnership or limited liability limited partnership is not a
proper party to an action or proceeding by or against the
partnership, the object of which is to recover damages or
enforce debts, obligations or other liabilities for which the
partner is not liable.
(e) Cross reference.--See section 103 (relating to
subordination of title to regulatory laws).
Section 19. Section 8205 of Title 15 is repealed:
[§ 8205. Liability of withdrawing partner.
(a) General rule.--Except as provided in subsection (b), if
the business of a registered limited liability partnership is
continued without liquidation of the partnership affairs
following the dissolution of the partnership as a result of the
withdrawal for any reason of a partner, the withdrawing partner
shall not be individually liable directly or indirectly, whether
by way of indemnification, contribution or otherwise, for the
debts and obligations of either the dissolved partnership or any
partnership continuing the business if a statement of withdrawal
is filed as provided in this section.
(b) Exceptions.--Subsection (a) shall not affect the
liability of a partner:
20150HB1398PN1895 - 29 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(1) Individually for any negligent or wrongful acts or
misconduct committed by him or by any person under his direct
supervision and control.
(2) For any debts or obligations of the partnership as
to which the withdrawing partner has agreed in writing to be
liable.
(3) To the partnership for damages if the partnership
agreement prohibits the withdrawal of the partner or the
withdrawal otherwise violates the partnership agreement.
(4) Under section 8334 (relating to partner accountable
as fiduciary).
(5) To the extent a debt or obligation of the
partnership has been expressly undertaken by the partner in
the partnership agreement or the certificate of limited
partnership.
(6) If the partnership subsequently dissolves within one
year after the date of withdrawal of the partner and the
business of the partnership is not continued following such
subsequent dissolution. This paragraph shall not be
applicable in the case of a withdrawal caused by:
(i) the death of the partner; or
(ii) the retirement of the partner pursuant to a
retirement policy of the dissolved partnership that has
been in effect prior to the retirement of the partner for
the shorter of one year or the period that the
partnership has been in existence.
(7) For any obligation undertaken by a partner in
writing to individually indemnify another partner of the
partnership or to individually contribute toward a liability
of another partner.
20150HB1398PN1895 - 30 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(c) Statement of withdrawal.--A statement of withdrawal
shall be executed by the withdrawing partner or his personal
representative and shall set forth:
(1) The name of the registered limited liability
partnership.
(2) The name of the withdrawing partner.
(d) Filing and effectiveness.--The statement of withdrawal
shall be filed in the Department of State and shall be effective
upon filing. The withdrawing partner shall send a copy of the
filed statement of withdrawal to the registered limited
liability partnership.
(e) Permissive filing.--Filing under this section is
permissive, and failure to make a filing under this section by a
partner entitled to do so shall not affect the right of that
partner to the limitation on liability provided by section 8204
(relating to limitation on liability of partners).
(f) Constructive notice.--Filing under this section shall
constitute constructive notice that the partner has withdrawn
from the partnership and is entitled to the protection from
liability provided by this section.
(g) Variation of section.--A written provision of the
partnership agreement may restrict or condition the application
of this section to some or all of the partners of the
partnership.
(h) Application of section.--A partner in a foreign
registered limited liability partnership, regardless of whether
or not it has registered to do business in this Commonwealth
under section 8211 (relating to foreign registered limited
liability partnerships), shall not be entitled to make a filing
under this section with regard to that partnership.
20150HB1398PN1895 - 31 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(i) Cross references.--See sections 134 (relating to
docketing statement) and 135 (relating to requirements to be met
by filed documents).]
Section 20. Section 8207 of Title 15 is amended to read:
§ 8207. Extraterritorial application of subchapter.
[(a) Legislative intent.--It is the intent of the General
Assembly in enacting this subchapter that the legal existence of
registered limited liability partnerships organized in this
Commonwealth be recognized outside the boundaries of this
Commonwealth and that, subject to any reasonable requirement of
registration, a domestic registered limited liability
partnership transacting business outside this Commonwealth be
granted protection of full faith and credit under the
Constitution of the United States.]
(b) Basis for determining liability of partners.--The
liability of partners in a [registered] domestic limited
liability partnership or domestic limited liability limited
partnership shall at all times be determined under Chapters [83]
84 (relating to general partnerships) and [85] 86 (relating to
limited partnerships) as modified by the provisions of this
subchapter.
(c) Conflict of laws.--The personal liability of a partner
of a [registered] domestic limited liability partnership or
domestic limited liability limited partnership to any person or
in any action or proceeding for the debts, obligations or other
liabilities of the partnership or for the acts or omissions of
other partners or representatives of the partnership shall be
governed solely and exclusively by the laws of this
Commonwealth. Whenever a conflict arises between the laws of
this Commonwealth and the laws of any other state with regard to
20150HB1398PN1895 - 32 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
the liability of partners of a [registered] domestic limited
liability partnership [registered under this subchapter] or
domestic limited liability limited partnership for the debts,
obligations and other liabilities of the partnership or for the
acts or omissions of the other partners or representatives of
the partnership, the laws of this Commonwealth shall govern in
determining such liability.
Section 21. Subchapter B of Chapter 82 of Title 15 is
repealed:
[SUBCHAPTER B
FOREIGN REGISTERED
LIMITED LIABILITY PARTNERSHIPS
§ 8211. Foreign registered limited liability partnerships.
(a) Governing law.--Subject to the Constitution of
Pennsylvania:
(1) The laws of the jurisdiction under which a foreign
registered limited liability partnership is organized govern
its organization and internal affairs and the liability of
its partners except as provided in subsection (c).
(2) A foreign registered limited liability partnership
may not be denied registration by reason of any difference
between those laws and the laws of this Commonwealth.
(c) Exception.--The liability of the partners in a foreign
registered limited liability partnership shall be governed by
the laws of the jurisdiction under which it is organized, except
that the partners shall not be entitled to greater protection
from liability than is available to the partners in a domestic
registered limited liability partnership.]
Section 22. Section 8221 of Title 15 is amended to read:
§ 8221. Annual registration.
20150HB1398PN1895 - 33 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(a) General rule.--Every domestic [registered] limited
liability partnership or limited liability limited partnership
in existence on December 31 of any year and every foreign
[registered] limited liability partnership or limited liability
limited partnership that is registered to do business in this
Commonwealth on December 31 of any year shall file in the
Department of State with respect to that year, and on or before
April 15 of the following year, a certificate of annual
registration on a form provided by the department, signed by a
general partner and accompanied by the annual registration fee
prescribed by subsection (b). The department shall not charge a
fee other than the annual registration fee for filing the
certificate of annual registration.
(b) Annual registration fee.--
(1) The annual registration fee to be paid when filing a
certificate of annual registration shall be equal to a base
fee of $200 times the number of persons who were general
partners of the partnership on December 31 of the year with
respect to which the certificate of annual registration is
being filed and who:
(i) in the case of a natural person, had his
principal residence on that date in this Commonwealth; or
(ii) in the case of any other person, was
incorporated or otherwise organized or existing on that
date under the laws of this Commonwealth.
(2) The base fee of $200 shall be increased on December
31, 1997, and December 31 of every third year thereafter by
the percentage increase in the Consumer Price Index for Urban
Workers during the most recent three calendar years for which
that index is available on the date of adjustment. Each
20150HB1398PN1895 - 34 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
adjustment under this paragraph shall be rounded up to the
nearest $10.
(c) Notice of annual registration.--Not later than February
1 of each year, the department shall give notice to every
partnership required to file a certificate of annual
registration with respect to the preceding year of the
requirement to file the certificate. The notice shall state the
amount of the base fee payable under subsection (b)(1), as
adjusted pursuant to subsection (b)(2), if applicable, and shall
be accompanied by the form of certificate of annual registration
to be filed. Failure by the department to give notice to any
party, or failure by any party to receive notice, of the annual
registration requirement shall not relieve the party of the
obligation to file the certificate of annual registration.
(d) Credit to Corporation Bureau Restricted Account.--The
annual registration fee shall not be deemed to be an amount
received by the department under Subchapter C of Chapter 1 for
purposes of section 155 (relating to disposition of funds),
except that $25 of the fee shall be credited to the Corporation
Bureau Restricted Account.
(e) Failure to pay annual fee.--
(1) Failure to file the certificate of annual
registration required by this section for five consecutive
years shall result in the automatic termination of:
(i) the status of the [registered] limited liability
partnership [as such.] or limited liability limited
partnership as such, if it is a domestic partnership; or
(ii) the registration of the limited liability
partnership or limited liability limited partnership, if
it is a foreign partnership.
20150HB1398PN1895 - 35 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(1.1) [In addition, any] Any annual registration fee
that is not paid when due shall be a lien in the manner
provided in this subsection from the time the annual
registration fee is due and payable. If a certificate of
annual registration is not filed within 30 days after the
date on which it is due, the department shall assess a
penalty of $500 against the partnership, which shall also be
a lien in the manner provided in this subsection. The
imposition of that penalty shall not be construed to relieve
the partnership from liability for any other penalty or
interest provided for under other applicable law.
(2) If the annual registration fee paid by a [registered
limited liability] partnership is subsequently determined to
be less than should have been paid because it was based on an
incorrect number of general partners or was otherwise
incorrectly computed, that fact shall not affect the
existence [or status of the registered limited liability
partnership as such], status or foreign registration of the
partnership, but the amount of the additional annual
registration fee that should have been paid shall be a lien
in the manner provided in this subsection from the time the
incorrect payment is discovered by the department.
(3) The annual registration fee shall bear simple
interest from the date that it becomes due and payable until
paid. The interest rate shall be that provided for in section
806 of the act of April 9, 1929 (P.L.343, No.176), known as
The Fiscal Code, with respect to unpaid taxes. The penalty
provided for in paragraph (1) shall not bear interest. The
payment of interest shall not relieve the [registered limited
liability] partnership from liability for any other penalty
20150HB1398PN1895 - 36 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
or interest provided for under other applicable law.
(4) The lien created by this subsection shall attach to
all of the property and proceeds thereof of the [registered
limited liability] partnership in which a security interest
can be perfected in whole or in part by filing in the
department under 13 Pa.C.S. Div. 9 (relating to secured
transactions; sales of accounts, contract rights and chattel
paper), whether the property and proceeds are owned by the
partnership at the time the annual registration fee or any
penalty or interest becomes due and payable or whether the
property and proceeds are acquired thereafter. Except as
otherwise provided by statute, the lien created by this
subsection shall have priority over all other liens, security
interests or other charges, except liens for taxes or other
charges due the Commonwealth. The lien created by this
subsection shall be entered on the records of the department
and indexed in the same manner as a financing statement filed
under 13 Pa.C.S. Div. 9. At the time an annual registration
fee, penalty or interest that has resulted in the creation of
a lien under this subsection is paid, the department shall
terminate the lien with respect to that annual registration
fee, penalty or interest without requiring a separate filing
by the partnership for that purpose.
(5) If the annual registration fee paid by a [registered
limited liability] partnership is subsequently determined to
be more than should have been paid for any reason, no refund
of the additional fee shall be made.
(6) Termination of the status [of a registered limited
liability partnership as such] or foreign registration of a
partnership under this section, whether voluntarily or
20150HB1398PN1895 - 37 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
involuntarily, shall not release it from the obligation to
pay any accrued fees, penalties and interest and shall not
release the lien created by this subsection.
(f) Exception for bankrupt partnerships.--A partnership that
would otherwise be required to pay the annual registration fee
set forth in subsection (b) shall not be required to pay that
fee with respect to any year during any part of which the
partnership is a [bankrupt as defined in section 8903 (relating
to definitions and index of definitions)] debtor in bankruptcy.
The partnership shall, instead, indicate on its certificate of
annual registration for that year that it is exempt from payment
of the annual registration fee pursuant to this subsection. If
the partnership fails to file timely a certificate of annual
registration, a lien shall be entered on the records of the
department pursuant to subsection (e) which shall not be removed
until the partnership files a certificate of annual registration
indicating its entitlement to an exemption from payment of the
annual registration fee as provided in this subsection. See
section 8201(e) (relating to scope).
Section 23. Chapter 82 of Title 15 is amended by adding
subchapters to read:
SUBCHAPTER D
DISTRIBUTIONS
Sec.
8231. Limitations on distributions by limited liability
partnership.
8232. Liability for improper distributions by limited liability
partnership.
§ 8231. Limitations on distributions by limited liability
partnership.
20150HB1398PN1895 - 38 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(a) General rule.--A domestic limited liability partnership
may not make a distribution, including a distribution under
section 8486 (relating to disposition of assets in winding up
and required contributions), if after the distribution:
(1) the partnership would not be able to pay its debts
as they become due in the ordinary course of the
partnership's business; or
(2) the partnership's total assets would be less than
the sum of its total liabilities plus the amount that would
be needed, if the partnership were to be dissolved and wound
up at the time of the distribution, to satisfy the
preferential rights upon dissolution and winding up of
partners and transferees whose preferential rights are
superior to the rights of persons receiving the distribution.
(b) Valuation.--A domestic limited liability partnership may
base a determination that a distribution is not prohibited under
subsection (a)(2) on:
(1) the book values of the assets and liabilities of the
partnership, as reflected on its books and records;
(2) a valuation that takes into consideration unrealized
appreciation and depreciation or other changes in value of
the assets and liabilities of the partnership;
(3) the current value of the assets and liabilities of
the partnership, either valued separately or valued in
segments or as an entirety as a going concern; or
(4) any other method that is reasonable in the
circumstances.
(c) Excluded liabilities.--In determining whether a
distribution is prohibited under subsection (a)(2), the
partnership need not consider obligations and liabilities unless
20150HB1398PN1895 - 39 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
they are required to be reflected on a balance sheet, not
including the notes to the balance sheet, prepared on the basis
of generally accepted accounting principles, or other such
accounting practices and principles as are used generally by the
partnership in the maintenance of its books and records and as
are reasonable in the circumstances.
(d) Measuring date of distribution.--Except as provided in
subsection (e), the effect of a distribution under subsection
(a) is measured:
(1) as of the date specified by the partnership when it
authorizes the distribution if the distribution occurs within
125 days of the earlier of the date so specified or the date
of authorization; or
(2) as of the date of distribution in all other cases.
(e) Date of redemption.--In the case of a distribution as
described in paragraph (1) of the definition of "distribution"
in section 8412 (relating to definitions), the distribution is
deemed to occur as of the earlier of the date money or other
property is transferred or debt is incurred by the partnership,
or the date the person entitled to the distribution ceases to
own the interest or right being acquired by the partnership in
return for the distribution.
(f) Status of distribution debt.--The indebtedness of a
domestic limited liability partnership to a partner or
transferee incurred by reason of a distribution made in
accordance with this section shall be at least on a parity with
the partnership's indebtedness to its general, unsecured
creditors, except to the extent subordinated by agreement.
(g) Certain subordinated debt.--The indebtedness of a
domestic limited liability partnership, including indebtedness
20150HB1398PN1895 - 40 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
issued as a distribution, is not a liability for purposes of
subsection (a) if the terms of the indebtedness provide that
payment of principal and interest is made only if and to the
extent that a payment of a distribution could then be made under
this section. If the indebtedness is issued as a distribution,
each payment of principal or interest is treated as a
distribution, the effect of which is measured on the date the
payment is made.
(h) Distributions in winding up.--In measuring the effect of
a distribution under section 8486, the liabilities of a
dissolved domestic limited liability partnership do not include
any claim that has been barred under section 8241 (relating to
known claims against dissolved limited liability partnership) or
8242 (relating to other claims against dissolved limited
liability partnership) or for which security has been provided
under section 8243 (relating to court proceedings).
(i) Cross references.--See sections 8415(d)(1) (relating to
contents of partnership agreement) and 8447 (relating to
standards of conduct for partners).
§ 8232. Liability for improper distributions by limited
liability partnership.
(a) General rule.--Except as provided in subsection (b), if
a partner of a limited liability partnership consents to a
distribution made in violation of section 8231 (relating to
limitations on distributions by limited liability partnership)
and in consenting to the distribution fails to comply with
section 8447 (relating to standards of conduct for partners),
the partner is personally liable to the partnership for the
amount of the distribution which exceeds the amount that could
have been distributed without the violation of section 8231.
20150HB1398PN1895 - 41 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(b) Partners without authority.--To the extent the
partnership agreement of a limited liability partnership
expressly relieves a partner of the authority and responsibility
to consent to distributions and imposes that authority and
responsibility on one or more other partners, the liability in
subsection (a) applies to the other partners and not to the
partner that the partnership agreement relieves of the authority
and responsibility.
(c) Recipients.--A person that receives a distribution
knowing that the distribution violated section 8231 is
personally liable to the limited liability partnership, but only
to the extent that the distribution received by the person
exceeded the amount that could have been properly paid under
section 8231.
(d) Contribution.--A person against which an action is
commenced because the person is liable under subsection (a) may:
(1) join any other person that is liable under
subsection (a) and seek to enforce a right of contribution
from the person; and
(2) join any person that received a distribution in
violation of subsection (c) and seek to enforce a right of
contribution from the person in the amount the person
received in violation of subsection (c).
(e) Statute of repose.--An action under this section is
barred unless commenced within two years after the distribution.
SUBCHAPTER E
DISSOLUTION
Sec.
8241. Known claims against dissolved limited liability
partnership.
20150HB1398PN1895 - 42 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
8242. Other claims against dissolved limited liability
partnership.
8243. Court proceedings.
8244. Liability of partner when claim against partnership
barred.
§ 8241. Known claims against dissolved limited liability
partnership.
(a) General rule.--Except as provided in subsection (d), a
dissolved limited liability partnership may give notice of a
known claim under subsection (b), which has the effect provided
in subsection (c).
(b) Required notice.--A dissolved limited liability
partnership may notify in record form its known claimants of the
dissolution. The notice must:
(1) specify the information required to be included in a
claim;
(2) state that a claim must be in writing and provide a
mailing address to which the claim is to be sent;
(3) state the deadline for receipt of a claim, which may
not be less than 120 days after the date the notice is
received by the claimant;
(4) state that the claim will be barred if not received
by the deadline; and
(5) unless the partnership has been throughout its
existence a limited liability partnership, state that the
barring of a claim against the partnership will also bar any
corresponding claim against any partner or person dissociated
as a partner which is based on section 8436 (relating to
partner's liability).
(c) Claims barred.--A claim against a dissolved limited
20150HB1398PN1895 - 43 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
liability partnership is barred if the requirements of
subsection (b) are met and:
(1) the claim is not received by the specified deadline;
or
(2) if the claim is timely received but rejected by the
partnership:
(i) the partnership causes the claimant to receive a
notice in record form stating that the claim is rejected
and will be barred unless the claimant commences an
action against the partnership to enforce the claim
within 90 days after the claimant receives the notice;
and
(ii) the claimant does not commence the required
action within 90 days after the claimant receives the
notice.
(d) Later arising claims.--This section shall not apply to a
claim based on an event occurring after the date of dissolution
or a liability that on that date is contingent.
§ 8242. Other claims against dissolved limited liability
partnership.
(a) Permissive notice.--A dissolved limited liability
partnership may publish notice of its dissolution and request
persons having claims against the partnership to present them in
accordance with the notice.
(b) Notice procedure.--A notice under subsection (a) must:
(1) be officially published one time;
(2) describe the information required to be contained in
a claim, state that the claim must be in writing and provide
a mailing address to which the claim is to be sent;
(3) state that a claim against the partnership is barred
20150HB1398PN1895 - 44 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24