PRINTER'S NO. 2459
No. 1761 Session of 1990
INTRODUCED BY FISHER AND LEWIS, AUGUST 23, 1990
REFERRED TO BANKING AND INSURANCE, AUGUST 23, 1990
AN ACT
1 Amending Titles 13 (Commercial Code), 15 (Corporations and
2 Unincorporated Associations) and 17 (Reserved) of the
3 Pennsylvania Consolidated Statutes, codifying and correcting
4 the law relating to credit unions; providing for the
5 incorporation and regulation of insurance companies; making
6 revisions, corrections and additions relating to other
7 associations; further providing for the fees of the
8 Department of State and certain filing officers; and making
9 repeals.
10 The General Assembly of the Commonwealth of Pennsylvania
11 hereby enacts as follows:
12 DIVISION I
13 AMENDMENT OF TITLE 15
14 Section 101. Short title.
15 This act shall be known and may be cited as the GAA
16 Amendments Act.
17 Section 102. Repeal and amendment of Title 15.
18 Subchapter B of Chapter 5, sections 1721, 1732(c) and 1770,
19 Chapter 27, sections 5303, 5305, 5702.1, 5721, 5974.1 and 5974.2
20 and Chapters 73 and 75 of Title 15 of the Pennsylvania
21 Consolidated Statutes are repealed. As much of Title 15, amended
1 April 27, 1990 (P.L.129, No.36), as is hereinafter set forth is
2 amended or added, and as much of Subpart II C as is hereinafter
3 set forth is reenacted, to read:
4 § 102. Definitions.
5 Subject to additional or inconsistent definitions contained
6 in subsequent provisions of this title that are applicable to
7 specific provisions of this title, the following words and
8 phrases when used in this title shall have, unless the context
9 clearly indicates otherwise, the meanings given to them in this
10 section:
11 * * *
12 "Association." A corporation, a partnership or two or more
13 persons associated in a common enterprise or undertaking. The
14 term does not include a testamentary trust or an inter vivos
15 trust as defined in 20 Pa.C.S. § 711(3) (relating to mandatory
16 exercise of jurisdiction through orphans' court division in
17 general).
18 * * *
19 "Corporation for profit." A corporation incorporated for a
20 purpose or purposes involving pecuniary profit, incidental or
21 otherwise, to its shareholders or members.
22 "Corporation not-for-profit." A corporation not incorporated
23 for a purpose or purposes involving pecuniary profit, incidental
24 or otherwise.
25 * * *
26 "Credit union." A credit union as defined in [section 1103]
27 17 Pa.C.S. § 102 (relating to application of title).
28 * * *
29 "Insurance corporation." An insurance corporation as defined
30 in section [1103] 3102 (relating to definitions).
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1 * * *
2 § 105. Fees.
3 (a) General rule.--The Department of State shall be entitled
4 to receive for services performed, as required by this title and
5 other applicable provisions of law, such fees as are specified
6 in or pursuant to Subchapter C (relating to Department of State
7 and UCC fees).
8 (b) Other services.--Any other department, board, commission
9 or officer of this Commonwealth shall be entitled to receive for
10 services performed, as required by this title, such fees as are
11 or may be lawfully charged for those or similar services.
12 § 131. Application of subchapter.
13 As used in this subchapter, the term "this title" includes
14 [Title] Titles 17 (relating to credit unions) and 54 (relating
15 to names) and any other provision of law that makes reference to
16 the powers and procedures of this subchapter.
17 § 133. Powers of Department of State.
18 (a) General rule.--The Department of State shall have the
19 power and authority reasonably necessary to enable it to
20 administer this subchapter efficiently and to perform the
21 functions specified in section 132 (relating to functions of
22 Department of State)[.], in 13 Pa.C.S. (relating to Uniform
23 Commercial Code) and in 17 Pa.C.S. (relating to credit unions).
24 The following shall not be agency regulations for the purposes
25 of section 612 of the act of April 9, 1929 (P.L.177, No.175),
26 known as The Administrative Code of 1929, the act of October 15,
27 1980 (P.L.950, No.164), known as the Commonwealth Attorneys Act,
28 the act of June 25, 1982 (P.L.633, No.181), known as the
29 Regulatory Review Act, or any similar provision of law, but
30 shall be subject to the opportunity of public comment
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1 requirement under section 201 of the act of July 31, 1968
2 (P.L.769, No.240), referred to as the Commonwealth Documents
3 Law:
4 (1) Sample filing forms promulgated by the department
5 under subsection (d).
6 (2) Instructions accompanying sample filing forms and
7 other explanatory material published in the Pennsylvania Code
8 that is intended to substantially track applicable statutory
9 provisions relating to the particular filing or to any of the
10 functions of the department covered by this subsection, if a
11 regulation of the department expressly states that such
12 instructions or explanatory materials shall not have the
13 force of law.
14 * * *
15 § 134. Docketing statement.
16 (a) General rule.--The Department of State may prescribe by
17 regulation one or more official docketing statement forms
18 designed to elicit from a person effecting a filing under this
19 title information that the department has found to be necessary
20 or desirable in connection with the processing of a filing. A
21 docketing statement submitted with the articles of incorporation
22 or division of a proposed domestic corporation for profit or
23 not-for-profit, the articles of domestication or application for
24 a certificate of authority of a foreign corporation for profit
25 or not-for-profit or the certificate of election of an electing
26 partnership shall set forth, inter alia, the kind or kinds of
27 business in which the association actually intends to engage in
28 this Commonwealth within one year of the [execution] submission
29 of the docketing statement. A docketing statement submitted with
30 articles of incorporation, consolidation or division of a
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1 domestic corporation not-for-profit or an application for a
2 certificate of authority of a foreign corporation not-for-profit
3 shall set forth with respect to the new corporation or
4 corporations resulting therefrom, inter alia, the statute by or
5 under which it was incorporated, the date of incorporation, the
6 names and residence addresses of its chief executive officer,
7 secretary and treasurer, regardless of the names or titles by
8 which they may be designated, the address of its principal place
9 of business and the amount, if any, of its authorized and issued
10 capital stock. A form of docketing statement prescribed under
11 this subsection:
12 (1) Shall be published in the Pennsylvania Code.
13 (2) Shall not be integrated into a single document
14 covering the requirements of the filing and its related
15 docketing statement.
16 (3) May be required by the department in connection with
17 a filing only if notice of the requirement appears on the
18 official format for the filing prescribed under section
19 133(d) (relating to physical characteristics and copies of
20 documents).
21 (4) Shall not be required to be submitted on department-
22 furnished forms.
23 (5) Shall not constitute a document filed in, with or by
24 the department for the purposes of this title or any other
25 provision of law except 18 Pa.C.S. § 4904 (relating to
26 unsworn falsification to authorities).
27 * * *
28 § 135. Requirements to be met by filed documents.
29 (a) General rule.--A document shall be accepted for filing
30 by the Department of State if it satisfies the following
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1 requirements:
2 * * *
3 (7) It is executed. The department shall not examine a
4 document to determine whether the document has been executed
5 by an authorized person or by sufficient authorized persons
6 or otherwise is duly executed. A document shall be deemed
7 executed if it contains a facsimile signature so long as the
8 operative portions of the document meet any applicable
9 requirements prescribed under section 133(d) (relating to
10 physical characteristics and copies of documents).
11 * * *
12 (c) Addresses.--
13 (1) Whenever any provision of this title [or of Title 54
14 (relating to names)] requires that any person set forth an
15 address in any document, such provision shall be construed to
16 require the submission of an actual street address or rural
17 route box number, and the department shall refuse to receive
18 or file any document that sets forth only a post office box
19 address.
20 (2) Whenever any provision of this title requires the
21 statement of a registered office address in any document
22 filed in the department, such provision shall be construed to
23 require the statement also of the county in which the
24 registered office address is located.
25 (d) Method of filing.--The department may prescribe by
26 regulation procedures for filing documents by electronic mail,
27 facsimile transmission, telex or other similar means of
28 communication.
29 § 136. Processing of documents by Department of State.
30 (a) Filing of documents.--If a document conforms to section
19900S1761B2459 - 6 -
1 135 (relating to requirements to be met by filed documents) the
2 Department of State shall forthwith [or on such date as is
3 requested by the person delivering the document, whichever is
4 later,] file the document, certify that the document has been
5 filed by endorsing upon the document the fact and date of
6 filing, make and retain a copy thereof and return the document
7 or a copy thereof so endorsed to or upon the order of the person
8 who delivered the document to the department.
9 (b) Immediate certified copy.--
10 (1) If a duplicate copy, which may be either a signed or
11 conformed copy, of any articles or other document authorized
12 or required by this title to be filed in the department is
13 delivered to the department with the original signed
14 document, the department shall compare the duplicate copy
15 with the original signed document and, if it finds that they
16 are identical, shall certify the duplicate copy by making
17 upon it the same endorsement that is required to appear upon
18 the original, together with a further endorsement that the
19 duplicate copy is a true copy of the original signed
20 document, and return the duplicate copy to the person who
21 delivered it to the department.
22 (2) If the duplicate copy is delivered by hand to the
23 office of the department at the seat of government at least
24 four hours before the close of business on any day not a
25 holiday and relates to a matter other than a label or other
26 mark requiring examination under Title 54 (relating to
27 names), and in the case of a document that creates a new
28 association or effects or reflects a change in name is
29 accompanied by evidence that the proposed name has been
30 reserved by or on behalf of the applicant, the department
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1 before the close of business on that day shall either:
2 (i) Certify the duplicate copy as required by this
3 subsection and make such certified copy available at the
4 office of the department to or upon the order of the
5 person who delivered it to the department.
6 (ii) Make available at the office of the department
7 to or upon the order of the person who delivered it to
8 the department a brief statement in writing of the
9 reasons of the department for refusing to certify such
10 duplicate copy.
11 See section 153(a)(10) (relating to certification fees).
12 [(2)] (3) In lieu of comparing the duplicate copy with
13 the original signed document as provided in [paragraph (1)]
14 paragraphs (1) and (2), the department may make a copy of the
15 original signed document at the cost of the person who
16 delivered it to the department.
17 * * *
18 § 139. Tax clearance of certain fundamental transactions.
19 A domestic association shall not file articles or a
20 certificate of merger or consolidation effecting a merger or
21 consolidation into a nonqualified foreign association or
22 articles or a certificate of dissolution or a statement of
23 revival, a qualified foreign association shall not file an
24 application for termination of authority or similar document in
25 the Department of State and a corporation shall not file
26 articles of division dividing solely into nonqualified foreign
27 corporations unless the articles, certificate, application or
28 other document are accompanied by:
29 (1) clearance certificates from the Department of
30 Revenue and the Office of Employment Security of the
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1 Department of Labor and Industry, evidencing the payment by
2 the association of all taxes and charges due the Commonwealth
3 required by law[.];
4 (2) a statement of assumption of tax liability:
5 (i) executed by the surviving, resulting or
6 withdrawing association or accompanying and incorporated
7 by reference into the plan of merger, consolidation or
8 division, stating that the surviving, resulting,
9 withdrawing or new association agrees to be liable for
10 payment of all taxes and charges due to the Commonwealth
11 of any and all nonsurviving domestic or qualified foreign
12 association or of the withdrawing association; or
13 (ii) executed by one or more of the directors,
14 shareholders or partners, or their attorneys-in-fact, of
15 a dissolving association, stating that the signatories
16 agree to be jointly and severally liable for payment of
17 all taxes and charges due to the Commonwealth by the
18 dissolving association up to the full amount of the net
19 assets of the association available for distribution on
20 dissolution;
21 if in either case the statement of assumption of tax
22 liability shall have been approved by the Department of
23 Revenue and by the Office of Employment Security of the
24 Department of Labor and Industry as adequately securing the
25 public revenues; or
26 (3) evidence of such other arrangement, agreed to by the
27 association and approved by the Department of Revenue and by
28 the Office of Employment Security of the Department of Labor
29 and Industry, as will adequately secure the public revenues.
30 § 140. Custody and management of orphan corporate and business
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1 records.
2 (a) General rule.--Any orphan corporate and business record
3 under the custody or control of a county, including the City and
4 County of Philadelphia, may become a Commonwealth record in the
5 manner provided in this section. The Department of State, with
6 the concurrence of the county records committee existing under
7 the act of August 14, 1963 (P.L.839, No.407), may provide for
8 the transfer on a progressive and phased basis to the custody
9 and management of the department of any or all orphan corporate
10 and business records. To the extent feasible, such records shall
11 be integrated with records of the department relating to the
12 same type of matters or transactions.
13 (b) Procedure.--The transfer contemplated by subsection (a)
14 shall be effected on a basis consistent with the availability of
15 appropriations. It is the intention of this section to encourage
16 the department to schedule work under this section on a seasonal
17 or otherwise intermittent basis in order to facilitate the
18 smoothing of the workload of the department. The department may
19 classify orphan corporate and business records for purposes of
20 priority of transfer by county of origin, type of matter or
21 transaction, vintage of matter or transaction, or on any other
22 basis or combination of bases which the department may deem to
23 be appropriate. The department shall publish and update in the
24 Pennsylvania Code a schedule, by county and type of matter or
25 transaction, setting forth where, as between a county and the
26 department, custody of all orphan corporate and business records
27 then resides.
28 (c) Fictitious name records.--The following statutes
29 provided for duplicate filing of fictitious name registrations
30 in both the department and in the office of the clerk of the
19900S1761B2459 - 10 -
1 court of common pleas or an equivalent row office in a home rule
2 charter county:
3 (1) Act of June 28, 1917 (P.L.645, No.227), relating to
4 individual fictitious names.
5 (2) Act of May 24, 1945 (P.L.967, No.380), referred to
6 as the Fictitious Names Act.
7 (3) Act of July 11, 1957 (P.L.783, No.374), known as the
8 Fictitious Corporate Name Act.
9 The county records committee may provide for the destruction of
10 such duplicate records without transfer to the custody of the
11 department.
12 (d) Definition.--As used in this section, the term "orphan
13 corporate and business records" means corporate and limited
14 partnership filings and recordings which were formerly effected
15 in the office of the clerk of the court of common pleas or the
16 office for the recording of deeds or an equivalent row office in
17 a home rule charter county and which are no longer effected in
18 such offices by reason of the enactment of:
19 (1) The act of , 1990 (P.L. , No. ),
20 known as the GAA Amendments Act, with respect to insurance
21 corporations, including corporations incorporated under or
22 subject to the act of May 17, 1921 (P.L.682, No.284), known
23 as The Insurance Company Law of 1921, or incorporated under
24 the acts of: April 28, 1903 (P.L.329, No.259); April 20, 1927
25 (P.L.317, No.190); June 24, 1939 (P.L.686, No.320); June 20,
26 1947 (P.L.687, No.298); June 28, 1951 (P.L.941, No.184); or
27 July 15, 1957 (P.L.929, No.401); or any similar act relating
28 to the incorporation or reincorporation of limited life
29 insurance companies.
30 (2) The act of December 21, 1988 (P.L.1444, No.177),
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1 known as the General Association Act of 1988, with respect to
2 certain:
3 (i) cooperative corporations incorporated under or
4 subject to the act of June 7, 1887 (P.L.365, No.252),
5 referred to as the Cooperative Association Act; and
6 (ii) public utility corporations, including
7 corporations incorporated under or subject to the act of
8 April 4, 1868 (P.L.62, No.29), referred to as the General
9 Railroad Law; the act of April 29, 1874 (P.L.73, No.32),
10 known as the Corporation Act of 1874; or the act of May
11 29, 1885 (P.L.29, No.32), referred to as the Natural Gas
12 Company Act of 1885.
13 (3) The act of December 19, 1975 (P.L.524, No.155), with
14 respect to certain limited partnerships, including limited
15 partnerships formed under the act of April 12, 1917 (P.L.55,
16 No.37), known as The Uniform Limited Partnership Act or the
17 act of March 21, 1836 (P.L.143, No.51) referred to as the
18 Limited Partnerships Act of 1836.
19 (4) The act of November 15, 1972 (P.L.1063, No.271),
20 with respect to nonprofit corporations incorporated under or
21 subject to the act of May 5, 1933 (P.L.289, No.105), known as
22 the Nonprofit Corporation Law of 1933, including corporations
23 of the first class incorporated under or subject to the
24 Corporation Act of 1874.
25 (5) Any similar act providing for the central filing in
26 the department of a document of a type previously filed or
27 recorded solely on a county or other decentralized basis.
28 SUBCHAPTER C
29 DEPARTMENT OF STATE AND UCC FEES
30 Sec.
19900S1761B2459 - 12 -
1 151. Short title and application of subchapter.
2 152. Definitions.
3 153. Fee schedule.
4 154. Enforcement and collection.
5 155. Disposition of funds.
6 § 151. Short title and application of subchapter.
7 (a) Short title.--This subchapter shall be known and may be
8 cited as the Corporation Bureau and UCC Fee Law.
9 (b) Application.--This subchapter contains an enumeration of
10 fees to be charged by the Corporation Bureau of the Department
11 of State for services performed under this title or any other
12 provision of law relating to corporations or associations and
13 under Titles 13 (relating to commercial code), 17 (relating to
14 credit unions) and 54 (relating to names), and by local filing
15 officers under Title 13.
16 § 152. Definitions.
17 The following words and phrases when used in this subchapter
18 shall have the meanings given to them in this section unless the
19 context clearly indicates otherwise:
20 "Ancillary transaction." Includes preclearance of document,
21 amendment of articles, charter, certificate or other organic
22 document, restatement of articles, charter, certificate or other
23 organic document, change in registered or principal office,
24 change in share structure, dissolution, cancellation or
25 termination, reorganization, withdrawal by foreign association,
26 withdrawal by a partner, or any similar transaction, or the
27 deposit in the Department of State for filing in, by or with the
28 Department of State or the Secretary of the Commonwealth of any
29 articles, statements, proceedings, agreements, or any like
30 papers affecting associations under the statutes of this
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1 Commonwealth.
2 "Bureau." The Corporation Bureau of the Department of State
3 or any successor agency within the department.
4 "Bureau Augmentation Account." The account established by
5 section 155 (relating to disposition of funds).
6 "Monthly base amount." One-twelfth of the total
7 appropriation to the bureau for the current fiscal year, except
8 that by regulation the bureau may redistribute the total
9 appropriation among the months of the fiscal year for the
10 purposes of this definition in order to adjust for seasonal
11 variations in workload, but any such redistribution shall not
12 affect the actual availability of appropriated funds which shall
13 be disbursed in the manner provided by law.
14 § 153. Fee schedule.
15 (a) General rule.--The fees of the Corporation Bureau of the
16 Department of State, including fees for the public acts and
17 transactions of the Secretary of the Commonwealth administered
18 through the bureau, and of filing officers under the Uniform
19 Commercial Code, shall be as follows:
20 (1) Domestic corporations:
21 Articles of incorporation, letters patent or
22 like instrument incorporating a corporation or
23 association..................................... $ 85
24 Articles or agreement or like instrument of
25 merger, consolidation or division............... 45
26 Additional fee for each association which is
27 a party to a merger or consolidation............ 20
28 Additional fee for each new corporation
29 resulting from a division....................... 85
30 Articles of conversion or like instrument... 45
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1 Each ancillary transaction.................. 45
2 (2) Foreign corporations:
3 Certificates of authority or like
4 qualification to do business.................... 175
5 Amended certificate of authority or like
6 change in qualification to do business.......... 175
7 Domestication............................... 85
8 Statement of merger or consolidation or like
9 instrument reporting occurrence of merger or
10 consolidation not effected by a filing in the
11 department...................................... 50
12 Additional fee for each qualified foreign
13 corporation which is named in a statement of
14 merger or consolidation or like instrument...... 20
15 Each ancillary transaction.................. 45
16 (3) Partnerships:
17 Certificate of limited partnership or like
18 instrument forming a limited partnership........ 85
19 Certificate of merger or consolidation...... 45
20 Additional fee for each association which is
21 a party to the merger or consolidation.......... 20
22 Application for registration of foreign
23 limited partnership............................. 175
24 Statement of election as an electing
25 partnership..................................... 85
26 Each ancillary transaction.................. 45
27 (4) Business trusts:
28 Deed of trust or other initial instrument
29 for a business trust............................ 85
30 Each ancillary transaction.................. 45
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1 (5) Fictitious names:
2 Registration................................ 45
3 Each ancillary transaction.................. 45
4 (6) Service of process:
5 Each defendant named or served.............. 10
6 (7) Trademarks, emblems, union labels,
7 description of bottles and like matters:
8 Registration................................ 45
9 Each ancillary transaction.................. 45
10 (8) Uniform Commercial Code:
11 Financing statement......................... 10
12 Each ancillary transaction.................. 10
13 Search - per debtor name.................... 10
14 Additional fee for each financing statement
15 found and for each statement of assignment
16 reported therein................................ 1
17 All filings under the Uniform Commercial
18 Code shall be made on standard forms approved by
19 the Department of State. No fee will be charged
20 for supplementary pages identical in size to the
21 standard form. A fee of $2 shall be charged for
22 each supplementary page of nonstandard size.
23 (9) Copy fees (including copies furnished by
24 filing officers under the Uniform Commercial
25 Code):
26 Each page of photocopy furnished............ 2
27 (10) Certification fees:
28 For certifying copies of any document or
29 paper on file, the fee specified in paragraph
30 (9), if the department furnished the copy, plus. 20
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1 For certifying a duplicate copy of a
2 document pursuant to section 136(b)(2) (relating
3 to immediate certified copy).................... 50
4 For issuing any other certificate of the
5 Secretary of the Commonwealth or the Department
6 of State (other than an engrossed certificate).. 25
7 (11) Report of record search (other than search
8 under paragraph (8)):
9 For preparing and providing a written or
10 photocopy, or both, report of a record search,
11 the fee specified in paragraph (9), if any,
12 plus............................................ 10
13 (12) Reservation and registration of names:
14 Reservation of association name............. 45
15 Registration of foreign or other corporation
16 name............................................ 45
17 (13) Change of registered office agency:
18 Each statement of change of registered
19 office by agent................................. 3
20 (14) Contingent domestication:
21 Statement of contingent domestication....... 85
22 Each year, or portion thereof, during which
23 a contingent domestication or temporary
24 domiciliary status is in effect................. 1,000
25 (b) Daily listings.--The bureau may provide listings or
26 copies of microfilm, or both, of complete daily filings of any
27 class of documents or papers for a fee of 25¢ per filing listed
28 or set forth therein.
29 (c) Other services.--The bureau may charge equivalent fees
30 for any like service not specified in subsections (a) and (b).
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1 § 154. Enforcement and collection.
2 (a) General rule.--The Department of State shall not be
3 required to receive or file any document or paper unless the
4 same shall be accompanied by the proper fee, but the department
5 may in its discretion permit the filing of any document or paper
6 without first requiring payment of the fee required by this
7 subchapter when satisfied that the fee will be paid promptly. If
8 any such fee is not paid in the manner and within the time
9 prescribed by regulation of the department, the filing to which
10 such fee relates shall become void.
11 (b) Extension of credit.--The department may make provision
12 by regulation for the extension of credit to persons dealing
13 with it. Any person who shall fail or refuse to satisfy any
14 indebtedness owing to the Commonwealth under this subchapter in
15 the manner and within the time prescribed by regulation adopted
16 pursuant to this subsection shall pay to the Commonwealth, in
17 addition to the principal amount of such indebtedness and
18 interest thereon, liquidated damages in the amount of $500.
19 (c) Disposition.--One quarter of the amount collected in any
20 month pursuant to this subchapter in excess of the monthly base
21 amount for that month shall be paid into the Bureau Augmentation
22 Account. Any balance shall be paid into the General Fund.
23 § 155. Disposition of funds.
24 (a) General rule.--The Corporation Bureau Augmentation
25 Account is hereby created and shall be a special restricted
26 receipts account within the General Fund. Moneys in such account
27 shall be used only for the support of the operations of the
28 Corporation Bureau.
29 (b) Augmentation.--Amounts in the Bureau Augmentation
30 Account shall be credited to the appropriation of the bureau for
19900S1761B2459 - 18 -
1 the fiscal year in which received. It is the intention of this
2 provision to enhance the service capability of the bureau by
3 permitting the bureau to adjust its level of services rapidly in
4 response to changes in the level of business and other economic
5 activity.
6 SUBCHAPTER [C] D
7 DEFINITIVE AND CONTINGENT DOMESTICATION OF
8 FOREIGN ASSOCIATIONS
9 § [151] 161. Domestication of certain foreign associations.
10 * * *
11 (e) Exclusion.--An association that can be domesticated
12 under section 4161 (relating to domestication) or 6161 (relating
13 to domestication) shall not be domesticated under this section.
14 (f) Definition.--As used in this section, the term
15 "association," except as restricted by subsection (e), includes
16 any foreign incorporated organization, private law corporation
17 (whether or not organized for business purposes), public law
18 corporation, partnership, proprietorship, joint venture,
19 foundation, trust, association or similar organization or
20 entity.
21 * * *
22 § [152] 162. Contingent domestication of certain foreign
23 associations.
24 (a) General rule.--Any association as defined in subsection
25 (i) may become a contingent domestic association by filing in
26 the Department of State a statement of contingent domestication.
27 The statement of contingent domestication and all papers and
28 information relating thereto shall remain confidential and shall
29 not be available for public inspection until and unless the
30 association files a [notice] statement of consummation of
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1 domestication as provided in subsection (c).
2 (b) Statement of contingent domestication.--The statement of
3 contingent domestication shall be executed by the association
4 and shall set forth in the English language:
5 (1) In the case of:
6 (i) a corporation subject to section 4161 (relating
7 to domestication), the statements required to be set
8 forth in articles of domestication (except the statement
9 required by section 4161(b)(6))[.];
10 (ii) a corporation subject to section 6161 (relating
11 to domestication), the statements required to be set
12 forth in articles of domestication (except the statement
13 required by section 6161(b)(6)); or
14 [(2) In the case of]
15 (iii) any other association, the statements required
16 by section [151(b)] 161(b) (relating to statement of
17 domestication) to be set forth in a statement of
18 domestication (except the statement required by section
19 [151(b)(5)] 161(b)(5)).
20 [(3)] (2) A statement that the effectiveness of the
21 statement is contingent upon the subsequent filing of a
22 [notice] statement of consummation of domestication.
23 [(4)] (3) A statement that the filing of the statement
24 of contingent domestication and the delegation of authority
25 to file a [notice] statement of consummation of domestication
26 has been authorized (unless its charter or other organic
27 documents require a greater vote):
28 (i) by a majority vote of the votes cast by all
29 shareholders entitled to vote thereon and, if any class
30 of shares is entitled to vote thereon as a class, a
19900S1761B2459 - 20 -
1 majority of the votes cast in each class vote, in the
2 case of a corporation subject to section 4161; [or]
3 (ii) by a majority vote of the votes cast by all
4 members, if any, entitled to vote thereon and, if any
5 class of members is entitled to vote thereon as a class,
6 a majority of the votes cast in each class vote, in the
7 case of a corporation subject to section 6161; or
8 [(ii)] (iii) by a majority in interest of the
9 shareholders, members or other proprietors of the
10 association in any other case.
11 (c) [Notice] Statement of consummation of domestication.--At
12 any time after the filing of a statement of contingent
13 domestication, the association may file in the department a
14 [notice] statement of consummation of domestication which shall
15 be executed by the association and shall set forth:
16 (1) The name of the association. If the name is in a
17 foreign language, it shall be set forth in Roman letters or
18 characters or Arabic or Roman numerals.
19 (2) A statement that either:
20 (i) an emergency condition exists in the
21 jurisdiction the law of which governs the internal
22 affairs of the association and that in the judgment of
23 the management of the association a temporary transfer of
24 the domicile of the association to this Commonwealth is
25 warranted by the circumstances; or
26 (ii) an event has occurred that, under the law of
27 the jurisdiction governing the internal affairs of the
28 association, permits the association to transfer its
29 domicile.
30 (d) Statement of termination of domestication.--At any time
19900S1761B2459 - 21 -
1 after the filing of a [notice] statement of consummation of
2 domestication, the association may file in the department a
3 statement of termination of domestication which shall be
4 executed by the association and shall set forth:
5 (1) The name of the association in the form set forth in
6 the prior filings under this section.
7 (2) [A] If a statement of consummation of domestication
8 has theretofore been filed and is then in effect, a statement
9 that the association elects to terminate its domicile in this
10 Commonwealth.
11 (3) A statement that either:
12 (i) the statement of contingent domestication is
13 reinstated pending the filing in the department of a new
14 [notice] statement of consummation of domestication; or
15 (ii) the statement of contingent domestication is
16 withdrawn.
17 (e) [Method of filing] Execution of filings.--[Documents may
18 be filed in the department under this section by electronic
19 mail, telecopy, telex or other form of writing, but such filing
20 shall expire if a duly executed duplicate is not filed in the
21 usual format within 30 days after the initial filing.] All
22 documents filed under this section shall be signed on behalf of
23 the association by any authorized person.
24 (f) Effect of filing [notice] statement of consummation of
25 domestication.--Upon the filing of a [notice] statement of
26 consummation of domestication, and until the filing of a [notice
27 of revocation] statement of termination of domestication, the
28 association shall have the status under the law of this
29 Commonwealth of:
30 (1) a business corporation domesticated under section
19900S1761B2459 - 22 -
1 4161, in the case of a corporation subject to that section;
2 [or]
3 (2) a nonprofit corporation domesticated under section
4 6161, in the case of a corporation subject to that section;
5 or
6 [(2)] (3) an association domesticated under section
7 [151] 161, in any other case.
8 (g) Effect of filing a statement of termination of
9 domestication.--Upon the filing of a statement of termination of
10 domestication, the association shall under the law of this
11 Commonwealth revert to the status it held prior to the filing
12 of:
13 (1) the [notice] statement of consummation of
14 domestication, if the statement of termination of
15 domestication states that the statement of contingent
16 domestication is reinstated; or
17 (2) the statement of contingent domestication, if the
18 statement of termination of domestication states that the
19 statement of contingent domestication is withdrawn.
20 (h) [Filing fee and annual] Annual renewal.--[In addition to
21 the filing fees otherwise provided by law, an additional fee of
22 $1,000 per year or portion thereof shall be payable annually by
23 any association that has in effect any contingent or temporary
24 domiciliary status under this section.] A renewal application
25 may be filed between October 1 and December 31 in each year and
26 shall extend the applicability of this section for the following
27 calendar year. Otherwise the association shall not be entitled
28 to any of the benefits of this section. See section 153(a)(14)
29 (relating to contingent domestication).
30 * * *
19900S1761B2459 - 23 -
1 SUBCHAPTER B
2 FIDUCIARY DUTY AND INDEMNIFICATION
3 Sec.
4 511. Application and effect of subchapter.
5 512. Standard of care and justifiable reliance.
6 513. Personal liability of directors.
7 514. Notation of dissent.
8 515. Exercise of powers generally.
9 516. Alternative standard.
10 517. Limitation on standing.
11 518. Nonexclusivity and supplementary coverage.
12 § 511. Application and effect of subchapter.
13 (a) General rule.--This subchapter shall apply to and the
14 terms "corporation" or "domestic corporation" in this subchapter
15 shall mean a domestic corporation except:
16 (1) A business corporation as defined in section 1103
17 (relating to definitions).
18 (2) A nonprofit corporation as defined in section 5103
19 (relating to definitions).
20 (b) Alternative provisions.--Section 516 (relating to
21 alternative standard) shall not be applicable to any corporation
22 to which section 515 (relating to exercise of powers generally)
23 is applicable. Section 515 shall be applicable to any
24 corporation except a corporation:
25 (1) the bylaws of which by amendment adopted by the
26 board of directors on or before July 26, 1990, and not
27 subsequently rescinded by an articles amendment, explicitly
28 provide that section 515 or corresponding provisions of prior
29 law shall not be applicable to the corporation; or
30 (2) the articles of which explicitly provide that
19900S1761B2459 - 24 -
1 section 515 or corresponding provisions of prior law shall
2 not be applicable to the corporation.
3 § 512. Standard of care and justifiable reliance.
4 (a) Directors.--A director of a domestic corporation shall
5 stand in a fiduciary relation to the corporation and shall
6 perform his duties as a director, including his duties as a
7 member of any committee of the board upon which he may serve, in
8 good faith, in a manner he reasonably believes to be in the best
9 interests of the corporation and with such care, including
10 reasonable inquiry, skill and diligence, as a person of ordinary
11 prudence would use under similar circumstances. In performing
12 his duties, a director shall be entitled to rely in good faith
13 on information, opinions, reports or statements, including
14 financial statements and other financial data, in each case
15 prepared or presented by any of the following:
16 (1) One or more officers or employees of the corporation
17 whom the director reasonably believes to be reliable and
18 competent in the matters presented.
19 (2) Counsel, public accountants or other persons as to
20 matters which the director reasonably believes to be within
21 the professional or expert competence of such person.
22 (3) A committee of the board upon which he does not
23 serve, duly designated in accordance with law, as to matters
24 within its designated authority, which committee the director
25 reasonably believes to merit confidence.
26 (b) Effect of actual knowledge.--A director shall not be
27 considered to be acting in good faith if he has knowledge
28 concerning the matter in question that would cause his reliance
29 to be unwarranted.
30 (c) Officers.--Except as otherwise provided in the articles,
19900S1761B2459 - 25 -
1 an officer shall perform his duties as an officer in good faith,
2 in a manner he reasonably believes to be in the best interests
3 of the corporation and with such care, including reasonable
4 inquiry, skill and diligence, as a person of ordinary prudence
5 would use under similar circumstances. A person who so performs
6 his duties shall not be liable by reason of having been an
7 officer of the corporation.
8 § 513. Personal liability of directors.
9 (a) General rule.--If a bylaw adopted by the shareholders
10 entitled to vote or members entitled to vote of a domestic
11 corporation so provides, a director shall not be personally
12 liable, as such, for monetary damages for any action taken
13 unless:
14 (1) the director has breached or failed to perform the
15 duties of his office under this subchapter; and
16 (2) the breach or failure to perform constitutes self-
17 dealing, willful misconduct or recklessness.
18 (b) Exceptions.--Subsection (a) shall not apply to:
19 (1) the responsibility or liability of a director
20 pursuant to any criminal statute; or
21 (2) the liability of a director for the payment of taxes
22 pursuant to Federal, State or local law.
23 (c) Cross reference.--See 42 Pa.C.S. § 8332.5 (relating to
24 corporate representatives).
25 § 514. Notation of dissent.
26 A director of a domestic corporation who is present at a
27 meeting of its board of directors, or of a committee of the
28 board, at which action on any corporate matter is taken on which
29 the director is generally competent to act, shall be presumed to
30 have assented to the action taken unless his dissent is entered
19900S1761B2459 - 26 -
1 in the minutes of the meeting or unless he files his written
2 dissent to the action with the secretary of the meeting before
3 the adjournment thereof or transmits the dissent, in writing, to
4 the secretary of the corporation immediately after the
5 adjournment of the meeting. The right to dissent shall not apply
6 to a director who voted in favor of the action. Nothing in this
7 subchapter shall bar a director from asserting that minutes of
8 the meeting incorrectly omitted his dissent if, promptly upon
9 receipt of a copy of such minutes, he notifies the secretary, in
10 writing, of the asserted omission or inaccuracy.
11 § 515. Exercise of powers generally.
12 (a) General rule.--In discharging the duties of their
13 respective positions, the board of directors, committees of the
14 board and individual directors of a domestic corporation may, in
15 considering the best interests of the corporation, consider to
16 the extent they deem appropriate:
17 (1) The effects of any action upon any or all groups
18 affected by such action, including shareholders, members,
19 employees, suppliers, customers and creditors of the
20 corporation, and upon communities in which offices or other
21 establishments of the corporation are located.
22 (2) The short-term and long-term interests of the
23 corporation, including benefits that may accrue to the
24 corporation from its long-term plans and the possibility that
25 these interests may be best served by the continued
26 independence of the corporation.
27 (3) The resources, intent and conduct (past, stated and
28 potential) of any person seeking to acquire control of the
29 corporation.
30 (4) All other pertinent factors.
19900S1761B2459 - 27 -
1 (b) Consideration of interests and factors.--The board of
2 directors, committees of the board and individual directors
3 shall not be required, in considering the best interests of the
4 corporation or the effects of any action, to regard any
5 corporate interest or the interests of any particular group
6 affected by such action as a dominant or controlling interest or
7 factor. The consideration of interests and factors in the manner
8 described in this subsection and in subsection (a) shall not
9 constitute a violation of section 512 (relating to standard of
10 care and justifiable reliance).
11 (c) Specific applications.--In exercising the powers vested
12 in the corporation, and in no way limiting the discretion of the
13 board of directors, committees of the board and individual
14 directors pursuant to subsections (a) and (b), the fiduciary
15 duty of directors shall not be deemed to require them to act as
16 the board of directors, a committee of the board or an
17 individual director solely because of the effect such action
18 might have on an acquisition or potential or proposed
19 acquisition of control of the corporation or the consideration
20 that might be offered or paid to shareholders or members in such
21 an acquisition.
22 (d) Presumption.--Absent breach of fiduciary duty, lack of
23 good faith or self-dealing, any act as the board of directors, a
24 committee of the board or an individual director shall be
25 presumed to be in the best interests of the corporation. In
26 assessing whether the standard set forth in section 512 has been
27 satisfied, there shall not be any greater obligation to justify,
28 or higher burden of proof with respect to, any act as the board
29 of directors, any committee of the board or any individual
30 director relating to or affecting an acquisition or potential or
19900S1761B2459 - 28 -
1 proposed acquisition of control of the corporation than is
2 applied to any other act as a board of directors, any committee
3 of the board or any individual director. Notwithstanding the
4 preceding provisions of this subsection, any act as the board of
5 directors, a committee of the board or an individual director
6 relating to or affecting an acquisition or potential or proposed
7 acquisition of control to which a majority of the disinterested
8 directors shall have assented shall be presumed to satisfy the
9 standard set forth in section 512, unless it is proven by clear
10 and convincing evidence that the disinterested directors did not
11 assent to such act in good faith after reasonable investigation.
12 (e) Definition.--The term "disinterested director" as used
13 in subsection (d) and for no other purpose means:
14 (1) A director of the corporation other than:
15 (i) A director who has a direct or indirect
16 financial or other interest in the person acquiring or
17 seeking to acquire control of the corporation or who is
18 an affiliate or associate, as defined in section 2552
19 (relating to definitions), of, or was nominated or
20 designated as a director by, a person acquiring or
21 seeking to acquire control of the corporation.
22 (ii) Depending on the specific facts surrounding the
23 director and the act under consideration, an officer or
24 employee or former officer or employee of the
25 corporation.
26 (2) A person shall not be deemed to be other than a
27 disinterested director solely by reason of any or all of the
28 following:
29 (i) The ownership by the director of shares of or a
30 membership in the corporation.
19900S1761B2459 - 29 -
1 (ii) The receipt as a holder of shares of or as a
2 member of any class or series of any distribution made to
3 all owners of shares of or members of that class or
4 series.
5 (iii) The receipt by the director of director's fees
6 or other consideration as a director.
7 (iv) Any interest the director may have in retaining
8 the status or position of director.
9 (v) The former business or employment relationship
10 of the director with the corporation.
11 (vi) Receiving or having the right to receive
12 retirement or deferred compensation from the corporation
13 due to service as a director, officer or employee.
14 (f) Cross reference.--See section 511(b) (relating to
15 alternative provisions).
16 § 516. Alternative standard.
17 (a) General rule.--In discharging the duties of their
18 respective positions, the board of directors, committees of the
19 board and individual directors of a domestic corporation may, in
20 considering the best interests of the corporation, consider the
21 effects of any action upon employees, upon suppliers and
22 customers of the corporation and upon communities in which
23 offices or other establishments of the corporation are located,
24 and all other pertinent factors. The consideration of those
25 factors shall not constitute a violation of section 512
26 (relating to standard of care and justifiable reliance).
27 (b) Presumption.--Absent breach of fiduciary duty, lack of
28 good faith or self-dealing, actions taken as a director shall be
29 presumed to be in the best interests of the corporation.
30 (c) Cross reference.--See section 511(b) (relating to
19900S1761B2459 - 30 -
1 alternative provisions).
2 § 517. Limitation on standing.
3 The duty of the board of directors, committees of the board
4 and individual directors under section 512 (relating to standard
5 of care and justifiable reliance) is solely to the domestic
6 corporation and may be enforced directly by the corporation or
7 may be enforced by a shareholder or member, as such, by an
8 action in the right of the corporation, and may not be enforced
9 directly by a shareholder, member or by any other person or
10 group. Notwithstanding the preceding sentence, sections 515(a)
11 and (b) (relating to exercise of powers generally) and 516(a)
12 (relating to alternative standard) do not impose upon the board
13 of directors, committees of the board and individual directors,
14 any legal or equitable duties, obligations or liabilities or
15 create any right or cause of action against, or basis for
16 standing to sue, the board of directors, committees of the board
17 and individual directors.
18 § 518. Nonexclusivity and supplementary coverage.
19 (a) General rule.--The indemnification and advancement of
20 expenses provided by or pursuant to section 522 (relating to
21 indemnification of authorized representatives) or any other
22 provisions of law providing for indemnification or advancement
23 of expenses applicable to any domestic corporation shall not be
24 deemed exclusive of any other rights to which a person seeking
25 indemnification or advancement of expenses may be entitled under
26 any bylaw, agreement, vote of shareholders, members or directors
27 or otherwise, both as to action in his official capacity and as
28 to action in another capacity while holding that office. Any
29 domestic corporation may create a fund of any nature, which may,
30 but need not be, under the control of a trustee, or otherwise
19900S1761B2459 - 31 -
1 secure or insure in any manner its indemnification obligations,
2 whether arising under or pursuant to this section or otherwise.
3 (b) When indemnification is not to be made.--Indemnification
4 pursuant to subsection (a) shall not be made in any case where
5 the act giving rise to the claim for indemnification is
6 determined by a court to have constituted willful misconduct or
7 recklessness.
8 (c) Grounds.--Indemnification pursuant to subsection (a)
9 under any bylaw, agreement, vote of shareholders, members or
10 directors or otherwise may be granted for any action taken and
11 may be made whether or not the corporation would have the power
12 to indemnify the person under any other provision of law except
13 as provided in this section and whether or not the indemnified
14 liability arises or arose from any threatened, pending or
15 completed action by or in the right of the corporation. Such
16 indemnification is declared to be consistent with the public
17 policy of this Commonwealth.
18 (d) Payment of expenses.--Expenses incurred by an officer,
19 director, employee or agent in defending any action or
20 proceeding against which indemnification may be made pursuant to
21 this section may be paid by the corporation in advance of the
22 final disposition of such action or proceeding upon receipt of
23 an undertaking by or on behalf of such person to repay such
24 amount if it shall ultimately be determined that he is not
25 entitled to be indemnified by the corporation.
26 (e) Rights to indemnification.--The indemnification and
27 advancement of expenses provided by, or granted pursuant to,
28 this section shall, unless otherwise provided when authorized or
29 ratified, continue as to a person who has ceased to be a
30 director, officer, employee or agent and shall inure to the
19900S1761B2459 - 32 -
1 benefit of the heirs, executors and administrators of such
2 person.
3 § 521. Pensions and allowances.
4 A banking institution[, a credit union, insurance
5 corporation] or a savings association may grant allowances or
6 pensions to officers, directors and employees for faithful and
7 long-continued services and, after the death of the officer,
8 director or employee either while in the service of the
9 corporation or after retirement, pensions or allowances may be
10 granted or continued to their dependents. The allowances to
11 dependents shall be reasonable in amount and paid only for a
12 limited time and, unless part of an employee benefit plan or
13 employment contract in effect at the time of retirement or death
14 of the officer, director or employee, shall not exceed in total
15 the amount of the compensation paid to the officer, director or
16 employee during the 12 months preceding retirement or death.
17 § 522. Indemnification of authorized representatives.
18 A banking institution[, a credit union, an insurance
19 corporation] or a savings association shall be governed by the
20 provisions of Subchapter [C] D of Chapter 17 (relating to
21 indemnification).
22 § 523. Actions by shareholders or members to enforce a
23 secondary right.
24 (a) General rule.--In any action brought to enforce a
25 secondary right on the part of one or more shareholders or
26 members against any officer or director or former officer or
27 director of a banking institution[, a credit union, an insurance
28 corporation] or a savings association, because the corporation
29 refuses to enforce rights which may properly be asserted by it,
30 the plaintiff or plaintiffs must aver and it must be made to
19900S1761B2459 - 33 -
1 appear that the plaintiff or each plaintiff was a shareholder or
2 was a member of the corporation at the time of the transaction
3 of which he complains or that his stock or membership devolved
4 upon him by operation of law from a person who was a shareholder
5 or member at that time.
6 * * *
7 § 1102. Application of subpart.
8 * * *
9 (c) Exclusions.--This subpart shall not apply to any of the
10 following corporations, whether proposed or existing, except as
11 otherwise expressly provided in this subpart or as otherwise
12 provided by statute applicable to the corporation:
13 (1) A banking institution.
14 (2) A credit union.
15 (3) [A domestic or foreign insurance corporation.
16 (4)] A savings association.
17 * * *
18 § 1103. Definitions.
19 Subject to additional definitions contained in subsequent
20 provisions of this subpart that are applicable to specific
21 provisions of this subpart, the following words and phrases when
22 used in this subpart shall have the meanings given to them in
23 this section unless the context clearly indicates otherwise:
24 * * *
25 "Credit union." [or "domestic credit union." A domestic
26 corporation for profit that is a credit union as defined in the
27 act of September 20, 1961 (P.L.1548, No.658), known as the
28 Credit Union Act] A credit union as defined in 17 Pa.C.S. § 102
29 (relating to application of title).
30 * * *
19900S1761B2459 - 34 -
1 "Distribution." A direct or indirect transfer of money or
2 other property (except its own shares or options, rights or
3 warrants to acquire its own shares) or incurrence of
4 indebtedness by a corporation to or for the benefit of any of
5 its shareholders in respect of any of its shares whether by
6 dividend or by purchase, redemption or other acquisition of its
7 shares or otherwise. A guarantee issued by a corporation for the
8 benefit of any of its shareholders shall not constitute a
9 distribution until such time as a valid demand for payment under
10 the guarantee is made upon the corporation.
11 * * *
12 "Entitled to vote." Those persons entitled [at the time] to
13 vote on the matter under [a plan or the terms of a fundamental
14 transaction where dissenters rights are not available under
15 section 1571(b)(2)(ii) (relating to exceptions) or under the
16 articles or] either the bylaws of the corporation or any
17 applicable controlling provision of law. The term includes those
18 persons entitled at the time to vote on the matter under a plan
19 or the terms of a fundamental transaction where dissenters
20 rights are not available under section 1571(b)(2)(ii) (relating
21 to exceptions).
22 "Exchange Act." The Securities Exchange Act of 1934 (48
23 Stat. 881, 15 U.S.C. § 78a et seq.).
24 * * *
25 "Foreign insurance corporation." A corporation for profit
26 incorporated under any laws other than those of this
27 Commonwealth that is qualified to do business in this
28 Commonwealth under the act of [May 17, 1921 (P.L.682, No.284),
29 known as The Insurance Company Law of 1921.] May 17, 1921
30 (P.L.789, No.285), known as The Insurance Department Act of
19900S1761B2459 - 35 -
1 1921.
2 * * *
3 "Insurance corporation" or "domestic insurance corporation."
4 [A domestic corporation for profit that is incorporated under or
5 subject to The Insurance Company Law of 1921 or any statute
6 relating to the incorporation or reincorporation of limited life
7 insurance companies.] An insurance corporation as defined in
8 section 3102 (relating to definitions).
9 "Internal Revenue Code of 1986." The Internal Revenue Code
10 of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).
11 "Investment Company Act of 1940." The Investment Company Act
12 of 1940 (54 Stat. 789, 15 U.S.C. § 80a-1 et seq.).
13 * * *
14 "Mutual insurance company." A mutual insurance company as
15 defined in section 3102 (relating to definitions).
16 * * *
17 "Qualified foreign business corporation." A foreign business
18 corporation that is:
19 (1) authorized under Chapter 41 (relating to foreign
20 business corporations) to do business in this Commonwealth;
21 or
22 (2) a foreign insurance corporation.
23 "Reclassification." A change in the number, voting rights,
24 designations, preferences, limitations, special rights or par
25 value of shares, or a conversion or exchange of one class or
26 series of shares into or for another class or series of shares,
27 other securities or obligations of the same corporation, or the
28 cancellation of shares. The term does not include a stock
29 dividend or split effected by distribution of its own previously
30 authorized shares pro rata to the holders of shares of the same
19900S1761B2459 - 36 -
1 or any other class or series pursuant to action solely of the
2 board of directors.
3 * * *
4 "Relax." When used with respect to a provision of the
5 articles or bylaws, means to provide lesser rights for an
6 affected representative or shareholder.
7 * * *
8 "Securities Act of 1933." The Securities Act of 1933 (48
9 Stat. 74, 15 U.S.C. § 77a et seq.).
10 * * *
11 § 1104. Other general provisions.
12 The following provisions of this title are applicable to
13 corporations subject to this subpart:
14 Section 101 (relating to short title and application of
15 title).
16 Section 102 (relating to definitions).
17 Section 103 (relating to subordination of title to
18 regulatory laws).
19 Section 104 (relating to equitable remedies).
20 Section 105 (relating to fees).
21 Section 106 (relating to effect of filing papers required
22 to be filed).
23 Section 107 (relating to form of records).
24 Section 108 (relating to change in location or status of
25 registered office provided by agent).
26 Section 109 (relating to name of commercial registered
27 office provider in lieu of registered address).
28 Section 110 (relating to supplementary general principles
29 of law applicable).
30 Section 132 (relating to functions of Department of
19900S1761B2459 - 37 -
1 State).
2 Section 133 (relating to powers of Department of State).
3 Section 134 (relating to docketing statement).
4 Section 135 (relating to requirements to be met by filed
5 documents).
6 Section 136 (relating to processing of documents by
7 Department of State).
8 Section 137 (relating to court to pass upon rejection of
9 documents by Department of State).
10 Section 138 (relating to statement of correction).
11 Section 139 (relating to tax clearance of certain
12 fundamental transactions).
13 Section 140 (relating to custody and management of orphan
14 corporate and business records).
15 Section 152 (relating to definitions).
16 Section 153 (relating to fee schedule).
17 Section 154 (relating to enforcement and collection).
18 Section 155 (relating to disposition of funds).
19 Section [152] 162 (relating to contingent domestication
20 of certain foreign associations).
21 Section 501 (relating to reserved power of General
22 Assembly).
23 Section 503 (relating to actions to revoke corporate
24 franchises).
25 Section 504 (relating to validation of certain defective
26 corporations).
27 Section 505 (relating to validation of certain defective
28 corporate acts).
29 Section 506 (relating to scope and duration of certain
30 franchises).
19900S1761B2459 - 38 -
1 Section 507 (relating to validation of certain share
2 authorizations).
3 [Section 511 (relating to standard of care and
4 justifiable reliance).
5 Section 512 (relating to personal liability of
6 directors).
7 Section 513 (relating to nonexclusivity and supplementary
8 coverage).]
9 § 1106. Uniform application of subpart.
10 * * *
11 (b) Exceptions.--
12 (1) Unless expressly provided otherwise in any amendment
13 to this subpart, the amendment shall take effect only
14 prospectively.
15 (2) An existing corporation lawfully using a name or, as
16 part of its name, a word that could not be used as or
17 included in the name of a corporation subsequently
18 incorporated or qualified under this subpart may continue to
19 use the name or word as part of its name if the use or
20 inclusion of the word or name was lawful when first adopted
21 by the corporation in this Commonwealth.
22 (3) Subsection (a) shall not adversely affect the rights
23 specifically provided for or saved in this subpart. See:
24 [The provisions of section 1521(b)(3) (relating to
25 provisions specifically authorized).]
26 The provisions of section 1524(e) (relating to
27 transitional provision).
28 [The preemptive rights set forth in section 1530(b)
29 (relating to preexisting preemptive rights).]
30 The provisions of section 1554(c) (relating to
19900S1761B2459 - 39 -
1 transitional provision).
2 The cumulative voting rights set forth in section
3 1758(c)(2) (relating to cumulative voting).
4 [The class voting rights upon certain amendments of
5 articles set forth in section 1914(b)(3) (relating to
6 statutory voting rights).]
7 The special voting requirements specified in section
8 1952(h) (relating to special requirements).
9 The provisions of section 2301(d) (relating to
10 transitional provisions).
11 The provisions of section 2541(a)(2) and (3) and (c)
12 (relating to application and effect of subchapter).
13 The provisions of section 2543(b)(1) and (2)
14 (relating to exceptions generally).
15 The provisions of section 2551(b)(3)(i), (5) and (6)
16 (relating to exceptions).
17 The provisions of section 2553(b)(2) (relating to
18 exception).
19 (4) Except as otherwise expressly provided in the
20 articles, a domestic corporation for profit that, on
21 September 30, 1989, was not subject to the Business
22 Corporation Law of 1933 and that thereafter becomes subject
23 to this subpart by operation of law shall be deemed to have
24 in effect articles that provide that the following provisions
25 of this subpart shall not be applicable to the corporation:
26 (i) Section 1726(a)(1) (relating to removal by the
27 shareholders) insofar as it provides a statutory right on
28 the part of shareholders to remove directors from office
29 without assigning any cause.
30 (ii) Section 1755(b)(2) (relating to special
19900S1761B2459 - 40 -
1 meetings).
2 (iii) Section 1912(a)(2) (relating to proposal of
3 amendments).
4 § 1107. (Reserved).
5 § [1107] 1108. Limitation on incorporation.
6 A corporation that can be incorporated under this subpart
7 shall not be incorporated except under the provisions of this
8 subpart.
9 § [1108] 1109. Execution of documents.
10 (a) General rule.--Any document filed in the Department of
11 State under this title by a domestic or foreign business
12 corporation subject to this subpart may be executed on behalf of
13 the corporation by any one duly authorized officer thereof. The
14 corporate seal may be affixed and attested but the affixation or
15 attestation of the corporate seal shall not be necessary for the
16 due execution of any filing by a corporation under this title.
17 (b) Cross reference.--See section 135 (relating to
18 requirements to be met by filed documents).
19 § 1110. Annual report information.
20 The Department of State shall make available as public
21 information for inspection and copying the names of the
22 president, vice-president, secretary and treasurer of
23 corporations for profit as annually forwarded to the department
24 by the Department of Revenue pursuant to section 403(a)(3) of
25 the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform
26 Code of 1971.
27 § 1303. Corporate name.
28 * * *
29 (b) Duplicate use of names.--The corporate name shall not be
30 the same as or confusingly similar to:
19900S1761B2459 - 41 -
1 (1) The name of any other domestic corporation for
2 profit or not-for-profit which is either in existence or for
3 which articles of incorporation have been filed but have not
4 yet become effective, or of any foreign corporation for
5 profit or not-for-profit which is either authorized to do
6 business in this Commonwealth or for which an application for
7 a certificate of authority has been filed but has not yet
8 become effective, or of any domestic or foreign limited
9 partnership that has filed in the Department of State a
10 certificate or qualified under Chapter 85 (relating to
11 limited partnerships) or under corresponding provisions of
12 prior law, or the name of any association registered at any
13 time under 54 Pa.C.S. Ch. 5 (relating to corporate and other
14 association names), unless:
15 (i) where the name is the same or confusingly
16 similar, the other association:
17 (A) has stated that it is about to change its
18 name, or to cease to do business, or is being wound
19 up, or is a foreign association about to withdraw
20 from doing business in this Commonwealth, and the
21 statement and the written consent of the other
22 association to the adoption of the name is filed in
23 the Department of State;
24 (B) has filed with the Department of Revenue a
25 certificate of out of existence, or has failed for a
26 period of three successive years to file with [the
27 Department of State or] the Department of Revenue a
28 report or return required by law[,] and [in the case
29 of a failure to file with the Department of Revenue,]
30 the fact of such failure has been certified by the
19900S1761B2459 - 42 -
1 Department of Revenue to the Department of State;
2 (C) has abandoned its name under the laws of its
3 jurisdiction of incorporation, by amendment, merger,
4 consolidation, division, expiration, dissolution or
5 otherwise, without its name being adopted by a
6 successor in a merger, consolidation, division or
7 otherwise, and an official record of that fact,
8 certified as provided by 42 Pa.C.S. § 5328 (relating
9 to proof of official records), is presented by any
10 person to the department; or
11 (D) has had the registration of its name under
12 54 Pa.C.S. Ch. 5 terminated and, if the termination
13 was effected by operation of 54 Pa.C.S. § 504
14 (relating to effect of failure to make decennial
15 filings), the application for the use of the name is
16 accompanied by a verified statement stating that at
17 least 30 days' written notice of intention to
18 appropriate the name was given to the delinquent
19 association at its registered office and that, after
20 diligent search by the affiant, the affiant believes
21 the association to be out of existence; or
22 (ii) where the name is confusingly similar, the
23 consent of the other association to the adoption of the
24 name is filed in the Department of State.
25 The consent of the association shall be evidenced by a
26 [certificate] statement to that effect executed by the
27 association.
28 * * *
29 (c) Required approvals or conditions.--
30 (1) The corporate name shall not imply that the
19900S1761B2459 - 43 -
1 corporation is:
2 * * *
3 (iii) An insurance company [that could be
4 incorporated under the act of May 17, 1921 (P.L.682,
5 No.284), known as The Insurance Company Law of 1921] nor
6 contain any of the words "annuity," "assurance,"
7 "beneficial," "bond," "casualty," "endowment,"
8 "fidelity," "fraternal," "guaranty," "indemnity,"
9 "insurance," "insurer," "reassurance," "reinsurance,"
10 "surety" or "title" when used in such a way as to imply
11 that the corporation is engaged in the business of
12 writing insurance or reinsurance as principal or any
13 other words of like purport unless it is duly licensed as
14 an insurance company by its jurisdiction of incorporation
15 or the Insurance Department certifies that it has no
16 objection to the use by the corporation or proposed
17 corporation of the designation. The corporate name of a
18 domestic insurance corporation shall:
19 (A) contain the word "mutual" if, and only if,
20 it is a mutual insurance company; and
21 (B) clearly designate the object and purpose of
22 the corporation.
23 * * *
24 (v) A credit union. See 17 Pa.C.S. § 104 (relating
25 to prohibition on use of words "credit union," etc.).
26 * * *
27 § 1306. 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 English
30 language:
19900S1761B2459 - 44 -
1 * * *
2 (8) Any other provisions that the incorporators may
3 choose to insert if:
4 (i) any provision of this subpart authorizes or
5 requires provisions pertaining to the subject matter
6 thereof to be set forth in the articles or bylaws of a
7 business corporation or in an agreement or other
8 instrument; or
9 (ii) the provisions, whether or not specifically
10 authorized by this subpart, relate to the purpose or
11 purposes of the corporation, the management of its
12 business or affairs or the rights, powers or duties of
13 its securityholders, directors or officers.
14 [The articles may, but need not, set forth a par value for
15 any authorized shares or class of shares.]
16 (b) Other provisions authorized.--A provision of the
17 original articles or a provision of the articles approved by the
18 shareholders, in either case adopted under subsection
19 (a)(8)(ii), may relax or be inconsistent with and supersede any
20 provision of this article concerning the subjects specified in
21 subsection (a)(8)(ii), except where a provision of this article
22 expressly provides that the articles shall not relax or be
23 inconsistent with any provision on a specified subject.
24 Notwithstanding the foregoing, the articles may provide greater
25 rights for shareholders than are authorized by any provision of
26 this article that otherwise provides that the articles shall not
27 relax or be inconsistent with any provision on a specified
28 subject.
29 (c) Par value.--The articles may, but need not, set forth a
30 par value for any authorized shares or class or series of
19900S1761B2459 - 45 -
1 shares.
2 [(b)] (d) Written consent to naming directors.--The naming
3 of directors in articles of incorporation shall constitute an
4 affirmation that the directors have consented in writing to
5 serve as such.
6 § 1504. Adoption, amendment and contents of bylaws.
7 * * *
8 (b) Exception.--Except as otherwise provided in section
9 1310(a) (relating to organization meeting) or in the articles,
10 to the extent authorized by section 1306(b) (relating to other
11 provisions authorized), the board of directors shall not have
12 the authority to adopt or change a bylaw on any subject that is
13 committed expressly to the shareholders by any of the provisions
14 of this subpart. See:
15 Subsection (d) (relating to amendment of voting
16 provisions).
17 Section 1521 (relating to authorized shares).
18 Section 1713 (relating to personal liability of
19 directors).
20 Section 1721 (relating to board of directors).
21 Section 1725 (relating to selection of directors).
22 Section 1726 (relating to removal of directors).
23 Section 1729 (relating to voting rights of directors).
24 Section 1756 (relating to quorum).
25 Section 1757 (relating to action by shareholders).
26 Section 1765 (relating to judges of election).
27 Section 2105 (relating to termination of nonstock
28 corporation status).
29 Section 2122 (relating to classes of membership).
30 Section 2124 (relating to voting rights of members).
19900S1761B2459 - 46 -
1 Section 2302 (relating to definition of minimum vote).
2 Section 2321 (relating to shares).
3 Section 2322 (relating to share transfer restrictions).
4 Section 2325 (relating to sale option of estate of
5 shareholder).
6 Section 2332 (relating to management by shareholders).
7 Section 2334 (relating to appointment of provisional
8 director in certain cases).
9 Section 2337 (relating to option of shareholder to
10 dissolve corporation).
11 Section 2923 (relating to issuance and retention of
12 shares).
13 * * *
14 (d) Amendment of voting provisions.--[A provision in the
15 bylaws that requires a specific number or percentage of votes
16 for the taking of any action by the shareholders or a class of
17 shareholders may, unless otherwise provided in a bylaw adopted
18 by the shareholders, be amended or repealed in the same manner
19 and by the same vote as is required to amend or repeal any other
20 provision in the bylaws.] Unless otherwise provided in a bylaw
21 adopted by the shareholders, whenever the bylaws require for the
22 taking of any action by the shareholders or a class of
23 shareholders a specific number or percentage of votes, the
24 provision of the bylaws setting forth that requirement shall not
25 be amended or repealed by any lesser number or percentage of
26 votes of the shareholders or of the class of shareholders.
27 § 1505. Persons bound by bylaws.
28 Except as otherwise provided by [section 512 (relating to
29 personal liability of directors) or 1721(e) (relating to
30 personal liability of directors), or 42 Pa.C.S. § 8364] section
19900S1761B2459 - 47 -
1 1713 (relating to personal liability of directors) or any
2 similar provision of law, the bylaws of a business corporation
3 shall operate only as regulations among the shareholders of the
4 corporation and shall not affect contracts or other dealings
5 with other persons unless those persons have actual knowledge of
6 the bylaws.
7 § 1508. Corporate records; inspection.
8 * * *
9 (d) [Cross reference.--See section 4145 (relating to
10 applicability of certain safeguards to foreign domiciliary
11 corporations).] Certain provisions of articles ineffective.--
12 This section may not be relaxed by any provision of the
13 articles.
14 (e) Cross reference.--See section 1763(c) (relating to
15 certification by nominee).
16 § 1510. [Usury not a defense] Certain specifically authorized
17 debt terms.
18 (a) [General rule] Interest rates.--A business corporation
19 shall not plead or set up usury, or the taking of more than the
20 lawful rate of interest, or the taking of any finance, service
21 or default charge in excess of any maximum rate therefor
22 provided or prescribed by law, as a defense to any action or
23 proceeding brought against it to recover damages on, or to
24 enforce payment of, or to enforce any other remedy on, any
25 obligation executed or effected by the corporation.
26 (b) Yield maintenance premiums.--A prepayment premium
27 determined by reference to the approximate spread between the
28 yield at issuance, or at the date of amendment of any of the
29 terms, of an obligation of a corporation and the yield at or
30 about such date of an interest rate index of independent
19900S1761B2459 - 48 -
1 significance and contingent upon a change in the ownership of
2 the shares of or a default by or other change in the condition
3 or prospects of the issuer or any affiliate of the issuer shall
4 be deemed liquidated damages and shall not constitute a penalty.
5 [(b) Definition] (c) Definitions.--As used in this section,
6 [the term "obligation" includes] the following words shall have
7 the meanings given to them in this subsection:
8 "Affiliate." An affiliate or associate as defined in section
9 2552 (relating to definitions).
10 "Obligation." Includes an installment sale contract.
11 [(c)] (d) Cross reference.--See section 4146 (relating to
12 provisions applicable to all foreign corporations).
13 § 1521. Authorized shares.
14 * * *
15 (b) Provisions specifically authorized.--
16 (1) Without limiting the authority contained in
17 subsection (a), a corporation, when so authorized in its
18 articles, may issue classes or series of shares:
19 (i) Subject to the right or obligation of the
20 corporation to redeem any of the shares for the
21 consideration, if any, fixed by or in the manner provided
22 by the articles for the redemption thereof. Unless
23 otherwise provided in the articles, any shares subject to
24 redemption shall be redeemable only pro rata or by lot or
25 by such other equitable method as may be selected by the
26 corporation. An amendment of the articles to add or amend
27 a provision permitting the redemption of any shares by a
28 method that is not pro rata nor by lot nor otherwise
29 equitable may be effected only pursuant to section 1906
30 (relating to special treatment of holders of shares of
19900S1761B2459 - 49 -
1 same class or series).
2 (ii) Entitling the holders thereof to cumulative,
3 noncumulative or partially cumulative dividends.
4 (iii) Having preference over any other shares as to
5 dividends or assets or both.
6 (iv) Convertible into shares of any other class or
7 series, or into obligations of the corporation.
8 (2) Any of the terms of a class or series of shares may
9 be made dependent upon:
10 (i) Facts ascertainable outside of the articles if
11 the manner in which the facts will operate upon the terms
12 of the class or series is set forth in the articles.
13 (ii) Terms incorporated by reference to an existing
14 agreement between the corporation and one or more other
15 parties, or to another document of independent
16 significance, if the articles state that the full text of
17 the agreement or other document is on file at the
18 principal place of business of the corporation and state
19 the address thereof. A corporation that takes advantage
20 of this subparagraph shall furnish a copy of the full
21 text of the agreement or other document, on request and
22 without cost, to any shareholder and, unless it is a
23 closely held corporation, on request and at cost, to any
24 other person.
25 (3) The articles may [expressly] confer upon a
26 shareholder a specifically enforceable right to the
27 declaration and payment of dividends, the redemption of
28 shares or the making of any other form of distribution if the
29 distribution is at the time of enforcement then [permitted]
30 not prohibited by section [1551 (relating to distributions to
19900S1761B2459 - 50 -
1 shareholders)] 1551(b)(2) (relating to limitation). Such a
2 [provision adopted on or after January 1, 1989, shall not be
3 valid unless it shall make] right shall not arise by
4 implication, but only by either an express reference to this
5 section or another express reference to specific
6 enforceability of a distribution.
7 * * *
8 § 1524. Payment for shares.
9 (a) General rule.--Consideration for shares, unless
10 otherwise restricted in the bylaws:
11 (1) May consist of money, obligations (including an
12 obligation of a shareholder), services performed whether or
13 not contracted for, contracts for services to be performed,
14 shares or other securities or obligations of the issuing
15 business corporation, or any other tangible or intangible
16 property. If shares are issued for other than money, the
17 value of the consideration shall be determined by or in the
18 manner provided by the board of directors.
19 (2) Shall be paid to or as ordered by the [business]
20 corporation.
21 * * *
22 (c) Status of issued shares.--[All] Except as provided in
23 subsection (e), all issued shares of a business corporation
24 shall be deemed fully paid regardless of failure to pay in full
25 the agreed consideration therefor [and, except]. Except as
26 otherwise provided by a regulatory statute controlling under
27 section 103(c) (relating to structural provisions in regulatory
28 statutes controlling), all issued shares of a corporation shall
29 be nonassessable. This subsection shall not affect the personal
30 obligation of a subscriber for shares of a corporation to pay
19900S1761B2459 - 51 -
1 the agreed consideration for the shares.
2 * * *
3 (e) Transitional provision.--A corporation may enforce calls
4 on partly paid shares outstanding on [January 1,] September 30,
5 1989, in the same manner and to the same extent as if this
6 subpart had not been enacted.
7 § 1525. Stock rights and options.
8 * * *
9 (c) Standard of care unaffected.--The provisions of
10 subsections (a) and (b) and section 2513 shall not be construed
11 to effect a change in the fiduciary relationship between a
12 director and a business corporation or to change the standard of
13 care of a director provided for in [section 1721 (relating to
14 board of directors)] Subchapter B of Chapter 17 (relating to
15 fiduciary duty).
16 * * *
17 (e) Shares subject to preemptive rights.--Authorized but
18 unissued shares subject to preemptive rights may be issued and
19 sold [to holders of] pursuant to a plan providing for the
20 issuance of rights or options entitling the holders thereof to
21 purchase shares of the same class or series as the shares
22 subject to such preemptive rights upon the exercise of such
23 rights or options [only with the written consent or] if the plan
24 is approved by the affirmative vote of [shareholders entitled to
25 cast at least] a majority of the votes [that all] cast by the
26 shareholders entitled to exercise such preemptive rights [with
27 respect thereto are entitled to cast].
28 § 1528. Shares represented by certificates and uncertificated
29 shares.
30 * * *
19900S1761B2459 - 52 -
1 (d) Notice of variations in rights.--Every certificate
2 representing shares issued by a business corporation that is
3 authorized to issue shares of more than one class or series
4 shall set forth upon the face or back of the certificate (or
5 shall state on the face or back of the certificate that the
6 corporation will furnish to any shareholder upon request and
7 without charge) a full or summary statement of the designations,
8 voting rights, preferences, limitations and special rights of
9 the shares of each class or series authorized to be issued so
10 far as they have been fixed and determined and the authority of
11 the board of directors to fix and determine the designations,
12 voting rights, preferences, limitations and special rights of
13 the classes and series of shares of the corporation. See also
14 sections 1524(d) (relating to rights of subscribing
15 shareholder), 1529(f) (relating to notice to transferee) and
16 2321(c) (relating to notice of statutory close corporation
17 status).
18 * * *
19 (f) Uncertificated shares.--The [bylaws] articles may
20 provide that any or all classes and series of shares, or any
21 part thereof, shall be uncertificated shares except that such a
22 provision shall not apply to shares represented by a certificate
23 until the certificate is surrendered to the corporation. Within
24 a reasonable time after the issuance or transfer of
25 uncertificated shares, the corporation shall send to the
26 registered owner thereof a written notice containing the
27 information required to be set forth or stated on certificates
28 by subsections (c) and (d). Except as otherwise expressly
29 provided by law, the rights and obligations of the holders of
30 shares represented by certificates and the rights and
19900S1761B2459 - 53 -
1 obligations of the holders of uncertificated shares of the same
2 class and series shall be identical.
3 § 1530. Preemptive rights of shareholders.
4 (a) General rule.--Except as otherwise provided in the
5 articles [or in subsection (b)], a business corporation may
6 issue shares, option rights or securities having conversion or
7 option rights, or obligations without first offering them to
8 shareholders of any class or classes.
9 [(b) Preexisting preemptive rights.--Unless otherwise
10 provided in its articles, the shareholders of a nonregistered
11 corporation shall have a preemptive right to subscribe for
12 shares, option rights, or securities having option rights,
13 issued for cash by the corporation, if the corporation was not
14 incorporated hereunder or under the Business Corporation Law of
15 1933 and its shareholders were entitled to preemptive rights at
16 the date the corporation became subject to this subpart, but
17 this subsection shall apply neither to the holders of shares of
18 a class issued after the date such corporation became subject to
19 the Business Corporation Law of 1933 or this subpart nor to the
20 issue of securities having conversion rights.
21 (c) Release of shares subject to preemptive rights.--Except
22 as otherwise provided in the articles, shares (or any option
23 rights or securities having conversion or option rights with
24 respect to such shares) that have been offered to shareholders
25 having a preemptive right thereto, at a price and upon terms
26 duly fixed, and that have not been subscribed for by them within
27 the time duly fixed by the articles or the board of directors,
28 may be thereafter offered for subscription to any person or
29 persons at a price and upon terms not more favorable than those
30 at which they were offered to such shareholders.]
19900S1761B2459 - 54 -
1 (b) Cross reference.--See section 1525(e) (relating to
2 shares subject to preemptive rights).
3 § 1551. Distributions to shareholders.
4 (a) General rule.--Unless otherwise restricted in the
5 bylaws, the board of directors may authorize and a business
6 corporation may make distributions. A provision in the articles
7 setting forth a par value for any authorized shares or class or
8 series of shares shall not restrict the ability of a corporation
9 to make distributions.
10 (b) Limitation.--A distribution may not be made if, after
11 giving effect thereto:
12 (1) the corporation would be unable to pay its debts as
13 they become due in the usual course of its business; or
14 (2) the total assets of the corporation would be less
15 than the sum of its total liabilities plus (unless otherwise
16 provided in the articles) the amount that would be needed, if
17 the corporation were to be dissolved at the time as of which
18 the distribution is measured, to satisfy the preferential
19 rights upon dissolution of shareholders whose preferential
20 rights are superior to those receiving the distribution. [For
21 purposes of this paragraph, total assets and liabilities
22 shall be determined by the]
23 (c) Valuation.--The board of directors[, which] may base its
24 determination [on such factors as it considers relevant,
25 including without limitation:] that a distribution is not
26 prohibited under subsection (b)(2) on one or more of the
27 following:
28 [(i)] (1) the book values of the assets and liabilities
29 of the corporation, as reflected on its books and records;
30 [and
19900S1761B2459 - 55 -
1 (ii)] (2) a valuation that takes into consideration
2 unrealized appreciation and depreciation or other changes in
3 value of the assets and liabilities of the corporation;
4 (3) the current value of the assets and liabilities of
5 the corporation, either valued separately or valued in
6 segments or as an entirety as a going concern; or
7 (4) any other method that is reasonable in the
8 circumstances.
9 In determining whether a distribution is prohibited by
10 subsection (b)(2), the board of directors need not consider
11 obligations and liabilities unless they are required to be
12 reflected on a balance sheet (not including the notes thereto)
13 prepared on the basis of generally accepted accounting
14 principles, or such other accounting practices and principles as
15 are used generally by the corporation in the maintenance of its
16 books and records and as are reasonable in the circumstances.
17 [See section 1721(b) (relating to standard of care; justifiable
18 reliance).
19 (c)] (d) Date of distribution.--[In the case of a purchase,
20 redemption or other acquisition of its own shares by a
21 corporation, the effect of a distribution shall be measured as
22 of the date money or other property is transferred or debt is
23 incurred by the corporation or as of the date the shareholder
24 ceases to be a shareholder of the corporation with respect to
25 the shares, whichever is earlier. In] The effect of a
26 distribution shall be measured:
27 (1) as of the date specified by the board of directors
28 when it authorizes the distribution if the distribution
29 occurs within 125 days of the earlier of the date so
30 specified or the date of authorization; or
19900S1761B2459 - 56 -
1 (2) as of the date of distribution in all other cases.[,
2 the effect of a distribution shall be measured as of the date
3 of its authorization if payment occurs 120 days or less
4 following the date of authorization or as of the date of
5 payment if payment occurs more than 120 days following the
6 date of authorization.]
7 In the case of a purchase, redemption or other acquisition of
8 its own shares by a corporation, the distribution shall be
9 deemed to occur as of the date money or other property is
10 transferred or debt is incurred by the corporation or as of the
11 date the shareholder ceases to be a shareholder of the
12 corporation with respect to the shares, whichever is earlier.
13 [(d)] (e) Redemption related and similar debt.--Indebtedness
14 of a corporation [incurred or issued] to a shareholder [in]
15 incurred by reason of a distribution made in accordance with
16 this section shall be at least on a parity with the indebtedness
17 of the corporation to its general unsecured creditors except to
18 the extent subordinated by agreement.
19 [(e)] (f) Certain subordinated debt.--Indebtedness of a
20 corporation, including indebtedness issued as a distribution,
21 shall not be considered a liability for purposes of
22 determinations under subsection (b) if its terms provide that
23 payment of principal and interest are made only if and to the
24 extent that payment of a distribution to shareholders could then
25 be made under this section. If [the subordinated] such
26 indebtedness is issued as a distribution, each payment of
27 principal or interest shall be treated as a distribution, the
28 effect of which shall be measured on the date the payment is
29 actually made.
30 (g) Cross references.--See Subchapter B of Chapter 17
19900S1761B2459 - 57 -
1 (relating to fiduciary duty) and section 3121 (relating to
2 distributions by insurance corporations).
3 § 1553. Liability for unlawful dividends and other
4 distributions.
5 (a) Directors.--Except as otherwise provided pursuant to
6 section [1721(e)] 1713 (relating to personal liability of
7 directors), a director who votes for or assents to any dividend
8 or other distribution contrary to the provisions of this subpart
9 or contrary to any restrictions contained in the bylaws shall,
10 if he has not complied with the standard provided in or pursuant
11 to section [1721(b)] 1712 (relating to standard of care[;] and
12 justifiable reliance), be liable to the corporation, jointly and
13 severally with all other directors so voting or assenting, for
14 the amount of the dividend that is paid or the value of the
15 other distribution in excess of the amount of the dividend or
16 other distribution that could have been made without a violation
17 of the provisions of this subpart or the restrictions in the
18 bylaws.
19 * * *
20 (e) Contrary articles ineffective.--Except as provided by
21 subsection (a), this section may not be varied by any provision
22 of the articles.
23 § 1554. Financial reports to shareholders.
24 * * *
25 (c) Transitional provision.--A bylaw adopted on or before
26 [December 31, 1989,] June 30, 1991, that:
27 (1) provides that this section shall not apply to the
28 shares of the corporation or to shares outstanding on a
29 specified or otherwise determinable date; or
30 (2) restricts the right of shareholders to receive
19900S1761B2459 - 58 -
1 financial information in a manner permissible under the
2 Business Corporation Law of 1933;
3 shall be deemed for the purposes of subsection (b) to be a
4 separate written agreement between the corporation and [each
5 holder of] any person holding shares, option rights or
6 securities having conversion or option rights, or to whom the
7 corporation is otherwise obligated to issue shares [outstanding
8 on the date of adoption of the bylaw for the purposes of
9 subsection (b)] on June 30, 1991, but only with respect to the
10 shares held by the person on that date or to be acquired
11 pursuant to such option rights, securities having conversion or
12 option rights or other obligation of the corporation.
13 (d) Certain provisions of articles ineffective.--This
14 section may not be relaxed by any provision of the articles.
15 [d)] (e) Cross references.--See [sections] section 2511
16 (relating to financial reports to shareholders) [and 4145
17 (relating to applicability of certain safeguards to foreign
18 domiciliary corporations)] and 42 Pa.C.S. § 2503(7) (relating to
19 right of participants to receive counsel fees).
20 § 1571. Application and effect of subchapter.
21 (a) General rule.--Except as otherwise provided in
22 subsection (b), any shareholder of a business corporation shall
23 have the right to dissent from, and to obtain payment of the
24 fair value of his shares in the event of, any corporate action,
25 or to otherwise obtain fair value for his shares, where this
26 [subpart] part expressly provides that a shareholder shall have
27 the rights and remedies provided in this subchapter. See:
28 Section 1906(c) (relating to dissenters rights upon
29 special treatment).
30 Section 1930 (relating to dissenters rights).
19900S1761B2459 - 59 -
1 Section 1931(d) (relating to dissenters rights in share
2 exchanges).
3 Section 1932(c) (relating to dissenters rights in asset
4 transfers).
5 Section 1952(d) (relating to dissenters rights in
6 division).
7 Section 1962(c) (relating to dissenters rights in
8 conversion).
9 Section 2104(b) (relating to procedure).
10 Section 2324 (relating to corporation option where a
11 restriction on transfer of a security is held invalid).
12 Section 2325(b) (relating to minimum vote requirement).
13 Section [2704] 2704(d) (relating to dissenters rights
14 upon election).
15 Section 2705(c) (relating to dissenters rights upon
16 renewal of election).
17 Section 2907(a) (relating to proceedings to terminate
18 breach of qualifying conditions).
19 Section 7104(b)(3) (relating to procedure).
20 (b) Exceptions.--
21 (1) Except as otherwise provided in paragraph (2), the
22 holders of the shares of any class or series of shares that,
23 at the record date fixed to determine the shareholders
24 entitled to notice of and to vote at the meeting at which a
25 plan specified in any of section 1930, 1931(d), 1932(c) or
26 1952(d) is to be voted on, are either:
27 (i) listed on a national securities exchange; or
28 (ii) held of record by more than 2,000 shareholders;
29 shall not have the right to obtain payment of the fair value
30 of any such shares under this subchapter.
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1 (2) Paragraph (1) shall not apply to and dissenters
2 rights shall be available without regard to the exception
3 provided in that paragraph in the case of:
4 (i) Shares converted by a plan if the shares are not
5 converted solely into shares of the acquiring, surviving,
6 new or other corporation or solely into such shares and
7 money in lieu of fractional shares.
8 (ii) Shares of any preferred or special class unless
9 the articles, the plan or the terms of the transaction
10 entitle all shareholders of the class to vote thereon and
11 require for the adoption of the plan or the effectuation
12 of the transaction the affirmative vote of a majority of
13 the votes cast by all shareholders of the class.
14 (iii) Shares entitled to dissenters rights under
15 section 1906(c) (relating to dissenters rights upon
16 special treatment).
17 (3) The shareholders of a corporation that acquires by
18 purchase, lease, exchange or other disposition all or
19 substantially all of the shares, property or assets of
20 another corporation by the issuance of shares, obligations or
21 otherwise, with or without assuming the liabilities of the
22 other corporation and with or without the intervention of
23 another corporation or other person, shall not be entitled to
24 the rights and remedies of dissenting shareholders provided
25 in this subchapter regardless of the fact, if it be the case,
26 that the acquisition was accomplished by the issuance of
27 voting shares of the corporation to be outstanding
28 immediately after the acquisition sufficient to elect a
29 majority or more of the directors of the corporation.
30 * * *
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1 (e) Other statutes.--The procedures of this subchapter shall
2 also be applicable to any transaction described in any statute
3 other than this [subpart] part that makes reference to this
4 subchapter for the purpose of granting dissenters rights.
5 (f) Certain provisions of articles ineffective.--This
6 subchapter may not be relaxed by any provision of the articles.
7 (g) Cross references.--See sections 1105 (relating to
8 restriction on equitable relief), 1904 (relating to de facto
9 transaction doctrine abolished) and 2512 (relating to dissenters
10 rights procedure).
11 § 1572. Definitions.
12 The following words and phrases when used in this subchapter
13 shall have the meanings given to them in this section unless the
14 context clearly indicates otherwise:
15 "Corporation." The issuer of the shares held or owned by the
16 dissenter before the corporate action or the successor by
17 merger, consolidation, division, conversion or otherwise of that
18 issuer. A plan of division may designate which of the resulting
19 corporations is the successor corporation for the purposes of
20 this subchapter. The successor corporation in a division shall
21 have sole responsibility for payments to dissenters and other
22 liabilities under this subchapter except as otherwise provided
23 in the plan of division.
24 * * *
25 § 1576. Failure to comply with notice to demand payment, etc.
26 (a) Effect of failure of shareholder to act.--A shareholder
27 who fails to timely demand payment, or fails (in the case of
28 certificated shares) to timely deposit certificates, as required
29 by a notice pursuant to section 1575 (relating to notice to
30 demand payment) shall not have any right under this subchapter
19900S1761B2459 - 62 -
1 to receive payment of the fair value of his shares.
2 * * *
3 § 1577. Release of restrictions or payment for shares.
4 * * *
5 (c) Payment of fair value of shares.--Promptly after
6 effectuation of the proposed corporate action, or upon timely
7 receipt of demand for payment if the corporate action has
8 already been effectuated, the corporation shall either remit to
9 dissenters who have made demand and (if their shares are
10 certificated) have deposited their certificates the amount that
11 the corporation estimates to be the fair value of the shares, or
12 give written notice that no remittance under this section will
13 be made. The remittance or notice shall be accompanied by:
14 (1) The closing balance sheet and statement of income of
15 the issuer of the shares held or owned by the dissenter for a
16 fiscal year ending not more than 16 months before the date of
17 remittance or notice together with the latest available
18 interim financial statements.
19 (2) A statement of the corporation's estimate of the
20 fair value of the shares.
21 (3) A notice of the right of the dissenter to demand
22 payment or supplemental payment, as the case may be,
23 accompanied by a copy of this subchapter.
24 (d) Failure to make payment.--If the corporation does not
25 remit the amount of its estimate of the fair value of the shares
26 as provided by subsection (c), it shall return any certificates
27 that have been deposited and release uncertificated shares from
28 any transfer restrictions imposed by reason of the demand for
29 payment. The corporation may make a notation on any such
30 certificate or on the records of the corporation relating to any
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1 such uncertificated shares that such demand has been made. If
2 shares with respect to which notation has been so made shall be
3 transferred, each new certificate issued therefor or the records
4 relating to any transferred uncertificated shares shall bear a
5 similar notation, together with the name of the original
6 dissenting holder or owner of such shares. A transferee of such
7 shares shall not acquire by such transfer any rights in the
8 corporation other than those that the original dissenter had
9 after making demand for payment of their fair value.
10 § 1578. Estimate by dissenter of fair value of shares.
11 * * *
12 (b) Effect of failure to file estimate.--Where [a
13 corporation has remitted payment of its estimated value of a
14 dissenter's shares, and] the dissenter does not file his own
15 estimate under subsection (a) within 30 days after the mailing
16 by the corporation of its remittance or notice, the dissenter
17 shall be entitled to no more than the amount stated in the
18 notice or remitted to him by the corporation.
19 § 1701. Applicability of subchapter.
20 (a) General rule.--The provisions of this subchapter shall
21 apply to every business corporation unless otherwise restricted:
22 (1) by any other provision of this subpart; or
23 (2) except with respect to section 1707(a) (relating to
24 exception to requirement of notice), in the bylaws.
25 (b) Limitation on certain provisions in the articles.--The
26 articles may not relax the statutory rights of shareholders to
27 notice provided in this subchapter.
28 § 1702. Manner of giving notice.
29 (a) General rule.--Whenever written notice is required to be
30 given to any person under the provisions of this subpart or by
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1 the articles or bylaws of any business corporation, it may be
2 given to the person either personally or by sending a copy
3 thereof by first class or express mail, postage prepaid, or by
4 telegram (with messenger service specified), telex or TWX (with
5 answerback received) or courier service, charges prepaid, or by
6 [telecopier] facsimile transmission, to his address (or to his
7 telex, TWX[, telecopier or telephone] or facsimile number)
8 appearing on the books of the corporation or, in the case of
9 directors, supplied by him to the corporation for the purpose of
10 notice. If the notice is sent by mail, telegraph or courier
11 service, it shall be deemed to have been given to the person
12 entitled thereto when deposited in the United States mail or
13 with a telegraph office or courier service for delivery to that
14 person or, in the case of telex or TWX, when dispatched. A
15 notice of meeting shall specify the place, day and hour of the
16 meeting and any other information required by any other
17 provision of this subpart.
18 (b) Adjourned shareholder meetings.--When a meeting of
19 shareholders is adjourned, it shall not be necessary to give any
20 notice of the adjourned meeting or of the business to be
21 transacted at an adjourned meeting, other than by announcement
22 at the meeting at which the adjournment is taken, unless the
23 board fixes a new record date for the adjourned meeting or this
24 subpart requires notice of the business to be transacted and
25 such notice has not previously been given.
26 (c) Bulk mail notice.--A corporation that is not a closely
27 held corporation and that gives notice by mail of any regular or
28 special meeting of the shareholders (or any other notice
29 required by this subpart or by the articles or bylaws to be
30 given to all shareholders or to all holders of a class or series
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1 of shares) at least 20 days prior to the day named for the
2 meeting or any corporate or shareholder action specified in the
3 notice may use any class of postpaid mail.
4 (d) Cross reference.--See section 3133 (relating to notice
5 of meetings of members of mutual insurance companies).
6 § 1703. Place and notice of meetings of board of directors.
7 * * *
8 (b) Notice.--[Meetings] Regular meetings of the board of
9 directors may be held upon such notice, if any, as the bylaws
10 may prescribe. Unless otherwise provided in the bylaws, written
11 notice of every special meeting of the board of directors shall
12 be given to each director at least five days before the day
13 named for the meeting. Neither the business to be transacted at,
14 nor the purpose of, any regular or special meeting of the board
15 need be specified in the notice of the meeting.
16 § 1704. Place and notice of meetings of shareholders.
17 * * *
18 (b) Notice.--Written notice of every meeting of the
19 shareholders shall be given by, or at the direction of, the
20 secretary or other authorized person to each shareholder of
21 record entitled to vote at the meeting at least:
22 (1) ten days prior to the day named for a meeting called
23 to consider a fundamental change under Chapter 19 (relating
24 to fundamental changes); or
25 (2) five days prior to the day named for the meeting in
26 any other case.
27 If the secretary or other authorized person neglects or refuses
28 to give notice of a meeting, the person or persons calling the
29 meeting may do so.
30 (c) Contents.--In the case of a special meeting of
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1 shareholders, the notice shall specify the general nature of the
2 business to be transacted, and in all cases the notice shall
3 comply with the express requirements of this subpart. The
4 corporation shall not have a duty to augment the notice.
5 § 1705. Waiver of notice.
6 (a) Written waiver.--Whenever any written notice is required
7 to be given under the provisions of this subpart or the articles
8 or bylaws of any business corporation, a waiver thereof in
9 writing, signed by the person or persons entitled to the notice,
10 whether before or after the time stated therein, shall be deemed
11 equivalent to the giving of the notice. [Except as otherwise
12 required by this subsection, neither] Neither the business to be
13 transacted at, nor the purpose of, a meeting need be specified
14 in the waiver of notice of the meeting. [In the case of a
15 special meeting of shareholders, the waiver of notice shall
16 specify the general nature of the business to be transacted.]
17 * * *
18 § 1708. Use of conference telephone and similar equipment.
19 [One] Except as otherwise provided in the bylaws, one or more
20 persons may participate in a meeting of the incorporators, the
21 board of directors or the shareholders of a business corporation
22 by means of conference telephone or similar communications
23 equipment by means of which all persons participating in the
24 meeting can hear each other. Participation in a meeting pursuant
25 to this section shall constitute presence in person at the
26 meeting.
27 SUBCHAPTER B
28 FIDUCIARY DUTY
29 Sec.
30 1711. Alternative provisions.
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1 1712. Standard of care and justifiable reliance.
2 1713. Personal liability of directors.
3 1714. Notation of dissent.
4 1715. Exercise of powers generally.
5 1716. Alternative standard.
6 1717. Limitation on standing.
7 § 1711. Alternative provisions.
8 (a) General rule.--Section 1716 (relating to alternative
9 standard) shall not be applicable to any business corporation to
10 which section 1715 (relating to exercise of powers generally) is
11 applicable.
12 (b) Exceptions.--Section 1715 shall be applicable to:
13 (1) Any registered corporation described in section
14 2502(1)(i) (relating to registered corporation status),
15 except a corporation:
16 (i) the bylaws of which explicitly provide that
17 section 1715 or corresponding provisions of prior law
18 shall not be applicable to the corporation by amendment
19 adopted by the board of directors on or before July 26,
20 1990, in the case of a corporation that was a registered
21 corporation described in section 2502(1)(i) on April 27,
22 1990; or
23 (ii) in any other case, the articles of which
24 explicitly provide that section 1715 or corresponding
25 provisions of prior law shall not be applicable to the
26 corporation by a provision included in the original
27 articles, or by an articles amendment adopted on or
28 before 90 days after the corporation first becomes a
29 registered corporation described in section 2502(1)(i).
30 (2) Any registered corporation described solely in
19900S1761B2459 - 68 -
1 section 2502(1)(ii), except a corporation:
2 (i) the bylaws of which explicitly provide that
3 section 1715 or corresponding provisions of prior law
4 shall not be applicable to the corporation by amendment
5 adopted by the board of directors on or before April 27,
6 1991, in the case of a corporation that was a registered
7 corporation described solely in section 2502(1)(ii) on
8 April 27, 1990; or
9 (ii) in any other case, the articles of which
10 explicitly provide that section 1715 or corresponding
11 provisions of prior law shall not be applicable to the
12 corporation by a provision included in the original
13 articles, or by an articles amendment adopted on or
14 before one year after the corporation first becomes a
15 registered corporation described in section 2502(1)(ii).
16 (3) Any business corporation that is not a registered
17 corporation described in section 2502(1), except a
18 corporation:
19 (i) the bylaws of which explicitly provide that
20 section 1715 or corresponding provisions of prior law
21 shall not be applicable to the corporation by amendment
22 adopted by the board of directors on or before April 27,
23 1991, in the case of a corporation that was a business
24 corporation on April 27, 1990; or
25 (ii) in any other case, the articles of which
26 explicitly provide that section 1715 or corresponding
27 provisions of prior law shall not be applicable to the
28 corporation by a provision included in the original
29 articles, or by an articles amendment adopted on or
30 before one year after the corporation first becomes a
19900S1761B2459 - 69 -
1 business corporation.
2 (c) Transitional provision.--A provision of the articles or
3 bylaws adopted pursuant to section 511(b) (relating to
4 alternative provisions) at a time when the corporation was not a
5 business corporation that provides that section 515 (relating to
6 exercise of powers generally) or corresponding provisions of
7 prior law shall not be applicable to the corporation shall be
8 deemed to provide that section 1715 shall not be applicable to
9 the corporation.
10 § 1712. Standard of care and justifiable reliance.
11 (a) Directors.--A director of a business corporation shall
12 stand in a fiduciary relation to the corporation and shall
13 perform his duties as a director, including his duties as a
14 member of any committee of the board upon which he may serve, in
15 good faith, in a manner he reasonably believes to be in the best
16 interests of the corporation and with such care, including
17 reasonable inquiry, skill and diligence, as a person of ordinary
18 prudence would use under similar circumstances. In performing
19 his duties, a director shall be entitled to rely in good faith
20 on information, opinions, reports or statements, including
21 financial statements and other financial data, in each case
22 prepared or presented by any of the following:
23 (1) One or more officers or employees of the corporation
24 whom the director reasonably believes to be reliable and
25 competent in the matters presented.
26 (2) Counsel, public accountants or other persons as to
27 matters which the director reasonably believes to be within
28 the professional or expert competence of such person.
29 (3) A committee of the board upon which he does not
30 serve, duly designated in accordance with law, as to matters
19900S1761B2459 - 70 -
1 within its designated authority, which committee the director
2 reasonably believes to merit confidence.
3 (b) Effect of actual knowledge.--A director shall not be
4 considered to be acting in good faith if he has knowledge
5 concerning the matter in question that would cause his reliance
6 to be unwarranted. The articles may not provide for a lower
7 standard of care than that required by this subsection or
8 subsection (a).
9 (c) Officers.--Except as otherwise provided in the bylaws,
10 an officer shall perform his duties as an officer in good faith,
11 in a manner he reasonably believes to be in the best interests
12 of the corporation and with such care, including reasonable
13 inquiry, skill and diligence, as a person of ordinary prudence
14 would use under similar circumstances. A person who so performs
15 his duties shall not be liable by reason of having been an
16 officer of the corporation.
17 § 1713. Personal liability of directors.
18 (a) General rule.--If a bylaw adopted by the shareholders of
19 a business corporation so provides, a director shall not be
20 personally liable, as such, for monetary damages for any action
21 taken unless:
22 (1) the director has breached or failed to perform the
23 duties of his office under this subchapter; and
24 (2) the breach or failure to perform constitutes self-
25 dealing, willful misconduct or recklessness.
26 (b) Exceptions.--
27 (1) Subsection (a) shall not apply to:
28 (i) the responsibility or liability of a director
29 pursuant to any criminal statute; or
30 (ii) the liability of a director for the payment of
19900S1761B2459 - 71 -
1 taxes pursuant to Federal, State or local law.
2 (2) The articles may not provide greater exoneration
3 from liability for directors than that permitted by this
4 section.
5 (c) Cross reference.--See 42 Pa.C.S. § 8332.5 (relating to
6 corporate representatives).
7 § 1714. Notation of dissent.
8 A director of a business corporation who is present at a
9 meeting of its board of directors, or of a committee of the
10 board, at which action on any corporate matter is taken on which
11 the director is generally competent to act, shall be presumed to
12 have assented to the action taken unless his dissent is entered
13 in the minutes of the meeting or unless he files his written
14 dissent to the action with the secretary of the meeting before
15 the adjournment thereof or transmits the dissent in writing to
16 the secretary of the corporation immediately after the
17 adjournment of the meeting. The right to dissent shall not apply
18 to a director who voted in favor of the action. Nothing in this
19 subchapter shall bar a director from asserting that minutes of
20 the meeting incorrectly omitted his dissent if, promptly upon
21 receipt of a copy of such minutes, he notifies the secretary, in
22 writing, of the asserted omission or inaccuracy.
23 § 1715. Exercise of powers generally.
24 (a) General rule.--In discharging the duties of their
25 respective positions, the board of directors, committees of the
26 board and individual directors of a business corporation may, in
27 considering the best interests of the corporation, consider to
28 the extent they deem appropriate:
29 (1) The effects of any action upon any or all groups
30 affected by such action, including shareholders, employees,
19900S1761B2459 - 72 -
1 suppliers, customers and creditors of the corporation, and
2 upon communities in which offices or other establishments of
3 the corporation are located.
4 (2) The short-term and long-term interests of the
5 corporation, including benefits that may accrue to the
6 corporation from its long-term plans and the possibility that
7 these interests may be best served by the continued
8 independence of the corporation.
9 (3) The resources, intent and conduct (past, stated and
10 potential) of any person seeking to acquire control of the
11 corporation.
12 (4) All other pertinent factors.
13 (b) Consideration of interests and factors.--The board of
14 directors, committees of the board and individual directors
15 shall not be required, in considering the best interests of the
16 corporation or the effects of any action, to regard any
17 corporate interest or the interests of any particular group
18 affected by such action as a dominant or controlling interest or
19 factor. The consideration of interests and factors in the manner
20 described in this subsection and in subsection (a) shall not
21 constitute a violation of section 1712 (relating to standard of
22 care and justifiable reliance).
23 (c) Specific applications.--In exercising the powers vested
24 in the corporation, including, without limitation, those powers
25 pursuant to section 1502 (relating to general powers), and in no
26 way limiting the discretion of the board of directors,
27 committees of the board and individual directors pursuant to
28 subsections (a) and (b), the fiduciary duty of directors shall
29 not be deemed to require them:
30 (1) to redeem any rights under, or to modify or render
19900S1761B2459 - 73 -
1 inapplicable, any shareholder rights plan, including, but not
2 limited to, a plan adopted pursuant or made subject to
3 section 2513 (relating to disparate treatment of certain
4 persons);
5 (2) to render inapplicable, or make determinations
6 under, the provisions of Subchapter E of Chapter 25 (relating
7 to control transactions), Subchapter F of Chapter 25
8 (relating to business combinations), Subchapter G of Chapter
9 25 (relating to control-share acquisitions) or Subchapter H
10 of Chapter 25 (relating to disgorgement by certain
11 controlling shareholders following attempts to acquire
12 control) or under any other provision of this title relating
13 to or affecting acquisitions or potential or proposed
14 acquisitions of control; or
15 (3) to act as the board of directors, a committee of the
16 board or an individual director solely because of the effect
17 such action might have on an acquisition or potential or
18 proposed acquisition of control of the corporation or the
19 consideration that might be offered or paid to shareholders
20 in such an acquisition.
21 (d) Presumption.--Absent breach of fiduciary duty, lack of
22 good faith or self-dealing, any act as the board of directors, a
23 committee of the board or an individual director shall be
24 presumed to be in the best interests of the corporation. In
25 assessing whether the standard set forth in section 1712 has
26 been satisfied, there shall not be any greater obligation to
27 justify, or higher burden of proof with respect to, any act as
28 the board of directors, any committee of the board or any
29 individual director relating to or affecting an acquisition or
30 potential or proposed acquisition of control of the corporation
19900S1761B2459 - 74 -
1 than is applied to any other act as a board of directors, any
2 committee of the board or any individual director.
3 Notwithstanding the preceding provisions of this subsection, any
4 act as the board of directors, a committee of the board or an
5 individual director relating to or affecting an acquisition or
6 potential or proposed acquisition of control to which a majority
7 of the disinterested directors shall have assented shall be
8 presumed to satisfy the standard set forth in section 1712,
9 unless it is proven by clear and convincing evidence that the
10 disinterested directors did not assent to such act in good faith
11 after reasonable investigation.
12 (e) Definition.--The term "disinterested director" as used
13 in subsection (d) and for no other purpose means:
14 (1) A director of the corporation other than:
15 (i) A director who has a direct or indirect
16 financial or other interest in the person acquiring or
17 seeking to acquire control of the corporation or who is
18 an affiliate or associate, as defined in section 2552
19 (relating to definitions), of, or was nominated or
20 designated as a director by, a person acquiring or
21 seeking to acquire control of the corporation.
22 (ii) Depending on the specific facts surrounding the
23 director and the act under consideration, an officer or
24 employee or former officer or employee of the
25 corporation.
26 (2) A person shall not be deemed to be other than a
27 disinterested director solely by reason of any or all of the
28 following:
29 (i) The ownership by the director of shares of the
30 corporation.
19900S1761B2459 - 75 -
1 (ii) The receipt as a holder of any class or series
2 of any distribution made to all owners of shares of that
3 class or series.
4 (iii) The receipt by the director of director's fees
5 or other consideration as a director.
6 (iv) Any interest the director may have in retaining
7 the status or position of director.
8 (v) The former business or employment relationship
9 of the director with the corporation.
10 (vi) Receiving or having the right to receive
11 retirement or deferred compensation from the corporation
12 due to service as a director, officer or employee.
13 (f) Cross reference.--See section 1711 (relating to
14 alternative provisions).
15 § 1716. Alternative standard.
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 business corporation may, in
19 considering the best interests of the corporation, consider the
20 effects of any action upon employees, upon suppliers and
21 customers of the corporation and upon communities in which
22 offices or other establishments of the corporation are located,
23 and all other pertinent factors. The consideration of those
24 factors shall not constitute a violation of section 1712
25 (relating to standard of care and justifiable reliance).
26 (b) Presumption.--Absent breach of fiduciary duty, lack of
27 good faith or self-dealing, actions taken as a director shall be
28 presumed to be in the best interests of the corporation.
29 (c) Cross reference.--See section 1711 (relating to
30 alternative provisions).
19900S1761B2459 - 76 -
1 § 1717. Limitation on standing.
2 The duty of the board of directors, committees of the board
3 and individual directors under section 1712 (relating to
4 standard of care and justifiable reliance) is solely to the
5 business corporation and may be enforced directly by the
6 corporation or may be enforced by a shareholder, as such, by an
7 action in the right of the corporation, and may not be enforced
8 directly by a shareholder or by any other person or group.
9 Notwithstanding the preceding sentence, sections 1715(a) and (b)
10 (relating to exercise of powers generally) and 1716(a) (relating
11 to alternative standard) do not impose upon the board of
12 directors, committees of the board and individual directors, any
13 legal or equitable duties, obligations or liabilities or create
14 any right or cause of action against, or basis for standing to
15 sue, the board of directors, committees of the board and
16 individual directors.
17 SUBCHAPTER [B] C
18 DIRECTORS AND OFFICERS
19 § 1721. Board of directors.
20 Unless otherwise provided by statute or in a bylaw adopted by
21 the shareholders, all powers enumerated in section 1502
22 (relating to general powers) and elsewhere in this subpart or
23 otherwise vested by law in a business corporation shall be
24 exercised by or under the authority of, and the business and
25 affairs of every business corporation shall be managed under the
26 direction of, a board of directors. If any such provision is
27 made in the bylaws, the powers and duties conferred or imposed
28 upon the board of directors by this subpart shall be exercised
29 or performed to such extent and by such person or persons as
30 shall be provided in the bylaws. Persons upon whom the
19900S1761B2459 - 77 -
1 liabilities of directors are imposed by this section shall to
2 that extent be entitled to the rights and immunities conferred
3 by or pursuant to this part and other provisions of law upon
4 directors of a corporation.
5 § 1722. Qualifications of directors.
6 (a) General rule.--Each director of a business corporation
7 shall be a natural person of full age who, unless otherwise
8 restricted in the bylaws, need not be a resident of this
9 Commonwealth or a shareholder of the corporation. Except as
10 otherwise provided in this section, the qualifications of
11 directors may be prescribed in the bylaws.
12 (b) Cross reference.--See section 3131 (relating to
13 directors).
14 § 1723. Number of directors.
15 (a) General rule.--The board of directors of a business
16 corporation shall consist of one or more members. The number of
17 directors shall be fixed by, or in the manner provided in, the
18 bylaws. If not so fixed, the number of directors shall be the
19 same as that stated in the articles or three if no number is so
20 stated.
21 (b) Cross reference.--See section 3131 (relating to
22 directors).
23 § 1724. Term of office of directors.
24 * * *
25 (b) Classified board of directors.--[If] Except as otherwise
26 provided in the articles, if the directors are classified in
27 respect of the time for which they shall severally hold office:
28 (1) Each class shall be as nearly equal in number as
29 possible.
30 (2) The term of office of at least one class shall
19900S1761B2459 - 78 -
1 expire in each year.
2 (3) The members of a class shall not be elected for a
3 longer period than four years.
4 § 1725. Selection of directors.
5 (a) General rule.--Except as otherwise provided in this
6 section, directors of a business corporation, other than those
7 constituting the first board of directors, shall be elected by
8 the shareholders. A bylaw adopted by the shareholders may
9 classify the directors with respect to the shareholders who
10 exercise the power to elect directors.
11 (b) Vacancies.--
12 (1) Except as otherwise provided in the bylaws:
13 (i) Vacancies in the board of directors, including
14 vacancies resulting from an increase in the number of
15 directors, may be filled by a majority vote of the
16 remaining members of the board though less than a quorum,
17 or by a sole remaining director, and each person so
18 selected shall be a director to serve for the balance of
19 the unexpired term unless otherwise restricted in the
20 bylaws.
21 (ii) When one or more directors resign from the
22 board effective at a future date, the directors then in
23 office, including those who have so resigned, shall have
24 power by the applicable vote to fill the vacancies, the
25 vote thereon to take effect when the resignations become
26 effective.
27 (2) In the case of a corporation having a [classified
28 board of directors] board classified as permitted by section
29 1724(b) (relating to classified board of directors), any
30 director chosen to fill a vacancy, including a vacancy
19900S1761B2459 - 79 -
1 resulting from an increase in the number of directors, shall
2 hold office until the next selection of the class for which
3 such director has been chosen, and until his successor has
4 been selected and qualified or until his earlier death,
5 resignation or removal.
6 * * *
7 (d) Cross [reference] references.--See the definition of
8 "shareholder" in section 1103 (relating to definitions) and
9 section 1758(c) relating to cumulative voting).
10 § 1726. Removal of directors.
11 (a) Removal by the shareholders.--
12 * * *
13 (5) The articles may not prohibit the removal of
14 directors by the shareholders for cause.
15 * * *
16 (c) Removal by the court.--Upon application of any
17 shareholder or director, the court may remove from office any
18 director in case of fraudulent or dishonest acts, or gross abuse
19 of authority or discretion with reference to the corporation, or
20 for any other proper cause, and may bar from office any director
21 so removed for a period prescribed by the court. The corporation
22 shall be made a party to the action and as a prerequisite to the
23 maintenance of an action under this subsection a shareholder
24 shall comply with Subchapter [E] F (relating to derivative
25 actions).
26 * * *
27 (e) Cross reference.--See section 1106(b)(4) (relating to
28 uniform application of subpart).
29 § 1732. Officers.
30 * * *
19900S1761B2459 - 80 -
1 (c) Cross references.--See sections 1110 (relating to annual
2 report information) and 3132 (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.
19900S1761B2459 - 81 -
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
19900S1761B2459 - 82 -
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
19900S1761B2459 - 83 -
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 * * *
19900S1761B2459 - 84 -
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
19900S1761B2459 - 85 -
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
19900S1761B2459 - 86 -
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.
19900S1761B2459 - 87 -
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:
19900S1761B2459 - 88 -
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 described in section 4102(b)
20 (relating to registered corporation exclusions); or
21 (B) a person (other than a natural person) that
22 is engaged principally in the business of making
23 equity investments in other businesses; or
24 (ii) with respect to any matter involving a person
25 described in subparagraph (i) that is or was a holder or
26 owner of shares of the corporation.
27 * * *
28 (d) Contrary provisions of the articles.--
29 (1) The articles may not contain a provision that varies
30 or is otherwise inconsistent with subsection (b)(2).
19900S1761B2459 - 89 -
1 (2) A provision of the articles that varies or is
2 otherwise inconsistent with any provision of this section
3 shall not be effective unless it is included in the original
4 articles or in an amendment adopted by the affirmative vote
5 of all shareholders of the corporation whether or not
6 otherwise entitled to vote thereon.
7 (e) Cross references.--See sections 2526 (relating to
8 appointment of custodian) and 3137 (relating to appointment of
9 custodian).
10 SUBCHAPTER [E] F
11 DERIVATIVE ACTIONS
12 SUBCHAPTER [F] G
13 JUDICIAL SUPERVISION OF CORPORATE ACTION
14 § 1791. Corporate action subject to subchapter.
15 (a) General rule.--This subchapter shall apply to and the
16 term "corporate action" in this subchapter shall mean any of the
17 following actions:
18 (1) The election, appointment, designation or other
19 selection and the suspension or removal of directors or
20 officers of a business corporation.
21 (2) The taking of any action on any matter that is
22 required under this subpart or under any other provision of
23 law to be, or that under the bylaws may be, submitted for
24 action to the shareholders, directors or officers of a
25 business corporation.
26 (b) Cross reference.--See section [4145 (relating to
27 applicability of certain safeguards to foreign domiciliary
28 corporations)] 3138 (relating to judicial supervision of
29 corporate action).
30 § 1792. Proceedings prior to corporate action.
19900S1761B2459 - 90 -
1 * * *
2 (c) Cross reference.--See section [4145 (relating to
3 applicability of certain safeguards to foreign domiciliary
4 corporations)] 3138 (relating to judicial supervision of
5 corporate action).
6 § 1793. Review of contested corporate action.
7 * * *
8 (c) Cross reference.--See section [4145 (relating to
9 applicability of certain safeguards to foreign domiciliary
10 corporations)] 3138 (relating to judicial supervision of
11 corporate action).
12 § 1901. Omission of certain provisions from filed plans.
13 (a) General rule.--A plan as filed in the Department of
14 State under any provision of this chapter may omit all
15 provisions of the plan except provisions, if any[,]:
16 (1) that are intended to amend or constitute the
17 operative provisions of the articles of a corporation as in
18 effect subsequent to the effective date of the plan[, if]; or
19 (2) that allocate or specify the respective assets and
20 liabilities of the resulting corporations, in the case of a
21 plan of division.
22 (b) Availability of full plan.--If any of the provisions of
23 a plan are omitted from the plan as filed in the department, the
24 articles of amendment, merger, consolidation, exchange, division
25 or conversion shall state that the full text of the plan is on
26 file at the principal place of business of the reclassifying,
27 surviving or new or a resulting corporation and shall state the
28 address thereof. A corporation that takes advantage of this
29 section shall furnish a copy of the full text of the plan, on
30 request and without cost, to any shareholder of any corporation
19900S1761B2459 - 91 -
1 that was a party to the plan and, unless all parties to the plan
2 were closely held corporations, on request and at cost to any
3 other person.
4 § 1903. Bankruptcy or insolvency proceedings.
5 (a) General rule.--Whenever a business corporation is
6 insolvent or in financial difficulty, the board of directors
7 may, by resolution and without the consent of the shareholders,
8 authorize and designate the officers of the corporation to
9 execute a deed of assignment for the benefit of creditors, or
10 file a voluntary petition in bankruptcy, or file an answer
11 consenting to the appointment of a receiver upon a complaint in
12 the nature of an equity action filed by creditors or
13 shareholders, or, if insolvent, file an answer to an involuntary
14 petition in bankruptcy admitting the insolvency of the
15 corporation and its willingness to be adjudged a [bankrupt]
16 debtor on that ground.
17 (b) Bankruptcy proceedings.--A business corporation may
18 participate in proceedings under and in the manner provided by
19 the Bankruptcy Code (11 U.S.C. § 101 et seq.) notwithstanding
20 any contrary provision of [this subpart or of] its articles or
21 bylaws[.] or this subpart, other than section 103 (relating to
22 subordination of title to regulatory laws). The corporation
23 shall have full power and authority to put into effect and carry
24 out a plan of reorganization or arrangement and the decrees and
25 orders of the court, or judge or referee relative thereto, and
26 may take any proceeding and do any act provided in the plan or
27 arrangement or directed by such decrees and orders, without
28 further action by its directors or shareholders. Such power and
29 authority may be exercised, and such proceedings and acts may be
30 taken, as may be directed by such decrees or orders, by the
19900S1761B2459 - 92 -
1 trustees or receivers of the corporation appointed in the
2 bankruptcy proceedings, or a majority thereof, or if none be
3 appointed and acting, by designated officers of the corporation,
4 or by a master or other representative appointed by the court or
5 judge or referee, with the effect as if exercised and taken by
6 unanimous action of the directors and shareholders of the
7 corporation. Without limiting the generality or effect of the
8 foregoing, the corporation may:
9 (1) alter, amend or repeal its bylaws;
10 (2) constitute or reconstitute and classify or
11 reclassify its board of directors and name, constitute or
12 appoint directors and officers in place of or in addition to
13 all or some of the directors or officers then in office;
14 (3) amend its articles of incorporation, including
15 without limitation for the purpose of:
16 (i) canceling or modifying the relative rights or
17 preferences of any or all authorized classes or series of
18 shares, whether or not any shares thereof are
19 outstanding;
20 (ii) providing that any of Subchapter E of Chapter
21 25 (relating to control transactions), Subchapter F of
22 Chapter 25 (relating to business combinations),
23 Subchapter G of Chapter 25 (relating to control-share
24 acquisitions) or Subchapter H of Chapter 25 (relating to
25 disgorgement by certain controlling shareholders
26 following attempts to acquire control) shall not be
27 applicable to the corporation, whether or not the
28 amendment is adopted in conformance with the procedures
29 specified in those subchapters, which amendment may take
30 effect immediately without regard to any passage of time
19900S1761B2459 - 93 -
1 otherwise required by those subchapters; or
2 (iii) otherwise altering, amending or repealing any
3 provision of the articles or bylaws notwithstanding any
4 provision therein that the articles or bylaws may be
5 altered, amended or repealed only under certain
6 conditions or only upon receiving the approval of a
7 specified number or percentage of votes of shareholders
8 or of a class of shareholders;
9 (4) be dissolved, transfer all or part of its assets,
10 merge, consolidate, participate in a share exchange, divide
11 or convert to a nonprofit corporation, as permitted by this
12 chapter, but in any such case a shareholder shall not be
13 entitled to dissenters rights with respect to his shares;
14 (5) authorize and fix the terms, manner and conditions
15 of the issuance of obligations, whether or not convertible
16 into shares of any class or series, or bearing warrants or
17 other evidence of optional rights to purchase or subscribe
18 for shares of any class or series; or
19 (6) lease its property and franchises to any person.
20 (c) Cross reference.--See the definition of "officer" in
21 section 1103 (relating to definitions).
22 § 1905. Proposal of fundamental transactions.
23 Where any provision of this chapter requires that an
24 amendment of the articles [or], a plan or the dissolution of a
25 business corporation be proposed or approved by action of the
26 board of directors, that requirement shall be construed to
27 authorize and be satisfied by the written agreement or consent
28 of all of the shareholders of [a business] the corporation
29 entitled to vote thereon.
30 § 1906. Special treatment of holders of shares of same class or
19900S1761B2459 - 94 -
1 series.
2 (a) General rule.--[An] Except as otherwise restricted in
3 the articles, an amendment or plan may contain a provision
4 classifying the holders of shares of a class or series into one
5 or more separate groups by reference to any facts or
6 circumstances that are not manifestly unreasonable and providing
7 mandatory treatment for shares of the class or series held by
8 particular shareholders or groups of shareholders that differs
9 materially from the treatment accorded other shareholders or
10 groups of shareholders holding shares of the same class or
11 series (including a provision modifying or rescinding rights
12 previously created under this section) if:
13 (1) (i) such provision is specifically authorized by a
14 majority of the votes cast by all shareholders entitled
15 to vote on the amendment or plan, as well as by a
16 majority of the votes cast by any class or series of
17 shares [whose rights are diminished thereby] any of the
18 shares of which are so classified into groups, whether or
19 not such class or series would otherwise be entitled to
20 vote on the amendment or plan; and
21 (ii) the provision voted on specifically enumerates
22 the type and extent of the special treatment authorized;
23 or
24 (2) under all the facts and circumstances, a court of
25 competent jurisdiction finds such special treatment is
26 undertaken in good faith, after reasonable deliberation and
27 is in the best interest of the corporation.
28 (b) Statutory voting rights upon special treatment.--Except
29 as provided in subsection (c), if an amendment or plan contains
30 a provision for special treatment, each [subgroup] group of
19900S1761B2459 - 95 -
1 [the] holders of any outstanding shares of a class or series who
2 are to receive the same special treatment under the amendment or
3 plan shall be entitled to vote as a special class in respect to
4 the plan regardless of any limitations stated in the articles or
5 bylaws on the voting rights of any class or series.
6 * * *
7 (d) [Exception] Exceptions.--This section shall not apply to
8 [the]:
9 (1) The creation or issuance of securities, contracts,
10 warrants or other instruments evidencing any shares, option
11 rights, securities having conversion or option rights or
12 obligations authorized by section 2513 (relating to disparate
13 treatment of certain persons).
14 (2) A provision of an amendment or plan that offers to
15 all holders of shares of a class or series the same option to
16 elect certain treatment.
17 (3) An amendment or plan that contains an express
18 provision that this section shall not apply or that fails to
19 contain an express provision that this section shall apply.
20 The shareholders of a corporation that proposes an amendment
21 or plan to which this section is not applicable by reason of
22 this paragraph shall have the remedies contemplated by
23 section 1105 (relating to restriction on equitable relief).
24 § 1911. Amendment of articles authorized.
25 (a) General rule.--A business corporation, in the manner
26 provided in this subchapter, may from time to time amend its
27 articles for one or more of the following purposes:
28 (1) To adopt a new name, subject to the restrictions
29 provided in this subpart.
30 (2) To modify any provision of the articles relating to
19900S1761B2459 - 96 -
1 its term of existence.
2 (3) To change, add to or diminish its purposes or to set
3 forth different or additional purposes.
4 (4) To cancel or otherwise affect the right of holders
5 of the shares of any class or series to receive dividends
6 that have accrued but have not been declared or to otherwise
7 effect a reclassification of or otherwise affect the
8 substantial rights of the holders of any shares, including
9 without limitation by providing special treatment of shares
10 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 (5) To restate the articles in their entirety.
15 (6) In any and as many other respects as desired.
16 * * *
17 (c) Cross reference.--See section 1521(b)(1)(i) (relating to
18 provisions specifically authorized).
19 § 1912. Proposal of amendments.
20 (a) General rule.--Every amendment of the articles of a
21 business corporation shall be proposed:
22 (1) by the adoption by the board of directors of a
23 resolution setting forth the proposed amendment; or
24 (2) unless otherwise provided in the articles, by
25 petition of shareholders entitled to cast at least 10% of the
26 votes that all shareholders are entitled to cast thereon,
27 setting forth the proposed amendment, which petition shall be
28 directed to the board of directors and filed with the
29 secretary of the corporation.
30 Except where the approval of the shareholders is unnecessary
19900S1761B2459 - 97 -
1 under this subchapter, the board of directors shall direct that
2 the proposed amendment be submitted to a vote of the
3 shareholders entitled to vote thereon. An amendment proposed
4 pursuant to paragraph (2) shall be submitted to a vote either at
5 the next annual meeting held not earlier than 120 days after the
6 amendment is proposed or at a special meeting of the
7 shareholders called for that purpose by the shareholders. See
8 [section] sections 1106(b)(4) (relating to uniform application
9 of subpart) and 2535 (relating to proposal of amendment to
10 articles).
11 * * *
12 § 1914. Adoption of amendments.
13 * * *
14 (b) Statutory voting rights.--Except as provided in
15 subsection (c), if a proposed amendment would:
16 (1) authorize the board of directors to fix and
17 determine the relative rights and preferences, as between
18 series, of any preferred or special class;
19 (2) make any change in the preferences, limitations or
20 special rights (other than preemptive rights or the right to
21 vote cumulatively) of the shares of a class or series adverse
22 to the class or series;
23 (3) [increase the number of authorized shares of a class
24 or series unless otherwise provided in original articles of
25 incorporation filed after January 1, 1969, or in an amendment
26 to the articles which created the class or series filed after
27 January 1, 1969, or in any amendment to the articles which
28 was adopted by a majority of the votes cast by all
29 shareholders of the class or series;
30 (4)] authorize a new class or series of shares having a
19900S1761B2459 - 98 -
1 preference as to dividends or assets which is senior to the
2 shares of a class or series; or
3 [(5)] (4) increase the number of authorized shares of
4 any class or series having a preference as to dividends or
5 assets which is senior in any respect to the shares of a
6 class or series;
7 then the holders of the outstanding shares of the class or
8 series shall be entitled to vote as a class in respect to the
9 amendment regardless of any limitations stated in the articles
10 or bylaws on the voting rights of any class or series.
11 (c) Adoption by board of directors.--Unless otherwise
12 restricted in the articles, an amendment of articles shall not
13 require the approval of the shareholders of the corporation if:
14 * * *
15 (2) the amendment is restricted to [a change in] any of
16 the following:
17 (i) changing the corporate name [or to provide];
18 (ii) providing for perpetual existence [or to
19 reflect];
20 (iii) reflecting a reduction in authorized shares
21 effected by operation of section 1552(a) (relating to
22 power of corporation to acquire its own shares) and, if
23 appropriate, [the deletion of] deleting all references to
24 a class or series of shares that is no longer
25 outstanding; or
26 (iv) adding or deleting a provision authorized by
27 section 1528(f) (relating to uncertificated shares).
28 * * *
29 (e) Amendment of voting provisions.--Unless otherwise
30 provided in [a bylaw adopted by the shareholders] the articles,
19900S1761B2459 - 99 -
1 whenever the articles require for the taking of any action by
2 the shareholders or a class of shareholders a specific number or
3 percentage of votes, the provision of the articles setting forth
4 that requirement shall not be amended or repealed by any lesser
5 number or percentage of votes of the shareholders or of the
6 class of shareholders.
7 § 1921. Merger and consolidation authorized.
8 * * *
9 (c) Business trusts, partnerships and other associations.--
10 The provisions of this subchapter applicable to domestic and
11 foreign business corporations shall also be applicable to a
12 merger [or], consolidation or share exchange to which a domestic
13 business corporation is a party or in which such a corporation
14 is the resulting entity with [or], into or involving a domestic
15 or foreign partnership, business trust or other association. The
16 surviving [or], resulting or exchanging entity in such a merger
17 [or], consolidation or share exchange may be a corporation,
18 partnership, business trust or other association. Subject to the
19 provisions of Subchapter F of Chapter 85 (relating to merger and
20 consolidation), the powers and duties vested in and imposed upon
21 the board of directors and shareholders in this subchapter shall
22 be exercised and performed by the group of persons under the
23 direction of whom the business and affairs of the partnership,
24 business trust or other association are managed and the holders
25 or owners of beneficial or other interests in the partnership,
26 business trust or other association, respectively, irrespective
27 of the names by which the managing group and the holders or
28 owners of beneficial or other interests are designated. The
29 units into which the beneficial or other interests in the
30 partnership, business trust or other association are divided
19900S1761B2459 - 100 -
1 shall be deemed to be shares for the purposes of applying the
2 provisions of this subchapter to a merger, consolidation or
3 share exchange involving the partnership, business trust or
4 other association. Dissenters rights shall be available to a
5 holder of beneficial or other interests only to the extent, if
6 any, provided by the law under which the partnership, business
7 trust or other association is organized.
8 § 1922. Plan of merger or consolidation.
9 (a) Preparation of plan.--A plan of merger or consolidation,
10 as the case may be, shall be prepared, setting forth:
11 * * *
12 (4) Any provisions desired providing special treatment
13 of shares held by any shareholder or group of shareholders as
14 authorized by, and subject to the provisions of, section 1906
15 (relating to special treatment of holders of shares of same
16 class or series).
17 * * *
18 (d) Party to plan.--A corporation, partnership, business
19 trust or other association that approves a plan in its capacity
20 as a shareholder or creditor of a merging or consolidating
21 corporation, or that furnishes all or a part of the
22 consideration contemplated by a plan, does not thereby become a
23 party to the plan for the purposes of this subchapter.
24 § 1923. Notice of meeting of shareholders.
25 (a) General rule.--Written notice of the meeting of
26 shareholders called for the purpose of considering the proposed
27 plan shall be given to each shareholder of record, whether or
28 not entitled to vote thereon, of each domestic business
29 corporation that is a party to the plan. There shall be included
30 in, or enclosed with, the notice a copy of the proposed plan or
19900S1761B2459 - 101 -
1 a summary thereof and, if Subchapter D of Chapter 15 (relating
2 to dissenters rights) is applicable to the holders of shares of
3 any class or series, a copy of that subchapter and of section
4 1930 (relating to dissenters rights) shall be furnished to the
5 holders of shares of that class or series.
6 * * *
7 § 1924. Adoption of plan.
8 (a) General rule.--The plan of merger or consolidation shall
9 be adopted upon receiving the affirmative vote of a majority of
10 the votes cast by all shareholders entitled to vote thereon of
11 each of the domestic business corporations that is a party to
12 the plan and, if any class or series of shares is entitled to
13 vote thereon as a class, the affirmative vote of a majority of
14 the votes cast in each class vote. The holders of any class or
15 series of shares of a domestic corporation that is a party to a
16 plan that effects any change in the articles of the corporation
17 shall be entitled to vote as a class on the plan if they would
18 have been entitled to a class vote under the provisions of
19 section 1914 (relating to adoption of amendments) had the change
20 been accomplished under Subchapter B (relating to amendment of
21 articles). A proposed plan of merger or consolidation shall not
22 be deemed to have been adopted by the corporation unless it has
23 also been approved by the board of directors, regardless of the
24 fact that the board has directed or suffered the submission of
25 the plan to the shareholders for action.
26 (b) Adoption by board of directors.--
27 (1) Unless otherwise required by its bylaws, a plan of
28 merger or consolidation shall not require the approval of the
29 shareholders of a constituent domestic business corporation
30 if:
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1 (i) whether or not the constituent corporation is
2 the surviving corporation:
3 (A) [the plan, whether or not the corporation is
4 the surviving corporation, does not alter the status
5 of the corporation as] the surviving or new
6 corporation is a domestic business corporation [or
7 alter in any respect the provisions of its articles]
8 and the articles of the surviving or new corporation
9 are identical to the articles of the constituent
10 corporation, except changes that under section
11 1914(c) (relating to adoption by board of directors)
12 may be made without shareholder action; [and]
13 (B) each share of the constituent corporation
14 outstanding immediately prior to the effective date
15 of the merger or consolidation is to continue as or
16 to be converted into, except as may be otherwise
17 agreed by the holder thereof, an identical share of
18 the surviving or new corporation after the effective
19 date of the merger or consolidation; and
20 (C) the plan provides that the shareholders of
21 the constituent corporation are to hold in the
22 aggregate shares of the surviving or new corporation
23 to be outstanding immediately after the effectiveness
24 of the plan entitled to cast at least a majority of
25 the votes entitled to be cast generally for the
26 election of directors;
27 (ii) immediately prior to the adoption of the plan
28 and at all times thereafter prior to its effective date,
29 another corporation that is a party to the plan owns
30 directly or indirectly 90% or more of the outstanding
19900S1761B2459 - 103 -
1 shares of each class of the constituent corporation; or
2 (iii) no shares of the constituent corporation have
3 been issued prior to the adoption of the plan of merger
4 or consolidation by the board of directors pursuant to
5 section 1922 (relating to plan of merger or
6 consolidation).
7 (2) If a merger or consolidation is effected pursuant to
8 paragraph (1)(i) or (iii), the plan of merger or
9 consolidation shall be deemed adopted by the constituent
10 corporation when it has been adopted by the board of
11 directors pursuant to section 1922.
12 (3) If a merger or consolidation of a subsidiary
13 corporation with a parent corporation is effected pursuant to
14 paragraph (1)(ii), the plan of merger or consolidation shall
15 be deemed adopted by the subsidiary corporation when it has
16 been adopted by the board of the parent corporation and
17 execution of articles of merger or consolidation by the
18 subsidiary corporation shall not be necessary.
19 * * *
20 § 1931. Share exchanges.
21 * * *
22 (b) Plan of exchange.--A plan of exchange shall be prepared,
23 setting forth:
24 (1) The terms and conditions of the exchange.
25 (2) The manner and basis of converting the shares of the
26 exchanging corporation into shares or other securities or
27 obligations of the acquiring person[. If], and, if any of the
28 shares of the exchanging corporation are not to be converted
29 solely into shares or other securities or obligations of the
30 acquiring person, the shares or other securities or
19900S1761B2459 - 104 -
1 obligations of any other person or cash, property or rights
2 that the holders of the shares of the exchanging corporation
3 are to receive in exchange for, or upon conversion of, the
4 shares and the surrender of any certificates [or instruments]
5 evidencing them, which securities or obligations, if any, of
6 any other person or cash, property and rights may be in
7 addition to or in lieu of the shares or other securities or
8 obligations of the acquiring person.
9 (3) Any changes desired to be made in the articles of
10 the exchanging corporation, which may include a restatement
11 of the articles.
12 (4) Any provisions desired providing special treatment
13 of shares held by any shareholder or group of shareholders as
14 authorized by, and subject to the provisions of, section 1906
15 (relating to special treatment of holders of shares of same
16 class or series). Notwithstanding subsection (a), a plan that
17 provides special treatment may affect less than all of the
18 outstanding shares of a class or series.
19 (5) Such other provisions as are deemed desirable.
20 Any of the terms of the plan may be made dependent upon facts
21 ascertainable outside of the plan if the manner in which the
22 facts will operate upon the terms of the plan is set forth in
23 the plan.
24 * * *
25 (h) Special requirements.--If any provision of the articles
26 or bylaws of an exchanging domestic business corporation adopted
27 before October 1, 1989, requires for the proposal or adoption of
28 a plan of merger, consolidation or asset transfer a specific
29 number or percentage of votes of directors or shareholders or
30 other special procedures, the plan of exchange shall not be
19900S1761B2459 - 105 -
1 proposed by the directors or adopted by the shareholders without
2 that number or percentage of votes or compliance with the other
3 special procedures.
4 § 1952. Proposal and adoption of plan of division.
5 (a) Preparation of plan.--A plan of division shall be
6 prepared, setting forth:
7 * * *
8 (5) Any provisions desired providing special treatment
9 of shares held by any shareholder or group of shareholders as
10 authorized by, and subject to the provisions of, section 1906
11 (relating to special treatment of holders of shares of same
12 class or series).
13 * * *
14 (h) Special requirements.--If any provision of the articles
15 or bylaws of a dividing domestic business corporation adopted
16 before [January] October 1, 1989, requires for the proposal or
17 adoption of a plan of merger, consolidation or asset transfer a
18 specific number or percentage of votes of directors or
19 shareholders or other special procedures, the plan of division
20 shall not be proposed or adopted by the directors or (if
21 adoption by the shareholders is otherwise required by this
22 subchapter) adopted by the shareholders without that number or
23 percentage of votes or compliance with the other special
24 procedures.
25 § 1954. Articles of division.
26 Upon the adoption of a plan of division by the corporation
27 desiring to divide, as provided in this subchapter, articles of
28 division shall be executed by the corporation and shall, subject
29 to section 109 (relating to name of commercial registered office
30 provider in lieu of registered address), set forth:
19900S1761B2459 - 106 -
1 (1) The name and the location of the registered office,
2 including street and number, if any, of the dividing domestic
3 business corporation or, in the case of a dividing foreign
4 business corporation, the name of the corporation and the
5 jurisdiction in which it is incorporated, together with
6 either:
7 (i) If a qualified foreign business corporation, the
8 address, including street and number, if any, of its
9 registered office in this Commonwealth.
10 (ii) If a nonqualified foreign business corporation,
11 the address, including street and number, if any, of its
12 principal office under the laws of that jurisdiction.
13 (2) The statute under which the dividing corporation was
14 incorporated and the date of incorporation.
15 (3) A statement that the dividing corporation will, or
16 will not, survive the division.
17 (4) The name and the address, including street and
18 number, if any, of[:
19 (i)] the registered office of each new domestic
20 business corporation or qualified foreign business
21 corporation resulting from the division[; and
22 (ii) the principal office under the laws of the
23 jurisdiction in which it is incorporated of each new
24 nonqualified foreign business corporation resulting from
25 the division].
26 (5) If the plan is to be effective on a specific date,
27 the hour, if any, and the month, day and year of the
28 effective date.
29 (6) The manner in which the plan was adopted by the
30 corporation.
19900S1761B2459 - 107 -
1 (7) Except as provided in section 1901 (relating to
2 omission of certain provisions from filed plans), the plan of
3 division.
4 § 1957. Effect of division.
5 * * *
6 (g) Disposition of shares.--Unless otherwise provided in the
7 plan, the shares and other securities or obligations, if any, of
8 each new corporation resulting from the division shall be
9 distributable to:
10 (1) the surviving corporation, if the dividing
11 corporation survives the division; or
12 (2) the holders of the common or other residuary shares
13 of the dividing corporation pro rata, in any other case.
14 § 1962. Proposal and adoption of plan of conversion.
15 (a) Preparation of plan.--A plan of conversion shall be
16 prepared, setting forth:
17 (1) The terms and conditions of the conversion.
18 (2) A restatement of the articles of the resulting
19 corporation, which articles shall comply with the
20 requirements of this part relating to nonprofit corporations.
21 (3) Any provisions desired providing special treatment
22 of shares held by any shareholder or group of shareholders as
23 authorized by, and subject to the provisions of, section 1906
24 (relating to special treatment of holders of shares of same
25 class or series).
26 (4) Such other provisions as are deemed desirable.
27 Any of the terms of the plan may be made dependent upon facts
28 ascertainable outside of the plan if the manner in which the
29 facts will operate upon the terms of the plan is set forth in
30 the plan.
19900S1761B2459 - 108 -
1 * * *
2 § 1972. Proposal of voluntary dissolution.
3 (a) General rule.--Any business corporation that has
4 commenced business may elect to dissolve voluntarily and wind up
5 its affairs in the manner provided in this subchapter. Voluntary
6 dissolution shall be proposed by the adoption by the board of
7 directors of a resolution recommending that the corporation be
8 dissolved voluntarily.
9 (b) Submission to shareholders.--The board of directors
10 shall direct that the question of dissolution be submitted to a
11 vote of the shareholders of the corporation entitled to vote
12 thereon at a regular or special meeting of the shareholders.
13 § 1974. Adoption of proposal.
14 (a) General rule.--The resolution shall be adopted upon
15 receiving the affirmative vote of a majority of the votes cast
16 by all shareholders of the business corporation entitled to vote
17 thereon and, if any class of shares is entitled to vote thereon
18 as a class, the affirmative vote of a majority of the votes cast
19 in each class vote. A proposal for the voluntary dissolution of
20 a corporation shall not be deemed to have been adopted by the
21 corporation unless it has also been recommended by resolution of
22 the board of directors, regardless of the fact that the board
23 has directed or suffered the submission of such a proposal to
24 the shareholders for action.
25 * * *
26 § 2101. Application and effect of chapter.
27 (a) General rule.--This chapter shall be applicable to:
28 (1) A business corporation that elects to become a
29 nonstock corporation in the manner provided by this chapter.
30 (2) A domestic corporation for profit subject to Subpart
19900S1761B2459 - 109 -
1 D (relating to cooperative corporations) organized on a
2 nonstock basis.
3 (3) A domestic insurance corporation that is a mutual
4 insurance company.
5 * * *
6 § 2105. Termination of nonstock corporation status.
7 * * *
8 (c) Mutual insurance companies.--With respect to the
9 termination of the status of a mutual insurance company as a
10 nonstock corporation, see section 103 (relating to subordination
11 of title to regulatory laws) and the act of December 10, 1970
12 (P.L.884, No.279) referred to as the Mutual Insurance Company
13 Conversion Law.
14 § 2121. Corporate name of nonstock corporations.
15 * * *
16 (b) Insurance names.--[A nonstock corporation shall not use
17 a name containing any of the words "annuity," "assurance,"
18 "beneficial," "bond," "casualty," "endowment," "fidelity,"
19 "fraternal," "guaranty," "indemnity," "insurance," "surety" or
20 "title" when used in such a way as to imply that the corporation
21 is engaged in the business of writing insurance as principal, or
22 any other words of like purport, unless there is submitted a
23 certificate from the Insurance Department certifying that the
24 department has no objection to the use by the corporation or
25 proposed corporation of such designation.] See section
26 1303(c)(1)(iii) (relating to corporate name).
27 § 2301. Application and effect of chapter.
28 * * *
29 (d) Transitional provisions.--The following provisions of
30 this chapter shall not apply to a statutory close corporation
19900S1761B2459 - 110 -
1 existing on [January 1,] September 30, 1989, unless otherwise
2 provided in a bylaw adopted in the manner provided by section
3 2332(b) (relating to procedure):
4 Section 2321(b) (relating to preemptive rights) insofar
5 as such provision authorizes the shareholders to adopt a
6 bylaw eliminating or limiting the preemptive rights provided
7 in that subsection.
8 Section 2322 (relating to share transfer restrictions).
9 Section 2323 (relating to transfer of shares in breach of
10 transfer restrictions). If section 2323 is not applicable to
11 the corporation, transfer restrictions (including a
12 restriction that is held not to be authorized by section 1529
13 (relating to transfer of securities; restrictions)) shall be
14 enforced in the same manner as if this article had not been
15 enacted.
16 Section 2325 (relating to sale option of estate of
17 shareholder).
18 Section 2336 (relating to fundamental changes).
19 * * *
20 § 2304. Additional contents of articles of statutory close
21 corporations.
22 (a) General rule.--In addition to the provisions otherwise
23 required by this subpart, the articles of a statutory close
24 corporation shall provide that neither the corporation nor any
25 shareholder shall make an offering of any of its shares of any
26 class that would constitute a "public offering" within the
27 meaning of the Securities Act of 1933 [(15 U.S.C. § 77a et
28 seq.)].
29 * * *
30 § 2309. Involuntary termination of statutory close corporation
19900S1761B2459 - 111 -
1 status; proceeding to prevent loss of status.
2 (a) General rule.--If any event occurs as a result of which
3 the provision included in the articles of a statutory close
4 corporation pursuant to section 2304(a) (relating to additional
5 contents of articles of statutory close corporations) to qualify
6 it as a statutory close corporation has been breached, the
7 status of the business corporation as a statutory close
8 corporation under this chapter shall terminate unless:
9 (1) Within 30 days after the occurrence of the event or
10 within 30 days after the event has been discovered, whichever
11 is later, the corporation:
12 (i) Files in the Department of State a [certificate]
13 statement executed by the corporation setting forth:
14 (A) The name of the corporation and, subject to
15 section 109 (relating to name of commercial
16 registered office provider in lieu of registered
17 address), the address, including street and number,
18 if any, of its registered office.
19 (B) A statement that the provision included in
20 its articles pursuant to section 2304(a) to qualify
21 it as a statutory close corporation has been
22 breached.
23 (ii) Furnishes a copy of the [certificate] statement
24 to each shareholder.
25 (2) The corporation concurrently with the filing of the
26 [certificate] statement takes such steps as are necessary to
27 correct the situation that threatens its status as a
28 statutory close corporation including, without limitation,
29 the refusal to register the transfer of shares that have been
30 wrongfully transferred as provided by section 2308 (relating
19900S1761B2459 - 112 -
1 to issuance or transfer of shares of a statutory close
2 corporation in breach of qualifying conditions) or initiation
3 of a proceeding under subsection (b).
4 * * *
5 (c) Notice of cure of breach.--When the situation that
6 threatened the status of the corporation as a statutory close
7 corporation has been remedied and if the corporation has not
8 amended its articles in accordance with section 2307 (relating
9 to voluntary termination of statutory close corporation status
10 by amendment of articles), the corporation shall file in the
11 department a [certificate] statement executed by the
12 corporation, setting forth:
13 (1) The name of the corporation and, subject to section
14 109 (relating to name of commercial registered office
15 provider in lieu of registered address), the address,
16 including street and number, if any, of its registered
17 office.
18 (2) A statement that no breach of the provision included
19 in its articles pursuant to section 2304(a) exists.
20 Upon the filing of the [certificate] statement, the status of
21 the corporation as a statutory close corporation under this
22 chapter, if theretofore terminated by reason of subsection (a),
23 shall be restored.
24 * * *
25 § 2334. Appointment of provisional director in certain cases.
26 * * *
27 (b) Application for relief.--
28 (1) An application for relief under this section must be
29 filed by or on behalf of:
30 (i) at least one-half of the number of directors
19900S1761B2459 - 113 -
1 then in office;
2 (ii) the holders of shares entitled to cast at least
3 one-third of the votes that all shareholders are entitled
4 to cast for the election of directors; or
5 (iii) shareholders entitled to cast at least two-
6 thirds of the votes that all shareholders of [the] any
7 class entitled to elect one or more directors are
8 entitled to cast for the election of directors, if there
9 is more than one class of shares then entitled to elect
10 one or more directors.
11 A bylaw of a statutory close corporation adopted by the
12 shareholders may provide that a lesser proportion of the
13 directors or of the shareholders or of a class of
14 shareholders may apply for relief under this section.
15 (2) Even though the requirements of paragraph (1) are
16 not satisfied, the court may nevertheless appoint a
17 provisional director if permitted by section 2333(b)
18 (relating to provisional director).
19 * * *
20 § 2502. Registered corporation status.
21 Subject to additional definitions contained in subsequent
22 provisions of this chapter which are applicable to specific
23 subchapters of this chapter, as used in this chapter, the term
24 "registered corporation" shall mean:
25 (1) A domestic business corporation:
26 (i) [having] that:
27 (A) has a class or series of shares entitled to
28 vote generally in the election of directors of the
29 corporation registered under the [Securities]
30 Exchange Act [of 1934 (15 U.S.C. § 78a et seq.)]; or
19900S1761B2459 - 114 -
1 (B) is registered as a management company under
2 the Investment Company Act of 1940 and in the
3 ordinary course of business does not redeem
4 outstanding shares at the option of a shareholder at
5 the net asset value or at another agreed method or
6 amount of value thereof; or
7 (ii) that is:
8 (A) subject to the reporting obligations imposed
9 by section 15(d) of the [Securities] Exchange Act [of
10 1934 (15 U.S.C. § 78o(d))] by reason of having filed
11 a registration statement which has become effective
12 under the Securities Act of 1933 [(15 U.S.C. § 77a et
13 seq.)] relating to shares of a class or series of its
14 equity securities[.] entitled to vote generally in
15 the election of directors; or
16 (B) registered as a management company under the
17 Investment Company Act of 1940 and in the ordinary
18 course of business redeems outstanding shares at the
19 option of a shareholder at the net asset value or at
20 another agreed method or amount of value thereof.
21 A corporation which satisfies both subparagraphs (i) and (ii)
22 shall be deemed to be described solely in subparagraph (i)
23 for the purposes of this chapter.
24 (2) A domestic business corporation all of the shares of
25 which are owned, directly or indirectly, by one or more
26 registered corporations or foreign corporations for profit
27 described in section 4102(b) (relating to registered
28 corporation exclusions).
29 § 2524. Consent of shareholders in lieu of meeting.
30 (a) General rule.--An action may be authorized by the
19900S1761B2459 - 115 -
1 shareholders of a registered corporation without a meeting by
2 less than unanimous written consent[, if action by less than
3 unanimous written consent is] only if permitted by its
4 articles[,].
5 (b) Effectiveness of action.--An action authorized by the
6 shareholders of a registered corporation without a meeting by
7 less than unanimous written consent may become effective
8 immediately upon its authorization, but prompt notice of the
9 action shall be given to those shareholders entitled to vote
10 thereon who have not consented.
11 § 2525. Judges of election.
12 The board of directors of a registered corporation may adopt
13 or change a bylaw on any subject otherwise expressly committed
14 to the shareholders by section 1765 (relating to judges of
15 election).
16 § 2526. Appointment of custodian.
17 Section 1767(a)(2) (relating to appointment of custodian of
18 corporation on deadlock or other cause) shall not be applicable
19 to a registered corporation described in section 2502(2)
20 (relating to registered corporation status).
21 § 2538. Approval of transactions with interested shareholders.
22 (a) General rule.--The following transactions shall require
23 the affirmative vote of the shareholders entitled to cast at
24 least a majority of the votes that all shareholders other than
25 the interested shareholder are entitled to cast with respect to
26 the transaction, without counting the vote of the interested
27 shareholder:
28 (1) Any transaction authorized under Subchapter C of
29 Chapter 19 (relating to merger, consolidation, share
30 exchanges and sale of assets) between a registered
19900S1761B2459 - 116 -
1 corporation or subsidiary thereof and a shareholder of the
2 registered corporation.
3 (2) Any transaction authorized under Subchapter D of
4 Chapter 19 (relating to division) in which the interested
5 shareholder receives a disproportionate amount of any of the
6 shares or other securities of any corporation surviving or
7 resulting from the plan of division.
8 (3) Any transaction authorized under Subchapter F of
9 Chapter 19 (relating to voluntary dissolution and winding up)
10 in which a shareholder is treated differently from other
11 shareholders of the same class (other than any dissenting
12 shareholders under Subchapter D of Chapter 15 (relating to
13 dissenters rights)).
14 (4) Any reclassification authorized under Subchapter B
15 of Chapter 19 (relating to amendment of articles) in which
16 the percentage of voting or economic share interest in the
17 corporation of a shareholder is materially increased relative
18 to substantially all other shareholders.
19 (b) Exceptions.--Subsection (a) shall not apply to a
20 transaction:
21 (1) that has been approved by a majority vote of the
22 board of directors without counting the vote of directors
23 who:
24 (i) are directors or officers of, or have a material
25 equity interest in, the interested shareholder; or
26 (ii) were nominated for election as a director by
27 the interested shareholder, and first elected as a
28 director, within 24 months of the date of the vote on the
29 proposed transaction; or
30 (2) in which the consideration to be received by the
19900S1761B2459 - 117 -
1 shareholders for shares of any class of which shares are
2 owned by the interested shareholder is not less than the
3 highest amount paid by the interested shareholder in
4 acquiring shares of the same class.
5 (c) Additional approvals.--The approvals required by this
6 section shall be in addition to, and not in lieu of, any other
7 approval required by this subpart, the articles of the
8 corporation, the bylaws of the corporation, or otherwise.
9 (d) Definition of "interested shareholder."--As used in this
10 section, the term "interested shareholder" includes the
11 shareholder who is a party to the transaction or who is treated
12 differently from other shareholders and any person, or group of
13 persons, that is acting jointly or in concert with the
14 interested shareholder and any person who, directly or
15 indirectly, controls, is controlled by, or is under common
16 control with, the interested shareholder. An interested
17 shareholder shall not include any person who, in good faith and
18 not for the purpose of circumventing this section, is an agent,
19 bank, broker, nominee or trustee for one or more other persons,
20 to the extent that the other person or persons are not
21 interested shareholders.
22 § 2541. Application and effect of subchapter.
23 (a) General rule.--Except as otherwise provided in this
24 section, this subchapter shall apply to a registered corporation
25 unless:
26 (1) the registered corporation is one described in
27 section 2502(1)(ii) or (2) (relating to registered
28 corporation status);
29 (2) (i) the bylaws, by amendment adopted either:
30 [(i)] (A) by March 23, 1984; or
19900S1761B2459 - 118 -
1 [(ii)] (B) on or after March 23, 1988, and on or
2 before June 21, 1988;
3 and, in either event, not subsequently rescinded by an
4 article amendment, explicitly provide that this
5 subchapter shall not be applicable to the corporation[;
6 or] in the case of a corporation which on June 21, 1988,
7 did not have outstanding one or more classes or series of
8 preference shares entitled, upon the occurrence of a
9 default in the payment of dividends or another similar
10 contingency, to elect a majority of the members of the
11 board of directors;
12 (ii) a bylaw adopted on or before June 21, 1988, by
13 a corporation excluded from the scope of this paragraph
14 by the restriction of subparagraph (i) relating to
15 certain outstanding preference shares shall be
16 ineffective unless ratified under paragraph (3);
17 (3) the bylaws of which explicitly provide that this
18 subchapter shall not be applicable to the corporation by
19 amendment ratified by the board of directors on or after (in
20 printing this act in the Laws of Pennsylvania and the
21 Pennsylvania Consolidated Statutes, the Legislative Reference
22 Bureau shall insert here, in lieu of this statement, the date
23 which is the date of enactment of this amendatory act) and on
24 or before (in printing this act in the Laws of Pennsylvania
25 and the Pennsylvania Consolidated Statutes, the Legislative
26 Reference Bureau shall insert here, in lieu of this
27 statement, the date which is 90 days after the date of
28 enactment of this amendatory act) in the case of a
29 corporation:
30 (i) which on June 21, 1988, had outstanding one or
19900S1761B2459 - 119 -
1 more classes or series of preference shares entitled,
2 upon the occurrence of a default in the payment of
3 dividends or another similar contingency, to elect a
4 majority of the members of the board of directors; and
5 (ii) the bylaws of which on that date contained a
6 provision described in paragraph (2); or
7 [(3)] (4) the articles explicitly provide that this
8 subchapter shall not be applicable to the corporation by a
9 provision included in the original articles, by an article
10 amendment adopted prior to the date of the control
11 transaction and prior to or on March 23, 1988, pursuant to
12 the procedures then applicable to the corporation, or by an
13 [article] articles amendment adopted prior to the date of the
14 control transaction and subsequent to March 23, 1988,
15 pursuant to both:
16 (i) the procedures then applicable to the
17 corporation; and
18 (ii) unless such proposed amendment has been
19 approved by the board of directors of the corporation, in
20 which event this subparagraph shall not be applicable,
21 the affirmative vote of the shareholders entitled to cast
22 at least 80% of the votes which all shareholders are
23 entitled to cast thereon.
24 A reference in the articles or bylaws to former section 910
25 (relating to right of shareholders to receive payment for shares
26 following a control transaction) of the act of May 5, 1933
27 (P.L.364, No.106), known as the Business Corporation Law of
28 1933, shall be deemed a reference to this subchapter for the
29 purposes of this section. See section 101(c) (relating to
30 references to prior statutes).
19900S1761B2459 - 120 -
1 * * *
2 § 2543. Controlling person or group.
3 (a) General rule.--For the purpose of this subchapter, a
4 "controlling person or group" means a person who has, or a group
5 of persons acting in concert that has, voting power over voting
6 shares of the registered corporation that would entitle the
7 holders thereof to cast at least 20% of the votes that all
8 shareholders would be entitled to cast in an election of
9 directors of the corporation.
10 (b) Exceptions generally.--Notwithstanding subsection (a):
11 (1) A person or group which would otherwise be a
12 controlling person or group within the meaning of this
13 section shall not be deemed a controlling person or group
14 unless, subsequent to the later of March 23, 1988, or the
15 date this subchapter becomes applicable to a corporation by
16 bylaw or article amendment or otherwise, that person or group
17 increases the percentage of outstanding voting shares of the
18 corporation over which it has voting power to in excess of
19 the percentage of outstanding voting shares of the
20 corporation over which that person or group had voting power
21 on such later date, and to at least the amount specified in
22 subsection (a), as the result of forming or enlarging a group
23 or acquiring, by purchase, voting power over voting shares of
24 the corporation.
25 (2) No person or group shall be deemed to be a
26 controlling person or group at any particular time if voting
27 power over any of the following voting shares is required to
28 be counted at such time in order to meet the 20% minimum:
29 (i) Shares which have been held continuously by a
30 natural person since January 1, 1983, and which are held
19900S1761B2459 - 121 -
1 by such natural person at such time.
2 (ii) Shares which are held at such time by any
3 natural person or trust, estate, foundation or other
4 similar entity to the extent the shares were acquired
5 solely by gift, inheritance, bequest, devise or other
6 testamentary distribution or series of these
7 transactions, directly or indirectly, from a natural
8 person who had acquired the shares prior to January 1,
9 1983.
10 (iii) Shares which were acquired pursuant to a stock
11 split, stock dividend, reclassification or similar
12 recapitalization with respect to shares described under
13 this paragraph that have been held continuously since
14 their issuance by the corporation by the natural person
15 or entity that acquired them from the corporation or that
16 were acquired, directly or indirectly, from such natural
17 person or entity, solely pursuant to a transaction or
18 series of transactions described in subparagraph (ii),
19 and that are held at such time by a natural person or
20 entity described in subparagraph (ii).
21 (iv) Control shares as defined in section 2562
22 (relating to definitions) which have not yet been
23 accorded voting rights pursuant to section 2564(a)
24 (relating to voting rights of shares acquired in a
25 control-share acquisition).
26 (v) Shares, the voting rights of which are
27 attributable to a person under subsection (d) if:
28 (A) the person acquired the option or conversion
29 right directly from or made the contract, arrangement
30 or understanding or has the relationship directly
19900S1761B2459 - 122 -
1 with the corporation; and
2 (B) the person does not at the particular time
3 own or otherwise effectively possess the voting
4 rights of the shares.
5 (vi) Shares acquired directly from the corporation
6 or an affiliate or associate, as defined in section 2552
7 (relating to definitions), of the corporation by a person
8 engaged in business as an underwriter of securities who
9 acquires the shares through his participation in good
10 faith in a firm commitment underwriting registered under
11 the Securities Act of 1933.
12 (3) In determining whether a person or group is or would
13 be a controlling person or group at any particular time,
14 there shall be disregarded voting power arising from a
15 contingent right of the holders of one or more classes or
16 series of preference shares to elect one or more members of
17 the board of directors upon or during the continuation of a
18 default in the payment of dividends on such shares or another
19 similar contingency.
20 * * *
21 § 2552. Definitions.
22 The following words and phrases when used in this subchapter
23 shall have the meanings given to them in this section unless the
24 context clearly indicates otherwise:
25 * * *
26 ["Exchange Act." The Securities Exchange Act of 1934 (48
27 Stat. 881, 15 U.S.C. § 78a et seq.), as amended.]
28 * * *
29 § 2554. Business combination.
30 The term "business combination," when used in reference to
19900S1761B2459 - 123 -
1 any registered corporation and any interested shareholder of the
2 corporation, means any of the following:
3 (1) A merger [or], consolidation, share exchange or
4 division of the corporation or any subsidiary of the
5 corporation [with]:
6 (i) with the interested shareholder; or
7 (ii) with, involving or resulting in any other
8 corporation (whether or not itself an interested
9 shareholder of the registered corporation) which is, or
10 after the merger or consolidation would be, an affiliate
11 or associate of the interested shareholder.
12 * * *
13 § 2561. Application and effect of subchapter.
14 * * *
15 (b) Exceptions.--This subchapter shall not apply to any
16 control-share acquisition:
17 * * *
18 (2) Of a corporation:
19 (i) (A) the bylaws of which explicitly provide that
20 this subchapter shall not be applicable to the
21 corporation by amendment adopted by the board of
22 directors on or before July 26, 1990, in the case of
23 a corporation [which]:
24 (I) which on April 27, 1990, was a
25 registered corporation described in section
26 2502(1)(i) [on April 27, 1990; or]; and
27 (II) did not on that date have outstanding
28 one or more classes or series of preference
29 shares entitled, upon the occurrence of a default
30 in the payment of dividends or another similar
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1 contingency, to elect a majority of the members
2 of the board of directors;
3 (B) a bylaw adopted on or before July 26, 1990,
4 by a corporation excluded from the scope of this
5 subparagraph by clause (A)(II) shall be ineffective
6 unless ratified under subparagraph (ii);
7 (ii) the bylaws of which explicitly provide that
8 this subchapter shall not be applicable to the
9 corporation by amendment ratified by the board of
10 directors on or after (in printing this act in the Laws
11 of Pennsylvania and the Pennsylvania Consolidated
12 Statutes, the Legislative Reference Bureau shall insert
13 here, in lieu of this statement, the date which is the
14 date of enactment of this amendatory act) and on or
15 before (in printing this act in the Laws of Pennsylvania
16 and the Pennsylvania Consolidated Statutes, the
17 Legislative Reference Bureau shall insert here, in lieu
18 of this statement, the date which is 90 days after the
19 date of enactment of this amendatory act) in the case of
20 a corporation:
21 (A) which on April 27, 1990, was a registered
22 corporation described in section 2502(1)(i);
23 (B) which on that date had outstanding one or
24 more classes or series of preference shares entitled,
25 upon the occurrence of a default in the payment of
26 dividends or another similar contingency, to elect a
27 majority of the members of the board of directors;
28 and
29 (C) the bylaws of which on that date contained a
30 provision described in subparagraph (i); or
19900S1761B2459 - 125 -
1 [(ii)] (iii) in any other case, the articles of
2 which explicitly provide that this subchapter shall not
3 be applicable to the corporation by a provision included
4 in the original articles, or by an articles amendment
5 adopted at any time by a corporation other than a
6 registered corporation described in section 2502(1)(i) or
7 on or before 90 days after the corporation first becomes
8 a registered corporation described in section 2502(1)(i).
9 * * *
10 (5) Consummated:
11 * * *
12 (xi) By a person engaged in business as an
13 underwriter of securities who acquires the shares
14 directly from the corporation or an affiliate or
15 associate of the corporation through his participation in
16 good faith in a firm commitment underwriting registered
17 under the Securities Act of 1933.
18 * * *
19 (d) Status of certain shares and effect of formation of
20 group on status.--
21 * * *
22 (4) No share of a corporation over which voting power,
23 or of which beneficial ownership, was or is acquired by the
24 acquiring person after April 27, 1990, at a time when this
25 subchapter was or is not applicable to the corporation shall
26 be deemed to be a control share.
27 (e) Application of duties.--The duty of the board of
28 directors, committees of the board and individual directors
29 under section [2564] 2565 (relating to procedure for
30 establishing voting rights of control shares) is solely to the
19900S1761B2459 - 126 -
1 corporation and may be enforced directly by the corporation or
2 may be enforced by a shareholder, as such, by an action in the
3 right of the corporation, and may not be enforced directly by a
4 shareholder or by any other person or group.
5 § 2562. Definitions.
6 The following words and phrases when used in this subchapter
7 shall have the meanings given to them in this section unless the
8 context clearly indicates otherwise:
9 * * *
10 "Disinterested shares." All voting shares of a corporation
11 that are not affiliate shares and that were beneficially owned
12 by the same holder (or a direct or indirect transferee from the
13 holder to the extent such shares were acquired by the transferee
14 solely pursuant to a transfer or series of transfers under
15 section 2561(b)(5)(i) through (vi) (relating to application and
16 effect of subchapter)) continuously during the period from:
17 * * *
18 (2) the record date established pursuant to section
19 [2564(c)] 2565(c) (relating to notice and record date).
20 ["Exchange Act." The term shall have the meaning specified
21 in section 2552 (relating to definitions).]
22 * * *
23 "Proxy solicitation" or "solicitation of proxies." Includes
24 any solicitation of a proxy, including a solicitation of a
25 revocable proxy of the nature and under the circumstances
26 described in section [2562.1(b)(3)] 2563(b)(3) (relating to
27 acquiring person safe harbor).
28 * * *
29 § [2562.1] 2563. Acquiring person safe harbor.
30 (a) Nonparticipant.--For the purposes of this subchapter, a
19900S1761B2459 - 127 -
1 person shall not be deemed an acquiring person, absent
2 significant other activities indicating that a person should be
3 deemed an acquiring person, by reason of voting or giving a
4 proxy or consent as a shareholder of the corporation if the
5 person is one who:
6 (1) did not acquire any voting shares of the corporation
7 with the purpose of changing or influencing control of the
8 corporation, seeking to acquire control of the corporation or
9 influencing the outcome of a vote of shareholders under
10 section [2563] 2564 (relating to voting rights of shares
11 acquired in a control-share acquisition) or in connection
12 with or as a participant in any agreement, arrangement,
13 relationship, understanding or otherwise having any such
14 purpose;
15 * * *
16 (b) Certain holders.--For the purpose of this subchapter, a
17 person shall not be deemed an acquiring person if such person
18 holds voting power within any of the ranges specified in the
19 definition of "control-share acquisition":
20 * * *
21 (2) in connection with the solicitation of proxies or
22 consents by or on behalf of the corporation in connection
23 with shareholder meetings or actions of the corporation; [or]
24 (3) as a result of the solicitation of revocable proxies
25 or consents with respect to voting shares if such proxies or
26 consents both:
27 (i) are given without consideration in response to a
28 proxy or consent solicitation made in accordance with the
29 applicable rules and regulations under the Exchange Act;
30 and
19900S1761B2459 - 128 -
1 (ii) do not empower the holder thereof, whether or
2 not this power is shared with any other person, to vote
3 such shares except on the specific matters described in
4 such proxy or consent and in accordance with the
5 instructions of the giver of such proxy or consent[.]; or
6 (4) to the extent of voting power arising from a
7 contingent right of the holders of one or more classes or
8 series of preference shares to elect one or more members of
9 the board of directors upon or during the continuation of a
10 default in the payment of dividends on such shares or another
11 similar contingency.
12 § [2563] 2564. Voting rights of shares acquired in a control-
13 share acquisition.
14 * * *
15 § [2564] 2565. Procedure for establishing voting rights of
16 control shares.
17 (a) Special meeting.--A special meeting of the shareholders
18 of a registered corporation shall be called by the board of
19 directors of the corporation for the purpose of considering the
20 voting rights to be accorded to the control shares if an
21 acquiring person:
22 (1) files an information statement fully conforming to
23 section [2565] 2566 (relating to information statement of
24 acquiring person);
25 * * *
26 (d) Special meeting or submission of issue at annual or
27 special meeting not required.--Notwithstanding subsections (a)
28 and (b), the corporation is not required to call a special
29 meeting of shareholders or otherwise present the issue of the
30 voting rights to be accorded to the control shares at any annual
19900S1761B2459 - 129 -
1 or special meeting of shareholders unless:
2 (1) the acquiring person delivers to the corporation a
3 complete information statement pursuant to section [2565]
4 2566; and
5 * * *
6 § [2565] 2566. Information statement of acquiring person.
7 (a) Delivery of information statement.--An acquiring person
8 may deliver to the registered corporation at its principal
9 executive office an information statement which shall contain
10 all of the following:
11 * * *
12 (8) Any other facts that would be substantially likely
13 to affect the decision of a shareholder with respect to
14 voting on the control-share acquisition pursuant to section
15 [2563] 2564 (relating to voting rights of shares acquired in
16 a control-share acquisition).
17 * * *
18 § [2566] 2567. Redemption.
19 Unless prohibited by the terms of the articles of a
20 registered corporation in effect before a control-share
21 acquisition has occurred, the corporation may redeem all control
22 shares from the acquiring person at the average of the high and
23 low sales price of shares of the same class and series as such
24 prices are specified on a national securities exchange, national
25 quotation system or similar quotation listing service on the
26 date the corporation provides notice to the acquiring person of
27 the call for redemption:
28 (1) at any time within 24 months after the date on which
29 the acquiring person consummates a control-share acquisition,
30 if the acquiring person does not, within 30 days after
19900S1761B2459 - 130 -
1 consummation of the control-share acquisition, properly
2 request that the issue of voting rights to be accorded
3 control shares be presented to the shareholders under section
4 [2564(a)] 2565(a) or (b) (relating to procedure for
5 establishing voting rights of control shares); and
6 (2) at any time within 24 months after the issue of
7 voting rights to be accorded such shares is submitted to the
8 shareholders pursuant to section [2564(a)] 2565(a) or (b);
9 and
10 (i) such voting rights are not accorded pursuant to
11 section [2563(a)] 2564(a) (relating to voting rights of
12 shares acquired in control-share acquisition); or
13 (ii) such voting rights are accorded and
14 subsequently lapse pursuant to section [2563(b)] 2564(b)
15 (relating to lapse of voting rights).
16 § [2567] 2568. Board determinations.
17 * * *
18 § 2571. Application and effect of subchapter.
19 * * *
20 (b) Exceptions.--This subchapter shall not apply to any
21 transfer of an equity security:
22 * * *
23 (2) Of a corporation:
24 (i) (A) the bylaws of which explicitly provide that
25 this subchapter shall not be applicable to the
26 corporation by amendment adopted by the board of
27 directors on or before July 26, 1990, in the case of
28 a corporation [which]:
29 (I) which on April 27, 1990, was a
30 registered corporation described in section
19900S1761B2459 - 131 -
1 2502(1)(i) [on April 27, 1990; or]; and
2 (II) did not on that date have outstanding
3 one or more classes or series of preference
4 shares entitled, upon the occurrence of a default
5 in the payment of dividends or another similar
6 contingency, to elect a majority of the members
7 of the board of directors;
8 (B) a bylaw adopted on or before July 26, 1990,
9 by a corporation excluded from the scope of this
10 subparagraph by clause (A)(II) shall be ineffective
11 unless ratified under subparagraph (ii);
12 (ii) the bylaws of which explicitly provide that
13 this subchapter shall not be applicable to the
14 corporation by amendment ratified by the board of
15 directors on or after (in printing this act in the Laws
16 of Pennsylvania and the Pennsylvania Consolidated
17 Statutes, the Legislative Reference Bureau shall insert
18 here, in lieu of this statement, the date which is the
19 date of enactment of this amendatory act) and on or
20 before (in printing this act in the Laws of Pennsylvania
21 and the Pennsylvania Consolidated Statutes, the
22 Legislative Reference Bureau shall insert here, in lieu
23 of this statement, the date which is 90 days after the
24 date of enactment of this amendatory act) in the case of
25 a corporation:
26 (A) which on April 27, 1990, was a registered
27 corporation described in section 2502(1)(i);
28 (B) which on that date had outstanding one or
29 more classes or series of preference shares entitled,
30 upon the occurrence of a default in the payment of
19900S1761B2459 - 132 -
1 dividends or another similar contingency, to elect a
2 majority of the members of the board of directors;
3 and
4 (C) the bylaws of which on that date contained a
5 provision described in subparagraph (i); or
6 [(ii)] (iii) in any other case, the articles of
7 which explicitly provide that this subchapter shall not
8 be applicable to the corporation by a provision included
9 in the original articles, or by an articles amendment
10 adopted at any time by a corporation other than a
11 registered corporation described in section 2502(1)(i) or
12 on or before 90 days after the corporation first becomes
13 a registered corporation described in section 2502(1)(i).
14 * * *
15 (6) Consummated by:
16 * * *
17 (iii) A person engaged in business as an underwriter
18 of securities who acquires the equity securities directly
19 from the corporation or an affiliate or associate, as
20 defined in section 2552 (relating to definitions), of the
21 corporation through his participation in good faith in a
22 firm commitment underwriting registered under the
23 Securities Act of 1933.
24 * * *
25 (8) Acquired by the controlling person or group after
26 April 27, 1990, at a time when this subchapter was or is not
27 applicable to the corporation.
28 * * *
29 § 2573. Definitions.
30 The following words and phrases when used in this subchapter
19900S1761B2459 - 133 -
1 shall have the meanings given to them in this section unless the
2 context clearly indicates otherwise:
3 * * *
4 "Proxy solicitation" or "solicitation of proxies." Includes
5 any solicitation of a proxy, including a solicitation of a
6 revocable proxy of the nature and under the circumstances
7 described in section [2573.1(b)(3)] 2574(b)(3) (relating to
8 controlling person or group safe harbor).
9 * * *
10 § [2573.1] 2574. Controlling person or group safe harbor.
11 * * *
12 (c) Preference shares.--In determining whether a person or
13 group would be a controlling person or group within the meaning
14 of this subchapter, there shall be disregarded voting power, and
15 the seeking to acquire control of a corporation to the extent
16 based upon voting power, to the extent of voting power arising
17 from a contingent right of the holders of one or more classes or
18 series of preference shares to elect one or more members of the
19 board of directors upon or during the continuation of a default
20 in the payment of dividends on such shares or another similar
21 contingency.
22 § [2574] 2575. Ownership by corporation of profits resulting
23 from certain transactions.
24 * * *
25 § [2575] 2576. Enforcement actions.
26 * * *
27 § 2581. Definitions.
28 The following words and phrases when used in this subchapter
29 shall have the meanings given to them in this section unless the
30 context clearly indicates otherwise:
19900S1761B2459 - 134 -
1 * * *
2 "Control-share approval."
3 (1) The occurrence of both:
4 * * *
5 (ii) the according by such registered corporation of
6 voting rights pursuant to section [2563(a)] 2564(a)
7 (relating to voting rights of shares acquired in a
8 control-share acquisition) in connection with such
9 control-share acquisition to control shares of the
10 acquiring person.
11 (2) The term shall also include a control-share
12 acquisition effected by an acquiring person, other than a
13 control-share acquisition described in section 2561(b)(3),
14 (4) or (5) (other than subparagraph 2561(b)(5)(vii))
15 (relating to application and effect of subchapter) if the
16 control-share acquisition:
17 (i) (A) occurs primarily in response to the actions
18 of an other acquiring person where Subchapter G
19 (relating to control-share acquisitions) applies to a
20 control-share acquisition or proposed control-share
21 acquisition by such other acquiring person; and
22 (B) either:
23 (I) pursuant to an agreement or plan
24 described in section 2561(b)(5)(vii);
25 (II) after adoption of an amendment to the
26 articles of the registered corporation pursuant
27 to section [2561(b)(2)(ii)] 2561(b)(2)(iii); or
28 (III) after reincorporation of the
29 registered corporation in another jurisdiction;
30 if the agreement or plan is approved or the amendment or
19900S1761B2459 - 135 -
1 reincorporation is adopted by the board of directors of
2 the corporation during the period commencing after the
3 satisfaction by such other acquiring person of the
4 requirements of section [2564(a)] 2565(a) or (b)
5 (relating to procedure for establishing voting rights of
6 control shares) and ending 90 days after the date such
7 issue is voted on by the shareholders, is withdrawn from
8 consideration or becomes moot; or
9 (ii) is consummated in any manner by a person who
10 satisfied, within two years prior to such acquisition,
11 the requirements of section [2564(a)] 2565(a) or (b).
12 * * *
13 CHAPTER 27
14 MANAGEMENT CORPORATIONS
15 Subchapter
16 A. Preliminary Provisions
17 B. Directors and Shareholders
18 C. Fundamental Changes
19 SUBCHAPTER A
20 PRELIMINARY PROVISIONS
21 Sec.
22 2701. Application and effect of chapter.
23 2702. Formation of management corporations.
24 2703. Additional contents of articles of management
25 corporations.
26 2704. Election of an existing business corporation to become
27 a management corporation.
28 2705. Termination and renewal of status as management
29 corporation.
30 § 2701. Application and effect of chapter.
19900S1761B2459 - 136 -
1 (a) General rule.--This chapter shall be applicable to a
2 business corporation, other than a statutory close corporation
3 or a professional corporation, that elects to become a
4 management corporation in the manner provided by this chapter.
5 (b) Laws applicable to management corporations.--Except as
6 otherwise provided in this chapter, this subpart shall be
7 generally applicable to all management corporations. The
8 specific provisions of this chapter shall control over the
9 general provisions of this subpart. Except as otherwise provided
10 in this article, a management corporation may be simultaneously
11 subject to this chapter and one or more other chapters of this
12 article.
13 (c) Effect of a contrary provision of the bylaws.--The
14 bylaws of a management corporation may provide either expressly
15 or by necessary implication that any one or more of the
16 provisions of this chapter, except this subchapter, shall not be
17 applicable, in whole or in part, to the corporation.
18 § 2702. Formation of management corporations.
19 A management corporation shall be formed in accordance with
20 Article B (relating to domestic business corporations generally)
21 except that its articles shall contain:
22 (1) A heading stating the name of the corporation and
23 that it is a management corporation.
24 (2) The provisions required by section 2703 (relating to
25 additional contents of articles of management corporations).
26 § 2703. Additional contents of articles of management
27 corporations.
28 In addition to the provisions otherwise required by this
29 subpart, the articles of a management corporation shall provide
30 that:
19900S1761B2459 - 137 -
1 (1) If, and so long as, the corporation is not a
2 registered corporation:
3 (i) All of the outstanding shares of the corporation
4 of all classes shall be subject to one or more of the
5 restrictions on transfer permitted by section 1529
6 (relating to transfer of securities; restrictions).
7 (ii) Except as part of a transaction having as a
8 purpose the establishment of the corporation as a
9 registered corporation, neither the corporation nor any
10 shareholder shall make an offering of any of its shares
11 of any class that would constitute a "public offering"
12 within the meaning of the Securities Act of 1933.
13 (2) If and so long as the corporation is not a
14 management company registered under the Investment Company
15 Act of 1940:
16 (i) if the compensation or cost of benefits of the
17 directors and five most highly-compensated officers of
18 the corporation is determined other than by a fixed
19 annual amount in dollars per year, or if the corporation
20 is managed by persons other than its directors and
21 officers, the rate, formula or other basis for payment by
22 the corporation of such compensation or benefits shall be
23 valid only if approved by the shareholders from time to
24 time by the affirmative vote; or
25 (ii) if subparagraph (i) is not applicable, the
26 compensation or the cost of benefits of directors and of
27 the five most highly-compensated officers of the
28 corporation shall not be increased to a higher number of
29 dollars per year without the prior affirmative vote
30 obtained within one year of such increase;
19900S1761B2459 - 138 -
1 of the holders of the outstanding shares of each class or
2 series whether or not otherwise entitled to vote by the
3 articles. If the articles confer upon the holders of a class
4 or series a specifically enforceable right to the declaration
5 and payment of dividends which are not contingent upon or
6 related to net income (other than as provided by section
7 1551(b) (relating to limitation)), the articles may deny the
8 holders of such class or series voting rights under this
9 paragraph.
10 (3) The terms "compensation" and "benefits" shall mean
11 amounts taxable, either currently or on a deferred basis, to
12 a director or officer of the corporation under the Internal
13 Revenue Code of 1986.
14 § 2704. Election of an existing business corporation to become
15 a management corporation.
16 (a) General rule.--A business corporation may become a
17 management corporation under this chapter by filing articles of
18 amendment which shall contain in addition to the requirements of
19 section 1915 (relating to articles of amendment):
20 (1) A heading stating the name of the corporation and
21 that it is a management corporation.
22 (2) A statement that it elects to become a management
23 corporation.
24 (3) The provisions required by section 2703 (relating to
25 additional contents of articles of management corporations).
26 (b) Procedure.--An election to become subject to this
27 chapter shall be proposed by a resolution adopted by the board
28 of directors and shall be adopted in accordance with the
29 requirements of Subchapter B of Chapter 19 (relating to
30 amendment of articles). If an effective date is not stated in
19900S1761B2459 - 139 -
1 the articles of amendment, this chapter shall become applicable
2 to the corporation on the date the articles of amendment are
3 filed in the Department of State.
4 (c) Dissenters rights upon election.--If any shareholder of
5 a corporation, other than a management company registered under
6 the Investment Company Act of 1940, that adopts an election
7 under this chapter to become a management corporation objects to
8 that action and complies with the provisions of Subchapter D of
9 Chapter 15 (relating to dissenters rights), the dissenting
10 shareholder shall be entitled to the rights and remedies of
11 dissenting shareholders therein provided.
12 (d) Cross reference.--See section 134 (relating to docketing
13 statement).
14 § 2705. Termination and renewal of status as a management
15 corporation.
16 (a) General rule.--A management corporation may terminate
17 its status as such and cease to be subject to this chapter by
18 amending its articles to delete therefrom the additional
19 provisions required by section 2702 (relating to formation of
20 management corporations) to be included in the articles of a
21 management corporation. If an effective date is not stated in
22 the articles of amendment, this chapter shall cease to be
23 applicable to the corporation on the date the articles of
24 amendment are filed in the Department of State.
25 (b) Automatic termination.--The status of a nonregistered
26 corporation as a management corporation shall terminate at the
27 time specified in this subsection upon the occurrence of any of
28 the following:
29 (1) Three months after the end of any fiscal year:
30 (i) at the end of which the corporation had less
19900S1761B2459 - 140 -
1 than $50,000,000 of assets; and
2 (ii) during which it had revenue or receipts of less
3 than $50,000,000.
4 (2) Three years after its date of incorporation or the
5 effective date of its most recent articles of amendment filed
6 under section 2704 (relating to election of an existing
7 business corporation to become a management corporation).
8 (c) Renewal.--An election to be subject to this chapter
9 terminated under subsection (b) may be renewed by complying with
10 the provisions of section 2704 (except subsection (c)) in the
11 same manner as an initial election, if the corporation then
12 satisfies the requirements of paragraph (b)(1).
13 (d) Dissenters rights upon renewal of election.--If any
14 shareholder of a nonregistered corporation that renews an
15 election under this chapter to continue as a management
16 corporation objects to that action and complies with the
17 provision of Subchapter D of Chapter 15 (relating to dissenters
18 rights), the dissenting shareholder shall be entitled to the
19 rights and remedies of dissenting shareholders therein provided.
20 SUBCHAPTER B
21 DIRECTORS AND SHAREHOLDERS
22 Sec.
23 2711. Selection and removal of directors.
24 2712. Shareholder meetings unnecessary.
25 § 2711. Selection and removal of directors.
26 (a) General rule.--The bylaws of a management corporation
27 may specify the manner in which and the persons by whom the
28 directors of the corporation shall be selected and may be
29 removed. Unless otherwise provided in the bylaws, the directors
30 of a management corporation shall be selected and may be removed
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1 by the board of directors. An incidental reference to the
2 election of directors by common or other junior shares contained
3 in the express terms of any class or series of any preference
4 shares defining the contingent or other voting rights of
5 preference shares shall not constitute for the purposes of this
6 section a provision of the articles providing for the election
7 of directors by the common or other junior shares.
8 (b) Term.--The duration of the term of office of a director
9 of a management corporation shall not be limited by statute.
10 § 2712. Shareholder meetings unnecessary.
11 Annual or other regular meetings of the shareholders of a
12 management corporation need not be held.
13 SUBCHAPTER C
14 FUNDAMENTAL CHANGES
15 Sec.
16 2721. Bylaw and fundamental change procedures.
17 2722. Changes in authorized shares.
18 § 2721. Bylaw and fundamental change procedures.
19 So long as a business corporation is a management corporation
20 subject to this chapter:
21 (1) The board of directors shall have the full authority
22 vested by this subpart in the shareholders to amend the
23 articles under section 2704(b) (relating to procedure) to
24 renew the election of the corporation to be subject to this
25 chapter and to adopt or change the bylaws, and a bylaw
26 adopted by the board of directors pursuant to this section
27 may continue in effect as long as the corporation remains
28 subject to this chapter.
29 (2) An amendment or plan shall not be adopted under
30 Chapter 19 (relating to fundamental changes), and a bylaw
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1 shall not be adopted or changed by the shareholders, without
2 the approval of the board of directors.
3 (3) In the case of a corporation that in the ordinary
4 course of business redeems all outstanding shares at the
5 option of the shareholder at the net asset value or at
6 another agreed method or amount of value thereof, an
7 amendment or plan under Chapter 19 shall not require the
8 approval of the shareholders of the corporation for adoption
9 by the corporation.
10 § 2722. Changes in authorized shares.
11 (a) General rule.--An amendment of the articles of a
12 management corporation shall not require the approval of the
13 shareholders of the corporation to the extent it increases or
14 decreases (to a number not less than that then outstanding) the
15 number of authorized shares of the corporation, or of any class
16 or series of the corporation.
17 (b) Procedure.--The articles of amendment shall set forth in
18 addition to the requirements of section 1915 (relating to
19 articles of amendment):
20 (1) The aggregate number of shares that the corporation
21 shall have authority to issue, or the designations of the
22 classes of shares of the corporation and the maximum number
23 of shares of each class that may be issued.
24 (2) A statement of the voting rights, designations,
25 preferences, limitations and special rights, if any, in
26 respect of the shares of any class or any series of any
27 class, to the extent that they have been determined, and the
28 maximum number of shares of any series of any class that may
29 be issued.
30 (3) A statement of any authority vested in the board of
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1 directors to divide the authorized and unissued shares into
2 classes or series, or both, and to determine for any such
3 class or series its voting rights, designations, preferences,
4 limitations and special rights.
5 § 2923. Issuance and retention of shares.
6 (a) General rule.--Shares in a professional corporation may
7 be beneficially owned, directly or indirectly, only by one or
8 more licensed persons and any issuance or transfer of shares
9 [issued] in violation of this restriction shall be void. A
10 shareholder of a professional corporation shall not enter into a
11 voting trust, proxy or any other arrangement vesting another
12 person (other than another licensed person who is a direct or
13 indirect shareholder of the same corporation) with the authority
14 to exercise the voting power of any or all of his shares, and
15 any such purported voting trust, proxy or other arrangement
16 shall be void.
17 [(b) Transfer of shares.--Shares in a professional
18 corporation may be transferred only to or on behalf of a
19 licensed person or to the professional corporation. Any transfer
20 in violation of this restriction shall be void.
21 (c)] (b) Ownership by estate.--Unless a lesser period of
22 time is provided in a bylaw of the corporation adopted by the
23 shareholders or in a written agreement among the shareholders of
24 the corporation, the estate of a deceased shareholder may
25 continue to hold shares of the professional corporation for a
26 reasonable period of administration of the estate, but the
27 personal representative of the estate shall not by reason of the
28 retention of shares be authorized to participate in any
29 decisions concerning the rendering of professional service.
30 [(d)] (c) Interstate application.--Where the activities in
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1 this Commonwealth of a person who is a licensed person under the
2 laws of another jurisdiction would be unlawful unless that
3 person were also a licensed person under the laws of this
4 Commonwealth, shares of a professional corporation shall not be
5 issued to or retained by or on behalf of him unless he is also a
6 licensed person under the laws of this Commonwealth. Except as
7 provided in the preceding sentence, this chapter shall not be
8 construed to require that any proportion or number of the
9 holders or beneficial owners of a professional corporation who
10 are licensed persons shall be licensed persons under the laws of
11 this Commonwealth.
12 CHAPTER 31
13 INSURANCE CORPORATIONS
14 Subchapter
15 A. Preliminary Provisions
16 B. Powers, Duties and Safeguards
17 C. Officers, Directors and Shareholders
18 SUBCHAPTER A
19 PRELIMINARY PROVISIONS
20 Sec.
21 3101. Application and effect of chapter.
22 3102. Definitions.
23 § 3101. Application and effect of chapter.
24 (a) General rule.--This chapter shall be applicable to a
25 business corporation that is a domestic insurance corporation.
26 (b) Application to business corporations generally.--The
27 existence of a provision of this chapter shall not of itself
28 create any implication that a contrary or different rule of law
29 is or would be applicable to a business corporation that is not
30 an insurance corporation. This chapter shall not affect any
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1 statute or rule of law that is or would be applicable to a
2 business corporation that is not an insurance corporation.
3 (c) Laws applicable to insurance corporations.--Except as
4 otherwise provided in this chapter, this subpart shall be
5 generally applicable to all insurance corporations. The specific
6 provisions of this chapter shall control over the general
7 provisions of this subpart. Except as otherwise provided in this
8 article, an insurance corporation may be simultaneously subject
9 to this chapter and one or more other chapters of this article.
10 § 3102. Definitions.
11 The following words and phrases when used in this chapter
12 shall have the meanings given to them in this section unless the
13 context clearly indicates otherwise:
14 "Insurance corporation" or "domestic insurance corporation."
15 A domestic business corporation that is engaged in the business
16 of writing insurance or reinsurance as principal and as such is
17 subject to regulation by the Insurance Department.
18 "Mutual insurance company." An insurance corporation that is
19 organized on the mutual principle.
20 SUBCHAPTER B
21 POWERS, DUTIES AND SAFEGUARDS
22 Sec.
23 3121. Bylaws.
24 3122. Distributions by insurance corporations.
25 § 3121. Bylaws.
26 Except as provided in section 1504(b) (relating to adoption,
27 amendment and contents of bylaws), the board of directors of an
28 insurance corporation shall have the authority to adopt, amend
29 and repeal bylaws, subject to the power of the members to change
30 such action. The articles may restrict the authority of the
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1 board to adopt, amend or repeal bylaws generally or on any
2 subject or class of subjects.
3 § 3122. Distributions by insurance corporations.
4 The amount of capital received by an insurance corporation
5 upon its stock shall be a liability of the corporation for the
6 purpose of determining the power of the corporation to make any
7 distribution of money or other assets to its shareholders or
8 members.
9 SUBCHAPTER C
10 OFFICERS, DIRECTORS AND SHAREHOLDERS
11 Sec.
12 3131. Directors.
13 3132. Officers.
14 3133. Notice of meetings of members of mutual insurance
15 companies.
16 3134. Quorum at shareholder or member meetings.
17 3135. Proxies of members of mutual insurance companies.
18 3136. Judges of election.
19 3137. Appointment of custodian.
20 3138. Judicial supervision of corporate action.
21 § 3131. Directors.
22 (a) Qualifications.--Two-thirds of the directors of an
23 insurance corporation shall be citizens of the United States.
24 (b) Number.--The board of directors of an insurance
25 corporation shall consist of not less than seven members.
26 § 3132. Officers.
27 The president, secretary and treasurer of an insurance
28 corporation shall be different persons. The treasurer shall be a
29 natural person of full age. The president shall be a director of
30 the corporation.
19900S1761B2459 - 147 -
1 § 3133. Notice of meetings of members of mutual insurance
2 companies.
3 (a) General rule.--Unless otherwise restricted in the
4 bylaws, persons authorized or required to give notice of an
5 annual meeting of members of a mutual insurance company for the
6 election of directors or of a meeting of members of a mutual
7 insurance company called for the purpose of considering an
8 amendment of the articles of the corporation may, in lieu of any
9 written notice of meeting of members required to be given by
10 this subpart, give notice of such meeting by causing notice of
11 such meeting to be officially published. Such notice shall be
12 published each week for at least:
13 (1) Three successive weeks, in the case of an annual
14 meeting.
15 (2) Four successive weeks, in the case of a meeting to
16 consider an amendment of the articles.
17 (b) Cross reference.--See 1 Pa.C.S. § 1909 (relating to
18 time; publication for successive weeks).
19 § 3134. Quorum at shareholder or member meetings.
20 The board of directors of an insurance corporation may adopt
21 or change a bylaw on any subject otherwise expressly committed
22 to the shareholders or members by section 1756(a) (relating to
23 quorum).
24 § 3135. Proxies of members of mutual insurance companies.
25 In no event shall a proxy given by a member of a mutual
26 insurance company, unless coupled with an interest, be voted on
27 or utilized to express consent or dissent to corporate action in
28 writing after 11 months from the date of execution of the proxy.
29 § 3136. Judges of election.
30 The board of directors of an insurance corporation may adopt
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1 or change a bylaw on any subject otherwise expressly committed
2 to the shareholders or members by section 1765 (relating to
3 judges of election).
4 § 3137. Appointment of custodian.
5 Section 1767 (relating to appointment of custodian of
6 corporation on deadlock or other cause) shall not be applicable
7 to an insurance corporation.
8 § 3138. Judicial supervision of corporate action.
9 Subchapter F of Chapter 17 (relating to judicial supervision
10 of corporate action) shall not be applicable to an insurance
11 corporation, insofar as inconsistent with the jurisdiction of
12 the Insurance Department.
13 § 4101. Application of article.
14 (a) General rule.--Except as otherwise provided in this
15 section or in subsequent provisions of this article, this
16 article shall apply to and the words "corporation" or "foreign
17 business corporation" in this article shall include every
18 foreign corporation for profit, including a corporation that, if
19 a domestic corporation for profit, would be a banking
20 institution, credit union[, insurance corporation] or savings
21 association.
22 (b) Domestic Federal financial institution exclusion.--
23 Except as permitted by act of Congress, this article shall not
24 apply to:
25 (1) Any of the following institutions or similar
26 federally chartered institutions engaged in this Commonwealth
27 in activities similar to those conducted by banking
28 institutions, saving associations or credit unions:
29 (i) National banking associations organized under
30 The National Bank Act (13 Stat. 99, 12 U.S.C. § 1 et
19900S1761B2459 - 149 -
1 seq.).
2 (ii) Federal savings and loan associations and
3 Federal mutual savings banks organized under the Home
4 Owners' Loan Act of 1933 (48 Stat. 128, 12 U.S.C. § 1461
5 et seq.).
6 (iii) Federal credit unions organized under the
7 Federal Credit Union Act (48 Stat. 1216, 12 U.S.C. § 1751
8 et seq.).
9 (2) Any other Federal corporation intended by the
10 Congress to be treated for state law purposes as a domestic
11 corporation of this Commonwealth.
12 [(c) Qualified insurance corporation exclusion.--This
13 article shall not apply to any foreign corporation for profit
14 qualified to do business in this Commonwealth under the act of
15 May 17, 1921 (P.L.682, No.284), known as The Insurance Company
16 Law of 1921, except as otherwise expressly provided by statute
17 applicable to the corporation.]
18 § 4121. Admission of foreign corporations.
19 * * *
20 (b) Qualification under former statutes.--If a foreign
21 corporation for profit was on March 19, 1966, admitted to do
22 business in this Commonwealth by the filing of a power of
23 attorney and statement under the act of June 8, 1911 (P.L.710,
24 No. 283), the power of attorney and statement shall be deemed an
25 approved application for a certificate of authority issued under
26 this subchapter and the corporation shall be deemed a holder of
27 the certificate. The corporation shall include in its initial
28 application, if any, for an amended certificate of authority
29 under this subchapter the information required by this
30 subchapter to be set forth in an application for a certificate
19900S1761B2459 - 150 -
1 of authority. A certificate of authority issued under the former
2 provisions of [the act of May 5, 1933 (P.L.364, No.106), known
3 as] the Business Corporation Law of 1933, shall be deemed to be
4 issued under this subchapter, and the certificate of authority
5 shall be deemed not to contain any reference to the kind of
6 business that the corporation proposes to do in this
7 Commonwealth.
8 (c) Foreign insurance corporations.--A foreign insurance
9 corporation shall not be required to procure a certificate of
10 authority under this subchapter.
11 § 4123. Requirements for foreign corporation names.
12 (a) General rule.--The Department of State shall not issue a
13 certificate of authority to any foreign business corporation
14 that, except as provided in subsection (b), has a name that is
15 rendered unavailable for use by a domestic business corporation
16 by any provision of section 1303(a), (b) or (c) (relating to
17 corporate name), except [subsections] subsection (c)(1)(ii) [or
18 (iii)] thereof (relating to banking [and insurance] names).
19 [(b) Exception; name.--The provisions of section 1303(b)
20 (relating to duplicate use of names) shall not prevent the
21 issuance of a certificate of authority to a foreign business
22 corporation setting forth a name that is confusingly similar to
23 the name of any other domestic or foreign corporation for profit
24 or corporation not-for-profit, or of any domestic or foreign
25 limited partnership that has filed a certificate or qualified
26 under Chapter 85 (relating to limited partnerships) or
27 corresponding provisions of prior law, or of any corporation or
28 other association then registered under 54 Pa.C.S. Ch. 5
29 (relating to corporate and other association names) or to any
30 name reserved or registered as provided in this part, if the
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1 foreign business corporation applying for a certificate of
2 authority files in the department one of the following:
3 (1) A resolution of its board of directors adopting a
4 fictitious name for use in transacting business in this
5 Commonwealth which fictitious name is not confusingly similar
6 to the name of the other corporation or other association or
7 to any name reserved or registered as provided in this part.
8 (2) The written consent of the other corporation or
9 other association or holder of a reserved or registered name
10 to use the same or confusingly similar name and one or more
11 words are added to make the name applied for distinguishable
12 from the other name.]
13 (b) Exceptions.--
14 (1) The provisions of section 1303(b) (relating to
15 duplicate use of names) shall not prevent the issuance of a
16 certificate of authority to a foreign business corporation
17 setting forth a name that is confusingly similar to the name
18 of any other domestic or foreign corporation for profit or
19 corporation not-for-profit, or of any domestic or foreign
20 limited partnership that has filed a certificate or qualified
21 under Chapter 85 (relating to limited partnerships) or
22 corresponding provisions of prior law, or of any corporation
23 or other association then registered under 54 Pa.C.S. Ch. 5
24 (relating to corporate and other association names) or to any
25 name reserved or registered as provided in this part, if the
26 foreign business corporation applying for a certificate of
27 authority files in the department one of the following:
28 (i) A resolution of its board of directors adopting
29 a fictitious name for use in transacting business in this
30 Commonwealth which fictitious name is not confusingly
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1 similar to the name of the other corporation or other
2 association or to any name reserved or registered as
3 provided in this part and that is otherwise available for
4 use by a domestic business corporation.
5 (ii) The written consent of the other corporation or
6 other association or holder of a reserved or registered
7 name to use the same or confusingly similar name and one
8 or more words are added to make the name applied for
9 distinguishable from the other name.
10 (2) The provisions of section 1303(c) (relating to
11 required approvals or conditions) shall not prevent the
12 issuance of a certificate of authority to a foreign business
13 corporation setting forth a name that is prohibited by that
14 subsection if the foreign business corporation applying for a
15 certificate of authority files in the department a resolution
16 of its board of directors adopting a fictitious name for use
17 in transacting business in this Commonwealth that is
18 available for use by a domestic business corporation.
19 § 4125. Issuance of certificate of authority.
20 Upon the filing of the application for a certificate of
21 authority, [the Department of State shall issue to] the foreign
22 business corporation shall be deemed to hold a certificate of
23 authority to do business in this Commonwealth. [The certificate
24 of authority shall be annexed to or endorsed upon the
25 application for a certificate of authority and shall state that,
26 subject to the Constitution and laws of this Commonwealth, the
27 corporation named in the application is authorized to do
28 business in this Commonwealth.]
29 § 4126. Amended certificate of authority.
30 * * *
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1 (b) Issuance of amended certificate of authority.--Upon the
2 filing of the application, [the department shall issue to] the
3 applicant corporation shall be deemed to hold an amended
4 certificate of authority. [The amended certificate of authority
5 shall be annexed to or endorsed upon the application for an
6 amended certificate of authority and shall state that the
7 certificate of authority of the corporation named in the
8 application is amended to reflect the change of name specified
9 in the application.]
10 * * *
11 § 4128. Revocation of certificate of authority.
12 * * *
13 (c) Exception.--Subsections (a) and (b) shall not apply to a
14 foreign insurance corporation.
15 § 4129. Application for termination of authority.
16 (a) General rule.--Any qualified foreign business
17 corporation may withdraw from doing business in this
18 Commonwealth and surrender its certificate of authority by
19 filing in the Department of State an application for termination
20 of authority, executed by the corporation, which shall set
21 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 last registered
26 office in this Commonwealth.
27 (2) The name of the jurisdiction under the laws of which
28 it is incorporated.
29 (3) The date on which it received a certificate of
30 authority to do business in this Commonwealth.
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1 (4) A statement that it surrenders its certificate of
2 authority to do business in this Commonwealth.
3 (5) A statement that notice of its intention to withdraw
4 from doing business in this Commonwealth was mailed by
5 certified or registered mail to each municipal corporation in
6 which the registered office or principal place of business of
7 the corporation in this Commonwealth is located, and that the
8 official publication required by subsection (b) has been
9 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 * * *
15 § 4142. General powers and duties of qualified foreign
16 corporations.
17 * * *
18 (c) Foreign insurance corporations.--A foreign insurance
19 corporation shall, insofar as it is engaged in the business of
20 writing insurance or reinsurance as principal, be subject to the
21 laws of this Commonwealth regulating the business of insurance
22 in lieu of the provisions of subsection (a).
23 § 4146. Provisions applicable to all foreign corporations.
24 The following provisions of this subpart shall, except as
25 otherwise provided in this section, be applicable to every
26 foreign corporation for profit, whether or not required to
27 procure a certificate of authority under this chapter:
28 Section 1503 (relating to defense of ultra vires), as to
29 contracts and conveyances made in this Commonwealth and
30 conveyances affecting real property situated in this
19900S1761B2459 - 155 -
1 Commonwealth.
2 Section 1506 (relating to form of execution of
3 instruments), as to instruments or other documents made or to
4 be performed in this Commonwealth or affecting real property
5 situated in this Commonwealth.
6 Section 1510 (relating to [usury not a defense] certain
7 specifically authorized debt terms), as to obligations (as
8 defined in the section) executed or effected in this
9 Commonwealth or affecting real property situated in this
10 Commonwealth.
11 Section 1782 (relating to actions against directors and
12 officers), as to any action or proceeding brought in a court
13 of this Commonwealth.
14 Subchapter F of Chapter 25 (relating to business
15 combinations), to the extent provided in section 2551(d)
16 (relating to continuing applicability).
17 § 4161. Domestication.
18 * * *
19 (b) Articles of domestication.--The articles of
20 domestication shall be executed by the corporation and shall set
21 forth in the English language:
22 * * *
23 (6) A statement that the filing of articles of
24 domestication and, if desired, the renunciation of the
25 original charter or articles of the corporation has been
26 authorized (unless its charter or other organic documents
27 require a greater vote) by a majority of the votes cast by
28 all shareholders entitled to vote thereon and, if any class
29 of shares is entitled to vote thereon as a class, a majority
30 of the votes cast in each class vote.
19900S1761B2459 - 156 -
1 * * *
2 § 5103. Definitions.
3 Subject to additional definitions contained in subsequent
4 provisions of this subpart [which] that are applicable to
5 specific [articles, chapters or other] provisions of this
6 subpart, the following words and phrases[,] when used in this
7 subpart shall have[, unless the context clearly indicates
8 otherwise,] the meanings given to them in this section unless
9 the context clearly indicates otherwise:
10 "Act" or "action." Includes failure to act.
11 "Articles." The original articles of incorporation, all
12 amendments [thereto, articles of merger and consolidation]
13 thereof, and any other articles, statements or certificates
14 permitted or required to be filed [by] in the Department of
15 State by sections 108 (relating to change in location or status
16 of registered office provided by agent) and 138 (relating to
17 statement of correction) or this subpart [or by Chapter 1
18 (relating to general provisions),] and including what have
19 heretofore been designated by law as certificates of
20 incorporation or charters. If an amendment of the articles or
21 articles of merger[,] or division [or conversion] made in the
22 manner permitted by this subpart restates articles in their
23 entirety or if there are articles of consolidation, conversion
24 or domestication, thenceforth the "articles" shall not include
25 any prior documents and any certificate issued by the
26 [Department of State] department with respect thereto shall so
27 state.
28 "Board of directors" or "board." The group of persons vested
29 with the management of the business and affairs of the
30 corporation irrespective of the name by which such group is
19900S1761B2459 - 157 -
1 designated. The term does not include an other body. The term,
2 when used in any provision of this subpart relating to the
3 organization or procedures of or the manner of taking action by
4 the board of directors, shall be construed to include and refer
5 to any executive or other committee of the board. Any provision
6 of this subpart relating or referring to action to be taken by
7 the board of directors or the procedure required therefor shall
8 be satisfied by the taking of corresponding action by a
9 committee of the board of directors to the extent authority to
10 take such action has been delegated to such committee pursuant
11 to section 5731 (relating to executive and other committees of
12 the board).
13 "Business." [In the case of a domestic nonprofit
14 corporation, any] Any or all of the activities for which [it] a
15 corporation has been incorporated[, and, in the case of a
16 foreign corporation not-for-profit, any or all of the activities
17 in which its certificate of authority authorizes it to engage
18 within this Commonwealth].
19 "Bylaws." The code or codes of rules adopted for the
20 regulation or management of the business and affairs of the
21 corporation irrespective of the name or names by which such
22 rules are designated.
23 "Charitable purposes." The relief of poverty, the
24 advancement of education, the advancement of religion, the
25 promotion of health, governmental or municipal purposes, and
26 other purposes the accomplishment of which is beneficial to the
27 community.
28 "Common trust fund." A fund maintained by the corporation
29 for the collective investment and reinvestment of trust assets,
30 and any other funds contributed thereto by such corporation, as
19900S1761B2459 - 158 -
1 fiduciary or otherwise.
2 "Corporation for profit." A corporation incorporated for a
3 purpose or purposes involving pecuniary profit, incidental or
4 otherwise, to its shareholders or members.
5 "Corporation not-for-profit." A corporation not incorporated
6 for a purpose or purposes involving pecuniary profit, incidental
7 or otherwise.
8 "Court." Subject to any inconsistent general rule prescribed
9 by the Supreme Court of Pennsylvania:
10 (1) the court of common pleas of the judicial district
11 embracing the county where the registered office of the
12 corporation is or is to be located; or
13 (2) where a corporation results from a merger,
14 consolidation, division or other transaction without
15 establishing a registered office in this Commonwealth or
16 withdraws as a foreign corporation, the court of common pleas
17 in which venue would have been laid immediately prior to the
18 transaction or withdrawal.
19 "Department." The Department of State of the Commonwealth.
20 "Directors." Persons designated, elected or appointed, by
21 that or any other name or title, to act as directors, and their
22 successors. The term does not include a member of an other body,
23 as such. The term, when used in relation to any power or duty
24 requiring collective action, shall be construed to mean "board
25 of directors."
26 "Domestic corporation for profit." A corporation for profit
27 incorporated under the laws of this Commonwealth.
28 "Domestic corporation not-for-profit." A corporation not-
29 for-profit incorporated under the laws of this Commonwealth.
30 "Entitled to vote." Those persons entitled to vote on the
19900S1761B2459 - 159 -
1 matter under either the bylaws of the corporation or any
2 applicable controlling provision of law.
3 "Foreign corporation for profit." A corporation for profit
4 incorporated under any laws other than those of this
5 Commonwealth.
6 "Foreign corporation not-for-profit." A corporation not-for-
7 profit incorporated under any laws other than those of this
8 Commonwealth.
9 "Foreign nonprofit corporation." A foreign corporation not-
10 for-profit or other entity subject to Chapter 61 (relating to
11 foreign nonprofit corporations), whether or not required to
12 qualify thereunder.
13 "Full age." Of the age of 18 years or over.
14 "Incorporator." A signer of the original articles of
15 incorporation.
16 "Member." One having membership rights in a corporation in
17 accordance with the provisions of its bylaws. The term, when
18 used in relation to the taking of corporate action includes:
19 (1) the proxy of a member, if action by proxy is
20 permitted under the bylaws of the corporation; and
21 (2) a delegate to any convention or assembly of
22 delegates of members established pursuant to any provision of
23 this subpart.
24 If and to the extent the bylaws confer rights of members upon
25 holders of securities evidencing indebtedness or governmental or
26 other entities pursuant to any provision of this subpart the
27 term shall be construed to include such security holders and
28 governmental or other entities. The term shall be construed to
29 include "shareholder" if the corporation issues shares of stock.
30 "Nonprofit corporation" or "domestic nonprofit corporation."
19900S1761B2459 - 160 -
1 A domestic corporation not-for-profit which is not excluded from
2 the scope of this subpart by section 5102 (relating to
3 application of subpart).
4 "Nonqualified foreign corporation[.]" or "nonqualified
5 foreign nonprofit corporation." A foreign corporation not-for-
6 profit which is not a qualified foreign corporation, as defined
7 in this section.
8 "Officer." If a corporation is in the hands of a custodian,
9 receiver, trustee or like official, the term includes that
10 official or any person appointed by that official to act as an
11 officer for any purpose under this subpart.
12 "Other body." A term employed in this subpart to denote a
13 person or group, other than the board of directors or a
14 committee thereof, who pursuant to authority expressly conferred
15 by this subpart may be vested by the bylaws of the corporation
16 with powers which, if not vested by the bylaws in such person or
17 group, would by this subpart be required to be exercised by
18 either:
19 (1) the membership of a corporation taken as a whole;
20 (2) a convention or assembly of delegates of members
21 established pursuant to any provision of this subpart; or
22 (3) the board of directors.
23 Except as otherwise provided in this subpart a corporation may
24 establish distinct persons or groups to exercise different
25 powers which this subpart authorizes a corporation to vest in an
26 other body.
27 "Qualified foreign corporation[.]" or "qualified foreign
28 nonprofit corporation." A foreign corporation not-for-profit
29 authorized under Chapter 61 (relating to foreign nonprofit
30 corporations) to do business in this Commonwealth.
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1 "Registered office." That office maintained by a corporation
2 in this Commonwealth, the address of which is filed in the
3 Department of State or which was recorded in the office of the
4 recorder of deeds in the manner formerly required by statute.
5 "Relax." When used with respect to a provision of the
6 articles or bylaws, means to provide lesser rights for an
7 affected representative or member.
8 "Representative." When used with respect to a corporation,
9 partnership, joint venture, trust or other enterprise, means a
10 director, officer, employee or agent thereof.
11 "Trust instrument." Any lawful deed of gift, grant, will or
12 other document by which the donor, grantor or testator shall
13 give, grant or devise any real or personal property or the
14 income therefrom in trust for any charitable purpose.
15 "Unless otherwise provided." When used to introduce a rule
16 implies that the alternative provisions contemplated may either
17 relax or restrict the stated rule.
18 "Unless otherwise restricted." When used to introduce a rule
19 implies that the alternative provisions contemplated may further
20 restrict, but may not relax, the stated rule.
21 § 5104. Other general provisions.
22 The following provisions of this title are applicable to
23 corporations subject to this subpart:
24 Section 101 (relating to short title and application of
25 title).
26 Section 102 (relating to definitions).
27 Section 103 (relating to subordination of title to
28 regulatory laws).
29 Section 104 (relating to equitable remedies).
30 Section 105 (relating to fees).
19900S1761B2459 - 162 -
1 Section 106 (relating to effect of filing papers required
2 to be filed).
3 Section 107 (relating to form of records).
4 Section 108 (relating to change in location or status of
5 registered office provided by agent).
6 Section 109 (relating to name of commercial registered
7 office provider in lieu of registered address).
8 Section 110 (relating to supplementary general principles
9 of law applicable).
10 Section 132 (relating to functions of Department of
11 State).
12 Section 133 (relating to powers of Department of State).
13 Section 134 (relating to docketing statement).
14 Section 135 (relating to requirements to be met by filed
15 documents).
16 Section 136 (relating to processing of documents by
17 Department of State).
18 Section 137 (relating to court to pass upon rejection of
19 documents by Department of State).
20 Section 138 (relating to statement of correction).
21 Section 139 (relating to tax clearance of certain
22 fundamental transactions).
23 Section 140 (relating to custody and management of orphan
24 corporate and business records).
25 Section 152 (relating to definitions).
26 Section 153 (relating to fee schedule).
27 Section 154 (relating to enforcement and collection).
28 Section 155 (relating to disposition of funds).
29 [Section 151 (relating to domestication of certain
30 foreign associations).]
19900S1761B2459 - 163 -
1 Section [152] 162 (relating to contingent domestication
2 of certain foreign associations).
3 Section 501 (relating to reserved power of General
4 Assembly).
5 Section 503 (relating to actions to revoke corporate
6 franchises).
7 Section 504 (relating to validation of certain defective
8 corporations).
9 Section 505 (relating to validation of certain defective
10 corporate acts).
11 [Section 511 (relating to standard of care and
12 justifiable reliance).
13 Section 512 (relating to personal liability of
14 directors).
15 Section 513 (relating to nonexclusivity and supplementary
16 coverage).]
17 Section 2552 (relating to definitions) (definitions of
18 "affiliate" and "associate").
19 § 5110. Annual report.
20 (a) General rule.--On or before April 30 of each year, a
21 corporation described in subsection (b) that has effected any
22 change in its officers during the preceding calendar year shall
23 file in the Department of State a statement executed by the
24 corporation and setting forth:
25 (1) The name of the corporation.
26 (2) The post office address, including street and
27 number, if any, of its principal office.
28 (3) The names and titles of the persons who are its
29 principal officers.
30 (b) Application.--This section shall apply to every:
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1 (1) domestic nonprofit corporation that has been
2 incorporated after December 31, 1972, or that has filed a
3 summary of record with the Department of State after December
4 31, 1972; and
5 (2) qualified foreign nonprofit corporation.
6 (c) Separate change in registered office required.--A filing
7 under this section shall not constitute compliance with section
8 5507(b) (relating to registered office).
9 (d) Fee.--No fee shall be charged for effecting a filing
10 under this section.
11 (e) Cross reference.--See section 134 (relating to docketing
12 statement).
13 § 5301. Purposes.
14 [Corporations] (a) General rule.--Except as provided in
15 subsection (b), corporations may be incorporated under this
16 article for any lawful purpose or purposes, including, but not
17 limited to, any one or more of the following or similar
18 purposes: athletic; any lawful business purpose to be conducted
19 on a not-for-profit basis; beneficial; benevolent; cemetery;
20 charitable; civic; control of fire; cultural; educational;
21 encouragement of agriculture or horticulture; fraternal;
22 [fraternal benefit;] health; literary; missionary; musical;
23 mutual improvement; patriotic; political; prevention of cruelty
24 to persons or animals; professional, commercial, industrial,
25 trade, service or business associations; promotion of the arts;
26 protection of natural resources; religious; research; scientific
27 and social.
28 (b) Exception.--Except as otherwise provided by Title 40
29 (relating to insurance) or the act of December 29, 1972
30 (P.L.1701, No.364), known as the Health Maintenance Organization
19900S1761B2459 - 165 -
1 Act, a corporation may not be incorporated under this article
2 for the purpose of engaging in the business of writing insurance
3 or reinsurance as principal.
4 § 5303. Corporate name.
5 (a) General rule.--The corporate name may be in any
6 language, but must be expressed in Roman letters or characters
7 or Arabic or Roman numerals.
8 (b) Duplicate use of names.--The corporate name shall not be
9 the same as or confusingly similar to:
10 (1) The name of any other domestic corporation for
11 profit or not-for-profit which is either in existence or for
12 which articles of incorporation have been filed but have not
13 yet become effective, or of any foreign corporation for
14 profit or not-for-profit which is either authorized to do
15 business in this Commonwealth or for which an application for
16 a certificate of authority has been filed but which has not
17 yet become effective, or of any domestic or foreign limited
18 partnership that has filed in the Department of State a
19 certificate or qualified under Chapter 85 (relating to
20 limited partnerships) or under corresponding provisions of
21 prior law, or the name of any association registered at any
22 time under 54 Pa.C.S. Ch.5 (relating to corporate and other
23 association names), unless:
24 (i) where the name is the same or confusingly
25 similar, the other association:
26 (A) has stated that it is about to change its
27 name, or to cease to do business, or is being wound
28 up, or is a foreign association about to withdraw
29 from doing business in this Commonwealth, and the
30 statement and the written consent of the other
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1 association to the adoption of the name is filed in
2 the Department of State;
3 (B) has filed with the Department of Revenue a
4 certificate of out of existence, or has failed for a
5 period of three successive years to file with the
6 Department of Revenue a report or return required by
7 law and the fact of such failure has been certified
8 by the Department of Revenue to the Department of
9 State;
10 (C) has abandoned its name under the laws of its
11 jurisdiction of incorporation, by amendment, merger,
12 consolidation, division, expiration, dissolution or
13 otherwise, without its name being adopted by a
14 successor in a merger, consolidation, division or
15 otherwise, and an official record of that fact,
16 certified as provided by 42 Pa.C.S. § 5328 (relating
17 to proof of official records), is presented by any
18 person to the department; or
19 (D) has had the registration of its name under
20 54 Pa.C.S. Ch.5 terminated and, if the termination
21 was effected by operation of 54 Pa.C.S. § 504
22 (relating to effect of failure to make decennial
23 filings), the application for the use of the name is
24 accompanied by a verified statement stating that at
25 least 30 days' written notice of intention to
26 appropriate the name was given to the delinquent
27 association at its registered office and that, after
28 diligent search by the affiant, the affiant believes
29 the association to be out of existence; or
30 (ii) where the name is confusingly similar, the
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1 consent of the other association to the adoption of the
2 name is filed in the Department of State.
3 The consent of the association shall be evidenced by a
4 statement to that effect executed by the association.
5 (2) A name the exclusive right to which is at the time
6 reserved by any other person whatsoever in the manner
7 provided by statute. A name shall be rendered unavailable for
8 corporate use by reason of the filing in the Department of
9 State of any assumed or fictitious name required by 54
10 Pa.C.S. Ch.3 (relating to fictitious names) to be filed in
11 the department only if and to the extent expressly so
12 provided in that chapter.
13 (c) Required approvals or conditions.--
14 (1) The corporate name shall not imply that the
15 corporation is:
16 (i) A governmental agency of the Commonwealth or of
17 the United States.
18 (ii) A bank, bank and trust company, savings bank,
19 private bank or trust company, as defined in the act of
20 November 30, 1965 (P.L.847, No.356), known as the Banking
21 Code of 1965.
22 (iii) An insurance company.
23 (iv) A public utility as defined in 66 Pa.C.S. § 102
24 (relating to definitions).
25 (v) A credit union. See 17 Pa.C.S. § 104 (relating
26 to prohibition on use of words "credit union," etc.).
27 (2) The corporate name shall not contain:
28 (i) The word "college," "university" or "seminary"
29 when used in such a way as to imply that it is an
30 educational institution conforming to the standards and
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1 qualifications prescribed by the State Board of
2 Education, unless there is submitted a certificate from
3 the Department of Education certifying that the
4 corporation or proposed corporation is entitled to use
5 that designation.
6 (ii) Words that constitute blasphemy, profane
7 cursing or swearing or that profane the Lord's name.
8 (iii) The words "engineer" or "engineering" or
9 "surveyor" or "surveying" or any other word implying that
10 any form of the practice of engineering or surveying as
11 defined in the act of May 23, 1945 (P.L.913, No.367),
12 known as the Professional Engineers Registration Law, is
13 provided unless at least one of the incorporators of a
14 proposed corporation or the directors of the existing
15 corporation has been properly registered with the State
16 Registration Board for Professional Engineers in the
17 practice of engineering or surveying and there is
18 submitted to the department a certificate from the board
19 to that effect.
20 (iv) The words "Young Men's Christian Association"
21 or any other words implying that the corporation is
22 affiliated with the State Young Men's Christian
23 Association of Pennsylvania unless the corporation is
24 incorporated for the purpose of the improvement of the
25 spiritual, mental, social and physical condition of young
26 people, by the support and maintenance of lecture rooms,
27 libraries, reading rooms, religious and social meetings,
28 gymnasiums, and such other means and services as may
29 conduce to the accomplishment of that object, according
30 to the general rules and regulations of such State
19900S1761B2459 - 169 -
1 association.
2 (v) The words "architect" or "architecture" or any
3 other word implying that any form of the practice of
4 architecture as defined in the act of December 14, 1982
5 (P.L.1227, No.281), known as the Architects Licensure
6 Law, is provided unless at least one of the incorporators
7 of a proposed corporation or the directors of the
8 existing corporation has been properly registered with
9 the Architects Licensure Board in the practice of
10 architecture and there is submitted to the department a
11 certificate from the board to that effect.
12 (vi) The word "cooperative" or an abbreviation
13 thereof unless the corporation is a cooperative
14 corporation.
15 (d) Other rights unaffected.--This section shall not
16 abrogate or limit the law as to unfair competition or unfair
17 practices, nor derogate from the common law, the principles of
18 equity, or the provisions of Title 54 (relating to names) with
19 respect to the right to acquire and protect trade names.
20 Subsection (b) shall not apply if the applicant files in the
21 department a certified copy of a final order of a court of
22 competent jurisdiction establishing the prior right of the
23 applicant to the use of a name in this Commonwealth.
24 (e) Remedies for violation of section.--The use of a name in
25 violation of this section shall not vitiate or otherwise affect
26 the corporate existence but any court having jurisdiction, upon
27 the application of:
28 (1) the Attorney General, acting on his own motion or at
29 the instance of any administrative department, board, or
30 commission of this Commonwealth; or
19900S1761B2459 - 170 -
1 (2) any person adversely affected;
2 may enjoin the corporation from using or continuing to use a
3 name in violation of this section.
4 § 5305. Reservation of corporate name.
5 (a) General rule.--The exclusive right to the use of a
6 corporate name may be reserved by any person. The reservation
7 shall be made by delivering to the Department of State an
8 application to reserve a specified corporate name, executed by
9 the applicant. If the department finds that the name is
10 available for corporate use, it shall reserve the name for the
11 exclusive use of the applicant for a period of 120 days.
12 (b) Transfer of reservation.--The right to exclusive use of
13 a specified corporate name reserved under subsection (a) may be
14 transferred to any other person by delivering to the department
15 a notice of the transfer, executed by the person who reserved
16 the name, and specifying the name and address of the transferee.
17 (c) Cross references.--See sections 134 (relating to
18 docketing statement) and 6131 (relating to registration of
19 name).
20 § 5306. Articles of incorporation.
21 (a) General rule.--Articles of incorporation shall be signed
22 by each of the incorporators[,] and shall set forth[,] in the
23 English language:
24 (1) The name of the corporation, unless the name is in a
25 foreign language[,] in which case it shall be set forth in
26 [English] Roman letters or characters or Arabic or Roman
27 numerals.
28 (2) [The] Subject to section 109 (relating to name of
29 commercial registered office provider in lieu of registered
30 address), the address, including street and number, if any,
19900S1761B2459 - 171 -
1 of its initial registered office in this Commonwealth.
2 (3) A brief statement of the purpose or purposes for
3 which the corporation is incorporated.
4 (4) A statement that the corporation is one which does
5 not contemplate pecuniary gain or profit, incidental or
6 otherwise.
7 (5) [The term for which it is to exist, which may be
8 perpetual] A statement that the corporation is incorporated
9 under the provisions of the Nonprofit Corporation Law of
10 1988.
11 (6) A statement whether the corporation is to be
12 organized upon a nonstock basis or a stock share basis, and,
13 if it is to be organized on a stock share basis:
14 (i) The aggregate number of shares [which] that the
15 corporation shall have authority to issue[, and, if the
16 shares are to consist of one class only, the par value of
17 each of the shares or a statement that all of the shares
18 are without par value, or if the shares are to be divided
19 into classes, the number of shares of each class, if any,
20 that are to have a par value and the par value of each
21 share of each class and the number of shares of each
22 class, if any, that are to be without par value]. It
23 shall not be necessary to set forth in the [original]
24 articles the designations of the classes of shares of the
25 corporation, or the maximum number of shares of each
26 class that may be issued.
27 (ii) A statement of the voting rights, designations,
28 preferences, [qualifications,] limitations[,
29 restrictions] and [the] special [or relative] rights in
30 respect of the shares of any class [the fixing of which
19900S1761B2459 - 172 -
1 by the articles of incorporation is desired] or any
2 series of any class, to the extent that they have been
3 determined.
4 (iii) A statement of [such authority as it may then
5 be desired to vest in the members,] any authority vested
6 in the board of directors or other body to [fix by
7 provision in the bylaws any] divide by provision in the
8 bylaws the authorized and unissued shares into classes or
9 series, or both, and to determine for any class or series
10 its voting rights, designations, preferences,
11 [qualifications,] limitations[, restrictions,] and
12 special [or relative] rights [of any class that may be
13 desired but which shall not be fixed in the articles].
14 (7) If the corporation is to have no members, a
15 statement to that effect.
16 (8) The name and address, including street and number,
17 if any, of each of the incorporators.
18 (9) The term for which the corporation is to exist, if
19 not perpetual.
20 (10) If the articles are to be effective on a specified
21 date, the hour, if any, and the month, day and year of the
22 effective date.
23 [(9)] (11) Any other provisions [which] that the
24 incorporators may choose to insert if:
25 (i) any provision of this [article] subpart
26 authorizes or requires provisions pertaining to the
27 subject matter thereof to be set forth in the articles or
28 bylaws of a nonprofit corporation or in an agreement or
29 other instrument; or
30 (ii) such provisions, [whether or not specifically
19900S1761B2459 - 173 -
1 authorized by this article,] are not inconsistent with
2 this subpart and relate to the [regulation of the
3 internal affairs or business of the corporation, or to]
4 purpose or purposes of the corporation, the management of
5 its business or affairs or the rights, powers or duties
6 of its members, security holders, directors or officers.
7 (b) Par value.--The articles may, but need not, set forth a
8 par value for any authorized shares or class or series of
9 shares.
10 [(b)] (c) Written consent to naming directors.--The naming
11 of directors in articles of incorporation shall constitute an
12 affirmation that such directors have consented in writing to
13 serve as such.
14 § 5311. Filing of [certificate] statement of summary of record
15 by certain corporations.
16 (a) General rule.--[Any nonprofit corporation which was not
17 incorporated under this article and which] Where any of the
18 valid charter documents of a nonprofit corporation are not on
19 file in the Department of State and the corporation desires to
20 file any document in the [Department of State] department under
21 any other provision of this article or [which] the corporation
22 desires to secure from the department any certificate to the
23 effect that the corporation is a corporation duly incorporated
24 and existing under the laws of this Commonwealth or a certified
25 copy of the articles of the corporation, the corporation shall
26 file in the department a [certificate] statement of summary of
27 record[,] which 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
19900S1761B2459 - 174 -
1 109 (relating to name of commercial registered office
2 provides in lieu of registered address), the location,
3 including street and number, if any, of its registered
4 office.
5 (2) The statute by or under which the corporation was
6 incorporated.
7 (3) The name under which, the manner in which and the
8 date on which the corporation was originally incorporated,
9 including the date when and the place where the original
10 articles were recorded.
11 (4) The place or places, including volume and page
12 numbers or their equivalent, where the documents constituting
13 the currently effective articles are filed or recorded, the
14 date or dates of each such filing or recording[,] and the
15 text of such currently effective articles. The information
16 specified in this paragraph may be omitted in a [certificate]
17 statement of summary of record [which] that is delivered to
18 the department contemporaneously with amended and restated
19 articles of the corporation filed under this [article]
20 subpart.
21 (5) Each name by which the corporation was known, if
22 any, other than its original name and its current name, and
23 the date or dates on which each change of name of the
24 corporation became effective.
25 A corporation shall be required to make only one filing under
26 this subsection.
27 (b) Validation of prior defects in incorporation.--Upon the
28 filing of a [certificate] statement under this section, the
29 corporation named in the [certificate] statement shall be deemed
30 to be a validly subsisting corporation to the same extent as if
19900S1761B2459 - 175 -
1 it had been duly incorporated and was existing under this
2 [article] subpart and the [Department of State] department shall
3 so certify regardless of any absence of or defect in the prior
4 [proceeding] proceedings relating to incorporation.
5 (c) Cross reference.--See section 134 (relating to docketing
6 statement).
7 SUBCHAPTER C
8 REVIVAL
9 [(Reserved)]
10 Sec.
11 5341. Statement of revival.
12 § 5341. Statement of revival.
13 (a) General rule.--Any nonprofit corporation whose charter
14 or articles have been forfeited by proclamation of the Governor
15 pursuant to section 1704 of the act of April 9, 1929 (P.L.343,
16 No.176), known as The Fiscal Code, or otherwise, or whose
17 corporate existence has expired by reason of any limitation
18 contained in its charter or articles and the failure to effect a
19 timely renewal or extension of its corporate existence, may at
20 any time by filing a statement of revival procure a revival of
21 its charter or articles, together with all the rights,
22 franchises, privileges and immunities and subject to all of its
23 duties, debts and liabilities that had been vested in and
24 imposed upon the corporation by its charter or articles as last
25 in effect.
26 (b) Contents of statement.--The statement of revival shall
27 be executed in the name of the forfeited or expired corporation
28 and shall, subject to section 109 (relating to name of
29 commercial registered office provider in lieu of registered
30 address), set forth:
19900S1761B2459 - 176 -
1 (1) The name of the corporation at the time its charter
2 or articles were forfeited or expired and the address,
3 including street and number, if any, of its last registered
4 office.
5 (2) The statute by or under which the corporation was
6 incorporated and the date of incorporation.
7 (3) The name that the corporation adopts as its new name
8 if the adoption of a new name is required by section 5304
9 (relating to required name changes by senior corporations).
10 (4) The address, including street and number, if any, of
11 its registered office in this Commonwealth.
12 (5) A reference to the proclamation or other action by
13 which its charter or articles were forfeited or a reference
14 to the limitation contained in its expired charter or
15 articles.
16 (6) A statement that the corporate existence of the
17 corporation shall be revived.
18 (7) A statement that the filing of the statement of
19 revival has been authorized by the corporation. Every
20 forfeited or expired corporation may act by its last
21 directors or may elect directors and officers in the manner
22 provided by this subpart for the limited purpose of effecting
23 a filing under this section.
24 (c) Filing and effect.--The statement of revival and, in the
25 case of a forfeited corporation, the clearance certificates
26 required by section 139 (relating to tax clearance of certain
27 fundamental transactions) shall be filed in the Department of
28 State. Upon the filing of the statement of revival, the
29 corporation shall be revived with the same effect as if its
30 charter or articles had not been forfeited or expired by
19900S1761B2459 - 177 -
1 limitation. The revival shall validate all contracts and other
2 transactions made and effected within the scope of the articles
3 of the corporation by its representatives during the time when
4 its charter or articles were forfeited or expired to the same
5 effect as if its charter or articles had not been forfeited or
6 expired.
7 (d) Cross reference.--See section 134 (relating to docketing
8 statement).
9 § 5502. General powers.
10 (a) General rule.--Subject to the limitations and
11 restrictions imposed by statute and, except as otherwise
12 provided in paragraph (4) [of this subsection], subject to the
13 limitations and restrictions contained in its articles, every
14 nonprofit corporation shall have power:
15 (1) To [continue as a corporation for the time] have
16 perpetual succession by its corporate name unless a limited
17 period of duration is specified in its articles, subject to
18 the power of the Attorney General under section 503 (relating
19 to actions to revoke corporate franchises) and to the power
20 of the General Assembly under the Constitution of
21 Pennsylvania.
22 (2) To sue and be sued, complain and defend[,] and
23 participate as a party or otherwise in any judicial,
24 administrative, arbitrative or other proceeding in its
25 corporate name.
26 (3) To have a corporate seal, which may be altered at
27 pleasure, and to use the [same] seal by causing it or a
28 facsimile thereof to be impressed or affixed[,] or in any
29 manner reproduced.
30 (4) To acquire, own and [dispose of] utilize any real or
19900S1761B2459 - 178 -
1 personal property, or any interest therein, wherever
2 situated, regardless of any limitation set forth in its
3 articles prior to January 1, 1972 as to the quantity or value
4 of real or personal property which it may hold, or as to the
5 amount of income derived therefrom.
6 (5) To sell [and convey, lease away], convey, mortgage,
7 pledge, lease, exchange or otherwise dispose of all or any
8 part of its property and assets, or any interest therein,
9 wherever situated.
10 (6) To guarantee, become surety for, acquire, own and
11 dispose of obligations, capital stock and other securities[,
12 and evidences of indebtedness].
13 (7) To borrow money, [to] issue [its evidences of
14 indebtedness, for labor done, or money or property, including
15 shares of the corporation, if the corporation is organized on
16 a stock share basis, properly acquirable by it, actually
17 received and to] or incur its obligations and secure any of
18 its obligations by mortgage on or pledge of or security
19 interest in all or any part of its property and assets,
20 wherever situated, franchises or income, or any interest
21 therein.
22 (8) To invest its [surplus] funds, [to] lend money and
23 to take and hold real and personal property as security for
24 the [payment] repayment of funds so invested or loaned.
25 (9) To make contributions and donations [for charitable
26 purposes].
27 (10) To use abbreviations, words, logos or symbols upon
28 the records of the corporation, and in connection with the
29 registration of, and inscription of ownership or entitlement
30 on, certificates evidencing membership in [the corporation or
19900S1761B2459 - 179 -
1 ownership of its] or securities [and upon the other records
2 of the corporation,] or obligations of the corporation, and
3 upon checks, proxies, notices and other instruments and
4 documents relating to the foregoing, which abbreviations,
5 words, logos or symbols shall [thereupon] have the same force
6 and effect as though the respective words and phrases for
7 which they stand were set forth in full for the purposes of
8 all statutes of this Commonwealth and all other purposes.
9 (11) To be a promoter, partner, member, associate or
10 manager of any partnership, enterprise or venture or in any
11 transaction, undertaking or arrangement [which] that the
12 [participating] corporation would have power to conduct
13 itself, whether or not [such] its participation involves
14 sharing or delegation of control with or to others.
15 (12) To transact any lawful business [which] that the
16 board of directors or other body [shall find to be in] finds
17 will aid [of] governmental [authority] policy.
18 (13) To continue the salaries of such of its employees
19 as may be serving in the active or reserve armed forces of
20 the United States, or in the national guard or in any other
21 organization established for the protection of the lives and
22 property of citizens of this Commonwealth or the United
23 States, during the term of [such] that service or during such
24 part thereof as [such] the employees, by reason of [such]
25 that service, may be unable to perform their duties as
26 employees of the corporation.
27 (14) To [grant allowances or] pay pensions [to its
28 directors, officers and employees] and establish pension
29 plans, pension trusts, profit sharing plans, share bonus
30 plans, share option plans, incentive and deferred
19900S1761B2459 - 180 -
1 compensation plans and other plans or trusts for any or all
2 of its present or former representatives and, after their
3 death, to grant allowances or pensions to their dependents or
4 beneficiaries, whether or not [such a] the grant was made
5 during their lifetime.
6 (15) To conduct its business, carry on its operations,
7 [and] have offices and exercise the powers granted by this
8 article or any other provision of law in any jurisdiction
9 within or without the United States.
10 [(16) To adopt, amend and repeal bylaws.
11 (17)] (16) To elect or appoint and remove officers,
12 employees and agents of the corporation, define their duties,
13 fix their reasonable compensation and the reasonable
14 compensation of directors, [and to indemnify corporate
15 personnel] to lend any of the foregoing money and credit and
16 to pay bonuses or other additional compensation to any of the
17 foregoing for past services.
18 [(18)] (17) To enter into any obligation appropriate for
19 the transaction of its affairs, including contracts or other
20 agreements with its members.
21 [(19)] (18) To have and exercise all of the powers and
22 means appropriate to effect the purpose or purposes for which
23 the corporation is incorporated.
24 [(20) To dissolve and wind up.]
25 (19) To have and exercise all other powers enumerated
26 elsewhere in this subpart or otherwise vested by law in the
27 corporation.
28 (b) Enumeration unnecessary.--It shall not be necessary to
29 set forth in the articles of the corporation the powers
30 enumerated in subsection (a) [of this section].
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1 (c) Board to exercise.--[Except as otherwise provided by
2 statute or in the bylaws, the powers enumerated in this section
3 and elsewhere in this article shall be exercised by the board of
4 directors of the corporation.] See section 5721 (relating to
5 board of directors).
6 § 5504. Adoption, amendment and contents of bylaws.
7 (a) General rule.--The members entitled to vote shall have
8 the power to adopt, amend and repeal the bylaws of a nonprofit
9 corporation[, but except]. Except as provided in subsection (b)
10 [of this section], the authority to adopt, amend and repeal
11 bylaws may be expressly vested by the bylaws in the board of
12 directors or other body, subject to the power of the members to
13 change such action. [Unless the bylaws otherwise provide, the
14 powers hereby conferred shall be exercised by a majority vote of
15 the members in office of the board of directors or other body,
16 or by the vote of members entitled to cast at least a majority
17 of the votes which all members present are entitled to cast
18 thereon, as the case may be, at any regular or special meeting
19 duly convened after notice to the members, directors or members
20 of such other body of that purpose.] The bylaws may contain any
21 provisions for [the regulation and management of] managing the
22 business and regulating the affairs of the corporation not
23 inconsistent with law or the articles. In the case of a meeting
24 of members, written notice shall be given to each member
25 entitled to vote that the purpose, or one of the purposes, of a
26 meeting is to consider the adoption, amendment or repeal of the
27 bylaws. There shall be included in, or enclosed with, the notice
28 a copy of the proposed amendment or a summary of the changes to
29 be effected thereby. Any change in the bylaws shall take effect
30 when adopted unless otherwise provided in the resolution
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1 effecting the change.
2 (b) Exception.--Except as provided in section 5310(a)
3 (relating to organization meeting), the board of directors or
4 other body shall not have the authority to adopt or change a
5 bylaw on any subject [which] that is committed [exclusively]
6 expressly to the members by any of the [following] provisions of
7 this [article:] subpart. See:
8 Subsection (d) (relating to amendment of voting
9 provisions).
10 Section 5713 (relating to personal liability of
11 directors.
12 [(1)] Section 5721 (relating to board of directors).
13 [(2)] Section 5725(b) (relating to selection of
14 directors).
15 [(3)] Section 5726(a) (relating to removal of directors
16 by the members).
17 [(4)] Section 5726(b) (relating to removal of directors
18 by the board).
19 [(5)] Section 5729 (relating to voting rights of
20 directors).
21 [(6)] Section 5751(a) (relating to classes and
22 qualifications of membership).
23 [(7)] Section 5752(c) (relating to rights of
24 shareholders).
25 [(8)] Section 5754(a) (relating to members grouped in
26 local units).
27 [(9)] Section 5755(a) (relating to regular meetings).
28 [(10)] Section 5756 (relating to quorum).
29 [(11)] Section 5757 (relating to action by members).
30 [(12)] Section 5758 (relating to voting rights of
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1 members).
2 [(13)] Section 5759(a) (relating to voting and other
3 action by proxy).
4 [(14)] Section 5760(a) (relating to voting in nonprofit
5 corporation matters).
6 [(15)] Section 5762 (relating to judges of election).
7 [(16)] Section 5766(a) (relating to termination and
8 transfer of membership).
9 [(17)] Section 5767 (relating to voting powers and other
10 rights of certain security holders and other entities).
11 [(18)] Section 5975(c) (relating to winding up and
12 distribution).
13 (c) Bylaw provisions in articles.--Where any provision of
14 this subpart or any other provision of law refers to a rule as
15 set forth in the bylaws of a corporation [such], the reference
16 shall be construed to include and be satisfied by any rule on
17 the same subject as set forth in the articles of the
18 corporation.
19 (d) Amendment of voting provisions.--Unless otherwise
20 restricted in a bylaw adopted by the members, whenever the
21 bylaws require for the taking of any action by the members or a
22 class of members a specific number or percentage of votes, the
23 provision of the bylaws setting forth that requirement shall not
24 be amended or repealed by any lesser number or percentage of
25 votes of the members or of the class of members.
26 § 5505. Persons bound by bylaws.
27 [The] Except as otherwise provided by section 5713 (relating
28 to personal liability of directors) or any similar provision of
29 law, bylaws of a nonprofit corporation shall operate [merely]
30 only as regulations among the members of the corporation, and
19900S1761B2459 - 184 -
1 shall not affect contracts or other dealings with other persons,
2 unless [such] those persons have actual knowledge of [such] the
3 bylaws.
4 § 5507. Registered office.
5 (a) General rule.--Every nonprofit corporation shall have
6 and continuously maintain in this Commonwealth a registered
7 office which may, but need not, be the same as its place of
8 business.
9 (b) [Change] Statement of change of registered office.--
10 After incorporation, a change of the location of the registered
11 office may be authorized at any time by [a majority vote of the
12 members in office of] the board of directors or other body.
13 Before [such] the change of location [shall become] becomes
14 effective, the corporation either shall amend its articles under
15 the provisions of this [article to reflect such] subpart to
16 reflect the change in location or shall file in the Department
17 of State a statement of change of registered office executed
18 [under the seal of the corporation and signed by two duly
19 authorized officers of] by the corporation, setting forth:
20 (1) The name of the corporation.
21 (2) The address, including street number, if any, of its
22 then registered office.
23 (3) The address, including street number, if any, to
24 which the registered office is to be changed.
25 (4) A statement that [such] the change was authorized by
26 [resolution duly adopted by at least a majority of the
27 members in office of] the board of directors or other body.
28 (c) Alternative procedure.--A corporation may satisfy the
29 requirements of this subpart concerning the maintenance of a
30 registered office in this Commonwealth by setting forth in any
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1 document filed in the department under any provision of this
2 subpart that permits or requires the statement of the address of
3 its then registered office, in lieu of that address, the
4 statement authorized by section 109(a) (relating to name of
5 commercial registered office provider in lieu of registered
6 address).
7 [(c)] (d) Cross reference.--See section 134 (relating to
8 docketing statement).
9 § 5701. Applicability of subchapter.
10 The provisions of this subchapter shall apply to every
11 nonprofit corporation unless otherwise restricted:
12 (1) by any other provision of this [article] subpart; or
13 (2) except with respect to section [5707] 5707(a)
14 (relating to exception to requirement of notice), in the
15 bylaws.
16 § 5702. Manner of giving notice.
17 (a) General rule.--Whenever written notice is required to be
18 given to any person under the provisions of this [article]
19 subpart or by the articles or bylaws of any nonprofit
20 corporation, it may be given to [such] the person[,] either
21 personally or by sending a copy thereof by first class or
22 express mail, postage prepaid, or by telegram (with messenger
23 service specified), telex or TWX (with answer back received) or
24 courier service, charges prepaid, or by facsimile transmission,
25 to his address (or to his telex, TWX or facsimile number)
26 appearing on the books of the corporation[,] or, in the case of
27 directors or members of an other body, supplied by him to the
28 corporation for the purpose of notice. If the notice is sent by
29 mail [or by], telegraph or courier service, it shall be deemed
30 to have been given to the person entitled thereto when deposited
19900S1761B2459 - 186 -
1 in the United States mail or with a telegraph office [for
2 transmission to such person] or courier service for delivery to
3 that person or, in the case of telex or TWX, when dispatched. A
4 notice of meeting shall specify the place, day and hour of the
5 meeting and any other information required by any other
6 provision of this [article] subpart.
7 (b) Adjourned meetings of members.--When a meeting of
8 members is adjourned, it shall not be necessary to give any
9 notice of the adjourned meeting or of the business to be
10 transacted at an adjourned meeting, other than by announcement
11 at the meeting at which [such] the adjournment is taken[.],
12 unless the board or other body fixes a new record date for the
13 adjourned meeting or this subpart requires notice of the
14 business to be transacted and such notice has not previously
15 been given.
16 (c) Bulk mail notice.--A corporation having more than 100
17 members of record that gives notice by mail of any regular or
18 special meeting of the members (or any other notice required by
19 this subpart or by the articles or bylaws to be given to all
20 members or to a class of members) at least 20 days prior to the
21 day named for the meeting or any corporate or member action
22 specified in the notice may use any class of postpaid mail.
23 (d) Notice by publication.--If the bylaws so provide,
24 persons authorized or required to give notice of a meeting of
25 members may, in lieu of any written notice of a meeting of
26 members required to be given by this subpart, give notice of the
27 meeting by causing notice of the meeting to be officially
28 published. If 80% of the members of record entitled to vote at
29 the meeting do not have addresses of record within the territory
30 of general circulation of the newspapers required for official
19900S1761B2459 - 187 -
1 publication, the notice shall also be published in newspapers
2 that have an aggregate territory of general circulation that
3 includes the addresses of record of at least 80% of the members
4 of record.
5 (e) Notice by public announcement.--In lieu of any written
6 notice of a meeting of members required to be given by this
7 subpart, persons authorized or required to give notice of a
8 meeting of members of any church or other religious organization
9 may give notice of the meeting by announcement at any two
10 regular church or religious services held during different weeks
11 within 30 days prior to the time at which the meeting of members
12 will be held. In any case where notice of a meeting is given by
13 announcement, notice shall be given at the last service
14 preceding the meeting. In the event that two church or religious
15 services are not held within such 30 day period, notice of a
16 meeting of members shall be given as otherwise provided in this
17 subchapter.
18 (f) Effect of notice pursuant to optional procedures.--For
19 the purposes of this subpart, notice given under subsection (d)
20 or (e) shall be deemed to be written notice to every member of
21 record entitled to vote at a meeting or to every person
22 otherwise entitled to notice.
23 § 5703. Place and notice of meetings of board of directors or
24 other body.
25 (a) Place.--Meetings of the board of directors or other body
26 may be held at such place within or without this Commonwealth as
27 the board of directors or other body may from time to time
28 appoint[,] or as may be designated in the notice of the meeting.
29 (b) Notice.--[Meetings] Regular meetings of the board of
30 directors or other body may be held upon such notice, if any, as
19900S1761B2459 - 188 -
1 the bylaws may prescribe. Unless otherwise provided in the
2 bylaws, written notice of every special meeting of the board of
3 directors or other body shall be given to each director or
4 member of such other body at least five days before the day
5 named for the meeting. Neither the business to be transacted at,
6 nor the purpose of, any regular or special meeting of the board
7 or other body need be specified in the notice of the meeting.
8 § 5704. Place and notice of meetings of members.
9 (a) Place.--[Meeting] Meetings of members may be held at
10 such place within or without this Commonwealth as may be
11 provided in or fixed pursuant to the bylaws [or as may be fixed
12 by the board of directors or other body pursuant to authority
13 granted by the bylaws]. Unless otherwise provided in or pursuant
14 to the bylaws, all meetings of the members shall be held in this
15 Commonwealth at the registered office of the corporation.
16 (b) Notice.--Written notice of every meeting of the members
17 shall be given by, or at the direction of, the secretary or
18 other authorized person[,] to each member of record entitled to
19 vote at the meeting[,] at least:
20 (1) ten days prior to the day named for a meeting called
21 to consider a fundamental change under Chapter 59 (relating
22 to fundamental changes); or
23 (2) five days prior to the day named for the meeting in
24 any other case.
25 If the secretary or [such] other authorized person [shall
26 neglect or refuse] neglects or refuses to give notice of a
27 meeting, the person or persons calling the meeting may do so.
28 (c) Contents.--In the case of a special meeting of the
29 members, the notice shall specify the general nature of the
30 business to be transacted, and in all cases the notice shall
19900S1761B2459 - 189 -
1 comply with the express requirements of this subpart. The
2 corporation shall not have a duty to augment the notice.
3 § 5705. Waiver of notice.
4 (a) Written waiver.--Whenever any written notice is required
5 to be given under the provisions of this [article] subpart or
6 the articles or bylaws of any nonprofit corporation, a waiver
7 thereof in writing, signed by the person or persons entitled to
8 [such] the notice, whether before or after the time stated
9 therein, shall be deemed equivalent to the giving of [such] the
10 notice. Except as otherwise required by this subsection, neither
11 the business to be transacted at, nor the purpose of, a meeting
12 need be specified in the waiver of notice of [such] the meeting.
13 [In the case of a special meeting of members such waiver of
14 notice shall specify the general nature of the business to be
15 transacted.]
16 (b) Waiver by attendance.--Attendance of a person at any
17 meeting shall constitute a waiver of notice of [such] the
18 meeting[,] except where a person attends a meeting for the
19 express purpose of objecting, at the beginning of the meeting,
20 to the transaction of any business because the meeting was not
21 lawfully called or convened.
22 § 5706. Modification of proposal contained in notice.
23 Whenever the language of a proposed resolution is included in
24 a written notice of a meeting required to be given under the
25 provisions of this subpart or the articles or bylaws of any
26 nonprofit corporation, the meeting considering the resolution
27 may without further notice adopt it with such clarifying or
28 other amendments as do not enlarge its original purpose.
29 § 5707. Exception to requirement of notice.
30 [Wherever] (a) General rule.--Whenever any notice or
19900S1761B2459 - 190 -
1 communication is required to be given to any person under the
2 provisions of this [article] subpart or by the articles or
3 bylaws of any nonprofit corporation[,] or by the terms of any
4 agreement or other instrument or as a condition precedent to
5 taking any corporate action[,] and communication with [such]
6 that person is then unlawful, the giving of [such] the notice or
7 communication to such person shall not be required and there
8 shall be no duty to apply for a license or other permission to
9 do so. Any action or meeting [which shall be] that is taken or
10 held without notice or communication to [any such] that person
11 shall have the same validity as if [such] the notice or
12 communication had been duly given. If the action taken is such
13 as to require the filing of any document with respect thereto
14 under any provision of law or any agreement or other instrument,
15 it shall be sufficient, if such is the fact and if notice or
16 communication is required, to state therein that notice or
17 communication was given to all persons entitled to receive
18 notice or communication except [such] persons with whom
19 communication was unlawful.
20 (b) Members without forwarding addresses.--Subsection (a)
21 shall also be applicable to any member with whom the corporation
22 has been unable to communicate for more than 24 consecutive
23 months because communications to the member are returned
24 unclaimed or the member has otherwise failed to provide the
25 corporation with a current address. Whenever the member provides
26 the corporation with a current address, subsection (a) shall
27 cease to be applicable to the member under this subsection.
28 § 5708. Use of conference telephone and similar equipment.
29 [One] Except as otherwise provided in the bylaws, one or more
30 persons may participate in a meeting of the incorporators, the
19900S1761B2459 - 191 -
1 board[,] of directors or [of] an other body, or [of] the members
2 of a nonprofit corporation by means of conference telephone or
3 similar communications equipment by means of which all persons
4 participating in the meeting can hear each other. Participation
5 in a meeting pursuant to this section shall constitute presence
6 in person at [such] the meeting.
7 SUBCHAPTER B
8 FIDUCIARY DUTY
9 Sec.
10 5711. Alternative provisions.
11 5712. Standard of care and justifiable reliance.
12 5713. Personal liability of directors.
13 5714. Notation of dissent.
14 5715. Exercise of powers generally.
15 5716. Alternative standard.
16 5717. Limitation on standing.
17 § 5711. Alternative provisions.
18 Section 5716 (relating to alternative standard) shall not be
19 applicable to any nonprofit corporation to which section 5715
20 (relating to exercise of powers generally) is applicable.
21 Section 5715 shall be applicable to any corporation except a
22 corporation:
23 (1) the bylaws of which by amendment adopted by the
24 board of directors on or before July 26, 1990, and not
25 subsequently rescinded by an articles amendment, explicitly
26 provide that section 5715 or corresponding provisions of
27 prior law shall not be applicable to the corporation; or
28 (2) the articles of which explicitly provide that
29 section 5715 or corresponding provisions of prior law shall
30 not be applicable to the corporation.
19900S1761B2459 - 192 -
1 § 5712. Standard of care and justifiable reliance.
2 (a) Directors.--A director of a nonprofit corporation shall
3 stand in a fiduciary relation to the corporation and shall
4 perform his duties as a director, including his duties as a
5 member of any committee of the board upon which he may serve, in
6 good faith, in a manner he reasonably believes to be in the best
7 interests of the corporation and with such care, including
8 reasonable inquiry, skill and diligence, as a person of ordinary
9 prudence would use under similar circumstances. In performing
10 his duties, a director shall be entitled to rely in good faith
11 on information, opinions, reports or statements, including
12 financial statements and other financial data, in each case
13 prepared or presented by any of the following:
14 (1) One or more officers or employees of the corporation
15 whom the director reasonably believes to be reliable and
16 competent in the matters presented.
17 (2) Counsel, public accountants or other persons as to
18 matters which the director reasonably believes to be within
19 the professional or expert competence of such person.
20 (3) A committee of the board upon which he does not
21 serve, duly designated in accordance with law, as to matters
22 within its designated authority, which committee the director
23 reasonably believes to merit confidence.
24 (b) Effect of actual knowledge.--A director shall not be
25 considered to be acting in good faith if he has knowledge
26 concerning the matter in question that would cause his reliance
27 to be unwarranted.
28 (c) Officers.--Except as otherwise provided in the bylaws,
29 an officer shall perform his duties as an officer in good faith,
30 in a manner he reasonably believes to be in the best interests
19900S1761B2459 - 193 -
1 of the corporation and with such care, including reasonable
2 inquiry, skill and diligence, as a person of ordinary prudence
3 would use under similar circumstances. A person who so performs
4 his duties shall not be liable by reason of having been an
5 officer of the corporation.
6 § 5713. Personal liability of directors.
7 (a) General rule.--If a bylaw adopted by the members of a
8 nonprofit corporation so provides, a director shall not be
9 personally liable, as such, for monetary damages for any action
10 taken unless:
11 (1) the director has breached or failed to perform the
12 duties of his office under this subchapter; and
13 (2) the breach or failure to perform constitutes self-
14 dealing, willful misconduct or recklessness.
15 (b) Exception.--Subsection (a) shall not apply to:
16 (1) the responsibility or liability of a director
17 pursuant to any criminal statute; or
18 (2) the liability of a director for the payment of taxes
19 pursuant to Federal, State or local law.
20 (c) Cross reference.--See 42 Pa.C.S. § 8332.5 (relating to
21 corporate representatives).
22 § 5714. Notation of dissent.
23 A director of a nonprofit corporation who is present at a
24 meeting of its board of directors, or of a committee of the
25 board, at which action on any corporate matter is taken on which
26 the director is generally competent to act, shall be presumed to
27 have assented to the action taken unless his dissent is entered
28 in the minutes of the meeting or unless he files his written
29 dissent to the action with the secretary of the meeting before
30 the adjournment thereof or transmits the dissent in writing to
19900S1761B2459 - 194 -
1 the secretary of the corporation immediately after the
2 adjournment of the meeting. The right to dissent shall not apply
3 to a director who voted in favor of the action. Nothing in this
4 subchapter shall bar a director from asserting that minutes of
5 the meeting incorrectly omitted his dissent if, promptly upon
6 receipt of a copy of such minutes, he notifies the secretary, in
7 writing, of the asserted omission or inaccuracy.
8 § 5715. Exercise of powers generally.
9 (a) General rule.--In discharging the duties of their
10 respective positions, the board of directors, committees of the
11 board and individual directors of a nonprofit corporation may,
12 in considering the best interests of the corporation, consider
13 to the extent they deem appropriate:
14 (1) The effects of any action upon any or all groups
15 affected by such action, including members, employees,
16 suppliers, customers and creditors of the corporation, and
17 upon communities in which offices or other establishments of
18 the corporation are located.
19 (2) The short-term and long-term interests of the
20 corporation, including benefits that may accrue to the
21 corporation from its long-term plans and the possibility that
22 these interests may be best served by the continued
23 independence of the corporation.
24 (3) The resources, intent and conduct (past, stated and
25 potential) of any person seeking to acquire control of the
26 corporation.
27 (4) All other pertinent factors.
28 (b) Consideration of interests and factors.--The board of
29 directors, committees of the board and individual directors
30 shall not be required, in considering the best interests of the
19900S1761B2459 - 195 -
1 corporation or the effects of any action, to regard any
2 corporate interest or the interests of any particular group
3 affected by such action as a dominant or controlling interest or
4 factor. The consideration of interests and factors in the manner
5 described in this subsection and in subsection (a) shall not
6 constitute a violation of section 5712 (relating to standard of
7 care and justifiable reliance).
8 (c) Specific applications.--In exercising the powers vested
9 in the corporation, including, without limitation, those powers
10 pursuant to section 5502 (relating to general powers), and in no
11 way limiting the discretion of the board of directors,
12 committees of the board and individual directors pursuant to
13 subsections (a) and (b), the fiduciary duty of directors shall
14 not be deemed to require them to act as the board of directors,
15 a committee of the board or an individual director solely
16 because of the effect such action might have on an acquisition
17 or potential or proposed acquisition of control of the
18 corporation or the consideration that might be offered or paid
19 to members 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 5712 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
19900S1761B2459 - 196 -
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 5712,
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 a membership in
29 or shares of the corporation.
30 (ii) The receipt as a member of or holder of shares
19900S1761B2459 - 197 -
1 of any class of any distribution made to all members of
2 or holders of shares of that class.
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 5711 (relating to
13 alternative provisions).
14 § 5716. 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 nonprofit corporation may,
18 in considering the best interests of the corporation, consider
19 the 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 5712
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 5711 (relating to
29 alternative provisions).
30 § 5717. Limitation on standing.
19900S1761B2459 - 198 -
1 The duty of the board of directors, committees of the board
2 and individual directors under section 5712 (relating to
3 standard of care and justifiable reliance) is solely to the
4 nonprofit corporation and may be enforced directly by the
5 corporation or may be enforced by a member, as such, by an
6 action in the right of the corporation, and may not be enforced
7 directly by a member or by any other person or group.
8 Notwithstanding the preceding sentence, sections 5715(a) and (b)
9 (relating to exercise of powers generally) and 5716(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, OFFICERS AND MEMBERS OF
18 AN OTHER BODY
19 § 5721. Board of directors.
20 Unless otherwise provided by statute or in a bylaw adopted by
21 the members, all powers enumerated in section 5502 (relating to
22 general powers) and elsewhere in this subpart or otherwise
23 vested by law in a nonprofit corporation shall be exercised by
24 or under the authority of, and the business and affairs of every
25 nonprofit corporation shall be managed under the direction of, a
26 board of directors. If any such provision is made in the bylaws,
27 the powers and duties conferred or imposed upon the board of
28 directors by this subpart shall be exercised or performed to
29 such extent and by such other body as shall be provided in the
30 bylaws.
19900S1761B2459 - 199 -
1 § 5732. Officers.
2 (a) General rule.--Every nonprofit corporation shall have a
3 president, a secretary, and a treasurer, or persons who shall
4 act as such, regardless of the name or title by which they may
5 be designated, elected or appointed and may have such other
6 officers and assistant officers as it [shall] may authorize from
7 time to time. The bylaws may prescribe special qualifications
8 for [such] the officers. The president and secretary shall be
9 natural persons of full age. The treasurer may be a corporation,
10 but if a natural person shall be of full age. [Such officers and
11 assistant officers shall be elected or appointed at such time,
12 in such manner, and for such terms, as the bylaws shall
13 prescribe.] Unless otherwise restricted in the bylaws, it shall
14 not be necessary for the officers to be directors [and any]. Any
15 number of offices may be held by the same person. [Unless
16 otherwise provided in the bylaws, the board of directors shall
17 elect and fix the compensation of the officers and assistant
18 officers.] The officers and assistant officers shall be elected
19 or appointed at such time, in such manner and for such terms as
20 may be fixed by or pursuant to the bylaws. Unless otherwise
21 provided by or pursuant to the bylaws, each officer shall hold
22 office for a term of one year and until his successor has been
23 selected and qualified or until his earlier death, resignation
24 or removal. Any officer may resign at any time upon written
25 notice to the corporation. The resignation shall be effective
26 upon receipt thereof by the corporation or at such subsequent
27 time as may be specified in the notice of resignation. The
28 [board of directors or other body] corporation may secure the
29 fidelity of any or all of [such] the officers by bond or
30 otherwise. Unless otherwise provided in the bylaws, the board of
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1 directors shall have power to fill any vacancies in any office
2 occurring from whatever reason.
3 (b) Authority.--Unless otherwise provided in the bylaws, all
4 officers of the corporation, as between themselves and the
5 corporation, shall [respectively] have such authority and
6 perform such duties in the management of the [property and
7 affairs of the] corporation as may be provided [in] by or
8 pursuant to the bylaws[,] or, in the absence of controlling
9 provisions in the bylaws, as may be determined by or pursuant to
10 resolutions or orders of the board of directors or other body.
11 (c) Nomination of officers.--Unless the bylaws provide
12 otherwise, officers shall be nominated by a nominating committee
13 or from the floor.
14 (d) Cross reference.--See section 5110 (relating to annual
15 report.
16 § 5734. Other body.
17 The [limitations, safeguards and procedures] provisions of
18 this subchapter, of Subchapters B (relating to fiduciary duty)
19 and D (relating to indemnification) and of other provisions of
20 law applicable to the board of directors and to directors
21 individually shall be applicable also to any "other body" as
22 defined in section 5103 (relating to definitions) and to the
23 members of an other body individually.
24 SUBCHAPTER [C] D
25 INDEMNIFICATION
26 § 5741. Third-party actions.
27 Unless otherwise restricted in its bylaws, a nonprofit
28 corporation shall have power to indemnify any person who was or
29 is a party or is threatened to be made a party to any
30 threatened, pending or completed action[, suit] or proceeding,
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1 whether civil, criminal, administrative or investigative (other
2 than an action by or in the right of the corporation), by reason
3 of the fact that he is or was a representative of the
4 corporation, or is or was serving at the request of the
5 corporation as a representative of another domestic or foreign
6 corporation for profit or not-for-profit, partnership, joint
7 venture, trust or other enterprise, against expenses (including
8 attorneys' fees), judgments, fines and amounts paid in
9 settlement actually and reasonably incurred by him in connection
10 with [such] the action[, suit] or proceeding if he acted in good
11 faith and in a manner he reasonably believed to be in, or not
12 opposed to, the best interests of the corporation[,] and, with
13 respect to any criminal [action or] proceeding, had no
14 reasonable cause to believe his conduct was unlawful. The
15 termination of any action[, suit] or proceeding by judgment,
16 order, settlement[,] or conviction[,] or upon a plea of nolo
17 contendere or its equivalent[,] shall not of itself create a
18 presumption that the person did not act in good faith and in a
19 manner [which] that he reasonably believed to be in, or not
20 opposed to, the best interests of the corporation[,] and, with
21 respect to any criminal [action or] proceeding, had reasonable
22 cause to believe that his conduct was unlawful.
23 § 5742. Derivative actions.
24 Unless otherwise restricted in its bylaws, a nonprofit
25 corporation shall have power to indemnify any person who was or
26 is a party, or is threatened to be made a party, to any
27 threatened, pending or completed action [or suit] by or in the
28 right of the corporation to procure a judgment in its favor by
29 reason of the fact that he is or was a representative of the
30 corporation[,] or is or was serving at the request of the
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1 corporation as a representative of another domestic or foreign
2 corporation for profit or not-for-profit, partnership, joint
3 venture, trust or other enterprise, against expenses (including
4 attorneys' fees) actually and reasonably incurred by him in
5 connection with the defense or settlement of [such] the action
6 [or suit] if he acted in good faith and in a manner he
7 reasonably believed to be in, or not opposed to, the best
8 interests of the corporation [and except that no
9 indemnification]. Indemnification shall not be made under this
10 section in respect of any claim, issue or matter as to which
11 [such] the person [shall have] has been adjudged to be liable
12 [for negligence or misconduct in the performance of his duty] to
13 the corporation unless and only to the extent that the court of
14 common pleas of the judicial district embracing the county in
15 which the registered office of the corporation is located or the
16 court in which [such] the action [or suit] was brought [shall
17 determine] determines upon application that, despite the
18 adjudication of liability but in view of all the circumstances
19 of the case, such person is fairly and reasonably entitled to
20 indemnity for such expenses [which] that the court of common
21 pleas or [such] other court shall deem proper.
22 § 5743. Mandatory indemnification.
23 [Notwithstanding any contrary provision of its articles or
24 bylaws, to] To the extent that a representative of a nonprofit
25 corporation has been successful on the merits or otherwise in
26 defense of any action[, suit] or proceeding referred to in
27 section 5741 (relating to third-party actions) or [section] 5742
28 (relating to derivative actions) or in defense of any claim,
29 issue or matter therein, he shall be indemnified against
30 expenses (including attorneys' fees) actually and reasonably
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1 incurred by him in connection therewith.
2 § 5744. Procedure for effecting indemnification.
3 Unless ordered by a court, any indemnification under section
4 5741 (relating to third-party actions) or [section] 5742
5 (relating to derivative actions) shall be made by the nonprofit
6 corporation only as authorized in the specific case upon a
7 determination that indemnification of the representative is
8 proper in the circumstances because he has met the applicable
9 standard of conduct set forth in [such section. Such] those
10 sections. The determination shall be made:
11 (1) by the board of directors by a majority vote of a
12 quorum consisting of directors who were not parties to [such
13 action, suit] the action or proceeding;
14 (2) if such a quorum is not obtainable[,] or[, even] if
15 obtainable and a majority vote of a quorum of disinterested
16 directors so directs, by independent legal counsel in a
17 written opinion;
18 (3) by such other body as may be provided in the bylaws;
19 or
20 (4) by the members.
21 § 5745. [(Reserved)] Advancing expenses.
22 Expenses (including attorneys' fees) incurred in defending
23 any action or proceeding referred to in this subchapter may be
24 paid by a nonprofit corporation in advance of the final
25 disposition of the action or proceeding upon receipt of an
26 undertaking by or on behalf of the representative to repay the
27 amount if it is ultimately determined that he is not entitled to
28 be indemnified by the corporation as authorized in this
29 subchapter or otherwise.
30 § 5746. [Scope of subchapter] Supplementary coverage.
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1 (a) General rule.--The indemnification and advancement of
2 expenses provided by, or granted pursuant to, the other sections
3 of this subchapter shall not be deemed exclusive of any other
4 rights to which a person seeking indemnification or advancement
5 of expenses may be entitled under any bylaw, agreement, vote of
6 members or disinterested directors or otherwise, both as to
7 action in his official capacity and as to action in another
8 capacity while holding [such] that office[, and shall continue
9 as to a person who has ceased to be a representative and shall
10 inure to the benefit of the heirs and personal representative of
11 such a person]. Section 5728 (relating to interested members,
12 directors or officers; quorum) shall be applicable to any bylaw,
13 contract or transaction authorized by the directors under this
14 section. A corporation may create a fund of any nature, which
15 may, but need not be, under the control of a trustee, or
16 otherwise secure or insure in any manner its indemnification
17 obligations, whether arising under or pursuant to this section
18 or otherwise.
19 (b) When indemnification is not to be made.--Indemnification
20 pursuant to subsection (a) shall not be made in any case where
21 the act or failure to act giving rise to the claim for
22 indemnification is determined by a court to have constituted
23 willful misconduct or recklessness.
24 (c) Grounds.--Indemnification pursuant to subsection (a)
25 under any bylaw, agreement, vote of members or directors or
26 otherwise may be granted for any action taken or any failure to
27 take any action and may be made whether or not the corporation
28 would have the power to indemnify the person under any other
29 provision of law except as provided in this section and whether
30 or not the indemnified liability arises or arose from any
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1 threatened, pending or completed action by or in the right of
2 the corporation. Such indemnification is declared to be
3 consistent with the public policy of this Commonwealth.
4 [(b)] (d) Trust property.--This subchapter shall not affect
5 the liability of a representative with respect to the
6 administration of assets held by the corporation pursuant to
7 section 5547 (relating to authority to take and hold trust
8 property).
9 § 5747. Power to purchase insurance.
10 Unless otherwise restricted in its bylaws, a nonprofit
11 corporation shall have power to purchase and maintain insurance
12 on behalf of any person who is or was a representative of the
13 corporation[,] or is or was serving at the request of the
14 corporation as a representative of another domestic or foreign
15 corporation for profit or not-for-profit, partnership, joint
16 venture, trust or other enterprise against any liability
17 asserted against him and incurred by him in any such capacity,
18 or arising out of his status as such, whether or not the
19 corporation would have the power to indemnify him against [such]
20 that liability under the provisions of this subchapter. Such
21 insurance is declared to be consistent with the public policy of
22 this Commonwealth.
23 § 5748. Application to surviving or new corporations.
24 For the purposes of this subchapter, references to "the
25 corporation" include all constituent corporations absorbed in a
26 consolidation, merger or division, as well as the surviving or
27 new corporations surviving or resulting therefrom, so that any
28 person who is or was a representative of [such a] the
29 constituent, surviving or new corporation, or is or was serving
30 at the request of [such] the constituent, surviving or new
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1 corporation as a representative of another domestic or foreign
2 corporation for profit or not-for-profit, partnership, joint
3 venture, trust or other enterprise, shall stand in the same
4 position under the provisions of this subchapter with respect to
5 the surviving or new corporation as he would if he had served
6 the surviving or new corporation in the same capacity.
7 § 5749. Application to employee benefit plans.
8 For the purposes of this subchapter:
9 (1) References to "other enterprises" shall include
10 employee benefit plans and references to "serving at the
11 request of the corporation" shall include any service as a
12 representative of the nonprofit corporation that imposes
13 duties on, or involves services by, the representative with
14 respect to an employee benefit plan, its participants or
15 beneficiaries.
16 (2) Excise taxes assessed on a person with respect to
17 any employee benefit plan pursuant to applicable law shall be
18 deemed "fines."
19 (3) Action with respect to an employee benefit plan
20 taken or omitted in good faith by a representative of the
21 corporation in a manner he reasonably believed to be in the
22 interest of the participants and beneficiaries of the plan
23 shall be deemed to be action in a manner that is not opposed
24 to the best interests of the corporation.
25 § 5750. Duration and extent of coverage.
26 The indemnification and advancement of expenses provided by,
27 or granted pursuant to, this subchapter shall, unless otherwise
28 provided when authorized or ratified, continue as to a person
29 who has ceased to be a representative of the corporation and
30 shall inure to the benefit of the heirs and personal
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1 representative of that person.
2 SUBCHAPTER [D] E
3 MEMBERS
4 § 5758. Voting rights of members.
5 * * *
6 (b) Procedures.--The manner of voting on any matter,
7 including changes in the articles or bylaws, may be by ballot,
8 mail, or any reasonable means provided in a bylaw adopted by the
9 members. If a bylaw adopted by the members provides a fair and
10 reasonable procedure for the nomination of candidates for any
11 office, only candidates who have been duly nominated in
12 accordance therewith shall be eligible for election. [The manner
13 of voting may be by ballot, mail, or any reasonable means
14 provided in a bylaw adopted by the members.] Unless otherwise
15 provided in such a bylaw, in elections for directors, voting
16 shall be by ballot, and the candidates receiving the highest
17 number of votes from each class or group [or] of classes, if
18 any, of members entitled to elect directors separately up to the
19 number of directors to be elected by such class or group of
20 classes shall be elected. If at any meeting of members,
21 directors of more than one class are to be elected, each class
22 of directors shall be elected in a separate election.
23 * * *
24 SUBCHAPTER [E] F
25 DERIVATIVE ACTIONS
26 (Reserved)
27 SUBCHAPTER [F] G
28 JUDICIAL SUPERVISION OF CORPORATE ACTION
29 SUBCHAPTER A
30 PRELIMINARY PROVISIONS
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1 [(Reserved)]
2 Sec.
3 5901. Omission of certain provisions from filed plans.
4 5902. Statement of termination.
5 5903. Bankruptcy or insolvency proceedings.
6 5904. (Reserved).
7 5905. Proposal of fundamental transactions.
8 § 5901. Omission of certain provisions from filed plans.
9 (a) General rule.--A plan as filed in the Department of
10 State under any provision of this chapter may omit all
11 provisions of the plan except provisions, if any:
12 (1) that are intended to amend or constitute the
13 operative provisions of the articles of a corporation as in
14 effect subsequent to the effective date of the plan; or
15 (2) that allocate or specify the respective assets and
16 liabilities of the resulting corporations, in the case of a
17 plan of division.
18 (b) Availability of full plan.--If any of the provisions of
19 a plan are omitted from the plan as filed in the department, the
20 articles of amendment, merger, consolidation, division or
21 conversion shall state that the full text of the plan is on file
22 at the principal place of business of the surviving or new or a
23 resulting corporation and shall state the address thereof. A
24 corporation that takes advantage of this section shall furnish a
25 copy of the full text of the plan, on request and without cost,
26 to any member of any corporation that was a party to the plan
27 and on request and at cost to any other person.
28 § 5902. Statement of termination.
29 (a) General rule.--If articles of amendment or articles of
30 merger, consolidation, division or conversion of a nonprofit
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1 corporation or to which it is a party have been filed in the
2 Department of State prior to the termination of the amendment or
3 plan pursuant to provisions therefor set forth in the resolution
4 or petition relating to the amendment or in the plan, the
5 termination shall not be effective unless the corporation shall,
6 prior to the time the amendment or plan is to become effective,
7 file in the department a statement of termination. The statement
8 of termination shall be executed by the corporation that filed
9 the amendment or by each corporation that is a party to the
10 plan, unless the plan permits termination by less than all of
11 the corporations, in which case the statement shall be executed
12 on behalf of the corporation or corporations exercising the
13 right to terminate, and shall set forth:
14 (1) A copy of the articles of amendment or articles of
15 merger, consolidation, division or conversion relating to the
16 amendment or plan that is terminated.
17 (2) A statement that the amendment or plan has been
18 terminated in accordance with the provisions therefor set
19 forth therein.
20 (b) Cross references.--See sections 134 (relating to
21 docketing statement) and 138 (relating to statement of
22 correction).
23 § 5903. Bankruptcy or insolvency proceedings.
24 (a) General rule.--Whenever a nonprofit corporation is
25 insolvent or in financial difficulty, the board of directors
26 may, by resolution and without the consent of the members,
27 authorize and designate the officers of the corporation to
28 execute a deed of assignment for the benefit of creditors, or
29 file a voluntary petition in bankruptcy, or file an answer
30 consenting to the appointment of a receiver upon a complaint in
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1 the nature of an equity action filed by creditors or members,
2 or, if insolvent, file an answer to an involuntary petition in
3 bankruptcy admitting the insolvency of the corporation and its
4 willingness to be adjudged a debtor on that ground.
5 (b) Bankruptcy proceedings.--A nonprofit corporation may
6 participate in proceedings under and in the manner provided by
7 Title 11 of the United States Code (relating to bankruptcy)
8 notwithstanding any contrary provision of its articles or bylaws
9 or this subpart, other than section 103 (relating to
10 subordination of title to regulatory laws). The corporation
11 shall have full power and authority to put into effect and carry
12 out a plan of reorganization or arrangement and the decrees and
13 orders of the court, or judge or referee relative thereto, and
14 may take any proceeding and do any act provided in the plan or
15 arrangement or directed by such decrees and orders, without
16 further action by its directors or members. Such power and
17 authority may be exercised, and such proceedings and acts may be
18 taken, as may be directed by such decrees or orders, by the
19 trustees or receivers of the corporation appointed in the
20 bankruptcy proceedings, or a majority thereof, or if none be
21 appointed and acting, by designated officers of the corporation,
22 or by a master or other representative appointed by the court or
23 judge or referee, with the effect as if exercised and taken by
24 unanimous action of the directors and members of the
25 corporation. Without limiting the generality or effect of the
26 foregoing, the corporation may:
27 (1) alter, amend or repeal its bylaws;
28 (2) constitute or reconstitute and classify or
29 reclassify its board of directors and name, constitute or
30 appoint directors and officers in place of or in addition to
19900S1761B2459 - 211 -
1 all or some of the directors or officers then in office;
2 (3) amend its articles of incorporation, including
3 without limitation for the purpose of altering, amending or
4 repealing any provision of the articles or bylaws
5 notwithstanding any provision therein that the articles or
6 bylaws may be altered, amended or repealed only under certain
7 conditions or only upon receiving the approval of a specified
8 number or percentage of votes of members or of a class of
9 members;
10 (4) be dissolved, transfer all or part of its assets,
11 merge, consolidate, divide or convert to a business
12 corporation, as permitted by this chapter;
13 (5) authorize and fix the terms, manner and conditions
14 of the issuance of obligations; or
15 (6) lease its property and franchises to any person.
16 (c) Cross reference.--See the definition of "officer" in
17 section 5103 (relating to definitions).
18 § 5904. (Reserved).
19 § 5905. Proposal of fundamental transactions.
20 Where any provision of this chapter requires that an
21 amendment of the articles, a plan or the dissolution of a
22 nonprofit corporation be proposed or approved by action of the
23 board of directors, that requirement shall be construed to
24 authorize and be satisfied by the written agreement or consent
25 of all of the members of the corporation.
26 § 5915. Articles of amendment.
27 Upon the adoption of an amendment by [the] a nonprofit
28 corporation, as provided in this subchapter, articles of
29 amendment shall be executed [under the seal of] by the
30 corporation [by two duly authorized officers thereof,] and shall
19900S1761B2459 - 212 -
1 set forth:
2 (1) The name of the corporation and, subject to section
3 109 (relating to name of commercial registered office
4 provider in lieu of registered address), the address,
5 including street and number, if any, of its registered
6 office.
7 (2) The statute under which the corporation was
8 incorporated and the date of incorporation.
9 (3) If the amendment is to be effective on a specified
10 date, the hour, if any, and the month, day and year of [such]
11 the effective date.
12 (4) The manner in which the amendment was adopted by the
13 corporation.
14 (5) The amendment adopted by the corporation, which
15 shall be set forth in full.
16 (6) If the amendment effects a restatement of the
17 articles, a statement that the restated articles supersede
18 the original articles and all amendments thereto.
19 § 5916. Filing and effectiveness of articles of amendment.
20 (a) Filing.--The articles of amendment of a nonprofit
21 corporation shall be filed in the Department of State. See
22 section 134 (relating to docketing statement).
23 (b) Effectiveness.--Upon the filing of the articles of
24 amendment in the department[,] or upon the effective date
25 specified in the articles of amendment, whichever is later, the
26 amendment shall become effective and the articles of
27 incorporation shall be deemed to be amended accordingly. [No] An
28 amendment shall not affect any existing cause of action in favor
29 of or against the corporation, or any pending action or
30 proceeding to which the corporation [shall be] is a party, or
19900S1761B2459 - 213 -
1 the existing rights of persons other than members or, except as
2 otherwise provided by order, if any, obtained pursuant to
3 section 5547(b) (relating to nondiversion of certain property)
4 divert any property subject to such section from the purpose or
5 purposes to which it was committed. [In the event] If the
6 corporate name [shall be] is changed by the amendment, [no] an
7 action brought by or against the corporation under its former
8 name shall not be abated for that reason.
9 [(c) Advertisement.--The corporation shall officially
10 publish notice of its intention to file or the filing of
11 articles of amendment. The notice may appear prior to or after
12 the day upon which the articles of amendment are filed in the
13 department, and shall set forth briefly:
14 (1) The name of the corporation, and the address,
15 including street and number, if any, of its registered
16 office.
17 (2) A statement that the articles of amendment are to be
18 or were filed under the provisions of this subpart.
19 (3) The nature and character of the amendment.
20 (4) The date when the articles of amendment will be or
21 were filed in the Department of State.]
22 § 5926. Articles of merger or consolidation.
23 Upon the adoption of the plan of merger or consolidation by
24 the corporations desiring to merge or consolidate, as provided
25 in this subchapter, articles of merger or articles of
26 consolidation, as the case may be, shall be executed [under the
27 seal of] by each corporation [by two duly authorized officers of
28 each corporation,] and shall, subject to section 109 (relating
29 to name of commercial registered office provider in lieu of
30 registered address), set forth:
19900S1761B2459 - 214 -
1 (1) The name and the location of the registered office,
2 including street and number, if any, of the domestic
3 surviving or new corporation[,] or, in the case of a foreign
4 surviving or new corporation, the name of [such] the
5 corporation and its [domiciliary] jurisdiction of
6 incorporation, together with either:
7 (i) if a qualified foreign nonprofit corporation,
8 the address, including street and number, if any, of its
9 registered office in this Commonwealth; or
10 (ii) if a nonqualified foreign nonprofit
11 corporation, the address, including street and number, if
12 any, of its principal office under the laws of [such
13 domiciliary] the jurisdiction in which it is
14 incorporated.
15 (2) The name and [the] address, including street and
16 number, if any, of the registered office of each other
17 domestic nonprofit corporation and qualified foreign
18 nonprofit corporation [which] that is a party to the plan.
19 (3) If the plan is to be effective on a specified date,
20 the hour, if any, and the month, day and year of [such] the
21 effective date.
22 (4) The manner in which the plan was adopted by each
23 domestic corporation[,] and, if one or more foreign
24 corporations are parties to the plan, the fact that the plan
25 was authorized, adopted or approved, as the case may be, by
26 each of the foreign corporations in accordance with the laws
27 of the jurisdiction in which it is incorporated.
28 (5) [The] Except as provided in section 5901 (relating
29 to omission of certain provisions from filed plans), the plan
30 of merger or consolidation.
19900S1761B2459 - 215 -
1 § 5954. Articles of division.
2 Upon the adoption of a plan of division by the corporation
3 desiring to divide, as provided in this subchapter, articles of
4 division shall be executed [under the seal of] by the
5 corporation [by two duly authorized officers thereof,] and
6 shall, subject to section 109 (relating to name of commercial
7 registered office provider in lieu of registered address), set
8 forth:
9 (1) The name and the location of the registered office,
10 including street and number, if any, of the dividing domestic
11 nonprofit corporation[,] or, in the case of a dividing
12 foreign nonprofit corporation, the name of [such] the
13 corporation and [its domiciliary] the jurisdiction in which
14 it is incorporated, together with either:
15 (i) [if] If a qualified foreign nonprofit
16 corporation, the address, including street and number, if
17 any, of its registered office in this Commonwealth[; or].
18 (ii) [if] 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] that jurisdiction.
22 (2) The statute under which the dividing corporation was
23 incorporated and the date of incorporation.
24 (3) A statement that the dividing corporation will, or
25 will not, survive the division.
26 (4) The name and the address, including street and
27 number, if any, of the registered office of each new domestic
28 nonprofit corporation or qualified foreign nonprofit
29 corporation resulting from the division.
30 (5) If the plan is to be effective on a specified date,
19900S1761B2459 - 216 -
1 the hour, if any, and the month, day and year of [such] the
2 effective date.
3 (6) The manner in which the plan was adopted by the
4 corporation.
5 (7) [The] Except as provided in section 5901 (relating
6 to omission of certain provisions from filed plans), the plan
7 of division.
8 § 5963. Articles of conversion.
9 Upon the adoption of a plan of conversion by the nonprofit
10 corporation desiring to convert, as provided in this subchapter,
11 articles of conversion shall be executed [under the seal of] by
12 the corporation [by two duly authorized officers thereof,] and
13 shall set 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) The statute under which the corporation was
20 incorporated and the date of incorporation.
21 (3) If the plan is to be effective on a specified date,
22 the hour, if any, and the month, day and year of [such] the
23 effective date.
24 (4) The manner in which the plan was adopted by the
25 corporation.
26 (5) [The] Except as provided in section 5901 (relating
27 to omission of certain provisions from filed plans), the plan
28 of conversion.
29 § 5971. Voluntary dissolution by members or incorporators.
30 (a) General rule.--The members or incorporators of a
19900S1761B2459 - 217 -
1 nonprofit corporation [which] that has not commenced business
2 may effect the dissolution of the corporation by filing articles
3 of dissolution in the Department of State. The articles of
4 dissolution shall be executed [under the seal] in the name of
5 the corporation by a majority of the members or incorporators,
6 and shall set forth:
7 (1) The name of the corporation and, subject to section
8 109 (relating to name of commercial registered office
9 provider in lieu of registered address), the address,
10 including street and number, if any, of its registered
11 office.
12 (2) The statute under which the corporation was
13 incorporated and the date of incorporation.
14 (3) That the corporation has not received any property
15 in trust, or otherwise commenced business.
16 (4) That the amount, if any, actually paid in on
17 subscriptions for memberships, less any part thereof
18 disbursed for necessary expenses, has been returned to those
19 entitled thereto.
20 (5) That [no debts of the corporation remain unpaid] all
21 liabilities of the corporation have been discharged or that
22 adequate provision has been made [therefore] therefor.
23 (6) That [all] a majority of the members or
24 incorporators elect that the corporation be dissolved.
25 (b) Filing.--The articles of dissolution shall be filed in
26 the Department of State. See section 134 (relating to docketing
27 statement).
28 (c) Effect.--Upon the filing of the articles of dissolution,
29 the existence of the corporation shall cease.
30 § 5972. Proposal of voluntary dissolution.
19900S1761B2459 - 218 -
1 (a) General rule.--Any nonprofit corporation [which] that
2 has commenced business may elect to dissolve voluntarily, and
3 wind up its affairs in the manner provided in this subchapter.
4 Voluntary dissolution shall be proposed by:
5 (1) the adoption by the board of directors or other body
6 of a resolution recommending that the corporation be
7 dissolved voluntarily;
8 (2) petition of members entitled to cast at least 10% of
9 the votes [which] that all members are entitled to cast
10 thereon, setting forth a resolution recommending that the
11 corporation be dissolved voluntarily, which petition shall be
12 directed to the board of directors and filed with the
13 secretary of the corporation; or
14 (3) such other method as may be provided in the bylaws.
15 (b) Submission to members.--The board of directors or other
16 body or the petitioning members shall direct that the question
17 of dissolution be submitted to a vote of the members of [such]
18 the corporation entitled to vote thereon at a regular or special
19 meeting of the members.
20 § 5973. Notice of meeting of members.
21 (a) General rule.--Written notice [shall, not less than ten
22 days before] of the meeting of members called for the purpose of
23 considering the advisability of voluntarily dissolving the
24 corporation[,] shall be given to each member of record entitled
25 to vote thereon[, and such] and the purpose shall be included in
26 the notice of the meeting.
27 (b) Cross reference.--See Subchapter A of Chapter 57
28 (relating to notice and meetings generally.
29 § 5974. Adoption of proposal.
30 (a) General rule.--The resolution shall be adopted upon
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1 receiving the affirmative vote of [the members present entitled
2 to cast at least a majority of the votes which all members
3 present are entitled to cast thereon, and if any class of
4 members is entitled to vote thereon as a class, the affirmative
5 vote of the members present of such class entitled to cast at
6 least a majority of the votes which all members present of such
7 class are entitled to cast thereon] a majority of the votes cast
8 by all members of the nonprofit corporation entitled to vote
9 thereon and, if any class of members is entitled to vote thereon
10 as a class, the affirmative vote of a majority of the votes cast
11 in each class vote.
12 (b) Adoption in absence of voting members.--If the
13 corporation has no members entitled to vote on the question of
14 the advisability of voluntarily dissolving the corporation, the
15 resolution shall be deemed adopted by the corporation when it
16 has been adopted by the board of directors or other body
17 pursuant to section 5972 (relating to proposal of voluntary
18 dissolution).
19 (c) Termination of proposal.--[The resolution or petition
20 may contain a provision that at any time prior to the filing of
21 articles of election to dissolve in the Department of State the
22 proposal may be terminated by the board of directors or other
23 body notwithstanding the adoption of the resolution by the
24 corporation.] Prior to the time when articles of dissolution are
25 filed in the Department of State, the proposal may be terminated
26 pursuant to provisions therefor, if any, set forth in the
27 resolution.
28 (d) Action rescinding election to dissolve.--Prior to the
29 time when articles of dissolution are filed in the department,
30 any nonprofit corporation may rescind its election to dissolve
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1 in the same manner and by the same procedure as that provided in
2 this subchapter for the election of a corporation to dissolve
3 voluntarily.
4 § 5975. Winding up in voluntary dissolution proceedings.
5 (a) Powers of board.--The board of directors or other body
6 of a nonprofit corporation shall have full power to wind up and
7 settle the affairs of a nonprofit corporation in the event of a
8 voluntary dissolution proceeding.
9 (b) Notice to creditors and taxing authorities.--After the
10 [filing in the Department of State of articles of election to
11 dissolve, the board of directors or other body] approval by the
12 members or the board of directors or other body pursuant to
13 section 5974(b) (relating to adoption in absence of voting
14 members) that the corporation dissolve voluntarily, the
15 corporation shall immediately cause notice of the winding up
16 proceedings to be officially published and to be mailed by
17 certified or registered mail to each known creditor and claimant
18 and to each [local government] municipal corporation in which
19 its registered office or principal place of business in this
20 Commonwealth is located.
21 (c) Winding up and distribution.--The [board of directors or
22 other body] corporation shall, as speedily as possible, proceed
23 to collect all sums due [to the corporation, to] it, convert
24 into cash all corporate assets the conversion of which into cash
25 is required to discharge its liabilities[, to collect the whole
26 or so much as may be necessary or just of any amounts remaining
27 unpaid on subscriptions for membership,] and, out of the assets
28 of the corporation, [to] discharge or make adequate provision
29 for the discharge of all liabilities of the corporation,
30 according to their respective priorities. Except as otherwise
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1 provided in a bylaw adopted by the members or in this [article]
2 subpart or by any other provision of law, any surplus remaining
3 after paying or providing for all liabilities of the corporation
4 shall be distributed [by the board of directors or other body]
5 to the shareholders, if any, pro rata, or if there be no
6 shareholders, among the members per capita.
7 § 5976. Judicial supervision of proceedings.
8 (a) General rule.--[The board of directors or other body] A
9 nonprofit corporation, at any time during the winding up
10 proceedings, may[, by petition,] apply to the court to have the
11 proceedings continued under the supervision of the court[,] and
12 thereafter the proceedings shall continue under the supervision
13 of the court[,] as provided in Subchapter G (relating to
14 involuntary liquidation and dissolution).
15 (b) Distribution of property committed to charitable
16 purposes.--If the assets of the corporation include any property
17 committed to charitable purposes, the board of directors or
18 other body shall apply to the court for an order pursuant to
19 section 5547(b) (relating to nondiversion of certain property)
20 specifying the disposition of the property.
21 (c) Religious assets.--In entering a decree providing for
22 the distribution of the assets of a corporation organized for
23 the support of public worship, the court shall, by its decree,
24 provide for the disposition of the assets of the corporation,
25 either by:
26 (1) vesting title thereto in such other corporation as
27 may, by its articles, be organized for the purpose of holding
28 title to the real estate held for public worship, according
29 to the formularies of the church or religious organization to
30 which the dissolved corporation was in allegiance;
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1 (2) authorizing the sale of such assets by a master or
2 trustee appointed for that purpose and the vesting of the
3 proceeds, upon the confirmation of such sale, in such body as
4 may be directed by the court, to be held in trust for
5 carrying out the intent and purpose of public worship; or
6 (3) vesting the title to such assets in any incorporated
7 or unincorporated body designated by the petitioners for the
8 same uses and trusts as the assets were theretofore held by
9 the dissolved corporation.
10 § 5977. Articles of dissolution.
11 (a) Preparation of articles.--When all liabilities of the
12 nonprofit corporation have been discharged, or adequate
13 provision [shall have] has been made therefor, and all of the
14 remaining assets of the corporation [shall] have been
15 distributed as provided in this subchapter, or in case its
16 assets are not sufficient to discharge its liabilities, when all
17 the assets have been fairly and equitably applied, as far as
18 they will go, to the payment of such liabilities, articles of
19 dissolution shall be executed [under the seal of] by the
20 corporation [by two duly authorized officers thereof,] and shall
21 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) [A statement that the corporation has theretofore
28 delivered to the Department of State articles of election to
29 dissolve, and the date on which such articles were filed in
30 the department.] The statute under which the corporation was
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1 incorporated and the date of incorporation.
2 (3) The names and respective addresses, including street
3 and number, if any, of its directors and officers.
4 (4) The manner in which the proposal to dissolve
5 voluntarily was adopted by the corporation.
6 [(3)] (5) A statement:
7 (i) that all liabilities of the corporation have
8 been discharged[,] or that adequate provision has been
9 made therefor; or
10 (ii) that the assets of the corporation are not
11 sufficient to discharge its liabilities, and that all the
12 assets of the corporation have been fairly and equitably
13 applied, as far as they will go, to the payment of such
14 liabilities.
15 An election by the corporation to proceed under Subchapter H
16 (relating to postdissolution claims) shall constitute the
17 making of adequate provision for the liabilities of the
18 corporation.
19 [(4)] (6) A statement:
20 (i) that all the remaining assets of the
21 corporation, if any, have been distributed as provided in
22 [this subchapter.] the Nonprofit Corporation Law of 1988;
23 or
24 (ii) that the corporation has elected to proceed
25 under Subchapter H and that any remaining assets of the
26 corporation will be distributed as provided in that
27 subchapter.
28 [(5)] (7) A statement that [there are] no actions or
29 proceedings are pending against the corporation in any court,
30 or that adequate provision has been made for the satisfaction
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1 of any judgment or decree [which] that may be obtained
2 against the corporation in each [such] pending action or
3 proceeding.
4 [(6)] (8) A statement that notice of the winding-up
5 proceedings of the corporation was mailed by certified or
6 registered mail to each [local government] known creditor and
7 claimant and to each municipal corporation in which the
8 registered office or principal place of business of the
9 corporation in this Commonwealth is located.
10 (b) Filing.--The articles of dissolution and the
11 certificates or statement required by section 139 (relating to
12 tax clearance of certain fundamental transactions) shall be
13 filed in the Department of State. [At the same time proof of the
14 advertisement required by section 5975(b) (relating to notice to
15 creditors and taxing authorities) shall be delivered to the
16 department.] See section 134 (relating to docketing statement).
17 (c) Effect.--Upon the filing of the articles of dissolution
18 in the department, the existence of the corporation shall cease.
19 § 5978. Winding up of corporation upon the expiration of its
20 period of duration.
21 Every nonprofit corporation [which] that is dissolved by
22 expiration of its period of duration shall, nevertheless,
23 continue to exist for the purpose of winding up its affairs,
24 prosecuting and defending actions or proceedings by or against
25 it, collecting and discharging obligations, disposing of and
26 conveying its property[,] and collecting and dividing its
27 assets, but not for the purpose of continuing business[,] except
28 insofar as necessary for the winding up of the corporation. The
29 board of directors or other body of [such] the corporation shall
30 continue as such[,] and shall have full power to wind up the
19900S1761B2459 - 225 -
1 affairs of the corporation.
2 § 5979. Survival of remedies and rights after dissolution.
3 [(a) Liabilities.--The dissolution of a nonprofit
4 corporation, either under this subchapter or under Subchapter G
5 (relating to involuntary liquidation and dissolution) or by
6 expiration of its period of duration, shall not take away or
7 impair any remedy given against such corporation, its directors
8 or members, for any liability incurred prior to such
9 dissolution, if an action thereon is brought before or within
10 two years after the date of such dissolution. Such actions may
11 be prosecuted against and defended by the corporation in its
12 corporate name.]
13 (a) General rule.--The dissolution of a nonprofit
14 corporation, either under this subchapter or under Subchapter G
15 (relating to involuntary liquidation and dissolution) or by
16 expiration of its period of duration or otherwise, shall not
17 eliminate nor impair any remedy available to or against the
18 corporation or its directors, members of an other body, officers
19 or members for any right or claim existing, or liability
20 incurred, prior to the dissolution, if an action thereon is
21 brought on behalf of:
22 (1) the corporation within the time otherwise limited by
23 law; or
24 (2) any other person before or within two years after
25 the date of the dissolution or within the time otherwise
26 limited by this subpart or other provision of law, whichever
27 is less. See sections 5987 (relating to proofs of claims),
28 5993 (relating to acceptance or rejection of matured claims)
29 and 5994 (relating to disposition of unmatured claims).
30 The actions or proceedings may be prosecuted against and
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1 defended by the corporation in its corporate name.
2 (b) Rights and assets.--The dissolution of a nonprofit
3 corporation shall not [take away or impair any property right,
4 tangible or intangible, including any right of action, of such
5 corporation.] affect the limited liability of a member of the
6 corporation theretofore existing with respect to transactions
7 occurring or acts or omissions done or omitted in the name of or
8 by the corporation except that, subject to section 5998
9 (relating to liability of members), if applicable, each member
10 shall be liable for his pro rata portion of the unpaid
11 liabilities of the corporation up to the amount of the net
12 assets of the corporation distributed to the member in
13 connection with the dissolution. Should any [such] property
14 right of a corporation be discovered after the dissolution of
15 the corporation, the surviving member or members of the board of
16 directors or other body [which] that wound up the affairs of the
17 corporation, or a receiver appointed by the court, shall have
18 authority to enforce [such] the property right and to collect
19 and divide the assets so discovered among the persons entitled
20 thereto and to prosecute actions or proceedings in the corporate
21 name of the corporation. Any assets so collected shall be
22 distributed and disposed of in accordance with the applicable
23 [decree] order of court, if any, otherwise in accordance with
24 this subchapter.
25 § 5989. Articles of involuntary dissolution.
26 (a) General rule.--[The court, in] In a proceeding under
27 this subchapter, the court shall enter [a decree] an order
28 dissolving the nonprofit corporation when the order, if any,
29 obtained pursuant to section 5547(b) (relating to nondiversion
30 of certain property) has been entered and when the costs and
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1 expenses of [such] the proceeding, and all liabilities of the
2 corporation [shall] have been discharged, and all of its
3 remaining assets have been distributed to the persons entitled
4 thereto, or, in case its assets are not sufficient to discharge
5 such costs, expenses and liabilities, when all the assets have
6 been applied, as far as they will go, to the payment of such
7 costs, expenses and liabilities.
8 (b) Filing.--[After the court shall have entered a decree of
9 dissolution, it shall be the duty of the prothonotary to] After
10 entry of an order of dissolution, the office of the clerk of the
11 court of common pleas shall prepare and execute articles of
12 dissolution substantially in the form provided by section 5977
13 (relating to articles of dissolution), [to] attach thereto a
14 certified copy of the [decree and to] order and transmit the
15 articles and attached [decree] order to the Department of State.
16 [No fee shall be charged by the department] A certificate or
17 statement provided for by section 139 (relating to tax clearance
18 of certain fundamental transactions) shall not be required, and
19 the department shall not charge a fee in connection with the
20 filing of articles of dissolution under this section. See
21 section 134 (relating to docketing statement).
22 (c) Effect.--Upon the filing of the articles of dissolution
23 in the department, the existence of the corporation shall cease.
24 SUBCHAPTER H
25 POSTDISSOLUTION CLAIMS
26 [(Reserved)]
27 Sec.
28 5991. Definition of successor entity.
29 5992. Notice to claimants.
30 5993. Acceptance or rejection of matured claims.
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1 5994. Disposition of unmatured claims.
2 5995. Court proceedings.
3 5996. No revival or waiver.
4 5997. Payments and distributions.
5 5998. Liability of members.
6 § 5991. Definition of successor entity.
7 As used in this subchapter, the term "successor entity"
8 includes any trust, receivership or other legal entity governed
9 by the laws of this Commonwealth or any other jurisdiction to
10 which the remaining assets of a dissolved nonprofit corporation
11 are transferred subject to its liabilities and which exists
12 solely for the purposes of prosecuting and defending actions, by
13 or against the corporation, enabling the corporation to settle
14 and close its business, to dispose of and convey the property of
15 the corporation, to discharge the liabilities of the
16 corporation, and to distribute to the members of the corporation
17 any remaining assets, but not for the purpose of continuing the
18 business for which the corporation was incorporated.
19 § 5992. Notice to claimants.
20 (a) General rule.--After a nonprofit corporation has been
21 dissolved in accordance with the procedures set forth in this
22 chapter, the corporation or any successor entity may give notice
23 of the dissolution requesting all persons having a claim against
24 the corporation to present their claims against the corporation
25 in accordance with the notice. The notice shall state:
26 (1) That all claims must be presented in writing and
27 must contain sufficient information reasonably to inform the
28 corporation or successor entity of the identity of the
29 claimant and the substance of the claim.
30 (2) The mailing address to which a claim must be sent.
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1 (3) The date by which a claim must be received by the
2 corporation or successor entity, which date shall be not less
3 than 60 days after the date the notice is given.
4 (4) That the corporation or a successor entity may make
5 distribution to other claimants and the members of the
6 corporation or persons interested as having been such without
7 further notice to the claimant.
8 (b) Unmatured claims.--The corporation or successor entity
9 electing to follow the procedures specified in subsection (a)
10 shall also give notice of the dissolution of the corporation to
11 persons with claims contingent upon the occurrence or
12 nonoccurrence of future events or otherwise conditional or
13 unmatured, and shall request that such persons present their
14 claims in accordance with the terms of the notice. The notice
15 shall be in substantially the form specified in subsection (a).
16 (c) Publication and service of notices.--The notices
17 required by this section shall be officially published at least
18 once a week for two consecutive weeks. Concurrently with or
19 preceding the publication, the corporation or successor entity
20 shall mail a copy of the notice by registered or certified mail,
21 return receipt requested, to each known claimant of the
22 corporation.
23 § 5993. Acceptance or rejection of matured claims.
24 A dissolved nonprofit corporation or successor entity may
25 reject, in whole or in part, any matured claim made by a
26 claimant pursuant to section 5992 (relating to notice to
27 claimants) by mailing notice of the rejection by registered or
28 certified mail, return receipt requested, to the claimant within
29 90 days after receipt of the claim and, in all events, at least
30 30 days before the expiration of the two-year period specified
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1 in section 5979(a)(2) (relating to survival of remedies and
2 rights after dissolution). A notice sent pursuant to this
3 section shall include or be accompanied by a copy of this
4 subchapter and of section 5979.
5 § 5994. Disposition of unmatured claims.
6 The dissolved nonprofit corporation or successor entity shall
7 offer any claimant whose claim made pursuant to section 5992
8 (relating to notice to claimants) is contingent, conditional or
9 unmatured, such security as the corporation or successor entity
10 determines is sufficient to provide compensation to the claimant
11 if the claim matures. The corporation or successor entity shall
12 mail the offer to the claimant by registered or certified mail,
13 return receipt requested, within 90 days after receipt of the
14 claim and, in all events, at least 30 days before the expiration
15 of the two-year period specified in section 5979(a)(2) (relating
16 to survival of remedies and rights after dissolution). A notice
17 sent pursuant to this section shall include or be accompanied by
18 a copy of this subchapter and of section 5979. If the claimant
19 offered the security does not deliver to the corporation or
20 successor entity a written notice rejecting the offer within 60
21 days after mailing of the offer for security, the claimant shall
22 be deemed to have accepted the security as the sole source from
23 which to satisfy his claim against the corporation.
24 § 5995. Court proceedings.
25 (a) General rule.--A dissolved nonprofit corporation or
26 successor entity that has given notice in accordance with
27 section 5992 (relating to notice to claimants) shall file an
28 application with the court for a determination of the amount and
29 form of security that will be sufficient to provide compensation
30 to:
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1 (1) Claimants whose matured claims are known to the
2 corporation or successor entity but whose identities are
3 unknown.
4 (2) Any claimant who has rejected the offer for security
5 made pursuant to section 5994 (relating to disposition of
6 unmatured claims).
7 (b) Guardian ad litem.--The court shall appoint a guardian
8 ad litem to represent all claimants whose identities are unknown
9 in any proceeding brought under this subchapter. The reasonable
10 fees and expenses of the guardian, including all reasonable
11 expert witness fees, shall be paid by the applicant in the
12 proceeding unless otherwise ordered by the court.
13 § 5996. No revival or waiver.
14 The giving of any notice or making of any offer under this
15 subchapter shall not revive any claim then barred or constitute
16 acknowledgment by the dissolved nonprofit corporation or
17 successor entity that any person to whom the notice is sent is a
18 proper claimant and shall not operate as a waiver of any defense
19 or counterclaim in respect of any claim asserted by any person
20 to whom the notice is sent.
21 § 5997. Payments and distributions.
22 (a) General rule.--A dissolved nonprofit corporation or
23 successor entity that has elected to proceed under the preceding
24 provisions of this subchapter shall:
25 (1) Pay the claims made and not rejected under section
26 5993 (relating to acceptance or rejection of matured claims).
27 (2) Post the security offered and not rejected under
28 section 5994 (relating to disposition of unmatured claims).
29 (3) Post security ordered by the court in any proceeding
30 under section 5995 (relating to court proceedings).
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1 (4) Pay or make provision for all other liabilities of
2 the corporation or the successor entity.
3 (b) Disposition.--The claims and liabilities shall be paid
4 in full and any provision for payment shall be made in full if
5 there are sufficient assets. If there are insufficient assets,
6 the claims and liabilities shall be paid or provided for in
7 order of their priority, and, among claims of equal priority,
8 ratably to the extent of funds legally available therefor. Any
9 remaining assets shall be distributed as provided in the last
10 sentence of section 5975(c) (relating to winding up and
11 distribution), except that the distribution shall not be made
12 less than 60 days after the last notice of rejection, if any,
13 was given under section 5993 (relating to acceptance or
14 rejection of matured claims).
15 (c) Evaluation of other liabilities.--In the absence of
16 actual fraud, the judgment of the board of directors or other
17 body of the dissolved corporation or the governing persons of
18 the successor entity as to the provision made for the payment of
19 all liabilities under subsection (a)(4) shall be conclusive.
20 (d) Disposition in absence of claims procedure.--A dissolved
21 corporation or successor entity that has not followed the
22 procedures in the preceding provisions of this subchapter shall
23 pay or make reasonable provision to pay all claims and
24 liabilities, including all contingent, conditional or unmatured
25 claims known to the corporation or the successor entity and all
26 claims that are known to the corporation or the successor entity
27 but for which the identity of the claimant is unknown. The
28 claims shall be paid in full and any such provision for payment
29 made shall be made in full if there are sufficient assets. If
30 there are insufficient assets, the claims and liabilities shall
19900S1761B2459 - 233 -
1 be paid or provided for according to their priority and, among
2 claims of equal priority, ratably to the extent of funds legally
3 available therefor. Any remaining assets shall be distributed as
4 provided in the last sentence of section 5975(c) (relating to
5 winding up and distribution).
6 (e) Liability of directors.--Directors or members of an
7 other body of a dissolved corporation or governing persons of a
8 successor entity that has complied with this section shall not
9 be personally liable to the claimants of the dissolved
10 corporation.
11 § 5998. Liability of members.
12 (a) General rule.--A member of a dissolved nonprofit
13 corporation, the assets of which were distributed pursuant to
14 section 5997 (relating to payments and distributions), shall not
15 be liable for any claim against the corporation in an amount in
16 excess of the member's pro rata share of the claim or the
17 amount, if any, distributed to the member, whichever is less.
18 (b) Limitation of actions.--A member of a dissolved
19 corporation, the assets of which were distributed pursuant to
20 section 5997(a) through (c), shall not be liable for any claim
21 against the corporation on which an action is not commenced
22 prior to the expiration of the period specified in section
23 5979(a)(2) (relating to survival of remedies and rights after
24 dissolution).
25 (c) Limitation of liability.--The aggregate liability of any
26 member of a dissolved corporation for claims against the
27 dissolved corporation shall not exceed the amount, if any,
28 distributed to the member in dissolution.
29 § 6121. Admission of foreign corporations.
30 (a) General rule.--A foreign nonprofit corporation [not-for-
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1 profit], before doing business in this Commonwealth, shall
2 procure a certificate of authority to do so from the Department
3 of State, in the manner provided in this subchapter. A foreign
4 nonprofit corporation [not-for-profit] shall not be denied a
5 certificate of authority by reason of the fact that the laws of
6 the jurisdiction governing its incorporation and internal
7 affairs differ from the laws of this Commonwealth.
8 (b) Qualification under former statute.--If a foreign
9 corporation was on March 19, 1966 admitted to do business in
10 this Commonwealth by the filing of a power of attorney and
11 statement under the act of June 8, 1911 (P.L.710, No.283), such
12 power of attorney and statement shall be deemed an approved
13 application for a certificate of authority issued under this
14 subchapter and [such] the corporation shall be deemed a holder
15 of [such a] the certificate. [Such] The corporation shall
16 include in its initial application, if any, for an amended
17 certificate of authority under this subchapter the information
18 required by this subchapter to be set forth in an application
19 for a certificate of authority. A certificate of authority
20 issued under the former provisions of the Nonprofit Corporation
21 Law of 1933, or former 15 Pa.C.S. Pt. III, Art. B, known as the
22 Nonprofit Corporation Law of 1972, as added by the act of
23 November 15, 1972 (P.L.1063, No.271), shall be deemed to be
24 issued under this subchapter and the certificate of authority
25 shall be deemed not to contain any reference to the kind of
26 business that the corporation proposes to do in this
27 Commonwealth.
28 § 6122. Excluded activities.
29 (a) General rule.--Without excluding other activities which
30 may not constitute doing business in this Commonwealth, a
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1 foreign nonprofit corporation [not-for-profit] shall not be
2 considered to be doing business in this Commonwealth for the
3 purposes of this subchapter by reason of carrying on in this
4 Commonwealth any one or more of the following acts:
5 (1) Maintaining or defending any action or [any]
6 administrative or arbitration proceeding or effecting the
7 settlement thereof or the settlement of claims or disputes.
8 (2) Holding meetings of its directors, other body or
9 members or carrying on other activities concerning its
10 internal affairs.
11 (3) Maintaining bank accounts.
12 (4) Maintaining offices or agencies for the transfer,
13 exchange and registration of its memberships or securities,
14 or appointing and maintaining trustees or depositories with
15 relation to its memberships or securities.
16 (5) Granting funds.
17 (6) Distributing information to its members.
18 (7) Creating as borrower or lender [evidences of debt],
19 acquiring or incurring, obligations or mortgages[, and rights
20 in real] or other security interests in real or personal
21 property.
22 (8) [Collecting] Securing or collecting debts [and] or
23 enforcing [mortgages and] any rights in property securing
24 [the same] them.
25 (9) Transacting any business in interstate or foreign
26 commerce.
27 (10) Conducting an isolated transaction completed within
28 a period of 30 days and not in the course of a number of
29 repeated transactions of like nature.
30 (11) Inspecting, appraising and acquiring real estate
19900S1761B2459 - 236 -
1 and mortgages and other liens thereon and personal property
2 and security interests therein, and holding, leasing [away],
3 conveying and transferring [the same] them, as fiduciary or
4 otherwise.
5 (b) Exceptions.--The specification of activities in
6 subsection (a) does not establish a standard for activities
7 [which] that may subject a foreign corporation to:
8 (1) [service] Service of process under any statute[;] or
9 general rule.
10 (2) [taxation] Taxation by the Commonwealth or any
11 political subdivision thereof[; or].
12 (3) [the] The provisions of section 6145 (relating to
13 applicability of certain safeguards to foreign corporations).
14 § 6123. [Restriction on admission of foreign corporations]
15 Requirements for foreign corporation names.
16 (a) General rule.--The Department of State shall not issue a
17 certificate of authority to any foreign [corporation not-for-
18 profit:
19 (1) If the application for the certificate of authority
20 required to be filed by this subchapter sets forth any kind
21 of business which a foreign corporation not-for-profit may
22 not lawfully do in this Commonwealth.
23 (2) The name of which is not expressed in English
24 letters or characters.
25 (3) Which, except as provided in subsection (b) of this
26 section, has a name which under section 7313 of this title
27 (relating to corporate name) is not available through consent
28 or otherwise for use by a domestic nonprofit corporation or a
29 domestic cooperative corporation, as the case may be.]
30 nonprofit corporation that, except as provided in subsection
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1 (b), has a name that is rendered unavailable for use by a
2 domestic nonprofit corporation by any provision of section
3 5303(a), (b) or (c) (relating to corporate name).
4 [(b) Exception; name.--The provisions of section 5303(b)
5 (relating to duplicate use of names) shall not prevent the
6 issuance of a certificate of authority to a foreign corporation
7 not-for-profit setting forth a name which is similar to the name
8 of any other domestic or foreign corporation for profit or
9 corporation not-for-profit, if:
10 (1) the department finds, upon proof by affidavit or
11 otherwise as it may determine, that:
12 (i) the applicant has engaged in business as a
13 corporation under its proposed name for not less than
14 three consecutive years immediately prior to the date of
15 its application;
16 (ii) the business to be conducted in this
17 Commonwealth is not the same as or similar to the
18 business conducted in this Commonwealth by the
19 corporation with whose name it may conflict; and
20 (iii) the public is not likely to be confused or
21 deceived; and
22 (2) the applicant shall agree in its application for a
23 certificate of authority to use with its corporate name in
24 this Commonwealth, to be placed immediately under or
25 following such name, the words "a .... (name or abbreviation
26 of jurisdiction of incorporation) corporation."]
27 (b) Exceptions.--
28 (1) The provisions of section 5303(b) (relating to
29 duplicate use of names) shall not prevent the issuance of a
30 certificate of authority to a foreign nonprofit corporation
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1 setting forth a name that is confusingly similar to the name
2 of any other domestic or foreign corporation for profit or
3 corporation not-for-profit, or of any domestic or foreign
4 limited partnership that has filed a certificate or qualified
5 under Chapter 85 (relating to limited partnerships) or
6 corresponding provisions of prior law, or of any corporation
7 or other association then registered under 54 Pa.C.S. Ch. 5
8 (relating to corporate and other association names) or to any
9 name reserved or registered as provided in this part, if the
10 foreign nonprofit corporation applying for a certificate of
11 authority files in the department one of the following:
12 (i) A resolution of its board of directors or other
13 body adopting a fictitious name for use in transacting
14 business in this Commonwealth which fictitious name is
15 not confusingly similar to the name of the other
16 corporation or other association or to any name reserved
17 or registered as provided in this part and that is
18 otherwise available for use by a domestic nonprofit
19 corporation.
20 (ii) The written consent of the other corporation or
21 other association or holder of a reserved or registered
22 name to use the same or confusingly similar name and one
23 or more words are added to make the name applied for
24 distinguishable from the other name.
25 (2) The provisions of section 5303(c) (relating to
26 required approvals or conditions) shall not prevent the
27 issuance of a certificate of authority to a foreign nonprofit
28 corporation setting forth a name that is prohibited by that
29 subsection if the foreign nonprofit corporation applying for
30 a certificate of authority files in the department a
19900S1761B2459 - 239 -
1 resolution of its board of directors adopting a fictitious
2 name for use in transacting business in this Commonwealth
3 that is available for use by a domestic nonprofit
4 corporation.
5 § 6124. Application for a certificate of authority.
6 (a) General rule.--[The foreign corporation not-for-profit
7 shall file in the Department of State an application for a
8 certificate of authority and at the same time shall deliver to
9 the department a certificate of the appropriate official of the
10 jurisdiction under the laws of which it was incorporated, dated
11 within 60 days of delivery of he application to the Department
12 of State, to the effect that it is a corporation duly
13 incorporated and existing under the laws of such jurisdiction.
14 The] An application for a certificate of authority shall be
15 executed [under the seal of the corporation, by two duly
16 authorized officers thereof,] by the foreign nonprofit
17 corporation and shall set forth:
18 (1) The name of the corporation.
19 (2) The name of the jurisdiction under the laws of which
20 it is incorporated.
21 (3) The address, including street and number, if any, of
22 its principal office under the laws of [its domiciliary
23 jurisdiction] the jurisdiction in which it is incorporated.
24 (4) [The] Subject to section 109 (relating to name of
25 commercial registered office provider in lieu of registered
26 address), the address, including street and number, if any,
27 of its proposed registered office in this Commonwealth.
28 (5) [A brief statement of the business it proposes to do
29 within this Commonwealth and a statement that such business
30 is authorized by its articles.
19900S1761B2459 - 240 -
1 (6)] A statement that it is a corporation incorporated
2 for a purpose or purposes not involving pecuniary profit,
3 incidental or otherwise.
4 (b) Advertisement.--A foreign nonprofit corporation shall
5 officially publish notice of its intention to apply or its
6 application for a certificate of authority. The notice may
7 appear prior to or after the day on which application is made to
8 the Department of State[,] and shall set forth briefly:
9 (1) A statement that the corporation will apply or has
10 applied for a certificate of authority under the provisions
11 of the Nonprofit Corporation Law of 1988.
12 (2) The name of the corporation and of the jurisdiction
13 under the laws of which it is incorporated.
14 (3) The address, including street and number, if any, of
15 its principal office under the laws of [its domiciliary
16 jurisdiction] the jurisdiction in which it is incorporated.
17 (4) [The] Subject to section 109, the address,
18 including street and number, if any, of its proposed
19 registered office in this Commonwealth.
20 [(5) The character and nature of the business it
21 proposes to do within this Commonwealth.
22 (6) The date when its application for a certificate of
23 authority will be or was filed in the Department of State.]
24 (c) Filing.--The application for a certificate of authority
25 shall be filed in the Department of State.
26 [(c)] (d) Cross reference.--See section 134 (relating to
27 docketing statement).
28 § 6125. Issuance of certificate of authority.
29 Upon the filing of the application for a certificate of
30 authority [and accompanying documents required by this
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1 subchapter, the Department of State shall issue to], the foreign
2 nonprofit corporation shall be deemed to hold a certificate of
3 authority to do business in this Commonwealth. [The certificate
4 of authority shall be annexed to or endorsed upon the
5 application for a certificate of authority and shall state that
6 subject to the Constitution and laws of this Commonwealth the
7 corporation named in such application is authorized to do in
8 this Commonwealth the business specified in such application.]
9 § 6126. Amended certificate of authority.
10 (a) General rule.--After receiving a certificate of
11 authority, a qualified foreign nonprofit corporation may,
12 subject to the provisions of this subchapter, change [its name,
13 or be authorized to do in this Commonwealth other or additional
14 business than that authorized by its certificate of authority,]
15 the name under which it is authorized to transact business in
16 this Commonwealth by filing in the Department of State an
17 application for an amended certificate of authority[, and if the
18 application is for or includes a change of name, a certificate
19 of the appropriate official of the jurisdiction under the laws
20 of which it was incorporated, dated within 60 days of the
21 delivery of the application to the department, to the effect
22 that it is a corporation duly incorporated and existing under
23 the laws of such jurisdiction under the new name. Such]. The
24 application shall be executed [under the seal of the corporation
25 by two duly authorized officers thereof,] by the corporation and
26 shall state:
27 (1) The name under which the applicant corporation
28 [received] currently holds a certificate of authority to do
29 business [within] in this Commonwealth.
30 (2) The name of the jurisdiction under the laws of which
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1 the corporation is incorporated.
2 (3) The address, including street and number, if any, of
3 its principal office under the laws of [its domiciliary
4 jurisdiction] the jurisdiction in which it is incorporated.
5 (4) [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 registered office in this Commonwealth which may
9 constitute a change in the address of its registered office.
10 (5) The [change in the certificate of authority of the
11 corporation which is desired and a statement that the change
12 of name, if any, reflects a change effected in the
13 jurisdiction of incorporation or that the amended statement
14 of the business, if any, proposed to be done in this
15 Commonwealth is such as is authorized by the articles of the
16 corporation in its domiciliary jurisdiction, or both.] new
17 name of the corporation and a statement that either:
18 (i) the change of name reflects a change effected in
19 the jurisdiction of incorporation; or
20 (ii) documents complying with section 6123(b)
21 (relating to exception; name) accompany the application.
22 [(b) Advertisement.--A foreign corporation shall officially
23 publish notice of its intention to apply or its application for
24 an amended certificate of authority in a manner similar to that
25 prescribed in this subchapter in the case of the filing of an
26 application for a certificate of authority. The notice may
27 appear prior to or after the day on which application is filed
28 in the Department of State, and shall in addition to the
29 foregoing requirements set forth briefly:
30 (1) If the application is for permission to do in this
19900S1761B2459 - 243 -
1 Commonwealth other or additional business, the character and
2 nature of the business it proposes to do under the amended
3 certificate of authority.
4 (2) If the application is for a change of name, the new
5 name under which it proposes to do business.
6 (c)] (b) Issuance of amended certificate of authority.--Upon
7 the filing of [such application the Department of State shall
8 issue to] the application, the applicant corporation shall be
9 deemed to hold an amended certificate of authority. [The amended
10 certificate of authority shall be annexed to or endorsed upon
11 the application for an amended certificate of authority and
12 shall state that, subject to the Constitution and laws of this
13 Commonwealth, the certificate of authority of the corporation
14 named in such application is amended as specified in such
15 application.
16 (d)] (c) Cross reference.--See section 134 (relating to
17 docketing statement).
18 § 6127. Merger [or], consolidation or division of qualified
19 foreign corporations.
20 (a) General rule.--Whenever a qualified foreign nonprofit
21 corporation [shall be] is a nonsurviving party to a statutory
22 merger [or], consolidation or division permitted by the laws of
23 the jurisdiction under which it is incorporated, the corporation
24 surviving the merger, or the new corporation resulting from the
25 consolidation or division, as the case may be, shall file in the
26 Department of State a statement of merger [or], consolidation or
27 division, which shall be executed by the surviving or new
28 corporation and shall set forth:
29 (1) The name of each nonsurviving qualified foreign
30 nonprofit corporation.
19900S1761B2459 - 244 -
1 (2) The name of the jurisdictions under the laws of
2 which each nonsurviving qualified foreign nonprofit
3 corporation was incorporated.
4 (3) The date on which each nonsurviving qualified
5 foreign nonprofit corporation received a certificate of
6 authority to do business [within] in this Commonwealth.
7 (4) A statement that the corporate existence of each
8 nonsurviving qualified foreign nonprofit corporation has been
9 terminated by merger [or], consolidation or division, as the
10 case may be.
11 (5) In the case of a consolidation[,] or division or if
12 the surviving corporation was a nonqualified foreign
13 nonprofit corporation prior to the merger, the statements on
14 the part of the surviving or new corporation required by
15 section 6124(a) (relating to application for a certificate of
16 authority).
17 (b) Effect of filing.--The filing of [such] the statement
18 shall operate, as of the effective date of the merger [or],
19 consolidation or division to cancel the certificate of authority
20 of each nonsurviving constituent corporation [which] that was a
21 qualified foreign nonprofit corporation and to qualify the
22 surviving or new corporation under this subchapter. If the
23 surviving or new corporation does not desire to continue as a
24 qualified foreign nonprofit corporation, it may thereafter
25 withdraw in the manner provided by section 6129 (relating to
26 application for termination of authority).
27 (c) Surviving qualified foreign corporations.--It shall not
28 be necessary for a surviving corporation [which] that was a
29 qualified foreign nonprofit corporation to effect any filing
30 under this subchapter with respect to a merger or division or to
19900S1761B2459 - 245 -
1 procure [either a new or] an amended certificate of authority to
2 do business in this Commonwealth[,] unless the name of such
3 corporation is changed by [such merger, or unless the
4 corporation desires to do in this Commonwealth other or
5 additional business than that which it is then authorized to do
6 in this Commonwealth] the merger or division.
7 (d) Cross reference.--See section 134 (relating to docketing
8 statement).
9 § 6128. Revocation of certificate of authority.
10 (a) General rule.--Whenever the Department of State [shall
11 find] finds that a qualified foreign nonprofit corporation [is
12 engaged in this Commonwealth in any business which it is not
13 authorized to do by its certificate of authority or by any
14 amended certificate of authority, or] has failed to secure an
15 amended certificate of authority as required by this subchapter
16 after changing its name, or has failed or refused to appear by
17 its proper [officers, agents, or employees] representatives, or
18 otherwise to comply with any subpoena issued by any court having
19 jurisdiction of the subject matter, or to produce [such] books,
20 papers, records or documents as required by [any such] a
21 subpoena, or is violating any of the laws of this Commonwealth,
22 or that its articles have been revoked or voided by its
23 [domiciliary] jurisdiction of incorporation, the [Department of
24 State] department shall give notice and opportunity for hearing
25 by registered or certified mail to [such] the corporation that
26 [such] the default exists and that its certificate of authority,
27 including any amendments [thereto] thereof, will be revoked
28 unless [such] the default [shall be] is cured within 30 days
29 after the mailing of [such] the notice. If [such] the default
30 [shall not be] is not cured within [such] the period of 30 days,
19900S1761B2459 - 246 -
1 the department shall revoke the certificate of authority,
2 including any amendments [thereto] thereof, of [such] the
3 foreign nonprofit corporation. Upon revoking [such] the
4 certificate of authority, the department shall mail to the
5 corporation, at its registered office in this Commonwealth, a
6 certificate of revocation.
7 (b) Effect of revocation.--Upon the issuance of [such] the
8 certificate of revocation, the authority of the corporation to
9 do business in this Commonwealth shall cease[,] and [such] the
10 corporation shall not thereafter do any business in this
11 Commonwealth unless it applies for and receives a new
12 certificate of authority.
13 § 6129. Application for termination of authority.
14 (a) General rule.--Any qualified foreign nonprofit
15 corporation may withdraw from doing business in this
16 Commonwealth and surrender its certificate of authority by
17 filing in the Department of State an application for termination
18 of authority, executed [under the seal of] by the corporation
19 [by two duly authorized officers thereof], which shall set
20 forth:
21 (1) The name of the corporation and, subject to section
22 109 (relating to name of commercial registered office
23 provider in lieu of registered address), the address,
24 including street and number, if any, of its registered office
25 in this Commonwealth.
26 (2) The name of the jurisdiction under the laws of which
27 it is incorporated.
28 (3) The date on which it received a certificate of
29 authority to do business [within] in this Commonwealth.
30 [(4) A statement that it revokes its designation of the
19900S1761B2459 - 247 -
1 Department of State or the Secretary of the Commonwealth, as
2 the case may be, as the agency or person on whom process
3 against it may be served in this Commonwealth.
4 (5)] (4) A statement that it surrenders its certificate
5 of authority to do business in this Commonwealth.
6 [(6) Repealed.
7 (7) A post-office address.
8 (8)] (5) A statement that notice of its intention to
9 withdraw from doing business in this Commonwealth was mailed
10 by certified or registered mail to each [local government]
11 municipal corporation in which the registered office or
12 principal place of business of the corporation in this
13 Commonwealth is located, and that the official publication
14 required by subsection (b) has been effected.
15 (6) The post office address, including street and
16 number, if any, to which process may be sent in an action or
17 proceeding upon any liability incurred before the filing of
18 the application for termination of authority.
19 (b) Advertisement.--A qualified foreign nonprofit
20 corporation shall, before filing an application for termination
21 of authority, officially publish and mail a notice of its
22 intention to withdraw from doing business in this Commonwealth
23 in a manner similar to that required by section 5975(b)
24 (relating to notice to creditors and taxing authorities). The
25 notice shall set forth briefly:
26 (1) The name of the corporation and the jurisdiction
27 under the laws of which it is incorporated.
28 (2) The address, including street and number, if any, of
29 its principal office under the laws of its [domiciliary]
30 jurisdiction of incorporation.
19900S1761B2459 - 248 -
1 (3) [The] Subject to section 109, the address, including
2 street and number, if any, of its last registered office in
3 this Commonwealth.
4 [(4) The date on or after which its application for
5 termination of authority will be filed in the Department of
6 State.]
7 (c) Filing.--[Such application] The application for
8 termination of authority and the certificates or statement
9 required by section 139 (relating to tax clearance of certain
10 fundamental transactions) shall be filed in the [Department of
11 State and shall be accompanied by proof of the advertisement
12 required by subsection (b)] department. See section 134
13 (relating to docketing statement).
14 (d) Effect of filing.--Upon the filing of the application
15 for termination of authority, the authority of the corporation
16 to do business [within] in this Commonwealth shall cease. The
17 termination of authority shall not affect any action or
18 proceeding pending at the time thereof or affect any right of
19 action arising with respect to the corporation before the filing
20 of the application for termination of authority. Process against
21 the corporation in an action upon any liability incurred before
22 the filing of the application for termination of authority may
23 be served as provided in 42 Pa.C.S. Ch. 53 (relating to bases of
24 jurisdiction and interstate and international procedure) or as
25 otherwise provided or prescribed by law.
26 § 6130. Change of address after withdrawal.
27 (a) General rule.--Any foreign nonprofit corporation [not-
28 for-profit withdrawing or which] that has withdrawn from doing
29 business in this Commonwealth, or its successor in interest,
30 may, from time to time, change the address to which process may
19900S1761B2459 - 249 -
1 be sent in an action upon any liability [or obligation] incurred
2 before the filing of an application for termination of
3 authority[, upon] by filing in the Department of State of a
4 statement of change of address by withdrawn corporation executed
5 [under the seal of] by the corporation [by two duly authorized
6 officers thereof], setting forth:
7 (1) The name of the [corporation] withdrawn corporation
8 and, if the statement is filed by a successor in interest,
9 the name and capacity of the successor.
10 (2) The name of the jurisdiction under the laws of which
11 [it] the corporation filing the statement is incorporated.
12 (3) The former post office address, including street and
13 number, if any, of [its former address] the withdrawn
14 corporation as of record in the department.
15 (4) The new post office address, including street and
16 number, if any, of [its new address] the withdrawn
17 corporation or its successor.
18 (b) Cross reference.--See section 134 (relating to docketing
19 statement).
20 § 6131. Registration of name.
21 (a) General rule.--A nonqualified foreign nonprofit
22 corporation may register its name under 54 Pa.C.S. Ch. 5
23 (relating to corporate and other association names) if the name
24 is available for use by a qualified foreign nonprofit
25 corporation under section 6123 (relating to requirements for
26 foreign corporation names), by filing in the Department of State
27 an application for registration of name, executed by the
28 corporation, which shall set forth:
29 (1) The name of the corporation.
30 (2) The address, including street and number, if any, of
19900S1761B2459 - 250 -
1 the corporation.
2 (b) Annual renewal.--A corporation that has in effect a
3 registration of its corporate name may renew the registration
4 from year to year by annually filing an application for renewal
5 setting forth the facts required to be set forth in an original
6 application for registration. A renewal application may be filed
7 between October 1 and December 31 in each year and shall extend
8 the registration for the following calendar year.
9 (c) Cross reference.--See section 134 (relating to docketing
10 statement).
11 § 6144. Registered office of qualified foreign corporations.
12 (a) General rule.--[Every] Subject to the provisions of
13 section 5507(c) (relating to alternative procedure) every
14 qualified foreign nonprofit corporation shall have, and
15 continuously maintain, in this Commonwealth a registered office,
16 which may but need not be the same as its place of business in
17 this Commonwealth.
18 (b) Change.--A qualified foreign corporation may, from time
19 to time, change the address of its registered office [upon
20 filing in the Department of State, before such change is made,
21 either an application for an amended certificate of authority
22 setting forth the changed registered office or a statement
23 executed under the seal of the corporation by two duly
24 authorized officers thereof, setting forth:
25 (1) The name of the corporation.
26 (2) The address, including street and number, if any, of
27 its then registered office.
28 (3) The address, including street and number, if any, to
29 which the registered office is to be changed.
30 (4) The procedure whereby such change was authorized.]
19900S1761B2459 - 251 -
1 in the manner provided by section 5507(b) (relating to statement
2 of change of registered office).
3 [(c) Cross reference.--See section 134 (relating to
4 docketing statement).]
5 § 6145. Applicability of certain safeguards to foreign
6 corporations.
7 * * *
8 (c) Minimum safeguards.--The following provisions of this
9 subpart shall be applicable to foreign corporations to which
10 this section applies, except that nothing in this subsection
11 shall require the filing of any document in the Department of
12 State as a prerequisite to the validity of any corporate action
13 or the doing of any corporate action by the foreign corporation
14 which is impossible under the laws of its domiciliary
15 jurisdiction:
16 * * *
17 (11) Subchapter [F] G of Chapter 57 (relating to
18 judicial supervision of corporate action).
19 * * *
20 For the purposes of this subsection, corporate action shall not
21 be deemed to be impossible under the laws of the domiciliary
22 jurisdiction of a foreign corporation merely because prohibited
23 or restricted by the terms of the articles, certificate of
24 incorporation, bylaws or other organic law of the corporation,
25 but the court may require the corporation to amend such organic
26 law so as to be consistent with the minimum safeguards
27 prescribed by this subsection.
28 * * *
29 SUBCHAPTER D
30 DOMESTICATION
19900S1761B2459 - 252 -
1 [(Reserved)]
2 § 6161. Domestication.
3 (a) General rule.--Any qualified foreign nonprofit
4 corporation may become a domestic nonprofit corporation by
5 filing in the Department of State articles of domestication. The
6 articles of domestication, upon being filed in the department,
7 shall constitute the articles of the domesticated foreign
8 corporation, and it shall thereafter continue as a corporation
9 which shall be a domestic nonprofit corporation subject to this
10 subpart.
11 (b) Articles of domestication.--The articles of
12 domestication shall be executed by the corporation and shall set
13 forth in the English language:
14 (1) The name of the corporation. If the name is in a
15 foreign language, it shall be set forth in Roman letters or
16 characters or Arabic or Roman numerals.
17 (2) Subject to section 109 (relating to name of
18 commercial registered office provider in lieu of registered
19 address), the address, including street and number, if any,
20 of its registered office in this Commonwealth.
21 (3) A statement that upon domestication the corporation
22 will be subject to the domestic corporation provisions of the
23 Nonprofit Corporation Law of 1988 and a brief statement of
24 the purpose or purposes for which it is to be domesticated
25 which shall be a purpose or purposes for which a domestic
26 nonprofit corporation may be incorporated under Article B
27 (relating to domestic nonprofit corporations generally).
28 (4) The term for which upon domestication it is to
29 exist, if not perpetual.
30 (5) Any desired provisions relating to the manner and
19900S1761B2459 - 253 -
1 basis of reclassifying the memberships in the corporation.
2 (6) A statement that the filing of articles of
3 domestication and, if desired, the renunciation of the
4 original charter or articles of the corporation has been
5 authorized (unless its charter or other organic documents
6 require a greater vote) by a majority of the votes cast by
7 all members entitled to vote thereon and, if any class of
8 members is entitled to vote thereon as a class, a majority of
9 the votes cast in each class vote.
10 (7) Any other provisions authorized by Article B to be
11 set forth in the original articles.
12 (c) Cross reference.--See section 134 (relating to docketing
13 statement).
14 § 6162. Effect of domestication.
15 As a domestic nonprofit corporation, the domesticated
16 corporation shall no longer be a foreign nonprofit corporation
17 for the purposes of this subpart and shall have all the powers
18 and privileges and be subject to all the duties and limitations
19 granted and imposed upon domestic nonprofit corporations. The
20 property, franchises, debts, liens, estates, taxes, penalties
21 and public accounts due the Commonwealth shall continue to be
22 vested in and imposed upon the corporation to the same extent as
23 if it were the successor by merger of the domesticating
24 corporation with and into a domestic nonprofit corporation under
25 Subchapter C of Chapter 59 (relating to merger, consolidation
26 and sale of assets). Memberships in the domesticated corporation
27 shall be unaffected by the domestication except to the extent,
28 if any, reclassified in the articles of domestication.
29 § 7102. Cooperative corporations generally.
30 (a) General rule.--Any corporation incorporated under this
19900S1761B2459 - 254 -
1 part may be organized on the cooperative principle by setting
2 forth in its articles a common bond of membership among its
3 shareholders or members by reason of occupation, residence or
4 otherwise and that it is a cooperative corporation.
5 (b) Applicable law.--A corporation incorporated under this
6 subpart shall be governed by the applicable provisions of this
7 subpart and, to the extent not inconsistent with this subpart:
8 (1) Subpart B (relating to business corporations) if its
9 articles state that it is incorporated for a purpose or
10 purposes involving pecuniary profit, incidental or otherwise,
11 to its shareholders or members or if its articles are silent
12 on the subject.
13 (2) Subpart C (relating to nonprofit corporations) if:
14 (i) [Its] its articles state that it is incorporated
15 for a purpose or purposes not involving pecuniary
16 profit[.]; or
17 (ii) [(Reserved).] it is subject to Chapter 73
18 (relating to electric cooperative corporations).
19 (c) Credit unions.--This subpart shall not apply to a credit
20 union, whether proposed or existing, except as otherwise
21 [expressly provided in this subpart or as otherwise] provided by
22 [statute applicable to the corporation] Title 17 (relating to
23 credit unions).
24 (d) Workers' cooperative corporations.--Except as otherwise
25 expressly provided in Chapter 77 (relating to workers'
26 cooperative corporations), only Chapters 1 (relating to general
27 provisions), 5 (relating to corporations) and 77 shall apply to
28 a corporation subject to Chapter 77. A cooperative corporation
29 may be incorporated under this chapter notwithstanding the fact
30 that its corporate purposes consist of or include a purpose or
19900S1761B2459 - 255 -
1 purposes within the scope of Chapter 77.
2 § 7103. Use of term "cooperative" in corporate name.
3 * * *
4 (b) Cross reference.--See section [7 of the act of June 21,
5 1937 (P.L.1969, No.389), known as the Electric Cooperative
6 Corporation Act] 7307 (relating to prohibition on use of words
7 "electric cooperative").
8 § 7104. Election of an existing business corporation to become
9 a cooperative corporation.
10 (a) General rule.--Any business corporation not organized on
11 the cooperative principle may become a cooperative corporation
12 for profit under this chapter by:
13 (1) Adopting a plan of conversion:
14 (i) providing for the redemption by the corporation
15 of all of its shares, whether or not redeemable by the
16 terms of its articles, if the corporation is to be
17 organized as a nonstock corporation; and
18 (ii) adjusting its affairs so as to comply with the
19 requirements of this chapter applicable to cooperative
20 corporations.
21 (2) Filing articles of amendment which shall contain, in
22 addition to the requirements of section 1915 (relating to
23 articles of amendment):
24 (i) A statement that the corporation elects to
25 become a cooperative corporation.
26 (ii) The provisions required by section 7102(a)
27 (relating to cooperative corporations generally) to be
28 set forth in the articles of a cooperative corporation.
29 (iii) If the corporation is to be a nonstock
30 corporation, a statement that the corporation is
19900S1761B2459 - 256 -
1 organized on a nonstock basis.
2 (iv) Such other changes, if any, that may be desired
3 in the articles.
4 (b) Procedure.--The plan of conversion of the corporation
5 into a cooperative corporation (which plan shall include the
6 amendment of the articles required by subsection (a)) shall be
7 adopted in accordance with the requirements of Subchapter B of
8 Chapter 19 (relating to amendment of articles) except that:
9 (1) The holders of shares of every class shall be
10 entitled to vote on the plan regardless of any limitations
11 stated in the articles or bylaws on the voting rights of any
12 class.
13 (2) The plan must be approved by two-thirds of the votes
14 cast by all shares of each class.
15 (3) If any shareholder of a business corporation that
16 adopts a plan of conversion into a cooperative corporation
17 objects to the plan of conversion and complies with the
18 provisions of Subchapter D of Chapter 15 (relating to
19 dissenters rights), the shareholder shall be entitled to the
20 rights and remedies of dissenting shareholders therein
21 provided. There shall be included in, or enclosed with, the
22 notice of the meeting of shareholders called to act upon the
23 plan of conversion a copy or a summary of the plan and a copy
24 of Subchapter D of Chapter 15 and of this subsection.
25 (4) The plan shall not impose any additional liability
26 upon any existing patron of the business of the corporation,
27 whether or not that person becomes a member of the
28 corporation pursuant to the plan, unless the patron expressly
29 assumes such liability.
30 § 7105. Termination of status as a cooperative corporation for
19900S1761B2459 - 257 -
1 profit.
2 (a) General rule.--A cooperative corporation for profit may
3 terminate its status as such and cease to be subject to this
4 chapter by:
5 (1) Adopting a plan of conversion:
6 (i) providing for the issue of appropriate shares to
7 its members if it is organized as a nonstock corporation
8 and is not to continue as such; and
9 (ii) adjusting its affairs so as to comply with the
10 requirements of this subpart applicable to business
11 corporations that are not cooperative corporations.
12 (2) Amending its articles to delete therefrom the
13 additional provisions required or permitted by:
14 (i) sections 2102(a)(1) (relating to formation of
15 nonstock corporations) and 2103 (relating to contents of
16 articles and other documents of nonstock corporations) to
17 be stated in the articles of a nonstock corporation if it
18 is organized as a nonstock corporation and is not to
19 continue as such;
20 (ii) section 7102(a) relating to cooperative
21 corporations generally) to be stated in the articles of a
22 cooperative corporation; and
23 (iii) section 7103 (relating to use of term
24 "cooperative" in corporate name).
25 (b) Procedure.--The plan of conversion (which plan shall
26 include the amendment of the articles required by this section)
27 shall be adopted in accordance with Subchapter B of Chapter 19
28 (relating to amendment of articles) except that:
29 (1) The members of every class shall be entitled to vote
30 on the plan regardless of any limitations stated in the
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1 articles or bylaws, or in a document evidencing membership,
2 on the voting rights of any class.
3 (2) The plan must be approved by a majority of the votes
4 cast by the members of each class.
5 (c) Increased vote requirements.--The bylaws of a
6 cooperative corporation for profit adopted by the shareholders
7 or members may provide that, on any amendment to terminate its
8 status as a cooperative corporation, a vote greater than that
9 specified in subsection (b) shall be required. If the bylaws
10 contain such a provision, that provision shall not be amended,
11 repealed or modified by any vote less than that required to
12 terminate the status of the corporation as a cooperative
13 corporation.
14 § 7106. Election of an existing nonprofit corporation to become
15 a cooperative corporation.
16 (a) General rule.--Any nonprofit corporation not organized
17 on the cooperative principle may become a nonprofit cooperative
18 corporation under this chapter by:
19 (1) Adopting a plan of conversion adjusting its affairs
20 so as to comply with the requirements of this chapter
21 applicable to cooperative corporations.
22 (2) Filing articles of amendment which shall contain, in
23 addition to the requirements of section 5915 (relating to
24 articles of amendment):
25 (i) A statement that the corporation elects to
26 become a cooperative corporation.
27 (ii) The provisions required by section 7102(a)
28 (relating to cooperative corporations generally) to be
29 set forth in the articles of a cooperative corporation.
30 (iii) Such other changes, if any, that may be
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1 desired in the articles.
2 (b) Procedure.--The plan of conversion of the corporation
3 into a cooperative corporation (which plan shall include the
4 amendment of the articles required by subsection (a)) shall be
5 adopted in accordance with the requirements of Subchapter B of
6 Chapter 59 (relating to amendment of articles) except that:
7 (1) The members of every class shall be entitled to vote
8 on the plan regardless of any limitations stated in the
9 articles or bylaws, or in a document evidencing membership,
10 on the voting rights of any class.
11 (2) The plan must be approved by two-thirds of the votes
12 cast by the members of each class.
13 (3) The plan shall not impose any additional liability
14 upon any existing patron of the business of the corporation,
15 whether or not that person becomes a member of the
16 corporation pursuant to the plan, unless the patron expressly
17 assumes such liability.
18 § 7107. Termination of nonprofit cooperative corporation
19 status.
20 (a) General rule.--A nonprofit cooperative corporation may
21 terminate its status as such and cease to be subject to this
22 chapter by:
23 (1) Adopting a plan of conversion adjusting its affairs
24 so as to comply with the requirements of this subpart
25 applicable to nonprofit corporations that are not cooperative
26 corporations.
27 (2) Amending its articles to delete therefrom the
28 additional provisions required or permitted by:
29 (i) section 7102(a) (relating to cooperative
30 corporations generally) to be stated in the articles of a
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1 cooperative corporation; and
2 (ii) section 7103 (relating to use of term
3 "cooperative" in corporate name).
4 (b) Procedure.--The plan of conversion (which plan shall
5 include the amendment of the articles required by this section)
6 shall be adopted in accordance with Subchapter B of Chapter 59
7 (relating to amendment of articles) except that:
8 (1) The members of every class shall be entitled to vote
9 on the plan regardless of any limitations stated in the
10 articles or bylaws, or in a document evidencing membership,
11 on the voting rights of any class.
12 (2) The plan must be approved by a majority of the votes
13 cast by the members of each class.
14 (c) Increased vote requirements.--The bylaws of a nonprofit
15 cooperative corporation adopted by the members may provide that,
16 on any amendment to terminate its status as a cooperative
17 corporation, a vote greater than that specified in subsection
18 (b) shall be required. If the bylaws contain such a provision,
19 that provision shall not be amended, repealed or modified by any
20 vote less than that required to terminate the status of the
21 corporation as a cooperative corporation.
22 CHAPTER 73
23 ELECTRIC COOPERATIVE CORPORATIONS
24 Subchapter
25 A. Preliminary Provisions
26 B. Powers, Duties and Safeguards
27 C. Unincorporated Area Certified Territory
28 SUBCHAPTER A
29 PRELIMINARY PROVISIONS
30 Sec.
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1 7301. Short chapters.
2 7302. Application of chapter.
3 7303. Definitions.
4 7304. Number and qualifications of incorporators.
5 7305. Purpose.
6 7306. Articles of incorporation.
7 7307. Prohibition on use of words "electric cooperative."
8 7308. Liberal construction.
9 § 7301. Short chapters.
10 (a) Short chapter of chapter.--This chapter shall be known
11 and may be cited as the Electric Cooperative Law of 1990.
12 (b) Short chapter of Subchapter C.--Subchapter C shall be
13 known and may be cited as the Unincorporated Area Certified
14 Territory Law of 1990.
15 § 7302. Application of chapter.
16 (a) General rule.--This chapter shall apply to and, unless
17 the context clearly indicates otherwise, the term "corporation"
18 or "electric cooperative corporation" in this chapter shall mean
19 a corporation incorporated under:
20 (1) the act of June 21, 1937 (P.L.1969, No.389), known
21 as the Electric Cooperative Corporation Act; or
22 (2) this chapter.
23 (b) Provisions complete in themselves.--The provisions of
24 this chapter, as supplemented by or pursuant to Subchapters 71A
25 (relating to general provisions) and 71C (relating to
26 cooperative contracts), are complete in themselves and shall be
27 controlling. The provisions of any other law of this
28 Commonwealth, except as provided in Part V of Title 1 (relating
29 to statutory construction) and in this chapter, shall not apply
30 to a corporation subject to this chapter.
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1 § 7303. Definitions.
2 The following words and phrases when used in this subchapter
3 and Subchapter B (relating to powers, duties and safeguards)
4 shall have the meanings given to them in this section unless the
5 context clearly indicates otherwise:
6 "Acquire." Construct or acquire by purchase, lease, devise,
7 gift or other mode of acquisition.
8 "Board." A board of directors of a corporation.
9 "Federal agency." Includes the United States of America and
10 any department, administration, commission, board, bureau,
11 office, establishment, agency, authority or instrumentality of
12 the United States of America, heretofore or hereafter created.
13 "Member." The incorporators of a corporation and each person
14 thereafter lawfully admitted to membership therein.
15 "Obligations." Includes bonds, notes, debentures, interim
16 certificates or receipts and all other evidences of indebtedness
17 issued by a corporation, whether secured or unsecured.
18 "Person." Includes any Federal agency, State or political
19 subdivision thereof or any body politic.
20 "Rural area." Any area, not included within the boundaries
21 of any incorporated or unincorporated city, town, village or
22 borough, having a population in excess of 2,500 inhabitants,
23 including both the farm and nonfarm population thereof.
24 § 7304. Number and qualifications of incorporators.
25 Three or more natural persons of full age who are residents
26 of this Commonwealth may incorporate an electric cooperative
27 corporation.
28 § 7305. Purpose.
29 Nonprofit cooperative corporations may be organized under
30 this chapter for the purpose of engaging in rural
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1 electrification by any one or more of the following methods:
2 (1) Furnishing of electric energy to persons in rural
3 areas who are not receiving central station service.
4 (2) Assisting in the wiring of the premises of persons
5 in rural areas or the acquisition, supply or installation of
6 electrical or plumbing equipment therein.
7 (3) Furnishing of electric energy, wiring facilities,
8 electrical or plumbing equipment or services to any other
9 corporation or to the members thereof.
10 § 7306. Articles of incorporation.
11 (a) General rule.--The articles of incorporation shall
12 state:
13 (1) The name of the corporation, which shall include the
14 words "Electric Cooperative" and the word "Corporation,"
15 "Incorporated," "Inc." or "Company" and shall not be
16 confusingly similar to the name of any other corporation.
17 (2) The purpose for which the corporation is formed.
18 (3) The names and addresses of the incorporators who
19 shall serve as directors and manage the affairs of the
20 corporation until its first annual meeting of members or
21 until their successors are elected and qualify.
22 (4) The number of directors, not less than three, to be
23 elected at the annual meetings of members.
24 (5) Subject to section 109 (relating to name of
25 commercial registered office provider in lieu of registered
26 office), the address, including street and number, if any, of
27 its registered office.
28 (6) The period of duration of the corporation, which may
29 be perpetual.
30 (7) The terms and conditions upon which persons will be
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1 admitted to membership and retain membership in the
2 corporation, but, if expressly so stated, the determination
3 of these matters may be reserved to the directors by the
4 bylaws.
5 (8) Any provisions, not inconsistent with law, which the
6 incorporators choose to insert for the regulation of the
7 business and affairs of the corporation.
8 (b) Cross references.--See section 134 (relating to
9 docketing statement) and Subchapter A of Chapter 53 (relating to
10 incorporation generally).
11 § 7307. Prohibition on use of words "electric cooperative."
12 The words "electric cooperative" shall not be used in the
13 corporate name of any domestic or foreign corporation for profit
14 or not-for-profit other than a corporation existing under this
15 chapter.
16 § 7308. Liberal construction.
17 All of the provisions of law applicable to electric
18 cooperative corporations shall be construed liberally. The
19 enumeration of any object, purpose, power, manner, method or
20 thing shall not be deemed to exclude like or similar objects,
21 purposes, powers, manners, methods or things. See section
22 7302(b) (relating to provisions complete in themselves).
23 SUBCHAPTER B
24 POWERS, DUTIES AND SAFEGUARDS
25 Sec.
26 7321. Special powers and limitations.
27 7322. Bylaws.
28 7323. Exemption of members from liability for debts of
29 corporation.
30 7324. Qualifications of members.
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1 7325. Annual meeting of members.
2 7326. Voting by members.
3 7327. Certificates of membership.
4 7328. Quorum of members.
5 7329. Directors.
6 7330. Nonprofit operation.
7 7331. Merger, consolidation, division or sale of assets.
8 7332. Dissolution.
9 7333. License fee; exemption from excise taxes.
10 7334. Exemption from jurisdiction of Public Utility Commission.
11 7335. Limited exemption from Securities Act.
12 § 7321. Special powers and limitations.
13 (a) General rule.--Each electric cooperative corporation
14 shall have power (in addition to or limitation of the powers
15 conferred by section 5502 (relating to general powers)):
16 (1) To generate, manufacture, purchase, acquire and
17 accumulate electric energy and to transmit, distribute, sell,
18 furnish and dispose of such electric energy to its members
19 only; and to construct, erect, purchase, lease as lessee and,
20 in any manner, acquire, own, hold, maintain, operate, sell,
21 dispose of, lease as lessor, exchange and mortgage plants,
22 buildings, works, machinery, supplies, equipment, apparatus
23 and transmission and distribution lines or systems necessary,
24 convenient or useful.
25 (2) To assist its members only to wire their premises
26 and install therein electrical and plumbing fixtures,
27 machinery, supplies, apparatus and equipment of any and all
28 kinds and character and, in connection therewith and for
29 those purposes, to purchase, acquire, lease, sell,
30 distribute, install and repair electrical and plumbing
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1 fixtures, machinery, supplies, apparatus and equipment of any
2 and all kinds and character and to receive, acquire, endorse,
3 pledge, hypothecate and dispose of notes, bonds and other
4 evidences of indebtedness.
5 (3) To furnish to other corporations organized under
6 this chapter, or to the members thereof, electric energy,
7 wiring facilities, electrical and plumbing equipment and
8 services convenient or useful.
9 (4) In connection with the acquisition, construction,
10 improvement, operation or maintenance of its lines, to use
11 any highway or any right-of-way, easement or other similar
12 property right owned or held by the Commonwealth or any
13 political subdivision thereof.
14 (5) To have and exercise the power of eminent domain for
15 the purpose and in the manner provided by the condemnation
16 laws of this Commonwealth relating to public utility
17 corporations for acquiring private property for public use,
18 such right to be paramount except as to property of the
19 Commonwealth or of any political subdivision thereof or any
20 public utility corporation, other than one engaged in
21 furnishing electric energy to the public, except that the
22 right of eminent domain shall exist in order to cross the
23 lines of any public utility not furnishing electric energy if
24 the crossing is effected in such manner as not to interfere
25 with the service lines or the service of the public utility.
26 (6) To fix, regulate and collect rates, fees, rents or
27 other charges for electric energy and any other facilities,
28 supplies, equipment or services furnished by the corporation.
29 (7) To accept gifts or grants of money, services or
30 property, real or personal.
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1 (8) To do and perform, either for itself or its members
2 or for any other corporation, or for the members thereof, any
3 and all acts and things and to have and exercise any and all
4 powers as may be necessary, convenient or appropriate to
5 effectuate the purpose for which the corporation is
6 incorporated.
7 (b) Enumeration unnecessary.--It shall not be necessary to
8 set forth in the articles of the corporation the powers
9 enumerated in this chapter.
10 § 7322. Bylaws.
11 The power to make, alter or repeal the bylaws of an electric
12 cooperative corporation shall be vested in the board of
13 directors. The bylaws may contain any provisions for the
14 regulation and management of the affairs of the corporation, not
15 inconsistent with law or the articles.
16 § 7323. Exemption of members from liability for debts of
17 corporation.
18 A member shall not be liable for the debts of an electric
19 cooperative corporation to an amount exceeding the sums
20 remaining unpaid on his membership fee, but nothing in this
21 chapter shall be construed to relieve any member from the
22 payment of any debt due by him to the corporation.
23 § 7324. Qualifications of members.
24 All persons in rural areas proposed to be served by an
25 electric cooperative corporation, who are not receiving central
26 station service, shall be eligible to membership in the
27 corporation. No person other than the incorporators shall be,
28 become or remain a member of the corporation unless the person
29 uses or agrees to use electric energy or, as the case may be,
30 the facilities, supplies, equipment and services furnished by
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1 the corporation. A corporation existing under this chapter may
2 become a member of another such corporation and may avail itself
3 fully of the facilities and services thereof.
4 § 7325. Annual meeting of members.
5 (a) Time of annual meeting.--An annual meeting of the
6 members of an electric cooperative corporation shall be held at
7 such time as may be provided in the bylaws.
8 (b) Call of special meetings.--Special meetings of the
9 members may be called by:
10 (1) the president;
11 (2) the board of directors;
12 (3) petition signed by not less than one-tenth of all of
13 the members; or
14 (4) such other officers or persons as may be provided in
15 the bylaws.
16 (c) Notice of meetings.--Written notice of every meeting of
17 members shall be delivered not less than ten nor more than 30
18 days before the date of the meeting. If mailed, the notice shall
19 be deemed to be delivered when deposited in the United States
20 mails in a sealed envelope, addressed to the member at his
21 address as it appears on the records of the corporation, with
22 postage thereon prepaid.
23 § 7326. Voting by members.
24 Each member present shall be entitled to one and only one
25 vote on each matter submitted to a vote at a meeting of members
26 of an electric cooperative corporation, but voting by proxy or
27 by mail may be provided for in the bylaws.
28 § 7327. Certificates of membership.
29 When a member of an electric cooperative corporation has paid
30 the membership fee in full, a certificate of membership shall be
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1 issued to the member. Memberships in the corporation and the
2 certificates shall be nontransferable. The certificate of
3 membership shall be surrendered to the corporation upon the
4 resignation, expulsion or death of the member.
5 § 7328. Quorum of members.
6 Unless otherwise provided in the bylaws, a majority of the
7 members present, in person or represented by proxy, shall
8 constitute a quorum for the transaction of business at a meeting
9 of members of an electric cooperative corporation, but, if
10 voting by mail is provided for in the bylaws, members so voting
11 shall be counted as if present.
12 § 7329. Directors.
13 (a) General rule.--The business and affairs of an electric
14 cooperative corporation shall be managed under the direction of
15 a board of not less than three directors who shall be natural
16 persons of full age. All directors shall be members.
17 (b) Vacancies.--Any vacancy occurring in the board and any
18 directorship to be filled shall be filled, as provided in the
19 bylaws, by persons who shall serve until directors may be
20 regularly elected.
21 § 7330. Nonprofit operation.
22 (a) General rule.--Each electric cooperative corporation
23 shall be operated without profit to its members, but the rates,
24 fees, rents or other charges for electric energy and any other
25 facilities, supplies, equipment or services furnished by the
26 corporation shall be sufficient at all times:
27 (1) To pay all operating and maintenance expenses
28 necessary or desirable for the prudent conduct of its
29 business and the principal of and interest on the obligations
30 issued or assumed by the corporation in the performance of
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1 the purpose for which it was organized.
2 (2) For the creation of reserves.
3 (b) Disposition of revenues.--The revenues of the
4 corporation shall be devoted, first, to the payment of operating
5 and maintenance expenses and the principal and interest on
6 outstanding obligations and, thereafter, to such reserves for
7 improvement, new construction, depreciation and contingencies as
8 the board may, from time to time, prescribe.
9 (c) Patronage distributions.--Revenues not required for the
10 purposes set forth in subsection (b) shall be returned, from
11 time to time, to the members on a pro rata basis, according to
12 the amount of business done with each during the period, either
13 in cash, in abatement of current charges for electric energy or
14 otherwise, as the board determines, but the return may be made
15 by way of general rate reduction to members if the board so
16 elects.
17 § 7331. Merger, consolidation, division or sale of assets.
18 (a) Merger, consolidation or division.--Any two or more
19 electric cooperative corporations may merge, consolidate or
20 divide but only if the surviving or resulting corporation is a
21 corporation existing under this chapter. Every merger,
22 consolidation or division shall be proposed by the adoption by
23 the board of directors of a resolution approving the plan of
24 merger, consolidation or division and directing that the plan be
25 submitted to a vote of the members entitled to vote thereon at a
26 regular or special meeting of the members.
27 (b) Sale of assets.--An electric cooperative corporation may
28 sell, lease, lease-sell, exchange or otherwise dispose of all or
29 substantially all of its assets only when authorized by the
30 affirmative vote of two-thirds of all the members of the
19900S1761B2459 - 271 -
1 corporation.
2 (1) The plan of asset transfer shall set forth the terms
3 and conditions of the sale, lease, exchange or other
4 disposition or may authorize the board of directors to fix
5 any or all of the terms and conditions, including the
6 consideration to be received by the corporation therefor.
7 (2) Prior to submission for consideration by the members
8 of the corporation, the board of directors of the corporation
9 shall first give all other domestic electric cooperative
10 corporations an opportunity to submit competing proposals.
11 Such opportunity shall be in the form of a written notice to
12 such corporations, which notice shall be attached to a copy
13 of the proposal which the corporation has already received.
14 Such corporations shall be given not less than 30 days during
15 which to submit competing proposals, and the actual minimum
16 period within which proposals are to be submitted shall be
17 stated in the written notice given to them.
18 (3) Within 30 days after expiration of the notice period
19 set by the board of directors under paragraph (2), written
20 notice of the special meeting to consider and take action on
21 the plan of asset transfer and expressing in detail each of
22 the proposals shall be given to each member of the
23 corporation. The special meeting shall not be held sooner
24 than 30 days after the giving of such notice to the members.
25 (4) After a plan of asset transfer has been authorized
26 by the members, the board of directors, in its discretion,
27 may abandon the sale, lease, lease-sale, exchange or other
28 disposition, subject to the rights of third parties under any
29 contracts relating thereto, without further action or
30 approval by the members.
19900S1761B2459 - 272 -
1 § 7332. Dissolution.
2 An electric cooperative corporation may dissolve only when
3 authorized by the affirmative vote of two-thirds of all the
4 members of the corporation. Any assets remaining after all
5 liabilities or obligations of the corporation have been
6 satisfied or discharged upon dissolution shall be distributed
7 pro rata among the members of the corporation at the time of the
8 filing of the certificate of dissolution.
9 § 7333. License fee; exemption from excise taxes.
10 Electric cooperative corporations subject to this chapter
11 shall pay annually, on or before July 1, to the Department of
12 Revenue a fee of $10 for each 100 members, or fraction thereof,
13 but shall be exempt from all other State taxes of whatsoever
14 kind or nature.
15 § 7334. Exemption from jurisdiction of Public Utility
16 Commission.
17 Except as provided in Subchapter C (relating to
18 unincorporated area certified territory), all electric
19 cooperative corporations subject to this chapter shall be exempt
20 in any and all respects from the jurisdiction and control of the
21 Pennsylvania Public Utility Commission.
22 § 7335. Limited exemption from Securities Act.
23 Whenever any electric cooperative corporation subject to this
24 chapter has borrowed money from any Federal agency, the
25 obligations issued to secure the payment of the money shall be
26 exempt from the provisions of the act of December 5, 1972
27 (P.L.1280, No.284), known as the Pennsylvania Securities Act of
28 1972, nor shall the provisions of that act apply to the issuance
29 of membership certificates.
30 SUBCHAPTER C
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1 UNINCORPORATED AREA CERTIFIED TERRITORY
2 Sec.
3 7351. Application of subchapter.
4 7352. Definitions.
5 7353. Geographical areas.
6 7354. Boundaries of certified territories; hearings.
7 7355. Obligations and rights within certified territory; new
8 electric-consuming facilities.
9 7356. Borderline service.
10 7357. Effect of incorporation, annexation or consolidation.
11 7358. Enforcement of compliance by commission.
12 7359. Expenses.
13 § 7351. Application of subchapter.
14 (a) General rule.--This subchapter shall apply only to the
15 establishment of boundaries of certified territory between
16 retail electric suppliers where one supplier is an electric
17 cooperative corporation and the other supplier is subject to the
18 jurisdiction of the Pennsylvania Public Utility Commission for
19 rates, terms and conditions for electric service.
20 (b) Municipal corporations.--Nothing contained in this
21 subchapter shall in any respect affect any of the rights,
22 privileges or obligations of any municipal corporation
23 furnishing retail electric service.
24 § 7352. Definitions.
25 The following words and phrases when used in this subchapter
26 shall have the meanings given to them in this section unless the
27 context clearly indicates otherwise:
28 "Certified territory." An unincorporated area as certified
29 pursuant to section 7354 (relating to boundaries of certified
30 territories; hearings).
19900S1761B2459 - 274 -
1 "Commission." The Pennsylvania Public Utility Commission of
2 the Commonwealth.
3 "Electric-consuming facilities." Everything that utilizes
4 electric energy from a central station source.
5 "Existing distribution line." An electric line of a design
6 voltage of 35 kV phase to phase or less which on July 30, 1975:
7 (1) was located in an unincorporated area; and
8 (2) was or had been used for retail electric service.
9 "Hearing." A hearing by the commission pursuant to
10 reasonable notice to all affected retail electric suppliers.
11 "Retail electric service." Electric service furnished to a
12 consumer for ultimate consumption, but not including wholesale
13 electric energy furnished by an electric supplier to another
14 electric supplier for resale.
15 "Retail electric supplier." Any person, exclusive of a
16 municipal corporation, engaged in the furnishing of retail
17 electric service. The term shall apply only to a retail electric
18 supplier which is an electric cooperative corporation and to a
19 retail electric supplier which is subject to the jurisdiction of
20 the commission for rates, terms and conditions for electric
21 service and has a mutual boundary in an unincorporated area with
22 an electric cooperative corporation.
23 "Unincorporated area." A geographical area outside the
24 corporate limits of cities and boroughs.
25 § 7353. Geographical areas.
26 It is hereby declared to be in the public interest that, to
27 encourage the orderly development of retail electric service in
28 unincorporated areas, to avoid wasteful duplication of
29 distribution facilities, to avoid unnecessary encumbering of the
30 landscape of the Commonwealth, to prevent the waste of materials
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1 and natural resources, to minimize inconvenience, diminished
2 efficiency and higher costs in serving the consumer and
3 otherwise for the public convenience and necessity, the
4 Commonwealth is divided into geographical areas, establishing
5 the unincorporated areas within which each retail electric
6 supplier is to provide retail electric service on an exclusive
7 basis.
8 § 7354. Boundaries of certified territories; hearings.
9 (a) Exclusive territories.--Except as otherwise provided in
10 this section, a retail electric supplier shall not furnish
11 retail electric service in the certified territory of another
12 retail electric supplier.
13 (b) Establishment of boundaries.--Except as otherwise
14 provided in this section, the boundaries of the certified
15 territory of each retail electric supplier in any unincorporated
16 area are hereby set as a line or lines substantially equidistant
17 between its existing distribution lines and the nearest existing
18 distribution lines of any other retail electric supplier in
19 every direction with the result that there is hereby certified
20 to each retail electric supplier such unincorporated area which
21 in its entirety is located substantially in closer proximity to
22 one of its existing distribution lines than the nearest existing
23 distribution line of any other retail electric supplier.
24 (c) Maps of certified territories.--On or before July 30,
25 1976, or, when requested in writing by a retail electric
26 supplier and for good cause shown, such further time as the
27 Pennsylvania Public Utility Commission may fix by order, each
28 retail electric supplier shall file with the commission a map or
29 maps showing all of its existing distribution lines as of July
30 30, 1975. The commission shall prepare or order to be prepared
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1 and filed in the manner and form prescribed by the commission
2 within six months thereafter a map or maps of uniform scale to
3 show, accurately and clearly, the boundaries of the certified
4 territory of each retail electric supplier as established under
5 subsection (a) and shall issue such map or maps of certified
6 territory to each retail electric supplier.
7 (d) Commission certification of service territories.--In
8 each unincorporated area, where the commission determines that
9 the existing distribution lines of two or more retail electric
10 suppliers are so intertwined or located that subsection (a)
11 cannot reasonably be applied, the commission shall, after
12 hearing, certify the service territory or territories for the
13 retail electric suppliers so as to promote the legislative
14 policy stated in section 7353 (relating to geographical areas).
15 (e) Examination and correction of maps.--Each retail
16 electric supplier shall have the right to examine the maps of
17 other retail electric suppliers filed with the commission
18 pursuant to this subchapter, and, if any errors are observed,
19 any retail electric supplier may informally petition the
20 commission for a conference of the affected parties to resolve
21 the alleged error. The petitioner shall serve a copy of the
22 petition by certified mail on the retail electric supplier whose
23 map is alleged to contain the error. The commission shall
24 arrange a conference as promptly as practicable after receipt of
25 the petition and shall give notice thereof to all retail
26 electric suppliers affected by the alleged error. If the alleged
27 error is not corrected to the satisfaction of any affected
28 retail electric supplier, the supplier may petition the
29 commission for a hearing, and the hearing shall be granted by
30 the commission as promptly as practicable. Upon completion by
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1 the commission of a map or maps showing the boundaries of the
2 certified territory of a retail electric supplier as established
3 under subsection (a), other retail electric suppliers shall have
4 the right to examine the map or maps and, if any errors exist in
5 location of boundary lines, any retail electric supplier
6 aggrieved thereby may informally petition the commission for a
7 conference to resolve the issue of the alleged incorrect
8 location of boundary. The procedure shall be as specified in
9 this section for resolution of alleged errors in the maps
10 supplied by any retail electric supplier.
11 (f) Adjustment of certified territories.--After the initial
12 establishment of the certified territory of each retail electric
13 supplier, two or more retail electric suppliers may, from time
14 to time, jointly apply to the commission for adjustment of their
15 adjoining certified territories, and, if the commission finds
16 that the adjustment is consistent with the purposes of this
17 subchapter and its standards, the commission shall approve the
18 adjustment and, to the extent required, shall prepare or cause
19 to be prepared revised maps in accordance with subsection (c) to
20 reflect the adjustment.
21 § 7355. Obligations and rights within certified territory; new
22 electric-consuming facilities.
23 (a) Service within certified territory.--Except as otherwise
24 provided in this section, each retail electric supplier shall be
25 obligated (upon receipt of an application in accordance with its
26 tariffs, rules, regulations or bylaws) and shall have the
27 exclusive right to furnish retail electric service to all
28 electric-consuming facilities located within its certified
29 territory and shall not furnish, make available, render or
30 extend its retail electric service to a consumer for use in
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1 electric-consuming facilities located within the certified
2 territory of another retail electric supplier. Any retail
3 electric supplier may extend its facilities through the
4 certified territory of another retail electric supplier if the
5 extension is necessary for the supplier to connect any of its
6 facilities or to serve its consumers within its own certified
7 territory, but any such extension shall not be deemed to be an
8 existing distribution line.
9 (b) Service to new electric-consuming facilities.--Except as
10 provided in subsections (c) and (e), any new electric-consuming
11 facility located in an unincorporated area which has not as yet
12 been included in a map issued by the Pennsylvania Public Utility
13 Commission pursuant to section 7354(c) (relating to maps of
14 certified territories) or certified pursuant to section 7354(d)
15 (relating to commission certification of service territories)
16 shall be furnished retail electric service by the retail
17 electric supplier which has an existing distribution line in
18 closer proximity to the electric-consuming facility than is the
19 nearest existing distribution line of any other retail electric
20 supplier. Any disputes under this subsection shall be resolved
21 by the commission.
22 (c) Correction of inadequate service.--If the commission,
23 after hearing, determines that the retail electric service being
24 furnished or proposed to be furnished by a retail electric
25 supplier to an electric-consuming facility is inadequate and is
26 not likely to be made adequate, the commission may authorize
27 another retail electric supplier to furnish retail electric
28 service to that facility.
29 (d) Electric-consuming facilities served by another retail
30 electric supplier.--Except as provided in subsection (c), no
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1 retail electric supplier shall furnish, make available, render
2 or extend retail electric service to any electric-consuming
3 facility to which the service is being lawfully furnished by
4 another retail electric supplier on July 30, 1975, or to which
5 retail electric service is lawfully commenced thereafter in
6 accordance with this section by another retail electric
7 supplier.
8 (e) Extension of service.--The provisions of this subchapter
9 shall not preclude any retail electric supplier from extending
10 its service after July 30, 1975, to its own property and
11 facilities but any facilities involved in the extension shall
12 not be deemed an existing distribution line.
13 § 7356. Borderline service.
14 Notwithstanding the establishment of certified territories
15 pursuant to this subchapter and the obligations and rights to
16 furnish service within the territory, a retail electric supplier
17 may request another retail electric supplier to render service
18 to one or more electric-consuming facilities where, in the
19 judgment of the requesting retail electric supplier, it would be
20 more economical or otherwise in the public interest for the
21 other retail electric supplier to do so and to enter into a
22 contract for that purpose with the other retail electric
23 supplier.
24 § 7357. Effect of incorporation, annexation or consolidation.
25 After July 30, 1975, the inclusion by incorporation,
26 consolidation or annexation of any part of the certified
27 territory of a retail electric supplier within the boundaries of
28 any city or borough shall not in any respect impair or affect
29 the rights of the retail electric supplier to continue and
30 extend electric service at retail throughout any part of its
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1 certified territory.
2 § 7358. Enforcement of compliance by commission.
3 Upon proceedings brought by an interested person or by action
4 of the Pennsylvania Public Utility Commission, the commission
5 shall have the jurisdiction to enforce compliance with this
6 subchapter and shall have jurisdiction to prohibit the
7 furnishing of retail electric service by any retail electric
8 supplier except in its certified territory or territories or
9 where lawfully serving and, in connection with the enforcement
10 and prohibition, to exercise all powers granted by this
11 subchapter or otherwise to the commission.
12 § 7359. Expenses.
13 (a) General rule.--The expenses of the Pennsylvania Public
14 Utility Commission in administering this subchapter shall be
15 assessed by the commission against the affected retail electric
16 suppliers on the following basis:
17 (1) Expenses which relate to the preparation or review
18 of maps to establish the certified territory of a single
19 retail electric supplier in any county or other area where
20 there is no other retail electric supplier shall be assessed
21 solely to such single retail electric supplier.
22 (2) Expenses which relate to the preparation or review
23 of maps to establish the certified territories of two or more
24 retail electric suppliers in any county or other area where
25 there are two or more retail electric suppliers shall be
26 assessed in equal shares among such retail electric
27 suppliers.
28 (3) Expenses which relate to the consideration and
29 disposition of alleged errors pursuant to section 7354(e)
30 (relating to examination and correction of maps) and the
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1 consideration and disposition of proposed adjustments
2 pursuant to section 7354(f) (relating to adjustment of
3 certified territories) shall be assessed in equal shares
4 among the retail electric suppliers affected thereby.
5 (4) Expenses which relate to the enforcement by the
6 commission of compliance with this subchapter shall be
7 assessed in equal shares against the retail electric supplier
8 or suppliers to which an order of enforcement is directed. If
9 the enforcement proceedings were initiated by a retail
10 electric supplier or suppliers and if no order of enforcement
11 is issued by the commission, the expenses shall be assessed
12 in equal shares against the retail electric supplier or
13 suppliers initiating the proceedings.
14 (5) Any other expenses of the commission shall be
15 assessed by the commission in equal shares among the retail
16 electric suppliers that are subject to this subchapter.
17 (b) Estimated expenses.--The commission may, if it deems
18 such action appropriate, assess expenses on the basis of
19 estimates made by it with appropriate adjustment or credit after
20 final determination of the expenses. appropriate adjustment or
21 credit after final determination of the expenses.
22 CHAPTER 75
23 COOPERATIVE AGRICULTURAL ASSOCIATIONS
24 Subchapter
25 A. Preliminary Provisions
26 B. Powers, Duties and Safeguards
27 SUBCHAPTER A
28 PRELIMINARY PROVISIONS
29 Sec.
30 7501. Short chapter of chapter.
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1 7502. Application of chapter.
2 7503. Definitions.
3 7504. Policy.
4 7505. Number and qualifications of incorporators.
5 7506. Purposes.
6 7507. Articles of incorporation.
7 § 7501. Short chapter of chapter.
8 This chapter shall be known and may be cited as the
9 Cooperative Agricultural Association Law of 1990.
10 § 7502. Application of chapter.
11 (a) General rule.--Except as otherwise provided in
12 subsections (b) and (c), this chapter applies to and the word
13 "association" in this chapter means a corporation with or
14 without capital stock incorporated under any of the following:
15 (1) The act of June 12, 1919 (P.L.466, No.238), relating
16 to cooperative agricultural associations without capital
17 stock.
18 (2) The act of April 30, 1929 (P.L.885, No.394),
19 relating to cooperative agricultural associations with
20 capital stock.
21 (3) The act of June 12, 1968 (P.L.173, No.94), known as
22 the Cooperative Agricultural Association Act.
23 (4) This chapter.
24 (b) Acceptance of chapter.--Any other domestic corporation
25 for profit or corporation not-for-profit incorporated under any
26 prior statute relating to cooperative corporations may become an
27 association subject to this chapter by filing in the Department
28 of State a certificate of election of cooperative agricultural
29 association status which shall be executed by the corporation
30 and shall set forth:
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1 (1) The name of the corporation and, subject to section
2 109 (relating to name of commercial registered office
3 provider in lieu of registered address), the address,
4 including street and number, if any, of its registered
5 office.
6 (2) The statute under which the corporation was
7 incorporated and the date of incorporation.
8 (3) A statement that the members or shareholders of the
9 corporation have elected, by a majority vote of the members
10 or shareholders present and voting at a meeting called for
11 that purpose at which a quorum is present, to accept the
12 provisions of this chapter for the government and regulation
13 of the affairs of the corporation.
14 (c) Foreign corporations.--This chapter shall apply to and
15 the word "association" in this chapter shall include a foreign
16 corporation for profit or corporation not-for-profit
17 incorporated with or without capital stock under any general or
18 special statute as a cooperative agricultural association for
19 the mutual benefit of its members, shareholders, patrons and
20 producers. A foreign association shall not transact business as
21 an association in this Commonwealth unless permitted to do so by
22 this chapter, and any violation of this provision may be
23 enjoined upon the application of any domestic association or
24 qualified foreign association.
25 § 7503. 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 "Agricultural products." Includes all livestock and
30 livestock products, dairy and dairy products, poultry and
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1 poultry products, horticultural, floricultural and viticultural
2 products, forestry and forestry products, seeds, nuts, mushrooms
3 and bee products and any and all kinds of farm products.
4 "Board." The board of directors of an association.
5 "Delegate." A member elected in the manner provided by
6 section 7531(b) (relating to election by districts) to represent
7 a local group of members, and having the powers and duties
8 specified in the bylaws.
9 "Department." The Department of Agriculture of the
10 Commonwealth.
11 "Engaging in agriculture." Includes engaging in dairying,
12 livestock raising, poultry raising, furbearing animal raising,
13 horticulture, floriculture, viticulture, forestry, beekeeping,
14 seed growing, nut growing, mushroom growing and engaging in any
15 and all kinds of farming and other allied occupations.
16 "Member." The holder of a membership in an association
17 without capital stock or the holder of voting shares in an
18 association organized with capital stock.
19 "Patron." A person using the facilities of an association
20 for the marketing of agricultural products or a person using the
21 facilities of an association for the purchase of supplies or the
22 rendering of services.
23 "Producer." A person engaging in agriculture.
24 "Supplies." Includes any and all types of supplies,
25 machinery and equipment used or consumed by persons engaging in
26 agriculture.
27 § 7504. Policy.
28 (a) General rule.--It is the policy of this Commonwealth, as
29 one means of improving the economic position of agriculture, to
30 encourage the organization of producers of agricultural products
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1 into effective cooperative agricultural associations under the
2 control of the producers for their mutual benefit, and to that
3 end this chapter shall be liberally construed. Where applicable
4 to this chapter and to Chapter 71 (relating to preliminary
5 provisions), Subpart B of Part II (relating to business
6 corporations) and Subpart C of Part II (relating to nonprofit
7 corporations) shall be construed, wherever possible, consistent
8 with law applicable to cooperative agricultural associations in
9 general.
10 (b) Associations not in restraint of trade.--
11 (1) No association complying with this chapter shall be
12 deemed to be a conspiracy, or a combination in restraint of
13 trade, or an illegal monopoly, or be deemed to have been
14 formed for the purpose of lessening competition or fixing
15 prices arbitrarily, nor shall the contracts between the
16 association and its producers, or any agreements authorized
17 in this chapter, be construed as an unlawful restraint of
18 trade, or as a part of a conspiracy or combination to
19 accomplish an improper or illegal purpose or act.
20 (2) An association may acquire, exchange, interpret and
21 disseminate past, present and prospective crop, market,
22 statistical, economic and other similar information relating
23 to the business of the association either directly or through
24 an agent created or selected by it or by other associations
25 acting in conjunction with it.
26 (3) An association may advise its members in respect to
27 the adjustment of their current and prospective production of
28 agricultural commodities and its relation to the prospective
29 volume of consumption, selling prices and existing or
30 potential surplus to the end that every market may be served
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1 from the most convenient productive areas under a program of
2 orderly marketing that will assure adequate supplies without
3 undue enhancement of prices or the accumulation of any undue
4 surplus of agricultural products.
5 § 7505. Number and qualifications of incorporators.
6 Five or more individuals of full age engaging in agriculture
7 or two or more cooperative agricultural associations may
8 incorporate an association. If an association is incorporated by
9 individuals, at least three of the individuals shall be
10 residents of this Commonwealth. If an association is
11 incorporated by cooperative agricultural associations, at least
12 one of the associations shall be a domestic association.
13 § 7506. Purposes.
14 An association may be incorporated under this chapter for the
15 purpose of engaging in any cooperative activity for producers of
16 agricultural products in connection with:
17 (1) Producing, assembling, marketing, buying, selling,
18 bargaining or contracting for agricultural products, or
19 harvesting, preserving, drying, processing, manufacturing,
20 blending, canning, packing, ginning, grading, storing,
21 warehousing, handling, transporting, shipping or utilizing
22 such products, or manufacturing or marketing the by-products
23 thereof.
24 (2) Manufacturing, processing, storing, transporting,
25 delivering, handling, buying for or furnishing supplies to
26 its members and patrons.
27 (3) Performing or furnishing business, educational,
28 recreational or other services, including the services of
29 labor, buildings, machinery, equipment, trucks, trailers and
30 tankers, or any other services connected with the purposes
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1 set forth in paragraphs (1) and (2) on a cooperative basis.
2 (4) Financing any of the activities set forth in
3 paragraphs (1) through (3).
4 § 7507. Articles of incorporation.
5 Articles of incorporation of an association incorporated
6 under this chapter shall comply with the applicable provisions
7 of this part except that, if organized without capital stock,
8 the articles shall state whether the property rights and
9 interests of each member are equal or unequal and, if unequal,
10 the priorities of those rights and interests.
11 SUBCHAPTER B
12 POWERS, DUTIES AND SAFEGUARDS
13 Sec.
14 7521. Special powers and limitations.
15 7522. Records of salary or other payments.
16 7523. Members.
17 7524. Issuance of shares.
18 7525. Sale, transfer or redemption of shares.
19 7526. Termination of membership.
20 7527. Voting by proxy or mail.
21 7528. Meetings.
22 7529. Fundamental changes.
23 7530. Bylaws.
24 7531. Directors.
25 7532. Removal of directors.
26 7533. Officers.
27 7534. Marketing arrangements.
28 7535. Patronage distributions.
29 7536. Audit of operations.
30 7537. Contract assignments to association.
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1 7538. Exemption from tax on capital stock and indebtedness.
2 § 7521. Special powers and limitations.
3 (a) General rule.--Each association shall have power (in
4 addition to or limitation of the powers conferred by section
5 1502 (relating to general powers) or 5502 (relating to general
6 powers)):
7 (1) To act as agent, broker or attorney-in-fact for its
8 members and patrons and for any subsidiary or affiliated
9 person.
10 (2) To hold chapter for its members and patrons and for
11 subsidiary and affiliated persons to property handled or
12 managed by the association on their behalf.
13 (3) In furtherance of association purposes, to make
14 loans or advances to its members and patrons or to subsidiary
15 and affiliated persons or their members.
16 (4) To establish and accumulate reserves and surplus to
17 capital and such other funds as may be authorized by the
18 articles of association or the bylaws.
19 (5) To issue membership certificates and to foster
20 membership in the association and to solicit patrons by
21 advertising or by educational or other lawful means.
22 (6) To issue and to sell common and preferred stock.
23 (7) To own shares of the capital stock of, to hold
24 membership in and to hold bonds or other obligations of other
25 persons engaged in any related activity or engaged in
26 producing, manufacturing, warehousing or marketing any of the
27 products handled by the association or engaged in financing
28 its activities or those of its members.
29 (8) To deal in products of and handle machinery,
30 equipment, supplies and perform services for nonmembers to an
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1 amount not greater in annual value than such as are dealt in,
2 handled or performed for or on behalf of its members.
3 (b) Enumeration unnecessary.--It shall not be necessary to
4 set forth in the articles of the association the powers
5 enumerated in this chapter.
6 § 7522. Records of salary or other payments.
7 Every association shall keep a record of all salaries, per
8 diem payments or other remuneration paid to each officer and
9 director by the association in addition to remuneration received
10 for agricultural commodities marketed through the association.
11 § 7523. Members.
12 An association shall admit to membership only persons who are
13 engaging in agriculture, including both tenants and landlords
14 receiving a share of the crop, and cooperative agricultural
15 associations of such producers who agree to patronize the
16 association in accordance with the uniform terms prescribed by
17 it, and only such persons shall be regarded as eligible members
18 of an association. The bylaws may prescribe additional
19 qualifications for membership but shall not enlarge the class
20 eligible for membership specified in this section.
21 § 7524. Issuance of shares.
22 (a) General rule.--Every association without capital stock
23 shall issue a certificate of membership to each member. Every
24 association with capital stock shall issue a certificate of
25 common shares to each member certifying the number of shares of
26 stock held by him. An association shall issue common shares or a
27 membership certificate only to persons eligible for membership
28 upon such terms and conditions as shall be provided in the
29 bylaws. Fractional shares may be issued.
30 (b) Voting rights.--Each eligible member shall be entitled
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1 to only one vote on each question that may be presented at any
2 meeting of the members regardless of the number of shares or
3 amount of membership capital owned by him.
4 (c) Preferred stock.--An association may issue preferred
5 shares to any person upon such terms and conditions as shall be
6 provided in the bylaws. The preferred shares shall carry no
7 voting rights other than as provided by section 7529(a)(3)
8 (relating to fundamental changes).
9 (d) Consideration.--No association shall issue a certificate
10 of membership, and no certificate for common shares shall be
11 issued until fully paid for, but promissory notes may be
12 accepted by the association as full or partial payment. The
13 association shall hold the membership certificate or shares as
14 security for the payment of the note, but such retention as
15 security shall not affect the right of the member to vote and
16 hold office.
17 (e) Evidence of equity in assets.--The association may, from
18 time to time, issue to any patron a certificate or other
19 evidence of the equity of the patron in any fund, capital
20 investment or other asset of the association. The certificate or
21 other evidence of equity may bear interest at a rate not in
22 excess of two points under the average treasury bill rate for
23 the 12 months preceding the date on which the payment is made
24 and may be transferred only to the association or to such other
25 person as may be approved by the association.
26 (f) Dividends.--Dividends may be paid on any shares and
27 dividends on preferred shares may be cumulative if so provided
28 in the articles. An association shall have a lien on all of its
29 issued shares and dividends declared or accrued thereon for all
30 indebtedness of the holders thereof to the association if
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1 provision therefor is stated on the face of the share
2 certificate.
3 § 7525. Sale, transfer or redemption of shares.
4 (a) General rule.--The common shares of an association may
5 be transferred only with the consent of the association and on
6 the books of the association and then only to persons eligible
7 to own shares in the association. No purported assignment or
8 transfer of the shares shall pass to any ineligible person any
9 right or privilege on account of the shares or any vote or voice
10 in the management or affairs of the association.
11 (b) Redemption or conversion.--In the event a holder of
12 common shares has done no business with an association for a
13 period of 12 months or in the event the board of directors of an
14 association finds that any of the common shares has come into
15 the hands of any person who is not eligible for membership or
16 that the holder thereof has ceased to be an eligible member, the
17 holder shall have no rights or privileges on account of the
18 shares or vote or voice in the management or the affairs of the
19 association (other than the right to participate in accordance
20 with law in case of dissolution and to receive the book or par
21 value of the shares, whichever is less, in the event of its sale
22 or transfer as provided in this subsection), and the association
23 shall have the right at its option:
24 (1) to redeem the shares at their book or par value,
25 whichever is less;
26 (2) to require the transfer of any such shares at such
27 book or par value, whichever is less, to any person eligible
28 to hold the shares; or
29 (3) to require the holder of any such shares to convert
30 the shares into preferred shares of equal value.
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1 In exercising its right to redeem or to require the transfer or
2 conversion of shares, if the holder fails to deliver the
3 certificate evidencing the shares for cancellation or transfer,
4 an association may cancel the certificate on its books and issue
5 a new certificate for common or preferred shares, as the case
6 may be, to the party entitled thereto.
7 (c) Preferred shares.--The preferred shares of an
8 association may be transferred only on the books of the
9 association, and the bylaws may provide that the association
10 shall have the option, at any time, to redeem the preferred
11 shares at par value, plus declared or accrued dividends.
12 (d) Notice on certificates.--Any restriction or option which
13 an association places upon the transfer or sale of any of its
14 outstanding shares, and any association option retained thereon,
15 shall be printed on each share certificate.
16 (e) Force majeure.--A member shall not lose his membership
17 in the association under this section by his failure to do
18 business with it if the failure is due to an act of God unless
19 the period of time involved is at least 24 months.
20 § 7526. Termination of membership.
21 (a) General rule.--Under the terms and conditions prescribed
22 in the bylaws, a member of an association without capital stock
23 shall lose his membership and his right to vote if he ceases to
24 belong to the class eligible for membership or has done no
25 business with an association for a period of 12 months.
26 (b) Valuation of and payment for membership.--After a member
27 has notified an association without capital stock of his
28 withdrawal or after the adoption of a resolution by the board
29 terminating his membership, the board shall appraise the value
30 in money of his membership interest in the association and shall
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1 determine and fix the manner in which the association shall pay
2 him the value of his interest unless the member, with the
3 consent of the association, transfers his certificate of
4 membership. Certificates of membership in an association without
5 capital stock shall not be transferred without the consent of
6 the association.
7 (c) Force majeure.--A member shall not lose his membership
8 in the association under this section by his failure to do
9 business with it if the failure is due to an act of God unless
10 the period of time involved is at least 24 months.
11 § 7527. Voting by proxy or mail.
12 (a) General rule.--Unless otherwise provided in the bylaws,
13 no member may vote by proxy or by mail. No unrevoked proxy shall
14 be valid more than 11 months from the date of its execution. If
15 voting by mail is permitted, absent members may, under rules
16 prescribed by the bylaws, be permitted to vote on specific
17 questions by written ballot prepared by the association and sent
18 by mail to or deposited with the secretary or other designated
19 officer of the association.
20 (b) Action on marketing programs.--Except for day to day
21 operating decisions relating to existing programs, no
22 association shall vote for its members on any new programs or
23 substantially modified proposals other than those regulated by
24 Federal or State agencies affecting existing marketing or
25 marketing development programs or amendments thereto unless it
26 has either first obtained approval of the delegates or conducted
27 a mail poll of its membership, and in such later event apprised
28 the members of their rights to cast a vote and method of voting
29 under the program and notified its membership of the results and
30 its intentions at least five days prior to casting its vote. If
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1 proxy voting is allowed by the bylaws of the association, the
2 proxy shall be valid only for the particular date and the
3 specific issue for which the vote is called.
4 § 7528. Meetings.
5 There shall be at least one meeting of members or delegates
6 each year. Annual and special membership or delegate meetings
7 shall be governed by the bylaws.
8 § 7529. Fundamental changes.
9 (a) General rule.--An association, by action of its members
10 or delegates, may amend its articles of incorporation in the
11 manner provided by the applicable provisions of this part except
12 that:
13 (1) No amendment shall be adopted without the
14 affirmative vote of two-thirds of the members or delegates
15 voting thereon.
16 (2) No amendment affecting the priority or preferential
17 rights of any outstanding stock shall be adopted without the
18 affirmative vote of two-thirds of the holders of the
19 outstanding stock affected.
20 (3) Any association not having capital stock may convert
21 into an association with capital stock by amending its
22 articles to set forth a description of the shares of each
23 class which are to be issued and a statement of the voting
24 rights, preferences, limitations and relative rights granted
25 to or imposed upon the shares of each class but only if the
26 conversion is proposed by three-fourths of the board of
27 directors.
28 (b) Procedure.--Written notice shall, not less than 15 days
29 before the meeting of members or delegates called for the
30 purpose of considering the proposed amendment or any other
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1 fundamental change, be given to each member or shareholder of
2 record. A notice of an amendment under subsection (a)(3) shall
3 set forth, in addition to the information otherwise required by
4 the appropriate provisions of this part, a complete description
5 of the shares proposed to be issued upon the conversion and the
6 manner of carrying the conversion into effect.
7 (c) Post-approval report.--Whenever an amendment of the
8 articles of an association is approved, the association shall
9 notify each member within 30 days after the filing of articles
10 of amendment by sending to each member a copy of the filed
11 amendment and, in the case of a conversion, a complete
12 description of the shares issued by the association.
13 § 7530. Bylaws.
14 (a) General rule.--The bylaws may provide for the following
15 matters:
16 (1) The time, place and manner of calling and conducting
17 meetings of the members or delegates and the number of
18 members or delegates (which may be less than a majority) that
19 shall constitute a quorum.
20 (2) The manner of voting and the conditions upon which
21 members or delegates may vote at general and special
22 meetings.
23 (3) Subject to any provision thereon in the articles of
24 association and in this chapter, the number, qualifications,
25 eligibility requirements, manner of nomination, duties and
26 terms of office of directors and officers, the time of their
27 election and mode and manner of giving notice thereof.
28 (4) The time, place and manner for calling and holding
29 meetings of the directors and any executive committee and the
30 number that shall constitute a quorum.
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1 (5) Rules consistent with law and the articles of
2 association for the management of the association, the
3 establishment of any election districts, the making of
4 contracts, the issuance, redemption and transfer of shares,
5 the relative rights, duties, interests and preferences of
6 members and shareholders and the mode, manner and effect of
7 expulsion of a member.
8 (6) Any other provisions deemed necessary or proper to
9 carry out the purposes of the association.
10 (7) Penalties for violations of the bylaws.
11 (b) Procedure.--Bylaws authorized to be made by the board of
12 directors may be amended or repealed and new bylaws may be
13 adopted by the members or delegates. Delegates may prescribe
14 that any bylaw made by them shall not be amended or repealed by
15 the directors, and members may provide that any bylaw made by
16 them shall not be amended or repealed by either the directors or
17 the delegates. The association shall notify each member of a
18 proposed change in the bylaws by sending to each member, at
19 least 15 days prior to any vote on the proposed change, a copy
20 of the proposed bylaw along with the time, date, place and
21 manner of voting for the proposed changes. Members may amend or
22 repeal bylaws adopted by the directors or the delegates by
23 filing with the secretary of the association a petition signed
24 by 25% of the voting membership and setting forth the text of
25 the proposed change. The secretary shall call a special meeting
26 or special vote of the association within 30 days of the receipt
27 of the petition. When a special meeting is called, at least 10%
28 of the voting membership shall be present to change the bylaws.
29 Whenever a proposed bylaw change is approved, the association
30 shall mail each member a copy of the approved bylaw within 30
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1 days of the approval.
2 § 7531. Directors.
3 (a) General rule.--The business and affairs of the
4 association shall be managed under the direction of a board of
5 not less than five directors who shall be natural persons of
6 full age. All directors shall be members. The first directors
7 shall serve until the first annual meeting of the association at
8 which time their successors shall be elected by the members of
9 the association. Thereafter, a director shall hold office for a
10 term of not less than one year nor more than three years and
11 until his successor has been elected and qualified. Every
12 election for a director shall be by secret ballot. A director
13 may succeed himself.
14 (b) Election by districts.--The bylaws may provide that the
15 territory in which the association has members shall be divided
16 into districts and that the directors shall be elected according
17 to such districts, either directly or by district delegates
18 elected by the members in that district. In such case, the
19 bylaws shall specify or the board of directors shall determine
20 the number of directors to be elected by each district and the
21 manner and method of dividing the directors and of districting
22 and redistricting of the territory in which the association has
23 members. The board of directors may use such standards as are
24 reasonable for assigning directors and districting and
25 redistricting the territory in which the association has
26 members. The bylaws or the board of directors may provide for
27 dividing districts into locals and for the election of district
28 delegates at local meetings of members. The bylaws shall
29 prescribe the procedures by which districts shall elect
30 directors. The board of directors shall hear and decide any
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1 controversy arising out of a district election and its decisions
2 shall be incontestable except for fraud. In any case in which
3 the election of directors is by districts, the board shall fill
4 a vacancy with a person who resides in or is a member of a local
5 in the district in which the vacancy exists.
6 (c) Classified board.--If the bylaws so provide, the
7 directors of an association may be classified in respect to the
8 time for which they severally hold office. In such case, each
9 class shall be as nearly equal in number as possible, the term
10 of office of at least one class shall expire in each year, and
11 the members of a class shall not be elected for a shorter period
12 than one year or for a longer period than three years. If, at
13 any meeting, directors of more than one class are to be elected,
14 each class of directors to be elected shall be elected in a
15 separate election.
16 (d) Educational program.--The Department of Agriculture, in
17 cooperation with the College of Agriculture of The Pennsylvania
18 State University, shall develop and implement an educational
19 program relating to the powers, duties, functions and
20 responsibilities of directors of associations. The Secretary of
21 Agriculture shall appoint an advisory council consisting of nine
22 individuals, including members and directors of associations,
23 two association managers and other interested individuals, who
24 shall advise the department on the development of the
25 educational program. Two members of the advisory council shall
26 be managers of associations. In addition, the department shall
27 furnish to each association director, free of charge, when first
28 elected as a director, an updated copy of this chapter and
29 annually thereafter any amendments or replacements thereof.
30 § 7532. Removal of directors.
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1 A director may be removed from office by the affirmative vote
2 of not less than a majority of the members present and voting at
3 any regular or special meeting called for that purpose or, where
4 the bylaws provide for the election of directors by districts,
5 by the affirmative vote of not less than a majority of the
6 members or delegates residing in or representing the district
7 from which he was elected. The bylaws shall provide for the
8 filing of charges, the giving of notice thereof, an opportunity
9 to be heard and the procedures under which a director may be
10 removed.
11 § 7533. Officers.
12 The board shall elect a president, a secretary and a
13 treasurer and may elect one or more vice presidents and any
14 other officers as may be authorized in the bylaws. The president
15 and at least one of the vice presidents must be members. Any two
16 of the offices of vice president, secretary and treasurer may be
17 combined in one person.
18 § 7534. Marketing arrangements.
19 (a) General rule.--An association and its members may make
20 and execute contracts requiring the members to obtain all or any
21 part of specific services from the association or to sell or
22 deliver all or any part of their specified agricultural products
23 to or through the association or any facilities to be created by
24 the association. The contract may provide that the association
25 may sell or resell the products sold or delivered by its
26 members, with or without taking chapter thereto, and pay over to
27 its members the resale price, after deducting all necessary
28 overhead costs, expenses, valuation reserves, interest,
29 dividends on common and preferred shares and such deductions for
30 capital and other purposes as may be specified in the contract
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1 or bylaws of an association. Each marketing or service contract
2 shall contain a provision which shall specify a reasonable
3 period in each year during which any contracting member of an
4 association, upon giving notice as prescribed in the contract,
5 may terminate the contract.
6 (b) Enforcement.--The bylaws or the marketing or service
7 contract may provide:
8 (1) For applying patronage refunds or savings allocated
9 to any member or other patron toward the payment for
10 liquidated damages specified in the contract to be paid to an
11 association by the member or other patron upon the breach by
12 him of any provision of the marketing or service contract.
13 (2) That the member will pay all costs, premiums for
14 bonds, expenses and fees in case any action is brought upon
15 the contract by the association. Any such provision shall be
16 valid and enforceable in the courts of this Commonwealth.
17 (3) That the association shall have the option to redeem
18 the voting shares at book value or par value, whichever is
19 lower, plus declared dividends, or the membership
20 certificate, whenever any contract between the association
21 and a member has been canceled in accordance with the terms
22 or conditions of the contract or by reason of breach of the
23 contract by the member.
24 (c) Injunction.--In the event of any such breach or
25 threatened breach of the marketing contract by a member, the
26 association shall be entitled to an injunction to prevent
27 further breach of the contract and to specific performance
28 thereof. Pending the adjudication of the action, and upon filing
29 a verified complaint showing the breach or threatened breach and
30 upon filing a sufficient bond, the association shall be entitled
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1 to a temporary restraining order and preliminary injunction
2 against the member. The right to an injunction shall be in
3 addition to the remedy provided in subsection (b).
4 (d) Inducing breach; spreading false reports.--Any person
5 who knowingly induces any member of an association to breach his
6 marketing contract with the association shall be liable to the
7 association for the full amount of damages sustained by it by
8 reason of the breach, and any person who maliciously and
9 knowingly spreads false reports about the finances or management
10 of the association shall be liable to the association in an
11 action for the actual damage which it may sustain by reason of
12 the false reports and punitive damages. The association shall be
13 entitled to an injunction against any such person to prevent
14 further injury to the association. In any action brought by an
15 association pursuant to this subsection, the association shall
16 be entitled to, in addition to any other recovery or remedy,
17 reasonable attorney fees involved in such matter.
18 § 7535. Patronage distributions.
19 (a) General rule.--The net proceeds or savings of an
20 association shall be apportioned, distributed and paid
21 periodically on the basis of patronage to those persons entitled
22 to receive them, at such times and in such manner as the bylaws
23 shall provide. The bylaws may provide that the net proceeds or
24 savings may be restricted to members or may be made at the same
25 or a different rate for member and nonmember patrons. The bylaws
26 may contain any reasonable provisions for the apportionment and
27 charging of net losses except that no member shall thereby
28 become liable for the debts of the association beyond any money
29 or other property delivered by the member to the association.
30 The bylaws may provide that any distribution to a nonmember
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1 eligible for membership may be credited to the nonmember until
2 the amount thereof equals the value of a membership certificate
3 or a common share of an association.
4 (b) Method of disbursement.--The apportionment, distribution
5 and payment of net proceeds or savings required by subsection
6 (a) may be in cash, credits, capital shares, certificates of
7 indebtedness, revolving fund certificates, letters of advice or
8 other securities or certificates issued by an association or by
9 any affiliated domestic or foreign association. Apportionment
10 and distribution of its net proceeds or savings or losses may be
11 separately determined for, and be based upon the patronage of,
12 single or multiple pools or particular departments of an
13 association, or as to particular commodities, supplies or
14 services, or such apportionment and distribution may be based
15 upon classification of patronage according to the type thereof.
16 (c) Minimum participation.--An association may provide in
17 its bylaws the minimum amount of any single annual patronage
18 transaction which shall be taken into account for the purpose of
19 participation in allocation and distribution of net proceeds or
20 savings or net losses under this section.
21 (d) Method of accounting.--For the purposes of this section,
22 net proceeds or savings or net losses shall be computed in
23 accordance with generally accepted accounting principles
24 applicable to cooperative associations, and after deducting from
25 gross proceeds or savings all costs and expenses of operation
26 and any dividends paid upon capital stock and interest paid upon
27 certificates or other evidence of equity in any fund, capital
28 investment or other assets of an association.
29 § 7536. Audit of operations.
30 (a) General rule.--At the close of each fiscal year, a
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1 complete certified audit of the operations of the association
2 shall be made by a qualified certified public accountant or by a
3 qualified public accountant, employed by the board of directors,
4 the written report of whom shall include the balance sheet,
5 operating statement, commissions, salaries and other
6 remunerations of managers and officers and other proper
7 information and shall be submitted to the members at the next
8 regular meeting. Within six months after the expiration of the
9 fiscal year for which made, the secretary of the association
10 shall file a copy of the certified audit in the Department of
11 Agriculture upon a form prescribed by the department. The
12 secretary of the association shall also include in the yearly
13 audit report to the department a list of the current officers
14 and directors and their addresses.
15 (b) Exceptions.--The annual audit of an association with
16 annual gross sales of $100,000 or less may be performed by an
17 audit committee of three or more members of the association
18 appointed by the board, at least one of whom shall be a member
19 of the board of directors. The members of the committee need not
20 be certified public accountants or public accountants.
21 (c) Enforcement.--Any association which fails, within 120
22 days from the close of the fiscal year, to file with the
23 department the certified audit required by subsection (a) shall
24 be notified by certified mail by the department that the
25 certified audit must be filed within 60 days from the date of
26 mailing of the notice and that, upon failure to file the
27 certified audit within the time so limited, the department will
28 file in the Department of State a statement of dissolution under
29 this subsection. If the certified audit is not filed in the
30 department within such 60-day period, the department shall file
19900S1761B2459 - 304 -
1 in the Department of State, with respect to each such defaulting
2 association, a statement of dissolution which shall identify the
3 association. Upon the filing of the statement, the articles of
4 the association shall be deemed forfeited for failure to comply
5 with the provisions of this section. However, the forfeiture
6 shall not prejudice the rights of creditors and members in and
7 to any property or assets of or belonging to the association.
8 The department shall annually, on or before April 1 of each
9 year, furnish each existing association and make public a
10 listing of the status of existing associations. Any association
11 which has so automatically forfeited its articles shall be
12 reinstated as an association under this chapter if the unfiled
13 certified audit is submitted to the department within 90 days
14 after such automatic forfeiture or within any extension thereof
15 granted by the department, which shall thereupon file in the
16 Department of State with respect to the association a notice of
17 withdrawal of statement of dissolution stating that the
18 association has complied with the provisions of this subsection.
19 In such event, no statement of revival or new articles of
20 incorporation need be filed in the Department of State, and the
21 association shall resume its status as a subsisting corporation.
22 The department shall review such yearly certified audits and
23 issue such reports and recommendations to each member of the
24 board of directors of the association as the department deems
25 necessary.
26 (d) Confidentiality.--No person shall, without the consent
27 or authorization of the association, except for official
28 purposes or in obedience to judicial process, make or permit any
29 disclosure whereby any information contained in a certified
30 audit may be identified as having been furnished by the
19900S1761B2459 - 305 -
1 association. No person shall knowingly exercise or attempt to
2 exercise any powers, privileges or franchises for an
3 association, given by this chapter, while the articles of the
4 association are forfeit unless that person is, and discloses
5 that he is, acting to reinstate the good standing of the
6 association under this chapter or is acting to wind up the
7 affairs of the association. A person violating the prohibitions
8 set forth in this subsection commits a misdemeanor of the third
9 degree.
10 (e) Withdrawal.--A certified audit shall not be withdrawn
11 without the approval of the board of directors.
12 § 7537. Contract assignments to association.
13 If any contract authorized by a cooperative contains an
14 assignment to the association of any part or all of funds due or
15 to become due the member during the life of the contract for any
16 product produced or to be produced by him or for any services
17 performed or to be performed in producing any product, any
18 person who accepts or receives the product from the member is
19 bound by the assignment after receiving written notice from the
20 association and the member of the amount and duration of the
21 assignment. However, as to any seasonal crop, if no funds are
22 paid or become payable by any person under such an assignment
23 for a period of two consecutive years during the life of the
24 contract, thereafter the assignment shall not be binding upon
25 any person who receives or accepts the product from the member
26 until the assignment is reaffirmed by the member in writing and
27 written notice thereof is given by the association or the
28 member. Any such reaffirmation shall continue to be effective
29 during the life of the contract until another lapse of two
30 consecutive years occurs.
19900S1761B2459 - 306 -
1 § 7538. Exemption from tax on capital stock and indebtedness.
2 No State or local tax shall be levied or placed upon the
3 capital stock of an association or upon any scrip, bonds,
4 certificates or other evidences of indebtedness issued by such
5 association. The association shall not be required to file in
6 the Department of Revenue, or with any other State or local
7 official of this Commonwealth, the reports relative to such
8 taxes as are or may be required of corporations not exempt from
9 the payment of such taxes.
10 § 7701. Short chapter of chapter.
11 This chapter shall be known and may be cited as the Workers'
12 Cooperative Corporation Law of 1988.
13 § [7701] 7702. Definitions.
14 * * *
15 § [7702] 7703. Corporations.
16 (a) Members and purpose.--Corporations, productive and
17 distributive, may be incorporated under this chapter, upon
18 compliance with its requirements, by five or more farmers,
19 mechanics, laborers or other persons who have incorporated
20 themselves together by written articles under section [7703]
21 7704 (relating to articles of incorporation) for the purpose of
22 carrying on agricultural, horticultural, mining, quarrying,
23 building, mechanical, manufacturing or commercial business; for
24 the purpose of manufacturing, cultivating, raising, trading or
25 dealing in goods, wares, merchandise, chattels, grains,
26 vegetables, roots, fruits and other produce or animals; or for
27 the purpose of buying, selling, holding, leasing or improving
28 lands, tenements or buildings.
29 * * *
30 § [7703] 7704. Articles of incorporation.
19900S1761B2459 - 307 -
1 * * *
2 (b) [Approval] Filing of articles.--The articles of
3 incorporation[, signed by each of the incorporators, together
4 with any filing fee required to be paid,] shall be [delivered
5 to] filed in the department. [If the department finds that the
6 articles comply with section 7704 (relating to content of
7 article) and that all required fees have been paid, it shall
8 approve the articles of incorporation; and a copy of the
9 articles shall be recorded in the bureau.] Upon the [approval]
10 filing of the articles of incorporation, the corporation's
11 existence begins. See section 134 (relating to docketing
12 statement).
13 (c) Evidence of incorporation.--The articles of
14 incorporation as [approved] filed in the department are
15 conclusive evidence of the fact that the corporation has been
16 [organized] incorporated; but proceedings may be instituted by
17 the Commonwealth to dissolve, wind up and terminate a
18 corporation which should not have been incorporated or which has
19 been incorporated by means of fraud or misrepresentation or
20 without substantial good faith compliance with the conditions
21 prescribed by this chapter as precedent to incorporation.
22 [§ 7704. Content of articles.]
23 (d) Content of articles.--The articles of incorporation
24 shall be signed by the persons originally associating themselves
25 together and shall state distinctly:
26 (1) The name by which the corporation shall be known,
27 which may not be the same as, or confusingly similar to, the
28 name of an association or corporation existing under the law
29 of the Commonwealth, the name of a foreign or alien
30 association or corporation authorized to transact business in
19900S1761B2459 - 308 -
1 this Commonwealth, or a corporate name reserved or registered
2 as provided by law.
3 (2) [The place in this Commonwealth where the principal
4 office is to be located.] Subject to section 109 (relating to
5 name of commercial registered office provider in lieu of
6 registered address), the address, including street and
7 number, if any, of its initial registered office in this
8 Commonwealth.
9 (3) A brief statement:
10 (i) of the purpose or purposes for which the
11 corporation is incorporated, which may consist of a
12 statement that the corporation has unlimited powers to
13 engage in any lawful act concerning any business for
14 which corporations may be incorporated under this
15 chapter; and
16 (ii) that the corporation is incorporated under this
17 [act] chapter.
18 (4) A description of the capital stock of each class
19 which is to be issued; a statement of the preferences,
20 qualifications, limitations, restrictions and special or
21 relative rights granted to or imposed upon the shares of each
22 class of capital stock; the total authorized capital stock;
23 the number of shares into which the capital stock is divided;
24 and the par value of each share of capital stock.
25 (5) The amount of capital that will be actually paid in
26 before commencing business.
27 (6) The terms on which individuals may become members.
28 (7) The number of directors, which may not be less than
29 five, constituting the initial board of directors and the
30 names and addresses of the persons who are to serve as
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1 directors until the first annual meeting of the members or
2 until their successors are elected and take office.
3 (8) Other matters as may be deemed proper and necessary.
4 (9) The term of its existence, which shall be either
5 perpetual or for a fixed term of years.
6 (10) The name and post office address of each of the
7 incorporators; a statement of the number of shares subscribed
8 to by each, which must be at least one; and the class of
9 shares to which each subscribes.
10 § 7720. Amendments of articles.
11 * * *
12 (b) Delivery and [recordation] filing.--Amendments to the
13 articles of incorporation[, signed by two authorized officers of
14 the corporation, together with a required filing fee,] shall be
15 [delivered to] filed in the department. [If the department finds
16 that the amendments to the articles comply with the law and that
17 all the required fees have been paid, it shall approve the
18 amendments to the articles of incorporation, and a copy of the
19 amended articles shall be recorded in the bureau.] Upon
20 [approval] the filing of amendments to the articles, they shall
21 become effective. See section 134 (relating to docketing
22 statement).
23 * * *
24 § 7721. Bylaws.
25 * * *
26 (b) Content.--The bylaws may provide for the following
27 matters:
28 (1) The time, place and manner of calling and conducting
29 meetings of the members and the number of members that
30 constitute a quorum.
19900S1761B2459 - 310 -
1 (2) The manner of voting and the conditions upon which
2 members may vote at general or special meetings.
3 (3) Subject to provision in the articles of
4 incorporation and in this [act] chapter, the number,
5 qualifications, eligibility requirements, manner of
6 nomination, duties and terms of office of directors and
7 officers; the time of their election; and mode and manner of
8 giving notice of election.
9 (4) The time, place and manner for calling and holding
10 meetings of the directors and executive committees and the
11 number that constitutes a quorum.
12 (5) Rules consistent with law and the articles of
13 incorporation for the management of the corporation; the
14 making of contracts; the issuance, redemption and transfer of
15 stock; the relative rights, duties, interests and preferences
16 of members and stockholders; and the mode, manner and effect
17 of termination of a member.
18 (6) Any other provisions deemed necessary or proper to
19 carry out the purposes of the corporation.
20 (7) Penalties for violations of the bylaws.
21 § 7726. Exemption from tax on capital stock and indebtedness.
22 No State or local tax may be levied or placed upon a
23 corporation's capital stock or upon bonds, certificates or other
24 evidences of indebtedness issued by a corporation. A corporation
25 is not required to file with the Department of Revenue or with
26 any other State or local official the reports relative to such
27 taxes as are required of corporations not exempt from payment of
28 the taxes.
29 § [7726] 7727. Applicability.
30 (a) General rule.--This chapter shall apply to domestic
19900S1761B2459 - 311 -
1 corporations incorporated under this chapter [on or after the
2 effective date of this chapter].
3 * * *
4 § 8102. Interchangeability of partnership and corporate forms
5 of organization.
6 * * *
7 (b) Exceptions.--Subsection (a) shall not:
8 (1) Affect any law relating to the taxation of
9 partnerships or corporations.
10 (2) Apply to a banking institution, credit union,
11 insurance corporation or savings association, unless the laws
12 relating thereto expressly contemplate the conduct of the
13 regulated business in partnership form.
14 (3) Permit a partnership to provide full limited
15 liability for all of the investors therein or otherwise fail
16 to preserve the intrinsic differences between the partnership
17 and corporate forms.
18 § 8103. Continuation of certain limited partnerships.
19 (a) Scope.--This section shall apply to any domestic limited
20 partnership that elects to be governed by this section. The
21 election, or a termination of the election, may be effected in
22 the manner provided in section 8701(a) (relating to application
23 of chapter).
24 (b) General rule.--The action under section 8571(a)(4)
25 (relating to nonjudicial dissolution) to elect to continue the
26 business of a limited partnership to which this section applies
27 or to appoint one or more replacement general partners of the
28 partnership, or both, may be effected by less than all, but not
29 less than a majority in interest, of the partners.
30 § 8503. Definitions.
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1 The following words and phrases when used in this chapter
2 shall have the meanings given to them in this section unless the
3 context clearly indicates otherwise:
4 * * *
5 "Court." Subject to any inconsistent general rule prescribed
6 by the Supreme Court of Pennsylvania:
7 (1) the court of common pleas of the judicial district
8 embracing the county where the registered office of the
9 limited partnership is or is to be located; or
10 (2) where a limited partnership results from a merger,
11 consolidation or other transaction without establishing a
12 registered office in this Commonwealth or withdraws as a
13 foreign limited partnership, the court of common pleas in
14 which venue would have been laid immediately prior to the
15 transaction or withdrawal.
16 * * *
17 § 8511. Certificate of limited partnership.
18 (a) General rule.--In order to form a limited partnership, a
19 certificate of limited partnership must be executed and filed in
20 the Department of State. The certificate shall set forth:
21 * * *
22 (4) If a partner's interest in the limited partnership
23 is to be evidenced by a certificate of partnership interest,
24 a statement to that effect.
25 (5) Any other matters the partners determine to include
26 therein. A provision included in the certificate of limited
27 partnership pursuant to this paragraph shall be deemed to be
28 a provision of the partnership agreement for purposes of any
29 provision of this chapter that refers to a rule as set forth
30 in the partnership agreement.
19900S1761B2459 - 313 -
1 * * *
2 (d) Transitional provision.--A limited partnership formed
3 under prior law shall not be required to set forth in its
4 certificate of limited partnership a registered office or the
5 business address of each general partner until such time as it
6 first amends its certificate of limited partnership under this
7 chapter.
8 [(d)] (e) Cross references.--* * *
9 § 8512. Amendment of certificate.
10 * * *
11 (b) Events requiring amendment.--An amendment to a
12 certificate of limited partnership shall be filed upon the
13 occurrence of any of the following events:
14 (1) A change in the name of the limited partnership.
15 (2) The admission of a new general partner.
16 (3) The withdrawal of a general partner.
17 [(4) The continuation of the business under section 8571
18 (relating to nonjudicial dissolution) after an event of
19 withdrawal of a general partner.]
20 * * *
21 § 8516. Liability for false statement in certificate.
22 (a) General rule.--If any certificate of limited partnership
23 or certificate of amendment or cancellation contains a
24 materially false statement, one who suffers loss by reasonable
25 reliance on the statement may recover damages for the loss from:
26 (1) any person who executes the certificate, or causes
27 another to execute it on his behalf, and knew, and any
28 general partner who knew or should have known, the statement
29 to be false in any material respect at the time the
30 certificate was executed; and
19900S1761B2459 - 314 -
1 (2) any general partner who thereafter knows or should
2 have known that any arrangement or other fact described in
3 the certificate has changed, making the statement inaccurate
4 in any material respect within a sufficient time before the
5 statement was relied upon reasonably to have enabled that
6 general partner to cancel or amend the certificate, or to
7 file an application for its cancellation or amendment under
8 section 8515 (relating to execution by judicial act).
9 (b) Cross reference.--See section 8511(d) (relating to
10 transitional provision).
11 § 8545. Merger and consolidation of limited partnerships
12 authorized.
13 * * *
14 (c) Business trusts and other associations.--The provisions
15 of this subchapter applicable to domestic and foreign limited
16 partnerships shall also be applicable to a merger or
17 consolidation with or into a domestic or foreign corporation,
18 business trust, general partnership or other association. The
19 surviving or resulting entity in such a merger or consolidation
20 may be a corporation, partnership, business trust or other
21 association. Except as otherwise provided by law in this or any
22 other state, the powers and duties vested in and imposed upon
23 the general partners and limited partners in this subchapter
24 shall be exercised and performed by the group of persons under
25 the direction of whom the business and affairs of the
26 corporation, business trust or other association are managed and
27 the holders or owners of shares or other interests in the
28 corporation, business trust or other association, respectively,
29 irrespective of the names by which the managing group and the
30 holders or owners of shares or other interests are designated.
19900S1761B2459 - 315 -
1 The units into which the shares or other interests in the
2 corporation, business trust or other association are divided
3 shall be deemed to be partnership interests for the purposes of
4 applying the provisions of this subchapter to a merger or
5 consolidation involving the corporation, business trust or other
6 association.
7 § 8558. Liability upon return of contribution.
8 * * *
9 (b) Unlawful distributions.--If a partner has received the
10 return of any part of his contribution in violation of the
11 partnership agreement or this chapter, he is liable to the
12 limited partnership for a period of [four] two years thereafter
13 for the amount of the contribution wrongfully returned.
14 * * *
15 § 8562. Assignment of partnership interest.
16 * * *
17 (b) Certificate of partnership interest.--The [partnership
18 agreement] certificate of limited partnership may provide that a
19 partner's interest in a limited partnership may be evidenced by
20 a certificate of partnership interest issued by the limited
21 partnership and may also provide for the assignment or transfer
22 of any partnership interest represented by such a certificate
23 and make other provisions with respect to such certificates. See
24 13 Pa.C.S. § 8102 (relating to definitions and index of
25 definitions).
26 * * *
27 § 8571. Nonjudicial dissolution.
28 (a) General rule.--A limited partnership is dissolved and
29 its affairs shall be wound up upon the happening of the first to
30 occur of the following:
19900S1761B2459 - 316 -
1 * * *
2 (4) An event of withdrawal of a general partner unless
3 at the time there is at least one other general partner and
4 the written provisions of the partnership agreement permit
5 the business of the limited partnership to be carried on by
6 the remaining general partner and that partner does so. The
7 limited partnership is not dissolved and is not required to
8 be wound up by reason of any event of withdrawal if, within
9 180 days after the withdrawal, all partners [(except as
10 provided in subsection (c))] agree in writing to continue the
11 business of the limited partnership or to the appointment of
12 one or more replacement general partners.
13 (5) Entry of an order of judicial dissolution under
14 section 8572 (relating to judicial dissolution).
15 * * *
16 (c) [Modification by agreement.--If the partnership
17 agreement so provides in writing, the action under subsection
18 (a)(4) to elect to continue the business of the limited
19 partnership or to appoint one or more replacement general
20 partners, or both, may be effected by less than all, but not
21 less than a majority in interest, of the partners.
22 (d)] Cross references.--See sections 8103 (relating to
23 continuation of certain limited partnerships) and 8512(b)
24 (relating to events requiring amendment).
25 § 8575. Survival of remedies and rights after dissolution.
26 (a) General rule.--The dissolution of a limited partnership
27 shall not eliminate or impair any remedy available to or against
28 the limited partnership or its partners for any right or claim
29 existing, or liability incurred, prior to the dissolution, if an
30 action thereon is brought on behalf of:
19900S1761B2459 - 317 -
1 (1) the limited partnership within the time otherwise
2 limited by law; or
3 (2) any other person before or within [four] two years
4 after the date of the dissolution or within the time
5 otherwise limited by law, whichever is less.
6 The actions may be prosecuted against and defended by the
7 limited partnership under the name of the limited partnership.
8 * * *
9 § 8701. Scope and definition.
10 (a) Application of chapter.--This chapter applies to a
11 general or limited partnership formed under the laws of this
12 Commonwealth that elects to be governed by this chapter. Any
13 partnership that desires to elect to be governed by this
14 chapter, or to amend or terminate the election, shall file in
15 the Department of State a statement of election, amendment or
16 termination, as the case may be, which shall be signed by a
17 general partner and shall set forth:
18 (1) The name of the partnership.
19 (2) The location of the principal place of business.
20 (3) The name of each [member] general partner of the
21 partnership as of the date of the statement.
22 (4) A statement that the partnership elects to be
23 governed by this chapter or that the election to be governed
24 by this chapter shall be amended or terminated, as the case
25 may be.
26 (5) If the election is to be made or terminated, a
27 statement that the election or termination has been
28 authorized by at least a majority in interest of the
29 partners.
30 Upon the filing of the statement of election, amendment or
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1 termination in the department, the election to be governed by
2 this chapter shall be effective, amended or terminated, as the
3 case may be.
4 * * *
5 § 9102. Funeral and similar benefits.
6 Members of unincorporated associations paying [periodical]
7 periodic or funeral benefits shall not be individually liable
8 for the payment of [periodical] periodic or funeral benefits or
9 other similar liabilities of the association. The liabilities
10 shall be payable only out of the treasury of the association.
11 § 9501. Application and effect of chapter.
12 (a) General rule.--
13 (1) [This] Unless the context clearly indicates
14 otherwise, this chapter shall apply to and the words
15 "business trust" in this chapter shall mean a business trust:
16 [(1)] (i) Hereafter established under the laws of
17 this Commonwealth.
18 [(2)] (ii) Whose deed of trust or other organic
19 document states, by amendment or otherwise, that the
20 trust exists subject to the provisions of this chapter,
21 in the case of a business trust heretofore established
22 under the laws of this Commonwealth or heretofore or
23 hereafter established under the laws of any other
24 jurisdiction.
25 (2) The words "business trust" in this chapter shall not
26 include:
27 (i) A trust contemplated by section 1768 (relating
28 to voting trusts and other agreements among shareholders)
29 or any similar provision of law.
30 (ii) A trust for creditors.
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1 (iii) A mortgage, deed of trust or other indenture
2 or similar instrument or agreement under which debt
3 securities are outstanding or to be issued.
4 (iv) A trust for the benefit of one or more
5 investors with respect to a lease of real or personal
6 property, unless the instrument creating the trust is
7 filed under this chapter.
8 * * *
9 § 9502. Creation of business trusts.
10 A business trust may be created in real or personal property,
11 or both, with power in the trustee or a majority of the
12 trustees:
13 (1) To receive title to, hold, buy, sell, exchange,
14 transfer and convey real and personal property for the use of
15 the business trust.
16 (2) To take, receive, invest or disburse the receipts,
17 earnings, rents, profits or returns from the trust estate.
18 (3) To carry on and conduct any lawful business
19 designated in the deed or other instrument of trust, and
20 generally to do any lawful act in relation to such trust
21 property that any individual owning the same absolutely might
22 do.
23 (4) To merge with another business trust or other
24 association, to divide or to engage in any other fundamental
25 or other transaction contemplated by the deed or other
26 instrument of trust.
27 § 9503. Documentation of trust.
28 (a) General rule.--A business trust shall not be valid
29 unless created by deed of trust or other written instrument
30 subscribed by one or more individuals, associations or other
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1 entities [and filed in the Department of State]. The trustees of
2 a business trust shall promptly cause the instrument or any
3 amendment thereof, except an amendment solely effecting or
4 reflecting the substitution of or other change in the trustees,
5 to be filed in the Department of State. The failure to effect
6 the filing shall not affect the validity of a business trust. A
7 trustee who violates the requirements of this subsection shall
8 be liable for a civil penalty in the amount of $1,000 payable to
9 the department.
10 * * *
11 (d) Duration.--The instrument creating a business trust
12 shall specify the period of its duration, which [shall not
13 exceed 21 years from its creation or from its last extension,
14 whichever is later. A beneficiary of a business trust who
15 objects to the extension of the term of existence of a business
16 trust and who complies with the provisions of Subchapter D of
17 Chapter 15 (relating to dissenters rights) shall be entitled to
18 the rights and remedies therein provided. The date of the
19 adoption of the amendment to the instrument changing the term of
20 existence shall be deemed to be the effective date of the plan,
21 the beneficiaries who make written demand shall be deemed to be
22 the dissenting shareholders, and the trust shall be deemed the
23 corporation for the purposes of that subchapter.] may be
24 perpetual. The rule against perpetuities or analogous principles
25 shall not be applicable to a business trust.
26 * * *
27 § 9506. Liability of trustees and beneficiaries.
28 (a) General rule.--Liability to third parties for any act,
29 omission or obligation of a trustee of a business trust when
30 acting in such capacity shall extend to [the whole of the trust
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1 estate or so much thereof] so much of the trust estate as may be
2 necessary to discharge such liability, but personal liability
3 shall not attach to the trustee or the beneficiaries of the
4 trust for any such act, omission or liability. An obligation of
5 a trust based upon a writing may be limited to a specific fund
6 or other identified pool or group of assets of the trust.
7 (b) Standards and immunities.--The provisions of [Subchapter
8 B of Chapter 5 (relating to indemnification and corporate
9 directors' liability)] Subchapters B (relating to fiduciary
10 duty) and D (relating to indemnification) of Chapter 17 shall be
11 applicable to trustees of a business trust.
12 § 9507. Foreign business trusts.
13 A business trust organized under any laws other than those of
14 this Commonwealth shall be subject to Subchapters B (relating to
15 qualification) and C (relating to powers, duties and
16 liabilities) of Chapter 41, as if it were a foreign business
17 corporation.
18 DIVISION II
19 INSURANCE CORPORATIONS
20 Section 201. Definition of term "insurance corporation."
21 As used in this division, the term "insurance corporation"
22 means any domestic insurance company of any of the classes
23 described in section 201 or 701(3) of the act of May 17, 1921
24 (P.L.682, No.284), known as The Insurance Company Law of 1921,
25 or incorporated under the acts of April 28, 1903 (P.L.329,
26 No.259), April 20, 1927 (P.L.317, No.190), June 24, 1939
27 (P.L.686, No.320), June 20, 1947 (P.L.687, No.298), June 28,
28 1951 (P.L.941, No.184), July 15, 1957 (P.L.929, No.401), or any
29 similar act relating to the incorporation or reincorporation of
30 limited life insurance companies. The term does not include any
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1 of the following:
2 (1) A hospital plan corporation subject to 40 Pa.C.S.
3 Ch. 61 (relating to hospital plan corporations).
4 (2) A professional health service corporation subject to
5 40 Pa.C.S. Ch. 63 (relating to professional health services
6 plan corporations).
7 (3) A fraternal benefit society subject to the act of
8 July 29, 1977 (P.L.105, No.38), known as the Fraternal
9 Benefit Society Code.
10 (4) A health maintenance organization subject to the act
11 of December 29, 1972 (P.L.1701, No.364), known as the Health
12 Maintenance Organization Act.
13 Section 202. Corporate powers.
14 (a) General rule.--No insurance corporation shall transact
15 any other business other than that specified in its original or
16 amended articles of incorporation or charter or authorized by
17 statute regulating the business of the corporation.
18 (b) Ancillary activities.--With the prior approval of the
19 Insurance Department, an insurance corporation may,
20 independently of its insurance business and in addition to
21 authority conferred by any other statute regulating the business
22 of the corporation, provide services of the kinds it performs in
23 the normal conduct of the business for which it is incorporated,
24 including, but not limited to, consultative, administrative,
25 investment, actuarial, loss prevention, data processing,
26 accounting, claims and collection services. The Insurance
27 Department shall take into account the effect of the provision
28 of such services on the insurance business of the corporation
29 and the risks inherent in the provision of such services by the
30 corporation.
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1 (c) Subsidiaries.--Subsections (a) and (b) shall not affect
2 the power of an insurance corporation to hold, own and control
3 subsidiaries engaged in other businesses as authorized by law.
4 Section 203. Authorization to do business.
5 No insurance corporation incorporated after (in printing this
6 act in the Laws of Pennsylvania the Legislative Reference Bureau
7 shall insert here, in lieu of this statement, the effective date
8 of this division) shall have power to engage in the business of
9 insurance until it shall have received a certificate from the
10 Insurance Department authorizing the corporation to commence
11 business.
12 Section 204. Amendment of articles.
13 (a) General rule.--Any amendment of the articles of
14 incorporation or charter of any insurance corporation that may
15 be effected only by action or with the approval of the
16 shareholders or members (other than an amendment authorizing or
17 creating a new class or series of shares or increasing the
18 authorized number of any previously authorized class or series
19 of shares) shall become effective only if approved by the
20 Insurance Department. See 15 Pa.C.S. § 103 (relating to
21 subordination of title to regulatory laws).
22 (b) Amendments not requiring approval of Insurance
23 Department.--The Department of State shall forward to the
24 Insurance Department a copy of any amendment of the articles of
25 incorporation or charter of any insurance corporation that
26 becomes effective without the approval of the Insurance
27 Department.
28 (c) Reduction in capital stock.--The capital stock of an
29 insurance corporation shall not be reduced below the minimum
30 amount of capital stock required by law for the formation of the
19900S1761B2459 - 324 -
1 corporation.
2 Section 205. Other fundamental transactions.
3 (a) General rule.--Any plan of merger, consolidation,
4 exchange, asset transfer, division or conversion of any
5 insurance corporation, any recapitalization or voluntary
6 dissolution of any insurance corporation or any issuance of
7 shares by any insurance corporation in exchange for shares of
8 another insurance company shall become effective only if
9 approved by the Insurance Department. See 15 Pa.C.S. § 103
10 (relating to subordination of title to regulatory laws).
11 (b) Standards.--A share exchange or similar transaction
12 shall be approved if it is in accordance with law and the terms
13 and conditions are fair. A reduction in capital stock shall be
14 approved if it is in accordance with law and consistent with the
15 interests of the policyholders and creditors. A merger or
16 consolidation of a title insurance company or the acquisition of
17 substantially all the assets or stock of a title insurance
18 company or abstract company by a title insurance company shall
19 be approved if it is in accordance with law, not inequitable to
20 the shareholders of any title insurance or abstract company
21 involved and will not substantially reduce the security of and
22 service to be rendered to policyholders of the domestic title
23 insurance company in this Commonwealth or elsewhere. Any other
24 transaction subject to subsection (a) shall be approved if it is
25 in accordance with law and not injurious to the interests of the
26 policyholders and creditors.
27 (c) Approval of compensation.--No director, officer, agent
28 or employee of any title insurance company or abstract company
29 party to any merger, consolidation or acquisition subject to
30 subsection (a) shall receive any fee, commission, compensation
19900S1761B2459 - 325 -
1 or other valuable consideration whatsoever for in any manner
2 aiding, promoting or assisting therein except as set forth in
3 the terms of the transaction submitted to the Insurance
4 Department for approval.
5 (d) Transactions with foreign corporations.--Any foreign
6 insurance company participating in or resulting from any
7 transaction subject to subsection (a) shall engage in the
8 transaction only with the approval of the insurance supervising
9 officials of the jurisdiction in which such foreign insurance
10 company is incorporated or is to be incorporated. A change in
11 domicile of an insurance corporation to another jurisdiction may
12 be effected only with the consent of the Insurance Department. A
13 foreign insurance company that is a surviving or resulting
14 corporation in any transaction subject to subsection (a) shall
15 not be deemed to hold a certificate of authority to do an
16 insurance business within this Commonwealth solely by reason of
17 the approval by the Insurance Department and consummation of the
18 transaction.
19 (e) Mergers of stock and mutual insurance companies.--A
20 mutual insurance company shall not merge or consolidate with an
21 insurance corporation organized on a stock share basis.
22 (f) Dissolution of mutual companies.--Assets of mutual life
23 insurance companies, derived from a health and accident
24 business, other than those properly credited to the members or
25 policyholders on policies covering such business, and the assets
26 of mutual companies, other than mutual life companies, which may
27 not be properly credited to policyholders and members, shall be
28 escheated to the Commonwealth upon the dissolution of such
29 companies.
30 (g) Definition.--As used in this section, the term
19900S1761B2459 - 326 -
1 "recapitalization" includes any reduction in stated capital and
2 excludes any new or additional share authorization for which
3 approval by the Insurance Department is not required by section
4 204 of this act.
5 Section 206. Increases in capital stock.
6 Within 30 days after any increase in the capital stock of an
7 insurance corporation, the corporation shall report the increase
8 to the Insurance Department on a form for that purpose
9 prescribed by regulation by the department.
10 Section 207. Administrative procedure.
11 (a) General rule.--Every application for a certificate of
12 authority or other approval by the Insurance Department under
13 this division shall be made to the department in writing and
14 shall be in such form as the procedural regulations of the
15 department may require.
16 (b) Standards for approval.--A certificate of authority or
17 other approval under this division shall be issued by order of
18 the department only if and when the department shall find and
19 determine that the application complies with the provisions of
20 this division and the procedural regulations of the department
21 thereunder.
22 (c) Procedure before department.--For the purpose of
23 enabling the department to make the finding or determination
24 required by subsection (b), the department shall afford
25 reasonable notice and opportunity for hearing, which shall be
26 public, and, before or after any such hearing, it may make such
27 inquiries, audits and investigations, and may require the
28 submission of such supplemental studies and information, as it
29 may deem necessary or proper to enable it to reach a finding or
30 determination. The department, in granting a certificate of
19900S1761B2459 - 327 -
1 authority or other approval, may impose such conditions as it
2 may deem to be just and reasonable. In every case the department
3 shall make a finding or determination in writing, stating
4 whether or not the application has been approved, and, if it has
5 been approved in part only, specifying the part which has been
6 approved and the part which has been denied. Any holder of a
7 certificate of authority or other approval, exercising the
8 authority conferred thereby, shall be deemed to have waived any
9 and all objections to the terms and conditions of such
10 certificate or other approval.
11 (d) Judicial review.--Orders of the department upon an
12 application for a certificate of authority or other approval
13 under this section shall be subject to judicial review in the
14 manner and within the time provided or prescribed by law.
15 Section 208. Existing powers preserved.
16 Nothing in this act shall impair the power of any insurance
17 corporation to transact business to the same extent as if this
18 act had not been enacted.
19 DIVISION III
20 CONFORMING AMENDMENTS
21 Section 301. Amendment of Title 13.
22 Sections 9103(f) and 9403 of Title 13 are amended to read:
23 § 9103. Perfection of security interests in multiple state
24 transactions.
25 * * *
26 (f) Uncertificated securities.--
27 (1) Except as provided in paragraph (2), the law
28 (including the conflict of laws rules) of the jurisdiction of
29 organization of the issuer governs the perfection and the
30 effect of perfection or nonperfection of a security interest
19900S1761B2459 - 328 -
1 in uncertificated securities.
2 (2) In the case of a registered corporation as defined
3 in 15 Pa.C.S. § 2502 (relating to registered corporation
4 status), which has a class of uncertificated securities
5 listed on the New York Stock Exchange or the American Stock
6 Exchange, the law ([including] excluding the conflict of laws
7 rules) of the jurisdiction in which those exchanges are
8 located governs the perfection and the effect of perfection
9 or nonperfection of a security interest in such
10 uncertificated securities.
11 § 9403. What constitutes filing; duration of filing; effect of
12 lapsed filing; duties of filing officer.
13 * * *
14 (g) Filing fees.--See 15 Pa.C.S. § 153 (relating to fee
15 schedule).
16 Section 302. Enactment of Title 17.
17 The Pennsylvania Consolidated Statutes is amended by adding a
18 title to read:
19 TITLE 17
20 CREDIT UNIONS
21 Chapter
22 1. Preliminary Provisions
23 3. Incorporation
24 5. Corporate Powers, Duties and Safeguards
25 7. Members, Directors and Officers
26 9. Amendment of Articles
27 11. Conversion, Merger and Consolidation
28 13. Dissolution
29 15. Out-of-State Credit Unions
30 CHAPTER 1
19900S1761B2459 - 329 -
1 PRELIMINARY PROVISIONS
2 Sec.
3 101. Short title of title.
4 102. Application of title.
5 103. Definitions.
6 104. Prohibition on use of words "credit union," etc.
7 § 101. Short title of title.
8 This title shall be known and may be cited as the Credit
9 Union Code.
10 § 102. Application of title.
11 This title applies to and the term "credit union" in this
12 title means a cooperative corporation incorporated under any of
13 the following:
14 (1) The act of May 26, 1933 (P.L.1076, No.260), referred
15 to as the Credit Union Act.
16 (2) The act of September 20, 1961 (P.L.1548, No.658),
17 known as the Credit Union Act.
18 (3) This title.
19 § 103. Definitions.
20 The following words and phrases when used in this title shall
21 have the meanings given to them in this section unless the
22 context clearly indicates otherwise:
23 "Activity." A transaction by a member on a loan, share
24 account, share draft account or certificate or a verbal or
25 written communication between the member and the credit union in
26 which the member indicates an awareness or interest in funds
27 deposited by the member in the credit union.
28 "Branch." A subsidiary office of the credit union which is
29 capable of offering the same or approximately the same level of
30 service to members that can be found at the principal office of
19900S1761B2459 - 330 -
1 the credit union. The term includes a branch credit union,
2 branch office, branch agency, additional office other than a
3 service facility and branch place of business.
4 "Department." The Department of Banking of the Commonwealth.
5 "Federal credit union." A credit union organized in
6 accordance with the provisions of the Federal Credit Union Act
7 (48 Stat. 1216, 12 U.S.C. § 1751 et seq.).
8 "Out-of-State credit union." A credit union incorporated
9 under the laws of another state.
10 "Service facility." A subsidiary office of the credit union
11 which is not capable of offering the same or approximately the
12 same level of service that can be found at the principal office
13 of the credit union.
14 "Volunteer." An individual who receives no compensation.
15 Reasonable health, accident and similar insurance protection and
16 the reimbursement of reasonable expenses incurred in the
17 discharge of the duties of the volunteer's position are not
18 compensation.
19 § 104. Prohibition on use of words "credit union," etc.
20 (a) General rule.--Only a credit union subject to this
21 title, a Federal credit union or a corporation organized in
22 accordance with a state credit union statute, may assume and use
23 the words "credit union" in its name or title, or operate in the
24 manner of a credit union.
25 (b) Penalties.--Any person, other than a credit union
26 subject to this title, a Federal credit union, a corporation
27 organized in accordance with a state credit union statute, or an
28 association of credit unions, who violates subsection (a) by
29 using a name or title containing the words "credit union" or any
30 other derivation thereof or so representing itself in its
19900S1761B2459 - 331 -
1 advertising, or otherwise conducting business as a credit union
2 shall, for each offense, be subject to a penalty levied by the
3 Department of Banking which shall be not less than $1,000, nor
4 more than $10,000. The officers of a corporation shall be liable
5 for such penalty if the offense is committed by a corporation.
6 This section shall be enforced by the department.
7 (c) Civil action.--In addition, a credit union, Federal
8 credit union, out-of-State credit union or an association of
9 these institutions, may institute a civil action arising out of
10 a violation of this section.
11 CHAPTER 3
12 INCORPORATION
13 Sec.
14 301. Purposes.
15 302. Number and qualifications of incorporators.
16 303. Articles of incorporation.
17 304. Department of Banking consideration of articles.
18 305. Bylaws.
19 § 301. Purposes.
20 (a) General rule.--A credit union may be incorporated under
21 this title for the purpose of promoting thrift among its
22 members, creating a source of credit for such members at
23 reasonable rates of interest and providing an opportunity for
24 its members to use and control their own money on a democratic
25 basis in order to improve their economic and social condition.
26 (b) Central or corporate credit unions.--A central or
27 corporate credit union formed primarily to serve other credit
28 unions, including Federal credit unions and out-of-State credit
29 unions, may be incorporated under this title and shall be
30 subject to all provisions of this title not inconsistent with
19900S1761B2459 - 332 -
1 provisions specifically applicable to central or corporate
2 credit unions. The purposes for which a central or corporate
3 credit union may be incorporated are:
4 (1) To accumulate and prudently manage the liquidity of
5 its member credit unions through interlending and investment
6 services.
7 (2) To act as an intermediary for credit union funds
8 between members and other corporate credit unions.
9 (3) To obtain liquid funds from other credit union
10 organizations, financial intermediaries and other sources.
11 (4) To foster and promote, in cooperation with other
12 state, regional and national corporate credit unions and
13 credit union organizations or associations, the economic
14 security, growth and development of member credit unions.
15 § 302. Number and qualifications of incorporators.
16 (a) General rule.--A credit union may be incorporated
17 pursuant to the provisions of this title, by seven or more
18 incorporators. Such incorporators shall be natural persons of
19 full age, the majority of whom are residents of this
20 Commonwealth and who have a common bond of association as
21 provided in section 701 (relating to membership).
22 (b) Central or corporate credit unions.--A central or
23 corporate credit union may be incorporated, pursuant to the
24 provisions of this title, by 15 or more credit unions chartered
25 under the laws of the United States or of any state, which have
26 agreed to purchase shares in the credit union in amounts not
27 less than the minimum specified in the bylaws.
28 § 303. Articles of incorporation.
29 Articles of incorporation shall be signed by each of the
30 incorporators. The articles of incorporation shall set forth:
19900S1761B2459 - 333 -
1 (1) The name of the proposed credit union, which shall
2 contain the words "credit union."
3 (2) The class of services to be performed by the credit
4 union, which services shall be within the scope of activities
5 of such associations as set forth in this title.
6 (3) The principal place where its business is to be
7 transacted, which shall be within this Commonwealth.
8 (4) The term for which it is to exist, which may be
9 perpetual.
10 (5) The par value of its shares.
11 (6) The names and post office addresses of the
12 incorporators, and the number of shares subscribed by each.
13 (7) The names and residences of each of the first
14 directors, not less than five in number, who shall serve
15 until the first annual meeting of the credit union, and the
16 name and residence of the treasurer.
17 (8) The common bond of membership.
18 (9) Any provision, not inconsistent with law, which the
19 incorporators may choose to insert for the regulation of the
20 business and the internal affairs of the credit union.
21 § 304. Department of Banking consideration of articles.
22 (a) General rule.--The articles of incorporation and two
23 copies of the proposed bylaws for the general governance of the
24 credit union shall be presented to the Department of Banking,
25 together with such reasonable fees as shall be established, by
26 the department, for such examination and such investigation as
27 it may deem necessary to ascertain:
28 (1) Whether the character and general fitness of the
29 incorporators, directors, and the treasurer named in the
30 articles of incorporation is satisfactory.
19900S1761B2459 - 334 -
1 (2) Whether the character and number of the group
2 proposed to be served affords reasonable promise of
3 sufficient support for the enterprise so as to make the
4 establishment of the proposed credit union economically
5 advisable.
6 (3) Whether the incorporators, directors and group
7 proposed to be served have a common bond of association as
8 provided in section 701 (relating to membership).
9 (4) Whether the proposed credit union unduly encroaches
10 upon the field of membership of any other credit union.
11 (5) Whether the application is in proper form and within
12 the purpose of this title.
13 (6) Whether the savings of members paid for shares will
14 be insured by the National Credit Union Administration or
15 other share insurance fund approved by the department.
16 Nonprofit corporations created by specific legislation of any
17 state to insure share accounts or depository accounts of
18 credit unions shall not be subject to regulation by the
19 Department of Insurance or to the laws of the Commonwealth
20 concerning insurance.
21 Within 60 days after receipt of the articles, the department
22 shall, upon the basis of the facts disclosed by the application
23 and its investigation, either approve or disapprove the
24 articles.
25 (b) Approval action.--If the department approves the
26 articles, it shall endorse its approval thereon and forward the
27 articles to the Department of State. The Department of State
28 shall, upon the receipt of the articles, file the same. Upon the
29 filing of the article of incorporation, the corporate existence
30 of the credit union shall begin. The articles of incorporation
19900S1761B2459 - 335 -
1 as filed in the Department of State are conclusive evidence of
2 the fact that the credit union has been incorporated.
3 (c) Disapproval action.--If the Department of Banking
4 disapproves the articles, it shall return them to the
5 incorporators, stating in detail its reasons for doing so.
6 (d) Cross reference.--See 15 Pa.C.S. § 134 (relating to
7 docketing statement).
8 § 305. Bylaws.
9 (a) General rule.--The original bylaws of a credit union
10 shall be adopted by the incorporators of the credit union and
11 copies thereof shall be transmitted to the Department of Banking
12 along with the articles of incorporation as provided in this
13 chapter.
14 (b) Amendments.--Thereafter, bylaws may be amended either by
15 two-thirds of the members present and voting or a majority of
16 the board of directors at any regular or special meeting of the
17 credit union, or of the board of directors, as the case may be,
18 if notice thereof is given and a quorum is established in
19 accordance with the bylaws.
20 (c) Restrictions on board of directors.--The board of
21 directors shall not amend any bylaws fixing their
22 qualifications, classification, term of office or compensation.
23 (d) Review by members.--Whenever the board of directors
24 amends the bylaws, written notice thereof shall be given to the
25 members prior to the next meeting of the members or within 90
26 days after such action by the board of directors, whichever is
27 sooner, and such action by the board of directors shall be
28 subject to the power of the members at their next meeting held
29 at least ten days after the mailing of the notice thereof, to
30 change or repeal such bylaw or amendment.
19900S1761B2459 - 336 -
1 CHAPTER 5
2 CORPORATE POWERS, DUTIES AND SAFEGUARDS
3 Sec.
4 501. Powers.
5 502. Powers of central or corporate credit unions.
6 503. Regulation by Department of Banking.
7 504. Fiscal year.
8 505. Capital and shares.
9 506. Joint accounts.
10 507. Minority and trust accounts.
11 508. Estate accounts.
12 509. Entrance fees.
13 510. Loan interest, fees and penalties.
14 511. Power to borrow.
15 512. Loans.
16 513. Reserves.
17 514. Dividends.
18 515. Rights and liabilities of terminating members.
19 516. Adverse claims.
20 517. Taxation.
21 § 501. Powers.
22 (a) General rule.--A credit union shall have the following
23 general powers:
24 (1) To continue as a corporation for the time specified
25 in its articles of incorporation subject to 15 Pa.C.S. § 501
26 (relating to reserved power of General Assembly).
27 (2) To maintain and defend judicial proceedings in its
28 corporate name.
29 (3) To adopt and use a corporate seal, and alter the
30 same at pleasure.
19900S1761B2459 - 337 -
1 (4) To grant allowances or pensions to officers,
2 directors and employees for faithful and long-continued
3 services and, after the death of the officer, director or
4 employee either while in the service of the corporation or
5 after retirement, pensions or allowances may be granted or
6 continued to their dependents. The allowances to dependents
7 shall be reasonable in amount and paid only for a limited
8 time and, unless part of an employee benefit plan or
9 employment contract in effect at the time of retirement or
10 death of the officer, director or employee, shall not exceed
11 in total the amount of the compensation paid to the officer,
12 director or employee during the 12 months preceding
13 retirement or death.
14 (5) To have and exercise all of the powers and means
15 necessary to effect the purpose or purposes for which the
16 credit union is organized.
17 (b) Special powers.--Except as set forth in subsection (c),
18 a credit union shall have the following special powers:
19 (1) To receive the savings of its members as payments,
20 representing equity on shares, share draft accounts and share
21 certificates.
22 (2) To make loans to members and to participate in loans
23 to credit union members, including members of any Federal
24 credit union or credit union chartered under the laws of any
25 state, jointly with such other credit unions, credit union
26 organizations or State or Federally chartered and regulated
27 depository institutions, if the institution which originates
28 such a loan shall be legally required to retain an interest
29 of at least 10% of the outstanding balance of the loan.
30 (3) To make loans to any cooperative society or
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1 societies, or other organization or organizations, which have
2 membership in the credit union.
3 (4) To make purchase money mortgage loans to members
4 secured by mortgages which are first liens on improved real
5 property situated within the United States, the improvement
6 being an established dwelling house for not more than four
7 families which is owned by the member of the credit union
8 making the mortgage and occupied or to be occupied, in whole
9 or in part, by such member. Purchase money mortgages shall
10 not exceed 90% of the fair market value of the property,
11 except that shares of the credit union owned by the mortgagor
12 may be assigned or pledged as additional collateral security
13 for the mortgage loan and, in such event, the mortgage loan
14 granted upon such property may be increased by the withdrawal
15 value of the additional pledged shares to an amount not to
16 exceed a maximum total mortgage loan of 100% of the fair
17 market value of such real property and the credit union may
18 release this additional collateral whenever the mortgage loan
19 meets all of the requirements of this title and could be made
20 legally at the time of release without the requirement of
21 additional collateral. Purchase money mortgage loans shall be
22 amortized by approximately equal payments sufficient in
23 amount to pay all interest and effect full repayment of
24 principal within a period not in excess of 30 years. Purchase
25 money mortgage loans on any one property shall not exceed 90%
26 of the fair market value of the property, except as provided
27 in this subsection, or 5% of the paid-in capital of the
28 credit union, whichever is lesser. The aggregate total of
29 mortgage loans shall not exceed 50% of the paid-in capital of
30 the credit union. Without regard to the limitations as to the
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1 amount and term of a purchase money mortgage loan or the
2 aggregate amount of all mortgage loans set forth in this
3 paragraph, a credit union may grant any mortgage loan which
4 is insured or guaranteed, in whole or in part, by the United
5 States or any instrumentality thereof, or if there is a
6 commitment to so insure or guarantee.
7 (5) To make loans to credit unions organized under the
8 laws of this Commonwealth or under the laws of any state or
9 under the laws of the United States. In the case of central
10 or corporate credit unions, the aggregate amount outstanding
11 on all such loans shall not exceed 25% of the unimpaired
12 capital of the lending credit union.
13 (6) To deposit its funds in insured state banks, bank
14 and trust companies, savings banks, national banking
15 associations, savings associations, Federal saving and loan
16 associations, insured credit unions and insured Federal
17 credit unions and central-type credit union organizations.
18 (7) To invest its funds in the following investments:
19 (i) Securities, obligations or other instruments of
20 or fully guaranteed as to principal and interest by the
21 United States or any agency thereof or in any trust
22 established for investing directly or collectively in the
23 same.
24 (ii) Bonds or other interest-bearing obligations of
25 the Commonwealth or any political subdivision thereof or
26 an authority which has been created as a body corporate
27 and politic under any law of this Commonwealth.
28 (iii) Shares of any building and loan, savings and
29 loan association or credit union, organized under the
30 laws of this Commonwealth, or of any Federal savings and
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1 loan association or Federal credit union, to the extent
2 to which the withdrawal or repurchase value of such
3 shares is insured by any agency of the United States or
4 any other insurer approved by the Department of Banking.
5 (iv) Bonds and notes of the Pennsylvania Housing
6 Agency created by the act of December 3, 1959 (P.L.1688,
7 No.621), known as the Housing Finance Agency Law.
8 (v) Capital stock, obligations or other securities
9 of any service corporation organized under the laws of
10 this Commonwealth or under the laws of any other state
11 and duly qualified to do business in this Commonwealth,
12 if the entire capital stock of such corporation is
13 available for purchase only by credit unions, organized
14 and existing under the laws of this Commonwealth and by
15 Federal credit unions or association of credit unions. A
16 complete description of the service corporation and its
17 activities must be furnished to the department and its
18 approval obtained by the credit union before investing in
19 such corporation. No credit union may make an investment
20 in a service corporation if its then aggregate
21 outstanding investments under this subparagraph would
22 exceed 1% of its assets.
23 The provisions of this paragraph shall not apply to any
24 investments lawfully owned by a credit union on February 20,
25 1990.
26 (8) To borrow money subject to the limitations set forth
27 in this title.
28 (9) To make, amend, alter and repeal bylaws not
29 inconsistent with law, for the regulation of its affairs and
30 the conduct and management of the credit union. Immediately
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1 upon the adoption of the bylaws, or any additions thereto, or
2 any alteration, amendment or repeal thereof, notice of such
3 fact and a copy of such bylaws or such alteration, amendment
4 or repeal, shall forthwith be sent to the department. The
5 department shall, within 60 days after receipt thereof, have
6 the power to disapprove, for any reasonable cause stated in
7 writing, any such bylaw or any such alteration, amendment or
8 repeal thereof, but the bylaw, alteration, amendment or
9 repeal shall be effective until the department disapproves it
10 and gives notice thereof to the credit union.
11 (10) To hold, purchase, mortgage, alter, improve and
12 sell such real property, and furniture and fixtures to be
13 used therein, as the purposes of the credit union require and
14 which the credit union occupies or intends to occupy for the
15 transaction of its business or partly so occupies and partly
16 leases to others, except that, without the prior written
17 approval of the department, the cost, at the time of
18 acquisition, of such real property and furniture and fixtures
19 therein shall not exceed in the aggregate 50% of the
20 unimpaired surplus and undivided earnings of the credit union
21 or 5% of its unimpaired capital up to $1,000,000, plus 3% of
22 its capital over $1,000,000, whichever is greater. Further a
23 credit union with the prior written approval of the
24 department shall generally have the power to sell any of its
25 assets and to purchase the assets of another credit union or
26 Federal credit union.
27 (11) To purchase group insurance at reasonable rates on
28 the lives of its members in an amount not to exceed the
29 respective shares balances of such members.
30 (12) To act as an issuing agent of the United States
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1 Treasury for the sale, issuance and redemption of United
2 States Savings Bonds to its members.
3 (13) To invest its funds in shares and become members of
4 any insured central-type credit union organized under the
5 laws of the United States or under the laws of this
6 Commonwealth in which such investments are specifically
7 authorized by the board of directors of the State credit
8 union making the investment.
9 (14) To receive payments on shares and deposits from
10 other credit unions and Federal credit unions. As used in
11 this paragraph, the term "deposit" means a type of time or
12 demand account in which the credit union incurs a debt to the
13 depositor.
14 (15) To receive payments on shares which may be issued
15 at varying dividend rates, share certificates which may be
16 issued at varying dividend rates and maturities and share
17 draft accounts from members or nonmember units of Federal,
18 state or local governments, including any officer, employee
19 or agent of the United States, any state or any political
20 subdivision thereof, or any territory or possession of the
21 United States having official custody of public funds and
22 lawfully investing such funds in a credit union.
23 (c) Southern Africa investments.--No funds of a credit union
24 shall be invested in any stock or obligation of any corporation
25 doing business, either by itself or through any subsidiary or
26 affiliate, in the Republic of South Africa or Namibia. This
27 prohibition shall have prospective effect from February 20,
28 1990, and shall not affect existing investments.
29 § 502. Powers of central or corporate credit unions.
30 (a) General rule.--A central or corporate credit union shall
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1 have the general power to enjoy the powers and privileges of any
2 other credit union incorporated under this title in addition to
3 those powers enumerated in this section, or otherwise granted to
4 corporate or central credit unions, regardless of any
5 limitations or restrictions found elsewhere in this title.
6 (b) Special powers.--A central or corporate credit union
7 shall have the following special powers to:
8 (1) Accept shares or deposits in any form from its
9 members, any credit union chartered under the laws of the
10 United States or of any state, including central or corporate
11 credit unions, and credit union organizations and
12 associations.
13 (2) Make loans to its members, any credit union
14 chartered under the laws of the United States or of any
15 state, including central or corporate credit unions, and
16 credit union organizations or associations.
17 (3) Buy and sell any form of marketable debt obligations
18 of domestic or foreign corporations or of Federal, state or
19 local government units.
20 (4) Borrow from any source without limitations, accept
21 demand deposits from any source and issue notes and
22 debentures.
23 (5) Acquire or sell the assets and assume the
24 liabilities of a member and to enter into agreements with any
25 credit union organized under the laws of the United States or
26 any state to discount or purchase loans made pursuant to
27 government guaranteed loan programs or real estate loans made
28 by any credit union or any obligations of the United States
29 or any agency thereof held by any credit union.
30 § 503. Regulation by Department of Banking.
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1 (a) General rule.--Credit unions shall be under the
2 supervision of the Department of Banking. The department is
3 hereby authorized and empowered to issue general rules and
4 regulations and specific orders for the protection of members of
5 credit unions, for insuring the conduct of the business of
6 credit unions on a safe and sound basis and for the effective
7 enforcement of this title. Credit unions shall report to the
8 department as often as may be required by it and at least
9 annually on blanks supplied by the department for that purpose.
10 Supplementary reports may be required by the department from
11 time to time. Credit unions shall be examined as often as may be
12 required by the department and at least annually, and the
13 department may use such other methods of assuring itself of the
14 condition of the credit unions as it shall deem advisable. The
15 cost of all such examinations and inspections shall be paid by
16 the credit union. A credit union shall also pay annually its
17 proportionate share of the overhead expense of the department
18 determined by regulation of the department. For failure to file
19 reports when due, unless excused for cause, a credit union shall
20 pay to the department $5 for each day of its delinquency.
21 (b) Suspension of personnel.--If, in the opinion of the
22 department, a director, officer or committee member of a credit
23 union has committed a violation of a statute, regulation or
24 cease and desist order which has become final or has engaged in
25 an unsafe or unsound practice involving the credit union or has
26 breached a fiduciary duty and if the department determines that
27 the credit union has suffered or will suffer substantial
28 financial loss or other damage or that the interests of its
29 members could be seriously prejudiced by reason of the
30 violation, practice or breach, the department may suspend the
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1 director, officer or committee member upon written notice,
2 pending a hearing to determine whether removal is required. The
3 notice shall contain a statement of the facts constituting
4 grounds for removal and shall indicate a time and place for a
5 hearing. The hearing shall be fixed for a date between 30 and 60
6 days from the date of service of notice, unless an earlier or
7 later date is set by the department at the request of the
8 director, officer or committee member.
9 (c) Seizure of credit union.--If the department determines
10 that a credit union is:
11 (1) violating any of the provisions of this title or any
12 rule or regulation of the department issued under and within
13 the authority of this title;
14 (2) conducting its business in an unsafe manner;
15 (3) in an unsafe and unsound condition to transact its
16 business; or
17 (4) insolvent;
18 the department may serve written notice of its intention to take
19 possession of the credit union. If the condition continues for a
20 period of 15 days after the giving of such notice, the
21 department may, in its discretion, take possession of the
22 business and property of the credit union and retain possession
23 until such time as the condition predicating such action is
24 remedied or until the affairs of the credit union are finally
25 liquidated. The department may take similar action if any report
26 is not filed within a period of 15 days after it is due. Any
27 person aggrieved by the action of the department in taking
28 possession of a credit union may appeal, whereupon the matter
29 shall be set down for hearing de novo.
30 (d) Exchange of reports of examination.--Whenever the shares
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1 of a credit union are insured by the National Credit Union Share
2 Insurance Fund or any other share insurance fund approved by the
3 department, the department is authorized to furnish to the
4 Administrator of the National Credit Union Administration or to
5 any other approved insurer any reports of examination made by
6 the department under this section. If a Pennsylvania credit
7 union conducts business in another state through the
8 establishment and operation of additional branch offices and
9 service facilities under section 904 (relating to place of
10 business), the department is authorized to furnish to the
11 financial regulatory agency of that state reports of examination
12 made by the department for the particular credit union.
13 § 504. Fiscal year.
14 The fiscal year of all credit unions shall end on December 31
15 of each year.
16 § 505. Capital and shares.
17 (a) General rule.--The capital of a credit union shall
18 consist of the payments that have been made to it on shares.
19 (b) Automatic lien.--The credit union shall have an
20 automatic lien on the shares of a member for any sum due it from
21 such member or for any loan endorsed by him.
22 (c) Share transfer restriction.--Shares of a credit union
23 shall be transferable only to other members of the credit union.
24 (d) Share insurance required.--The shares representing the
25 savings of members shall be insured in such amounts as provided
26 by the National Credit Union Administration or other share
27 insurance fund approved by the Department of Banking to insure
28 the shares of credit unions. A credit union that has not
29 obtained share account insurance from the National Credit Union
30 Administration or other share insurance fund approved by the
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1 department may not, without the prior written approval of the
2 department, accept payments from its members for the purchase of
3 shares.
4 § 506. Joint accounts.
5 (a) General rule.--Whenever shares of a credit union shall
6 be issued in the names of two or more persons, the credit union
7 shall not pay any dividends or earnings thereon, or the
8 repurchase value thereof, except upon proper receipt,
9 acquittance, or other action as the case may be, of all of such
10 persons, unless at the time of subscribing to the shares, or at
11 a subsequent time, all the parties agree to a different
12 arrangement, and give the credit union written notice thereof.
13 (b) Payments to less than all joint owners.--Whenever any
14 share accounts of a credit union shall be issued in the names of
15 two or more persons, and such share accounts shall have been
16 subscribed for under an arrangement with the credit union
17 whereby the dividends thereon, or the repurchase value thereof,
18 may be paid upon receipt, acquittance, or other action, as the
19 case may be, of either or any of such persons, the credit union
20 may pay such dividends or repurchase value upon such receipt,
21 acquittance, or other action, as the case may be, of either or
22 any of such persons, pursuant to the arrangement provided for in
23 this section, notwithstanding the fact that one or more of the
24 other persons may be dead and the credit union has notice
25 thereof.
26 (c) Revocation of agency.--The co-owner of a joint account
27 may, with consent of the credit union, give said credit union
28 written notice not to honor any or all requests for withdrawal
29 of shares of any other co-owner of the joint account.
30 (d) Spousal accounts.--This section, except subsection (c),
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1 shall not be construed to affect share accounts in the names of
2 a husband and his wife.
3 § 507. Minority and trust accounts.
4 (a) General rule.--Shares may be issued and payments on
5 subscribed shares received in the name of a minor, or in trust,
6 in such manner as the bylaws may provide.
7 (b) Transactions with minors.--Whenever shares of a credit
8 union shall be issued in the name of any minor 12 years of age
9 or older, the credit union may pay the dividends or earnings
10 thereon, as well as the withdrawal value of such shares, to such
11 minor, without the assent of his parent or guardian. The
12 receipt, acquittance, or other action required by the credit
13 union to be taken by the minor shall be binding upon such minor
14 with like effect as if such minor were of full age and shall be
15 a valid release to the credit union. The parent or guardian of
16 such minor shall not, in his capacity as parent or guardian,
17 have the power to attach, or in any manner transfer, any shares
18 issued to or in the name of such minor.
19 (c) Transactions with trustees.--Whenever shares of a credit
20 union shall be issued to any person describing himself in
21 subscribing for such shares as trustee for any person or
22 persons, and no other notice of the existence and terms of a
23 valid trust than such description shall have been given to the
24 credit union, the dividends or earnings on such shares, as well
25 as the withdrawal value of such shares, shall, in the event of
26 the death of the person so described as trustee, be paid to the
27 person or persons for whose benefit the shares were stated to
28 have been subscribed if, at the time of payment, such
29 beneficiary is 16 years of age or older. Payment may be made to
30 any such beneficiary who is 16 years of age or older, under the
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1 same conditions as if such shares had been originally subscribed
2 for by him. If there are two or more beneficiaries named on any
3 such shares, the credit union shall, in the absence of written
4 notice to the contrary, make payment to such of the
5 beneficiaries as may survive the trustee, in equal portions. The
6 receipt or acquittance of any such beneficiary or beneficiaries
7 for payments made in accordance with this section shall be a
8 full, complete and valid release of the credit union from any
9 further liability for the amounts so paid.
10 § 508. Estate accounts.
11 (a) General rule.--In the absence of a written agreement or
12 document to the contrary, the assets in the account of a
13 deceased member shall be considered part of the estate of the
14 deceased member. In the absence of such an agreement or document
15 and except for a release of such assets under existing law, the
16 credit union shall, upon learning of the death of the member,
17 freeze the assets in the account of the member, and shall not
18 permit deposits or withdrawals to be made in the account without
19 receiving authorization by a court-recognized representative of
20 the estate for deposits or withdrawals. Until the credit union
21 receives the authorization, it may, if its bylaws so provide,
22 close the account of the deceased member and transfer the funds
23 to unclaimed shares. The payment of the funds of the deceased
24 member to the estate of the deceased member shall release the
25 credit union from liability for the amounts paid.
26 (b) Establishment of account by personal representative.--A
27 court-recognized representative of the estate of a deceased
28 member may open an account with the credit union for the deposit
29 and withdrawal of the funds of the estate, whether or not the
30 representative is a member, if the deceased member was in good
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1 standing at the time of death. The payment of the funds of the
2 estate to the estate of the deceased member shall release the
3 credit union from liability for the amounts paid. If a court-
4 recognized representative of an estate is a member of the credit
5 union, the representative may open a separate account with the
6 credit union for the deposit and withdrawal of funds of the
7 estate, whether or not the decedent was a member of the credit
8 union. The payment of the funds of the estate to the estate
9 shall release the credit union from liability for the amounts
10 paid.
11 § 509. Entrance fees.
12 A credit union may charge an entrance fee of an amount, not
13 in excess of $1, as may be provided by the bylaws.
14 § 510. Loan interest, fees and penalties.
15 (a) General rule.--Interests rates on loans made by a credit
16 union to its members shall not exceed 15% per annum, when
17 calculated on the unpaid principal balances. Interest shall be
18 computed for the actual number of days which have elapsed at the
19 time of payment, except that interest for mortgage loans may be
20 paid according to a preauthorized amortization schedule.
21 (b) Procedure for increase in rates.--Before any credit
22 union shall charge any higher rate than that authorized in
23 subsection (a), it shall obtain approval for such higher rate
24 from at least two-thirds of the board of directors of the credit
25 union and such higher approved rate shall then apply only to
26 loans made by the credit union thereafter. Members shall be
27 notified in writing of the action of the board of directors not
28 later than the next regular mailing of members account
29 statements, which is at least 20 days subsequent to the action
30 of the board.
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1 (c) Closing and collection fees.--No other charges or fines
2 in connection with loans shall be collected other than fees to
3 public officials, actual fees necessary to secure collateral,
4 fees required to be charged by government agencies and
5 reasonable fees of attorneys and outside collectors or outside
6 collection agencies, if the aggregate of such collection fees
7 does not exceed 20% of the outstanding loan balance.
8 (d) Late payment charges.--A credit union may also collect
9 late payment charges not in excess of 5% of the principal and
10 interest due on any installment payment of a loan that is more
11 than 15 days delinquent.
12 (e) Penalty for overcharge.--The taking, receiving,
13 reserving or charging interest greater than allowed by this
14 section shall be deemed a forfeiture of the entire interest on
15 the loan, except when such overcharge is the result of a
16 clerical error in computation. In case an interest greater than
17 that which is allowed by this section has been paid, the
18 borrower may within six months after payment recover from the
19 credit union the entire amount of interest paid, except when
20 such overcharge is the result of a clerical error in computation
21 in which case only the excess interest paid may be recovered.
22 (f) Additional powers of certain insured credit unions.--A
23 credit union insured by a share insurance fund other than the
24 National Credit Union Share Insurance Fund may make any loan
25 authorized by this title, at such interest, finance charge, rate
26 and terms as a credit union insured by the National Credit Union
27 Share Insurance Fund, except that the authority permitted under
28 this subsection shall not apply to the extension of credit for
29 the purchase of goods and services through the issuance and use
30 of credit cards.
19900S1761B2459 - 352 -
1 § 511. Power to borrow.
2 (a) General rule.--A credit union may borrow from any source
3 a sum not exceeding 50% of its capital, surplus and undivided
4 earnings for the purpose of meeting the demand for loans to
5 members or for the purpose of meeting demands for share
6 withdrawals.
7 (b) Exception.--A credit union shall not borrow for the
8 purpose of making investments authorized by section 501(b)(7)
9 (relating to powers).
10 § 512. Loans.
11 Except as otherwise provided in this title, a credit union
12 may make loans to its members only. Loans must be made subject
13 to the conditions contained in the bylaws. A borrower may repay
14 his loan, in whole or in part, any day the office of the credit
15 union is open for business. No director, officer or member of
16 any committee may obtain a loan from the credit union in which
17 he holds office on terms, rates or conditions more favorable
18 than those granted to any other member or endorse a loan granted
19 by the credit union in which he holds office.
20 § 513. Reserves.
21 (a) General rule.--At the end of each accounting period the
22 gross income shall be determined. From this amount, there shall
23 be set aside, as a regular reserve against losses on loans and
24 against such other losses as may be specified by the Department
25 of Banking, sums in accordance with the following schedule:
26 (1) A credit union in operation for more than four years
27 and having assets of $500,000 or more shall set aside:
28 (i) 10% of gross income until the regular reserve
29 shall equal 4% of the total of outstanding loans and risk
30 assets; then
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1 (ii) 5% of gross income until the regular reserve
2 shall equal 6% of the total of outstanding loans and risk
3 assets.
4 (2) A credit union in operation less than four years or
5 having assets of less than $500,000 shall set aside:
6 (i) 10% of gross income until the regular reserve
7 shall equal 7.5% of the total of the outstanding loans
8 and risk assets; then
9 (ii) 5% of gross income until the regular reserve
10 shall equal 10% of the total of outstanding loans and
11 risk assets.
12 (3) Whenever the regular reserve falls below the stated
13 percentage of the total of outstanding loans and risk assets,
14 it shall be replenished by regular contributions in such
15 amounts as may be needed to maintain the stated reserve
16 goals.
17 (4) All entrance fees collected shall be set aside in
18 the regular reserve fund.
19 (5) The regular reserve fund thus established shall not
20 be loaned out to members and shall be deposited as authorized
21 in section 501(b)(6) (relating to powers) or invested in such
22 investments as are authorized by section 501(b)(7). The
23 regular reserve fund shall belong to the credit union and
24 shall not be distributed except in case of liquidation. The
25 board of directors shall decide the loans which are to be
26 charged off against the regular reserve fund, except that the
27 Department of Banking may at the time of examination of a
28 credit union recommend for charge-off such loans which in its
29 opinion are unsound, which loans shall be charged against the
30 regular reserve fund within 60 days of the receipt of such
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1 recommendation from the department. Any amount received from
2 the repayment of a loan after it has been charged off against
3 the regular reserve fund shall be credited back to the fund.
4 (6) The directors are authorized, after the required
5 reserve has been provided for, to make additional transfers
6 from undivided earnings to a contingent reserve for other
7 anticipated losses and expenses, but the members at the
8 annual meeting may retransfer any part or all of such
9 contingent reserve to the undivided earnings account.
10 (b) Changes in reserve requirement.--The department may
11 decrease the reserve requirement set forth in subsection (a)
12 when in its opinion such a decrease is necessary or desirable.
13 The department may also require special reserves to protect the
14 interests of members either by regulation or for an individual
15 credit union in any special case.
16 § 514. Dividends.
17 (a) General rule.--The board of directors of a credit union
18 or the members on recommendation of the board of directors,
19 whichever the bylaws provide, may declare dividends to be paid
20 on all shares and share certificates from the net earnings and
21 undivided earnings at such intervals and for such periods as the
22 board of directors may authorize and after provision for the
23 required reserves. Within the discretion of the board of
24 directors, payments on all shares which are made within the
25 first ten days of a month may be entitled to dividends for the
26 full month in which such payment is made. Dividends may be added
27 to the credit of the members share accounts, paid in cash, or
28 partially credited to share accounts and partially paid in cash,
29 at the option of the board of directors.
30 (b) Inactive accounts.--A share account may be transferred
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1 to a special account if, for at least six years, there has been
2 no activity by the owner of the account and all written
3 communications from the credit union to the owner of the account
4 have been returned to the credit union with no forwarding
5 address. After the transfer the credit union may cease paying
6 dividends on the transferred account and may cease sending
7 notices to the owner. A member whose account has been
8 transferred may reclaim the funds from the credit union at any
9 time prior to the time the account is escheated. After escheat
10 reclaiming is governed by Article XIII.1 of the act of April 9,
11 1929 (P.L.343, No.176), known as The Fiscal Code.
12 § 515. Rights and liabilities of terminating members.
13 All amounts paid on shares of an expelled or withdrawing
14 member, with any dividends accredited thereto to the date
15 thereof, shall, as funds become available and after deducting
16 all amounts due from the member to the credit union, be paid to
17 him. The credit union may require 60 days' notice of intention
18 to withdraw shares. Withdrawing or expelled members shall have
19 no further rights in the credit union, but they shall not by
20 such withdrawal or expulsion be released from any remaining
21 liability to the credit union.
22 § 516. Adverse claims.
23 (a) General rule.--Notice to a credit union or Federal
24 credit union of an adverse claim against shares standing in the
25 name of any member shall not be effectual to cause the credit
26 union or Federal credit union to recognize such adverse claim,
27 unless the adverse claimant shall procure either an attachment
28 or proper restraining order against the credit union or Federal
29 credit union from a court of competent jurisdiction in a cause
30 of action therein instituted by him, wherein the member or his
19900S1761B2459 - 356 -
1 legal representative is made a party in the manner provided by
2 law, or unless he shall execute to the credit union or Federal
3 credit union in form, and with sureties acceptable to it a bond
4 indemnifying the credit union or Federal credit union from any
5 liability, loss, damages, costs and expenses arising from the
6 recognition of such adverse claim.
7 (b) Exception.--This section shall not apply in any instance
8 where the person in whose name the shares are held is a trustee
9 for such adverse claimant, and the facts constituting such
10 relationship, as well as the facts showing reasonable cause of
11 belief on the part of the claimant that such trustee is about to
12 misappropriate the shares, are made to appear by verified
13 statement of such claimant.
14 § 517. Taxation.
15 A credit union incorporated under or subject to this title
16 shall be deemed an institution for savings, and its assets,
17 together with all the accumulation therein, shall not be subject
18 to taxation except as to real estate owned by it. The shares of
19 a credit union shall not be subject to a capital stock bonus tax
20 or a stock transfer tax when issued by the corporation.
21 CHAPTER 7
22 MEMBERS, DIRECTORS AND OFFICERS
23 Sec.
24 701. Membership.
25 702. Meetings.
26 703. Voting rights and procedures.
27 704. Notice to members.
28 705. Expulsion and withdrawal.
29 706. Election of directors and credit and supervisory
30 committee members.
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1 707. Duties of directors generally.
2 708. Officers.
3 709. Compensation of directors and officers.
4 710. Executive committee.
5 711. Procedures for approving service by certain persons.
6 712. Indemnification and exoneration from liability of
7 directors and officers.
8 713. Loan procedures.
9 714. Annual examination.
10 715. Actions by members to enforce a secondary right.
11 § 701. Membership.
12 (a) General rule.--Credit union organizations shall be
13 limited to groups having a potential membership of 200 or more
14 adult persons and having a common bond of association within a
15 well defined community or rural district by reason of occupation
16 or of membership in a religious congregation or fraternal or
17 labor organization or residence within a well defined community
18 or rural district. A credit union may also retain its original
19 field of membership and, additionally, include in its field of
20 membership other occupational groups, as well as like
21 associational groups having a common bond with the original
22 field of membership, with insufficient number of members to form
23 or conduct the affairs of a separate credit union, if the
24 existing credit union obtains prior permission from the
25 Department of Banking. The membership of a credit union shall be
26 limited to and consist of the incorporators of the credit union
27 and such other persons, having the common bond of association,
28 set forth in the articles of incorporation, as have been duly
29 admitted members, have paid the entrance fee as provided in the
30 bylaws and own and retain one or more shares. Organizations
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1 composed principally of the same group as the credit union
2 membership may be members. Employes of credit unions may be
3 members of such credit unions.
4 (b) Family members.--Persons who are members of the
5 immediate family of a member of the credit union may be elected
6 to membership.
7 (c) Trust and joint tenancy deposits.--Shares may be issued
8 in trust for or in joint tenancy with the right of survivorship
9 with any person designated by the credit union member, but no
10 joint tenant or beneficiary of a trust shall be permitted to
11 vote, obtain a loan, or hold office, unless he is within the
12 field of membership and is a qualified member in his own right.
13 (d) Continuation of membership.--Any member who leaves or
14 has left the field of membership and has not withdrawn all of
15 his share account shall not cease to be a member of the credit
16 union by reason thereof, and he shall have all of the rights and
17 obligations of membership including, but not limited to, the
18 right to retain and to add to his share account, and the right
19 to vote. Upon leaving the field of membership, the provisions of
20 this subsection shall apply to persons who have become members
21 of the credit union solely by reason of the provisions of
22 subsection (b), but the provisions of subsection (c) shall not
23 be affected by this subsection.
24 (e) Spouse of deceased member.--The unremarried widow or
25 widower of a deceased member may become a member of the credit
26 union.
27 § 702. Meetings.
28 The annual meeting shall be held at the time, place and in
29 the manner indicated in the bylaws. Special meetings may also be
30 held in the manner provided in the bylaws.
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1 § 703. Voting rights and procedures.
2 At all meetings a member shall have but one vote,
3 irrespective of his shareholdings. There shall be no voting by
4 proxy, but any member, other than a natural person, may cast its
5 vote through an agent duly delegated and appointed agent in
6 writing.
7 § 704. Notice to members.
8 (a) General rule.--All written notices required by this
9 title to be given to members shall be delivered in person to
10 each member or mailed to each member at the address for such
11 member appearing on the records of the credit union.
12 (b) Notice of changes in fees, charges or policies.--Each
13 new member to a credit union shall be provided with written
14 notice by the respective credit union listing any fees, service
15 charges or policies regarding the transfer of funds to
16 noninterest bearing accounts. A new member and each existing
17 member shall subsequently be provided with similar written
18 notice if there is a change by the credit union in the amount or
19 type of fees or service charges or a change in the policy
20 regarding the transfer of funds to noninterest bearing accounts.
21 The credit union shall also provide such information to any
22 member upon request by that member.
23 § 705. Expulsion and withdrawal.
24 (a) Expulsion.--A member may be expelled:
25 (1) by a vote of a majority of the members present at a
26 regular or a special meeting called to consider the matter,
27 at which a quorum, as provided in the bylaws, is present, but
28 only after a hearing after due notice to the member of the
29 time and place of the meeting and of the reason or reasons
30 for such proposed expulsion; or
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1 (2) by a vote of a two-thirds majority of the board of
2 directors present at a regular or special meeting called to
3 consider the matter if:
4 (i) the board has given the member notice of the
5 meeting and of the reason for proposed expulsion;
6 (ii) there is a quorum, as provided in the bylaws,
7 present at the meeting; and
8 (iii) there is a hearing on the matter at the
9 meeting.
10 (b) Withdrawal.--Any member may withdraw from the credit
11 union at any time, but notice of withdrawal may be required.
12 § 706. Election of directors and credit and supervisory
13 committee members.
14 (a) General rule.--At the organization meeting and at all
15 subsequent annual meetings, the credit union members shall elect
16 from the membership of the credit union a board of directors of
17 not less than five members, a credit committee of not less than
18 three members if the bylaws so provide, and a supervisory
19 committee of not less than three nor more than five members if
20 the bylaws so provide, all to hold office for such terms
21 respectively, as the bylaws provide and until successors are
22 duly qualified. A member shall not serve on more than one of the
23 committees. Not more than one member of the board, who shall not
24 be the treasurer or an assistant treasurer, may serve as a
25 member of the credit committee. A member of the board of
26 directors, treasurer or an assistant treasurer may not serve on
27 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
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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
19900S1761B2459 - 364 -
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
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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
19900S1761B2459 - 366 -
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
19900S1761B2459 - 367 -
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
19900S1761B2459 - 368 -
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, to which security the corporation shall have
27 recourse in such amount as the court having jurisdiction shall
28 determine upon the termination of the action. The amount of the
29 security may, from time to time, be increased or decreased in
30 the discretion of the court having jurisdiction of the action
19900S1761B2459 - 369 -
1 upon showing that the security provided has or may become
2 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
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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
19900S1761B2459 - 371 -
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 § 1101. Conversion into Federal credit union.
16 (a) General rule.--A credit union may be converted into a
17 Federal credit union by complying with the following
18 requirements:
19 (1) The proposition for such conversion shall first be
20 approved by a majority vote of the directors of the credit
21 union who shall also set a date for the vote thereon by the
22 members. The vote of the members shall be conducted at a
23 meeting held on such date or by written ballot to be filed on
24 or before such date. Written notice of the proposition and of
25 the date set for the vote shall be given each member not more
26 than 30 nor less than ten days prior to such date. Approval
27 of the proposition shall be by the affirmative vote of a
28 majority of the members, in person or in writing.
29 (2) A statement of the result of the vote, certified by
30 an officer of the credit union shall be filed with the
19900S1761B2459 - 372 -
1 Department of Banking within ten days after the vote is
2 taken.
3 (3) Promptly after the vote is taken and in no event
4 later than 90 days thereafter, if the proposition for
5 conversion was approved, the credit union shall take such
6 action as may be necessary under the applicable laws of the
7 United States to make it a Federal credit union, and within
8 ten days after receipt of the Federal credit union charter,
9 it shall file a copy of the charter thus issued with the
10 Department of State which shall furnish a copy thereof to the
11 Department of Banking. Upon such filing with the Department
12 of State, the credit union shall no longer be subject to any
13 of the provisions of this title. The successor Federal credit
14 union shall be vested with all of the assets and shall
15 continue to be responsible for all of the obligations of the
16 credit union thus converted to the same extent as though the
17 conversion had not taken place.
18 (b) Cross reference.--See 15 Pa.C.S. § 134 (relating to
19 docketing statement).
20 § 1102. Conversion from Federal credit union.
21 (a) General rule.--A Federal credit union may be converted
22 into a credit union subject to the provisions of this title by:
23 (1) Complying with all Federal requirements requisite to
24 enabling it to convert to a credit union or to cease being a
25 Federal credit union.
26 (2) Filing with the Department of Banking proof of
27 compliance with such Federal requirements in form
28 satisfactory to the department.
29 (3) Filing with the department articles of conversion
30 which shall set forth:
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1 (i) The proposed name of the converted credit union.
2 (ii) The exact location of the principal place of
3 business of the credit union into which the Federal
4 credit union plans to become converted.
5 (iii) The number, names and addresses of the persons
6 to be the first directors of the converted credit union.
7 (iv) All other statements required by this title to
8 be set forth in original articles of incorporation in the
9 case of the formation of a credit union in so far as such
10 information is applicable to a Federal credit union
11 proposing to become converted into a credit union.
12 (b) Department of Banking review.--Immediately upon the
13 receipt of the articles of conversion, the department shall
14 conduct such examination as may be deemed necessary to ascertain
15 from the best sources of information at its command:
16 (1) Whether the name of the proposed credit union
17 conforms with the requirements of law for the name of a
18 credit union, and whether it is the same as one already
19 adopted or reserved by another person, or is so similar
20 thereto that it is likely to mislead the public.
21 (2) Whether the conversion is made for legitimate
22 purposes.
23 (3) Whether the interests of members and creditors are
24 adequately protected.
25 (4) Whether the proposed credit union meets all of the
26 requirements of this title and violates none of its
27 prohibitions applicable to a credit union incorporated under
28 this title.
29 (5) Whether the Federal credit union has complied with
30 the requirements of the laws of the United States as they
19900S1761B2459 - 374 -
1 relate to the conversion of a Federal credit union into a
2 credit union.
3 Within 60 days after receipt of the articles of conversion, the
4 Department of Banking shall, upon the basis of the facts
5 disclosed by its investigation, either approve or disapprove
6 such articles.
7 (c) Approval action.--If the department approves the
8 articles, it shall register its approval thereon and shall
9 forward them to the Department of State for filing. Immediately
10 upon receipt of the approved articles of conversion, the
11 Department of State shall file the articles. The conversion
12 shall become effective immediately upon such filing and the
13 converted credit union shall have all the rights, privileges,
14 immunities and franchises of the Federal credit union, except
15 that it shall not thereafter acquire authority to engage in any
16 business or exercise any right which is forbidden to a credit
17 union when originally incorporated under this title.
18 (d) Disapproval action.--If the Department of Banking
19 disapproves the articles of conversion, it shall return them to
20 the Federal credit union desiring to become converted into a
21 credit union stating in detail its reasons for so doing.
22 (e) Cross reference.--See 15 Pa.C.S. § 134 (relating to
23 docketing statement).
24 § 1103. Merger and consolidation authorized.
25 (a) General rule.--A credit union subject to this title may
26 merge or consolidate with other credit unions, with Federal
27 credit unions, with out-of-State credit unions, or with a
28 combination of other credit unions, Federal credit unions and
29 out-of-State credit unions to form a credit union, Federal
30 credit union or out-of-State credit union.
19900S1761B2459 - 375 -
1 (b) Approvals and conditions.--Before merging or
2 consolidating, the credit unions involved must obtain prior
3 approval from the Department of Banking. In the case of a merger
4 or consolidation with a Federal credit union, the merger or
5 consolidation shall be made pursuant to Federal law in addition
6 to the provisions of this title. In the case of a merger or
7 consolidation with an out-of-State credit union, the merger or
8 consolidation shall be made pursuant to the credit union law of
9 the state of incorporation of the out-of-State credit union or,
10 if credit unions incorporated in different states are involved,
11 pursuant to the credit union laws of the various states of
12 incorporation of the out-of-State credit unions in addition to
13 the provisions of this title.
14 § 1104. Adoption of plan.
15 (a) General rule.--The board of directors of each of the
16 credit unions, Federal credit unions or out-of-State credit
17 unions which desire to merge or consolidate shall, by resolution
18 adopted by at least a majority of all the members of each board,
19 approve a plan of merger or consolidation setting forth the
20 terms and conditions of the merger or consolidation and the mode
21 of carrying the same into effect, the manner and basis of
22 converting the shares of each credit union, Federal credit union
23 or out-of-State credit union into shares or other securities or
24 obligations of the surviving or new credit union, Federal credit
25 union or out-of-State credit union, and such other details and
26 provisions as are deemed necessary. Except where the approval of
27 the members is not required, the board of directors shall direct
28 that the plan be submitted to a vote of the members of such
29 credit union, Federal credit union or out-of-State credit union
30 entitled to vote thereon at an annual or special meeting of the
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1 members to be held on not less than 15 days prior written notice
2 thereof given to each member of record, which notice shall state
3 the place, day, hour and purpose of the meeting and shall have,
4 included therein or enclosed therewith, a copy or summary of the
5 plan of merger or consolidation.
6 (b) Domestic approval.--The plan of merger or consolidation,
7 to form a surviving or new credit union, Federal credit union or
8 out-of-State credit union, shall be adopted upon receiving, if
9 the credit union is not the surviving institution, the
10 affirmative vote of at least a majority of the members voting
11 thereon or upon receiving, if the credit union is the surviving
12 institution, the affirmative vote of at least a majority of the
13 board of directors voting thereon.
14 (c) Federal or out-of-State approval.--The plan of merger or
15 consolidation shall be authorized, adopted or approved by each
16 of the merging or consolidating Federal credit unions and out-
17 of-State credit unions in accordance with applicable Federal or
18 State law.
19 § 1105. Articles of merger or consolidation.
20 (a) General rule.--Upon the adoption, pursuant to the
21 provisions of this chapter, of the plan of merger or
22 consolidation by the credit unions, Federal credit unions and
23 out-of-State credit unions desiring to merge or consolidate,
24 articles of merger or consolidation shall be executed by each
25 credit union, Federal credit union and out-of-State credit union
26 by a duly authorized officer of each credit union, Federal
27 credit union and out-of-State credit union, and shall set forth:
28 (1) The name and exact location of the principal place
29 of business of the surviving or new credit union, Federal
30 credit union or out-of-State credit union.
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1 (2) The time and place of the meeting of the board of
2 directors at which the plan of merger or consolidation was
3 proposed and, except where approval of the members is not
4 required, the time and place of the meeting of the members of
5 each credit union, Federal credit union and out-of-State
6 credit union at which the plan of merger or consolidation was
7 authorized, adopted or approved, the kind and period of
8 notice given to the members, and the total vote by which the
9 plan was authorized, adopted or approved.
10 (3) In the case of a merger into a surviving credit
11 union, any changes desired to be made in the articles of the
12 surviving credit union, or, in the case of a consolidation
13 into a new credit union, all of the statements required by
14 this title to be set forth in the original articles in the
15 case of the formation of a credit union.
16 (4) The number, names and addresses of the persons to be
17 the first directors of the surviving or new credit union,
18 Federal credit union or out-of-State credit union.
19 (5) The plan of merger or consolidation.
20 (b) Department of Banking review.--The articles of merger or
21 consolidation shall be filed with the Department of Banking
22 which, immediately upon receipt thereof, shall conduct such
23 investigation as may be deemed necessary to ascertain from the
24 best sources at its command:
25 (1) Whether, if the articles are articles of
26 consolidation, the name of the proposed new credit union,
27 Federal credit union or out-of-State credit union conforms
28 with the requirements of law for the name of a credit union,
29 and whether it is the same as one already adopted or reserved
30 by another corporation or person, or is so similar thereto
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1 that it is likely to mislead the public.
2 (2) Whether, if the merger or consolidation includes one
3 or more Federal credit unions, all requirements of the laws
4 of the United States pertaining thereto have been complied
5 with.
6 (3) Whether the interests of members and creditors are
7 adequately protected.
8 (4) Whether the credit unions including the surviving or
9 new credit union, have met all of the requirements of this
10 title and have violated none of its prohibitions applicable
11 to a credit union incorporated under this title.
12 (5) Whether, if the merger or consolidation includes an
13 out-of-State credit union, there is compliance with the
14 applicable requirements of the law of the state of
15 incorporation of the out-of-State credit union.
16 Within 60 days after receipt of the articles of merger or
17 consolidation, the Department of Banking shall, upon the basis
18 of the facts disclosed by its investigation, either approve or
19 disapprove such articles.
20 (c) Approval action.--If the department approves the
21 articles, it shall register its approval thereon and shall
22 forthwith forward them to the Department of State for filing;
23 and immediately upon receipt thereof, the Department of State
24 shall file the articles.
25 (d) Effect of merger or consolidation.--The merger or
26 consolidation shall become effective immediately upon such
27 filing and the surviving or new credit union, Federal credit
28 union or out-of-State credit union shall be vested with all the
29 assets and shall have all the rights, privileges, immunities and
30 franchises and shall be responsible for all the obligations of
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1 the merging or consolidating credit unions, Federal credit
2 unions and out-of-State credit unions; but otherwise, if such
3 surviving or new credit union shall be a Federal credit union or
4 an out-of-State credit union, upon such filing by the Department
5 of State, the surviving or new Federal credit union or out-of-
6 State credit union shall no longer be subject to the provisions
7 of this title other than, in the case of an out-of-State credit
8 union, Chapter 15 (relating to out-of-State credit unions).
9 (e) Disapproval action.--If the Department of Banking shall
10 disapprove the articles, it shall return them to the credit
11 union, Federal credit union or out-of-State credit union from
12 which they were received, stating the reasons for such
13 disapproval.
14 (f) Cross reference.--See 15 Pa.C.S. § 134 (relating to
15 docketing statement).
16 CHAPTER 13
17 DISSOLUTION
18 Sec.
19 1301. Dissolution authorized.
20 1302. Approval of voluntary dissolution.
21 1303. Dissolution proceedings.
22 1304. Department of Banking supervision.
23 § 1301. Dissolution authorized.
24 Any credit union may elect to dissolve voluntarily and wind
25 up its affairs in the manner provided in this chapter. However,
26 if it shall appear to the Department of Banking, upon an
27 examination of the business, assets and affairs of the credit
28 union, that its assets will probably be insufficient to pay in
29 full its members and creditors, it shall take possession of the
30 business and property of the credit union and retain possession
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1 until its affairs are finally liquidated.
2 § 1302. Approval of voluntary dissolution.
3 (a) General rule.--The procedure for voluntary dissolution
4 shall be as follows:
5 (1) A plan of dissolution, setting forth in detail the
6 number of liquidating trustees, which shall be one, three or
7 five, to be elected by the members, the amount of the bond
8 which shall be supplied by each of the liquidating trustees,
9 and the powers, duties and compensation of such trustees,
10 shall be adopted by a vote of at least two-thirds of all
11 directors of the credit union.
12 (2) A meeting of the membership shall be called for the
13 purpose of acting on the plan of dissolution. Written notice
14 setting forth the date and purpose of such meeting shall be
15 furnished each member at least ten days prior to the date of
16 the meeting. The plan of dissolution shall be adopted upon
17 the affirmative vote of a majority of the entire membership
18 of the credit union in person or by written ballot.
19 (3) Upon approval of the plan, the members shall
20 forthwith proceed to elect the number of liquidating trustees
21 provided for in the plan of dissolution. If more than one
22 liquidating trustee is to be elected, each member shall have
23 the right to multiply his vote by the number of trustees to
24 be elected and cast the whole number of such votes for one
25 candidate or distribute them among two or more candidates.
26 The candidates receiving the highest number of votes up to
27 the number of liquidating trustees to be chosen shall be
28 elected.
29 (4) A certificate of election to dissolve signed by a
30 duly authorized officer of the credit union shall be executed
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1 and delivered to the Department of Banking. The certificate
2 shall set forth:
3 (i) The name of the credit union.
4 (ii) The exact location of its place of business.
5 (iii) The names and addresses of its officers and
6 directors.
7 (iv) The number of directors voting for, and the
8 number voting against, the proposed plan of voluntary
9 dissolution.
10 (v) The total number of members and the number of
11 members voting for, and the number voting against, the
12 proposed plan of voluntary dissolution.
13 (vi) The names and addresses of the proposed
14 liquidating trustees and the number of votes received by
15 every candidate for the position of liquidating trustee.
16 (vii) The amount of the bond required to be supplied
17 by each trustee.
18 (viii) A verified statement by each of the proposed
19 liquidating trustees stating that he is willing to serve
20 as liquidating trustee, subject to the provisions of this
21 chapter and to the terms of the proposed plan of
22 voluntary dissolution, that he will, so far as the duty
23 devolves upon him, diligently and honestly liquidate the
24 affairs of the credit union, and will not knowingly
25 violate or permit to be violated any of the provisions of
26 this chapter or of the proposed plan of voluntary
27 liquidation.
28 (ix) The proposed plan of voluntary dissolution.
29 (b) Department of Banking review.--Upon receipt of the
30 certificate of election to dissolve, the Department of Banking
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1 shall conduct an examination or an investigation, or take such
2 other action as it deems necessary, to determine whether to
3 approve the plan of voluntary dissolution. If the department
4 determines that the plan of voluntary dissolution does not
5 prejudice the interests of members or creditors, it shall
6 endorse its approval on the certificate of election to dissolve
7 and send it to the Department of State for filing. If the
8 Department of Banking disapproves the plan, it shall return the
9 certificate to the credit union stating in detail its reasons
10 for doing so.
11 (c) Effect of filing certificate.--Upon the filing by the
12 Department of State of the certificate of election to dissolve,
13 the Department of State shall furnish a copy thereof to the
14 Department of Banking and the credit union. Upon such filing,
15 the credit union shall cease to transact its business and the
16 liquidating trustee or trustees shall commence the liquidation
17 of the credit union. The liquidating trustee or trustees shall
18 thereafter be authorized to carry out, in his own name or in
19 their own names as liquidating trustee or trustees of the credit
20 union, the powers granted to him or them by the plan of
21 voluntary dissolution and may sue and be sued for the purpose of
22 determining and enforcing the debts due the credit union and its
23 obligations.
24 (d) Cross reference.--See 15 Pa.C.S. § 134 (relating to
25 docketing statement).
26 § 1303. Dissolution proceedings.
27 (a) Collection and distribution of assets.--The liquidating
28 trustee or trustees shall proceed in the manner provided by the
29 Department of Banking to gather the assets, determine the
30 liabilities, and distribute the assets of the credit union until
19900S1761B2459 - 383 -
1 its affairs are fully adjusted and wound up. Under this section
2 the department shall set forth the order of the distribution of
3 the assets. The provisions of this section on distribution of
4 assets apply whether the dissolution is voluntary or
5 involuntary.
6 (b) Proof of claims.--The liquidating trustee or trustees
7 shall notify all creditors and members appearing on the records
8 of the association, by notice sent to or given at the address
9 appearing for such creditor or member on the records or, if no
10 address appears there, at the last known address of the creditor
11 or member, of the amount which the records show to be due such
12 member or creditor. The liquidating trustee or trustees shall
13 also advertise, for three successive weeks in a newspaper of
14 general circulation and in a legal newspaper, if any, in the
15 county in which the credit union is located, that the credit
16 union is liquidating pursuant to a plan of voluntary
17 liquidation. The advertisement shall set forth a date not less
18 than 90 days after the date of the first published advertisement
19 before which all creditors or members must present their claims,
20 under oath or affirmation, to the trustee or trustees or be
21 bound by the amount shown on the records of the credit union to
22 be due them. Thereafter all claims shall be permanently barred.
23 (c) Limitation period.--Any claim which is rejected or
24 disallowed by the trustee or trustees shall be barred unless an
25 action is brought thereon within 90 days after mailing of the
26 notice of rejection or disallowance.
27 § 1304. Department of Banking supervision.
28 The Department of Banking shall continue to supervise the
29 credit union, in the hands of the liquidating trustee or
30 trustees, until the liquidation is complete and the affairs of
19900S1761B2459 - 384 -
1 the credit union are fully settled.
2 § 1305. Articles of dissolution.
3 (a) General rule.--When in the opinion of the Department of
4 Banking the liquidation of a credit union is complete and its
5 affairs are fully settled, the Department of Banking shall
6 execute and file in the Department of State articles of
7 dissolution, which shall set forth:
8 (1) The name of the credit union.
9 (2) The statute under which the credit union was
10 incorporated and the date of incorporation.
11 (3) A statement that the liquidation of the credit union
12 is complete and its affairs are fully settled.
13 (b) Filing procedures.--A certificate or statement provided
14 for by 15 Pa.C.S. § 139 (relating to tax clearance of certain
15 fundamental transactions) shall not be required and the
16 Department of State shall not charge a fee in connection with
17 the filing of articles of dissolution under this section. See 15
18 Pa.C.S. § 134 (relating to docketing statement).
19 (c) Effect.--Upon the filing of the articles of dissolution
20 in the Department of State, the existence of the credit union
21 shall cease.
22 CHAPTER 15
23 OUT-OF-STATE CREDIT UNIONS
24 Sec.
25 1501. Authorization to do business.
26 1502. Covenants by applicant.
27 1503. Supervision by Department of Banking.
28 1504. Revocation of authorization to do business.
29 § 1501. Authorization to do business.
30 (a) General rule.--A credit union organized in another state
19900S1761B2459 - 385 -
1 may conduct business as a credit union in this Commonwealth with
2 the approval of the Department of Banking as long as a credit
3 union chartered under the laws of this Commonwealth is permitted
4 to do business in the state in which the credit union is
5 organized.
6 (b) Findings.--To grant approval the department must find
7 that the out-of-State credit union:
8 (1) Is a credit union organized under a statute similar
9 to this title.
10 (2) Is financially solvent.
11 (3) Has required account insurance acceptable to the
12 department.
13 (4) Is effectively examined and supervised by the
14 regulatory authority of the state in which it is organized.
15 (5) Needs to conduct business in this Commonwealth to
16 adequately serve its members in this Commonwealth.
17 § 1502. Covenants by applicant.
18 To conduct business in this Commonwealth, an out-of-State
19 credit union must agree to:
20 (1) Grant loans at rates not higher than those permitted
21 for credit unions incorporated under this title.
22 (2) Comply with the same consumer protection provisions
23 that apply to credit unions incorporated under this title.
24 (3) Accept service of process as contemplated by 42
25 Pa.C.S. § 5301(a)(2)(i) (relating to persons).
26 § 1503. Supervision by Department of Banking.
27 (a) General rule.--The Department of Banking may examine an
28 out-of-State credit union:
29 (1) to the same extent that a Pennsylvania credit union
30 is examined by the regulatory agency with jurisdiction over
19900S1761B2459 - 386 -
1 credit unions in the state in which the out-of-State credit
2 union is incorporated; or
3 (2) pursuant to an agreement between the department and
4 the regulatory agency with jurisdiction over credit unions in
5 the state in which the out-of-State credit union is
6 incorporated.
7 (b) Reports of other examinations.--The department may
8 require, as a condition for permitting an out-of-State credit
9 union to operate or to continue to operate in this Commonwealth,
10 that the regulatory agency with jurisdiction over the out-of-
11 State credit union furnish reports of examination regarding the
12 out-of-State credit union to the department.
13 § 1504. Revocation of authorization to do business.
14 The Department of Banking may revoke the approval of an out-
15 of-State credit union to conduct business as a credit union in
16 this Commonwealth if the department makes any of the following
17 findings:
18 (1) The out-of-State credit union no longer meets the
19 requirements of section 1501 (relating to authorization to do
20 business).
21 (2) The out-of-State credit union has violated
22 Pennsylvania statutes or regulations or orders of the
23 department.
24 (3) The out-of-State credit union has engaged in a
25 pattern of unsafe or unsound credit union practices.
26 (4) Continued operation by the out-of-State credit union
27 is likely to have a substantially adverse impact on the
28 financial, economic or other interests of residents of this
29 Commonwealth served by the out-of-State credit union.
30 Section 303. Amendment of Title 20.
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1 Sections 726 and 727 of Title 20 are amended to read:
2 § 726. Venue of nonprofit corporations.
3 Except as otherwise [specifically provided in Part III of
4 Title 15 (relating to corporations not-for-profit)] prescribed
5 by general rules, in exercising the jurisdiction [conferred upon
6 orphans' court divisions by rules of judicial administration] of
7 the court over the property or affairs of a [nonprofit] domestic
8 or foreign nonprofit corporation, the venue shall be in the
9 county where the registered office of the corporation is located
10 or deemed to be located for venue purposes or, in the absence of
11 a registered office within this Commonwealth, in a county where
12 any property held or controlled by the nonprofit corporation is
13 located.
14 § 727. Venue of cemetery companies.
15 Except as otherwise [specifically] provided in [Part III of]
16 Title [15] 9 (relating to [corporations not-for-profit)] burial
17 grounds) or prescribed by general rules, in exercising the
18 jurisdiction [conferred upon orphans' court divisions by rules
19 of judicial administration] of the court over the property or
20 affairs of a domestic or foreign cemetery company in matters
21 relating to burial grounds or to property held for the burial of
22 the dead or for the care or adornment of burial grounds, the
23 venue shall be in the county where the burial ground, or any
24 part thereof is located or, in the absence of any involved
25 burial grounds within this Commonwealth, in a county where any
26 property held or controlled by the cemetery company is located.
27 Section 304. Amendment of Title 22.
28 Section 501(a) of Title 22 is amended to read:
29 § 501. Appointment by nonprofit corporations.
30 (a) Appointment authorized.--Any nonprofit corporation, as
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1 defined in [Part III of Title] 15 Pa.C.S. Pt.II Subpt. C
2 (relating to nonprofit corporations [not-for-profit])
3 maintaining a cemetery or any buildings or grounds open to the
4 public, or organized for the prevention of cruelty to children
5 or aged persons or animals, or one or more of such purposes, may
6 apply to the court of common pleas of the county of the
7 registered office of the corporation for the appointment of such
8 persons as the corporation may designate to act as policemen for
9 the corporation. The court, upon such application, may by order
10 [and decree] appoint such persons, or as many of them as it may
11 deem proper and necessary, to be such policemen.
12 * * *
13 Section 305. Amendment of Title 24.
14 Title 24 is amended by adding parts to read:
15 PART I
16 PRELIMINARY PROVISIONS
17 Chapter
18 1. General Provisions
19 CHAPTER 1
20 GENERAL PROVISIONS
21 Sec.
22 102. Definitions.
23 § 102. Definitions.
24 Subject to additional definitions contained in subsequent
25 provisions of this title which are applicable to specific
26 provisions of this title, the following words and phrases when
27 used in this title shall have the meanings given to them in this
28 section unless the context clearly indicates otherwise:
29 "Certificate of authority." An instrument in writing issued
30 by the department authorizing a person to engage in this
19900S1761B2459 - 389 -
1 Commonwealth in the business or occupation specified in the
2 instrument.
3 "Department." The Department of Education of the
4 Commonwealth.
5 "State board." The State Board of Education of the
6 Commonwealth.
7 PART III
8 HIGHER EDUCATION
9 Chapter
10 65. Private Colleges, Universities and Seminaries
11 CHAPTER 65
12 PRIVATE COLLEGES, UNIVERSITIES AND SEMINARIES
13 Sec.
14 6501. Applicability of chapter.
15 6502. State board to prescribe standards.
16 6503. Certification of institutions.
17 6504. Fundamental changes.
18 6505. Power to confer degrees.
19 6506. Visitation of institutions and revocation of authority.
20 6507. Institution names to be approved by department.
21 6508. Restraining use of term "college," "university" or
22 "seminary."
23 6509. Penalty for violation of chapter.
24 § 6501. Applicability of chapter.
25 (a) General rule.--This chapter applies to, and the word
26 "institution" in this chapter means, any institution which
27 applies to itself, either as part of its name or in any other
28 manner, the designation of "college," "university" or "seminary"
29 in such a way as to give the impression that it is an
30 educational institution conforming to the standards and
19900S1761B2459 - 390 -
1 qualifications prescribed by the State board. Nothing is this
2 chapter shall be construed to expand the powers of the State
3 board with respect to any institution heretofore existing.
4 (b) Exceptions.--Notwithstanding subsection (a), this
5 chapter does not apply to any:
6 (1) Incorporated or unincorporated theological seminary
7 without power to confer degrees.
8 (2) Public instrumentality subject to the policy
9 supervision and direction of the State board.
10 § 6502. State board to prescribe standards.
11 (a) General rule.--The State board shall prescribe standards
12 and qualifications for all institutions entitled to apply to
13 themselves the designation of "college," "university" or
14 "seminary."
15 (b) Minimum standards.--No institution shall be authorized
16 to confer degrees in the arts, pure and applied science,
17 philosophy, literature, law, medicine and theology, or any of
18 them, unless it has:
19 (1) A minimum protective endowment of at least $500,000,
20 beyond all indebtedness and assets invested in buildings and
21 apparatus for the exclusive purpose of promoting instruction,
22 except that, in the case of tax-supported institutions or
23 those maintained by religious or other eleemosynary
24 organizations, financial support or contributed services
25 equivalent in value to the endowment herein specified may be
26 substituted for such endowment.
27 (2) A faculty consisting of at least eight regular
28 professors who devote all their time to the instruction of
29 its higher education classes, unless the institution is
30 devoted to a specific subject in the arts, archaeology,
19900S1761B2459 - 391 -
1 literature or science (medical and law schools excepted), in
2 which case the faculty shall consist of at least three
3 regular professors who devote all their time to the
4 instruction in the special branch for which the institution
5 is established, and two or more instructors or fellows in the
6 particular branch, who shall be provided to assist in the
7 instruction to be given the students for the promotion of
8 original investigation and in the development and growth of
9 the special branch of science to which such institution may
10 be devoted.
11 § 6503. Certification of institutions.
12 (a) General rule.--No person shall apply to itself, either
13 as part of its name or in any other manner, the designation of
14 "college," "university" or "seminary" in such a way as to give
15 the impression that it is an educational institution conforming
16 to the standards and qualifications prescribed by the State
17 board unless it shall have received from the department a
18 certificate of authority authorizing the institution to use such
19 designation, and, if the institution is authorized to confer
20 degrees, specifying the degrees which the institution is
21 authorized to confer.
22 (b) Exemptions.--Subsection (a) does not apply to:
23 (1) Any:
24 (i) Nonprofit corporation incorporated with the
25 approval of the department or the former Department of
26 Public Instruction under the former provisions of
27 sections 211 and 312 of the Nonprofit Corporation Law of
28 1933, or otherwise incorporated with the power to confer
29 degrees under corresponding provisions of prior law.
30 (ii) Foreign nonprofit corporation that received a
19900S1761B2459 - 392 -
1 certificate of authority as a qualified foreign
2 corporation from the Department of State with the
3 approval of the department or the former Department of
4 Public Instruction under the former provisions of section
5 902(4) of the Nonprofit Corporation Law of 1933, or
6 otherwise admitted to do business with the power to
7 confer degrees under corresponding provisions of prior
8 law.
9 For the purposes of this chapter, such a corporation shall be
10 deemed to be a holder of a certificate of authority issued
11 under this section authorizing the conferring of those
12 degrees that the institution was authorized by law to confer
13 immediately prior to the effective date of this chapter.
14 (2) Any corporation incorporated prior to September 1,
15 1937, the corporate name of which, or any unincorporated
16 person then conducting any educational institution, the trade
17 or fictitious name of which, included the designation
18 "college" or "university."
19 (c) Form of application.--Every application for a
20 certificate of authority under this section shall be made to the
21 department in writing and shall be in such form and contain such
22 information as the regulations of the department may require.
23 (d) Standards for issuance of certificate.--A certificate of
24 authority shall be issued by order of the department only if and
25 when the department finds and determines that:
26 (1) The application complies with the provisions of this
27 chapter, the regulations of the department thereunder, and
28 the standards and qualifications for institutions prescribed
29 by the State board thereunder.
30 (2) The courses of instruction, the standards of
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1 admission to the institution and the composition of the
2 faculty appear to be sufficient and to conform to the
3 requirements of this chapter.
4 (3) The educational needs of the particular locality in
5 which the institution is to be situated and of the
6 Commonwealth at large are likely to be furthered by the
7 granting of the application.
8 (e) Procedure.--For the purpose of enabling the department
9 to make the finding or determination required by subsection (d),
10 the department shall, by publication of notice in the
11 Pennsylvania Bulletin, afford reasonable opportunity for
12 hearing, which shall be public, and, before or after any such
13 hearing, it may make such inquiries, audits and investigations,
14 and may require the submission of such supplemental studies and
15 information, as it may deem necessary or proper to enable it to
16 reach a finding or determination. The department, in issuing a
17 certificate of authority, may impose such conditions as it may
18 deem to be just and reasonable. In every case the department
19 shall make a finding or determination in writing, stating
20 whether or not the application has been approved, and, if it has
21 been approved in part only, specifying the part which has been
22 approved and the part which has been denied. Any holder of a
23 certificate of authority, exercising the authority conferred
24 thereby, shall be deemed to have waived any and all objections
25 to the terms and conditions of such certificate.
26 (f) Judicial review.--Orders of the department upon an
27 application for a certificate of authority under this section
28 shall be subject to judicial review in the manner and within the
29 time provided or prescribed by law.
30 § 6504. Fundamental changes.
19900S1761B2459 - 394 -
1 (a) General rule.--It is unlawful for any institution
2 holding a certificate of authority under this chapter
3 authorizing the conferring of degrees to amend its articles of
4 incorporation, to merge or consolidate with any other
5 corporation or to divide or convert without first securing the
6 approval of the department with respect thereto.
7 (b) Form of application.--Every application for approval of
8 a fundamental change under this section shall be made to the
9 department in writing and shall be in such form and shall
10 contain such information as the department shall require.
11 (c) Standards for approval.--The amendment of articles,
12 merger, consolidation, division or conversion shall be approved
13 by order of the department only if and when the department finds
14 and determines that such fundamental change conforms to law,
15 including the regulations of the department under this chapter,
16 and the standards and qualifications for institutions prescribed
17 by the State board thereunder, and will result in an institution
18 which, under the then current provisions of this chapter and
19 standards and qualifications for institutions of the State board
20 thereunder, would be eligible to receive a certificate of
21 authority as an institution.
22 (d) Procedure.--The proceedings before the department shall
23 be subject to the provisions of section 6503(e) (relating to
24 procedure).
25 (e) Judicial review.--Orders of the department upon an
26 application for approval under this section shall be subject to
27 judicial review in the manner and within the time provided or
28 prescribed by law.
29 § 6505. Power to confer degrees.
30 A nonprofit corporation as defined in Title 15 (relating to
19900S1761B2459 - 395 -
1 corporations and unincorporated associations) which receives a
2 certificate of authority under this chapter authorizing the
3 conferring of degrees may confer baccalaureate degrees in the
4 arts, science, philosophy or literature, but only upon students
5 who have completed a college or university course normally
6 covering four years, or such other degrees at the associate,
7 baccalaureate or advanced level as may be specified in the
8 certificate of authority. The qualifications of admission to
9 these four-year courses, or to advanced classes in these
10 courses, shall be not less than four years of academic or high
11 school preparation, or its equivalent, and shall be subject to
12 the standards promulgated by the State board.
13 § 6506. Visitation of institutions and revocation of authority.
14 (a) General rule.--Any institution holding a certificate of
15 authority under this chapter authorizing the conferring of
16 degrees shall be subject to visitation and inspection by
17 representatives of the department. If any such institution shall
18 fail to maintain the standards and qualifications prescribed by
19 the State board under this chapter the department may, after
20 notice to the institution and opportunity for hearing, suspend
21 or revoke the certificate of authority of the institution.
22 (b) Judicial review.--Orders of the department in any
23 proceeding relating to the suspension or revocation of a
24 certificate of authority of an institution under this section
25 shall be subject to judicial review in the manner and within the
26 time provided or prescribed by law.
27 § 6507. Institution names to be approved by department.
28 The Department of State shall not approve any corporate name
29 or register any assumed or fictitious or other name including
30 the words "college," "university" or "seminary" used in such a
19900S1761B2459 - 396 -
1 way as to give the impression that the proprietor of such name
2 is an educational institution conforming to the standards and
3 qualifications prescribed by the State board, unless the
4 application for incorporation, qualification or change of name
5 or the application for registration is accompanied by a
6 certificate from the department that the corporation or proposed
7 corporation or the person or persons applying for registration
8 are entitled to use such designation.
9 § 6508. Restraining use of term "college," "university" or
10 "seminary."
11 Upon the application of the Attorney General, any court
12 having jurisdiction shall, in a proper case where a violation of
13 this chapter is shown, grant an injunction restraining the use
14 of the designation of "college," "university" or "seminary."
15 § 6509. Penalty for violation of chapter.
16 A person who violates this chapter commits a summary offense.
17 Section 306. Amendment of Title 42.
18 (a) Subchapter F of Chapter 83 of Title 42, including any
19 amendments enacted by the present General Assembly, is repealed.
20 (b) Title 42 is amended by adding a section to read:
21 § 8332.5. Corporate representatives.
22 (a) General rule.--The liability of an individual shall be
23 limited to the extent expressly provided by or pursuant to Title
24 15 (relating to corporations and unincorporated associations).
25 See 15 Pa.C.S. Ch. 5 Subch. B (relating to fiduciary duty and
26 indemnification), Ch. 17 Subch. B (relating to fiduciary duty)
27 and Ch. 57 Subch. B (relating to fiduciary duty).
28 (b) Certain governmental corporations.--An individual who is
29 a director, officer or employee of a governmental corporation
30 and who is not entitled to immunity under Chapter 85 (relating
19900S1761B2459 - 397 -
1 to matters affecting government units) may assert any applicable
2 immunity under 15 Pa.C.S. Ch. 57 Subch. B (relating to fiduciary
3 duty) to the same extent as if the governmental corporation were
4 a nonprofit corporation which had elected the maximum immunity
5 available under such subchapter.
6 Section 307. Amendment of Title 54.
7 Section 311(f) of Title 54 is amended to read:
8 § 311. Registration.
9 * * *
10 (f) Required approvals.--The fictitious name shall not
11 contain:
12 (1) The words "college," "university" or "seminary" when
13 used in such a way as to imply that the entity is an
14 educational institution conforming to the standards and
15 qualifications prescribed by the State Board of Education
16 unless there is submitted a certificate from the Department
17 of Education certifying that the entity is entitled to use
18 such designation.
19 (2) The words "engineer" or "engineering" or "surveyor"
20 or "surveying" or any other word implying that any form of
21 the practice of engineering or surveying, as defined in the
22 act of May 23, 1945 (P.L.913, No.367), known as the
23 ["]Professional Engineers Registration Law,["] is provided
24 unless at least one of the parties to the registration has
25 been properly registered with the State Registration Board
26 for Professional Engineers and there is submitted to the
27 department a certificate from the board to that effect.
28 (3) The words "bank," "banking," "banker" or "trust" or
29 any other word implying that the entity is a bank, bank and
30 trust company, savings bank, private bank or trust company,
19900S1761B2459 - 398 -
1 as defined in the act of November 30, 1965 (P.L.847, No.356),
2 known as the ["]Banking Code of 1965,["] unless approved by
3 the Department of Banking.
4 (4) The word "cooperative" or any abbreviation thereof
5 unless it is subject to 15 Pa.C.S. Pt. II Subpt. D (relating
6 to cooperative corporations) [or a statute thereby saved from
7 repeal].
8 (5) The words "architect" or "architecture" or any other
9 word implying that any form of the practice of architecture
10 as defined in the act of December 14, 1982 (P.L.1227,
11 No.281), known as the Architects Licensure Law, is provided
12 unless at least one of the parties to the registration has
13 been properly registered with the Architects Licensure Board
14 in the practice of architecture and there is submitted to the
15 department a certificate from the board to that effect.
16 (6) The words "credit union" or any other words implying
17 that the entity is a credit union as defined in 17 Pa.C.S. §
18 102 (relating to application of title), unless approved by
19 the Department of Banking.
20 (7) Any word or phrase not permitted by law to be filed
21 under this chapter without governmental consent unless there
22 is submitted to the department written evidence of such
23 consent.
24 * * *
25 Section 308. Amendment of Title 69.
26 The heading of Title 69 is amended to read:
27 TITLE 69
28 [SAVING AND VALIDATING PROVISIONS]
29 SAVINGS ASSOCIATIONS
30 Section 309. Conforming cross references in unconsolidated
19900S1761B2459 - 399 -
1 statutes.
2 (a) Insurance Company Law.--References in the following act
3 enacted prior to July 1, 1971 (see 1 Pa.C.S. § 1937 (relating to
4 references to statutes and regulations)), to section 337.5 of
5 the act of May 17, 1921 (P.L.682, No.284), known as The
6 Insurance Company Law of 1921, shall be deemed to be a reference
7 to section 205 of this act and 15 Pa.C.S. § 1924(b)(1)(ii) and
8 such act is repealed to the extent inconsistent with this
9 subsection: section 337.6 of the act of May 17, 1921 (P.L.682,
10 No.284), known as The Insurance Company Law of 1921.
11 (b) Professional Association Act.--References in the
12 following act enacted prior to July 1, 1971 (see 1 Pa.C.S. §
13 1937 (relating to references to statutes and regulations)), to
14 the act of August 7, 1961 (P.L.941, No.416), known as the
15 Professional Association Act, shall be deemed to be a reference
16 to 15 Pa.C.S. Ch. 93 (relating to professional associations) and
17 such act is repealed to the extent inconsistent with this
18 subsection: sections 2, 8.4 and 8.6 of the act of May 26, 1947
19 (P.L.318, No.140), known as The C.P.A. Law.
20 (c) Electric Cooperative Corporation Act.--References in the
21 following act enacted prior to July 1, 1971 (see 1 Pa.C.S. §
22 1937 (relating to references to statutes and regulations)), to
23 the act of June 21, 1937 (P.L.1969, No.389), known as the
24 Electric Cooperative Corporation Act, shall be deemed to be a
25 reference to 15 Pa.C.S. Ch. 73 Subchs. A (relating to
26 preliminary provisions) and B (relating to powers, duties and
27 safeguards) and such act is repealed to the extent inconsistent
28 with this subsection: sections 2471.1(b) and 2472.2(k) of the
29 act of February 1, 1966 (1965 P.L.1656, No.581), known as The
30 Borough Code, added by section 1 of the act of December 30, 1982
19900S1761B2459 - 400 -
1 (P.L.1465, No.333).
2 DIVISION IV
3 MISCELLANEOUS PROVISIONS
4 Section 401. Repeals.
5 (a) Except as otherwise expressly provided in this
6 subsection, the following acts and parts of acts are repealed:
7 Act of May 5, 1899 (P.L.253, No.148), entitled "An act to
8 allow Medical Colleges of the Commonwealth of Pennsylvania to
9 confer diplomas in public health."
10 Subparagraphs (ii) through (ix) of section 618-A of the act
11 of April 9, 1929 (P.L.177, No.175), known as The Administrative
12 Code of 1929.
13 Act of May 5, 1933 (P.L.289, No.105), known as the Nonprofit
14 Corporation Law of 1933.
15 Act of May 7, 1937 (P.L.585, No.150), entitled, as amended,
16 "An act prohibiting the use of the designation of "college" by
17 any institution not conforming to the standards of a college
18 prescribed by the State Board of Education; and providing for
19 injunctions, and penalties."
20 Act of June 21, 1937 (P.L.1969, No.389), known as the
21 Electric Cooperative Corporation Act.
22 Section 513 of the act of December 14, 1967 (P.L.746,
23 No.345), known as the Savings Association Code of 1967.
24 Act of June 12, 1968 (P.L.173, No.94), known as the
25 Cooperative Agricultural Association Act.
26 Last sentence of section 403(a)(3) of the act of March 4,
27 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
28 Sections 3, 4 and 8 of the act of November 15, 1972
29 (P.L.1063, No.271), entitled "An act amending the act of
30 November 25, 1970 (P.L.707, No.230), entitled 'An act codifying
19900S1761B2459 - 401 -
1 and compiling a part of the law of the Commonwealth,' adding
2 provisions relating to burial grounds, corporations, including
3 corporations not-for-profit, educational institutions, private
4 police, certain charitable or eleemosynary institutions, certain
5 nonprofit insurers, service of process on certain nonresident
6 persons, names, prescribing penalties and making repeals."
7 Act of July 30, 1975 (P.L.113, No.57), known as the Retail
8 Electric Supplier Unincorporated Area Certified Territory Act.
9 As much as reads "and acknowledge before an officer competent
10 to take acknowledgment of deeds," of the second sentence of
11 section 201 of the act of July 29, 1977 (P.L.105, No.38), known
12 as the Fraternal Benefit Society Code. If the Insurance
13 Commissioner shall approve under the act the incorporation,
14 merger, consolidation, conversion or division of any fraternal
15 benefit society or any other amendment of articles or other
16 fundamental change in the charter of any society under the act,
17 he shall deliver the papers relating thereto to the Department
18 of State. The provisions of sections 204 and 205 of the act
19 shall not apply to any fraternal benefit society incorporated
20 under the provisions of the Nonprofit Corporation Law of 1972
21 prior to January 29, 1978. The provisions of the act shall
22 control over Title 15 of the Pennsylvania Consolidated Statutes
23 (relating to corporations and associations) as provided in 15
24 Pa.C.S. § 103 (relating to subordination of title to regulatory
25 laws).
26 Sections 105, 301 and 304(a)(6) and (b) of the act of
27 December 21, 1988 (P.L.1444, No.177), known as the General
28 Association Act of 1988.
29 (b) The following acts and parts of acts applicable to
30 insurance companies and corporations are repealed:
19900S1761B2459 - 402 -
1 Act of November 27, 1865 (1866 P.L.1228, No.1119), entitled
2 "An act relating to the organization and meetings of certain
3 corporations, incorporated under the laws of this Commonwealth."
4 Act of April 15, 1869 (P.L.29, No.30), entitled "An act
5 requiring a majority of the directors or managers of
6 corporations to constitute a quorum."
7 Act of May 15, 1874 (P.L.186, No.118), entitled "An act to
8 authorize the issuing of letters patent to certain
9 corporations."
10 Act of June 17, 1887 (P.L.411, No.274), entitled "A further
11 supplement to an act, entitled 'An act to provide for the
12 incorporation and regulation of certain corporations,' approved
13 April twenty-ninth, one thousand eight hundred and seventy-four,
14 providing for the further regulation of such corporations."
15 Act of May 20, 1891 (P.L.101, No.77), entitled "An act
16 authorizing salaried officers of private or business
17 corporations to concurrently serve as directors therein."
18 Act of April 19, 1901 (P.L.80, No.51), entitled "An act to
19 regulate the number of directors in corporations chartered under
20 the laws of this Commonwealth."
21 Act of July 2, 1901 (P.L.603, No.298), entitled "An act
22 authorizing corporations, organized for profit, to purchase,
23 hold, sell, assign, transfer, mortgage, pledge, or otherwise
24 dispose of, the shares of capital stock of, or any bonds,
25 securities or evidences of indebtedness created by, any other
26 corporation."
27 Act of March 5, 1903 (P.L.14, No.17), entitled "An act
28 concerning proxies, authorizing representation and voting of
29 shares of capital stock of corporations at meetings and
30 elections thereof."
19900S1761B2459 - 403 -
1 Act of March 16, 1905 (P.L.42, No.26), entitled "An act
2 providing for the voting of shares of stock in corporations in
3 this Commonwealth, held by executors, administrators, guardians,
4 and trustees, and the manner of voting the same."
5 Act of May 28, 1913 (P.L.336, No.222), entitled "An act
6 authorizing corporations of this Commonwealth to declare, at any
7 time or times, dividends out of new profits; and prescribing the
8 time within which the same shall be paid."
9 Act of March 30, 1921 (P.L.54, No.28), entitled "An act
10 permitting corporations to change the date of their annual
11 meeting as fixed by its charter."
12 Sections 104, 106, 203, 204, 205 (except the second
13 sentence), 207, 208, 209, 210 (insofar as it prohibits the use
14 of shares without par value), 211, 213, 214, 301.2, 302, 303,
15 304, 305, 306, 307, first and second paragraphs of section 308,
16 sections 309, 310, 311, 312, 313, first paragraph and as much of
17 the first sentence of the second paragraph as reads as follows
18 "provided for in the bylaws" of section 314, sections 315, 316,
19 322 (except subsections (d) and (e)), 323, 324, 325, 326, 327,
20 328, 329, 330, 331, 332, 333, 334, 335, 336, 337, 337.5, 338,
21 340, 341, 343, 344, 352, 355, 532, 607 (insofar as it prohibits
22 the use of shares without par value), 608, 751 and 752 of the
23 act of May 17, 1921 (P.L.682, No.284), known as The Insurance
24 Company Law of 1921. The provisions of The Insurance Company Law
25 of 1921 that have not been repealed by this act shall control
26 over the provisions of Title 15.
27 Act of March 15, 1923 (P.L.10, No.8), entitled "An act
28 relating to the recording of certificates of incorporation of
29 domestic corporations; providing for the recording of certified
30 copies thereof in certain cases; validating the recording of
19900S1761B2459 - 404 -
1 such certified copies heretofore recorded; and making the record
2 of such certified copies competent evidence for all purposes."
3 Act of July 12, 1923 (P.L.1083, No.443), entitled "An act
4 authorizing corporations to issue stock at a price in excess of
5 the par value thereof."
6 Act of April 7, 1925 (P.L.183, No.131), entitled "An act
7 providing that certificates of association and articles of
8 incorporation or of any improvements, amendments, or alterations
9 thereto may be acknowledged and sworn or affirmed to before a
10 notary public or justice of the peace; validating such
11 acknowledgments made prior to the approval of this act."
12 Act of May 12, 1925 (P.L.615, No.329), entitled "An act
13 pertaining to corporations organized or doing business within
14 the Commonwealth; limiting the operation of their by-laws; and
15 providing for the execution of contracts, notes, mortgages, et
16 cetera, by such corporations."
17 Act of May 13, 1925 (P.L.679, No.368), entitled, as amended,
18 "An act authorizing corporations to issue stock to their
19 employes and to employes of their subsidiaries, and authorizing
20 such an issue without first offering such shares to the
21 stockholders, subject to certain limitations."
22 Act of April 27, 1927 (P.L.404, No.260), entitled "An act
23 prohibiting corporations from pleading usury as a defense."
24 Act of April 26, 1929 (P.L.794, No.341), entitled "An act
25 relating to mutual fire insurance companies incorporated under
26 any general or special law of the Commonwealth of Pennsylvania;
27 empowering any such company to regulate the number of, and the
28 manner of nominating directors, managers, or trustees thereof;
29 and providing a method for fixing the time of annual meetings of
30 members of any such company."
19900S1761B2459 - 405 -
1 Act of April 30, 1929 (P.L.903, No.401), entitled "An act
2 relating to corporations; providing methods of determining what
3 stockholders shall be entitled to vote at meetings, or to
4 receive dividends, or allotments of rights, or to exercise
5 rights; and the effect thereon of transfers of stock within
6 sixty days of any election or meeting."
7 Act of May 16, 1945 (P.L.594, No.249), entitled, as amended,
8 "An act authorizing and empowering any corporation for profit,
9 and any mutual insurance company, mutual savings bank, or other
10 corporation on a mutual plan heretofore or hereafter organized
11 under any general or special law of this Commonwealth, by action
12 of its board of directors to make contributions for public and
13 charitable purposes; and ratifying certain contributions."
14 Section 5 of the act of June 28, 1951 (P.L.941, No.184),
15 entitled "An act authorizing certain existing beneficial or
16 protective societies, heretofore incorporated, to reincorporate,
17 or to merge and reincorporate, as limited life insurance
18 companies, for the purpose of making insurance upon the health
19 of individuals and against personal injury and disablement and
20 death, including endowment insurance; regulating such
21 corporations, and limiting the amounts for which such
22 corporations may issue policies."
23 Section 1 of the act of August 19, 1953 (P.L.1075, No.280),
24 entitled "An act authorizing corporations to grant stock
25 options, pensions and allowances, under certain circumstances;
26 and validating stock options, pensions and allowances heretofore
27 granted."
28 Act of August 14, 1963 (P.L.910, No.434), entitled "An act
29 authorizing certain domestic stock insurance companies to issue
30 stock having a par value of not less than one dollar per share,
19900S1761B2459 - 406 -
1 and validating certain stock which any such corporation may
2 heretofore have been authorized to issue or issued."
3 (c) All acts and parts of acts relating to limited life
4 insurance companies are repealed insofar as inconsistent with
5 this act.
6 (d) The act of September 20, 1961 (P.L.1548, No.658), known
7 as the Credit Union Act, is repealed.
8 (e) All other parts of those acts which are specified in
9 this section and all other acts and parts of acts are repealed
10 insofar as they are in any manner inconsistent with this act.
11 Section 402. Preparation of act for printing.
12 In editing and preparing this act for printing in the Laws of
13 Pennsylvania, or pursuant to 1 Pa.C.S. Ch. 5 (relating to
14 official publication of the consolidated statutes), the Director
15 of the Legislative Reference Bureau shall insert the date of
16 enactment, pamphlet law page number and act number of this act
17 in the appropriate blanks of the enrolled bill version of this
18 act, without obtaining the approvals or marking the notations
19 required under 1 Pa.C.S. § 1105 (relating to editing statutes
20 for printing).
21 Section 403. Transitional provision.
22 The Department of State is authorized to adopt and publish
23 one or more forms of temporary docketing statement under 15
24 Pa.C.S. § 134 (relating to docketing statement) and other
25 temporary forms necessary or appropriate for the implementation
26 of Title 15 (relating to corporations and unincorporated
27 associations) upon compliance with the requirements of Title 15
28 and Title 45 (relating to legal notices) only. Any such
29 temporary docketing statement or form shall automatically be
30 deemed withdrawn on December 31, 1991, unless, prior thereto, it
19900S1761B2459 - 407 -
1 shall have been superseded by a permanent docketing statement or
2 form promulgated in the manner required by law.
3 Section 404. Effective dates and applicability.
4 (a) Effective dates.--This act shall take effect
5 immediately, except that:
6 (1) Subchapter C of Chapter 1 of Title 15 (relating to
7 Department of State and UCC fees) shall take effect on the
8 first day of the month following the month of enactment of
9 this act.
10 (2) 15 Pa.C.S. § 1702(c) and the amendments to 15
11 Pa.C.S. § 1924(b) shall be retroactive to October 1, 1989.
12 (3) The amendments to 15 Pa.C.S. § 5758(b) shall be
13 retroactive to February 13, 1972.
14 (4) 15 Pa.C.S. § 1901(2) and Chapters 73 and 75 of Title
15 15 shall take effect in four months.
16 (5) The amendments to Chapter 77 of Title 15 shall be
17 retroactive to June 19, 1989.
18 (6) The amendments to 15 Pa.C.S. § 8562(b) shall take
19 effect in four months and shall not apply to any certificate
20 of partnership interest issued or issuable on the effective
21 date of such amendments.
22 (7) Title 17 (relating to credit unions) and section
23 401(d) of this act shall take effect in two months.
24 (8) The expansion of the scope of Subpart B of Part II
25 of Title 15 to include insurance corporations as defined in
26 section 201 and all related changes in law affecting
27 insurance corporations, including the repeals provided in
28 section 401(b), shall take effect in six months.
29 (b) Applicability.--The provisions of Title 15 that are
30 derived from former 42 Pa.C.S. Ch. 83 Subch. F (relating to
19900S1761B2459 - 408 -
1 corporate directors' liability):
2 (1) shall not be construed to repeal or otherwise affect
3 or impair 15 Pa.C.S. § 1728 (relating to interested directors
4 or officers; quorum) or 2538 (relating to approval of
5 transactions with interested shareholders) or 42 Pa.C.S. §
6 8332.2 (relating to officer, director, or trustee of
7 nonprofit organization negligence standard); and
8 (2) shall not apply to:
9 (i) any actions filed prior to January 27, 1987, nor
10 to any breach of performance of duty or any failure of
11 performance of duty by any director or officer of a
12 business corporation occurring prior to that date; or
13 (ii) any actions filed against or any breach of
14 performance of duty or any failure of performance of duty
15 by any director or officer of any other domestic
16 corporation for profit or not-for-profit occurring prior
17 to the date that such corporation first became or becomes
18 subject to former 42 Pa.C.S. Ch. 83 Subch. F or 15
19 Pa.C.S. Ch. 5 Subch. B (relating to indemnification and
20 corporate directors' liability).
21 SOURCE NOTES
22 Section 102: The provisions repealed by this section are
23 supplied by this act as follows:
24 Official Superseding
25 Citation Provision
26 15 Pa.C.S. §511(a) 15 Pa.C.S. §§512(a), (b), 5712(a), (b)
27 (b) 15 Pa.C.S. §§516(a), 5716(a)
28 (c) 15 Pa.C.S. §§516(b), 5716(b)
19900S1761B2459 - 409 -
1 (d) 15 Pa.C.S. §§515(a), (b), 517, 5715(a),
2 (b), 5717
3 (e) 15 Pa.C.S. §§515(c), 5715(c)
4 (f) 15 Pa.C.S. §§515(d), 5715(d)
5 (g) 15 Pa.C.S. §§511(b), 5711(b)
6 (h) 15 Pa.C.S. §§515(e), 5715(e)
7 (i) 15 Pa.C.S. Omitted
8 15 Pa.C.S. §512(a) 15 Pa.C.S. §§513(a), 5713(a)
9 (b) 15 Pa.C.S. §§513(b), 5713(b)
10 15 Pa.C.S. §513 15 Pa.C.S. §§518, 5718
11 15 Pa.C.S. §1721(a) 15 Pa.C.S. §1721
12 (b) 15 Pa.C.S. §1712(a), (b)
13 (c) 15 Pa.C.S. §1716(a)
14 (d) 15 Pa.C.S. §1716(b)
15 (e) 15 Pa.C.S. §§1715(a), (b), 1717
16 (f) 15 Pa.C.S. §1715(c)
17 (g) 15 Pa.C.S. §1715(d)
18 (h) 15 Pa.C.S. §1713
19 (i) 15 Pa.C.S. §1714
20 (j) 15 Pa.C.S. §1711
21 (k) 15 Pa.C.S. §1715(e)
22 (l) Omitted
23 15 Pa.C.S. §1732(c) 15 Pa.C.S. §1712(c)
24 15 Pa.C.S. §1770 15 Pa.C.S. §2538
25 15 Pa.C.S. §2701(a) 15 Pa.C.S. §2701(a)
26 (b) 15 Pa.C.S. §2701(b)
27 (c) 15 Pa.C.S. §§2702, 2703
28 15 Pa.C.S. §2702(a) 15 Pa.C.S. §2704(a)
29 (b) 15 Pa.C.S. §2704(b)
30 15 Pa.C.S. §2703(a) 15 Pa.C.S. §2704(b)
19900S1761B2459 - 410 -
1 (b) 15 Pa.C.S. §2705
2 15 Pa.C.S. §2704 15 Pa.C.S. §2704(c)
3 15 Pa.C.S. §2711 15 Pa.C.S. §2721
4 15 Pa.C.S. §2712 15 Pa.C.S. §2722
5 15 Pa.C.S. §2721 15 Pa.C.S. §2711
6 15 Pa.C.S. §2722 15 Pa.C.S. §2712
7 15 Pa.C.S. §5303 15 Pa.C.S. §5303
8 15 Pa.C.S. §5305 15 Pa.C.S. §5305
9 15 Pa.C.S. §5702.1 15 Pa.C.S. §5702(d), (e), (f)
10 15 Pa.C.S. §5721 15 Pa.C.S. §5721
11 15 Pa.C.S. §5974.1 Omitted
12 15 Pa.C.S. §5974.2 Omitted
13 15 Pa.C.S. §7301 15 Pa.C.S. Ch.73
14 15 Pa.C.S. §7501 15 Pa.C.S. Ch.75
15 The source notes for the amended or added provisions of Title 15
16 are as follows:
17 15 Pa.C.S. §102: The last sentence of the definition of
18 "association" is new. Definitions of "corporation for profit"
19 and "corporation not-for-profit" patterned after 15 Pa.C.S.
20 §1103. Definitions of "credit union" and "insurance corporation"
21 conformed to new 17 Pa.C.S. §102 and 15 Pa.C.S. §3102,
22 respectively.
23 15 Pa.C.S. §105: Subsection (a) is derived from act of July
24 12, 1972 (P.L.769, No.182) (former 71 P.S. §803.1 et seq.).
25 15 Pa.C.S. §131: Conforming change.
26 15 Pa.C.S. §133: Reference to Title 13 in the first sentence
27 of subsection (a) and the balance of subsection (a) are new.
28 15 Pa.C.S. §134: Reference in second sentence of subsection
29 (a) to execution of docketing statement changed to submission of
30 the docketing statement.
19900S1761B2459 - 411 -
1 15 Pa.C.S. §135: Paragraphs (a)(7) and (c)(2) and subsection
2 (d) are new. The amendment to paragraph (c)(1) deletes redundant
3 language. See 15 Pa.C.S. §131.
4 15 Pa.C.S. §136: Provision in subsection (a) permitting a
5 person filing a document to request that it be filed at a later
6 date omitted in light of subsection (c). Reference in paragraph
7 (b)(2) to submission of evidence that a name has been reserved
8 is new. Last sentence of paragraph (b)(2) is new.
9 15 Pa.C.S. §139: Paragraphs (2) and (3) are new.
10 15 Pa.C.S. §140: New.
11 15 Pa.C.S. §151: Subsection (a) is patterned after act of
12 July 1, 1978 (P.L.700, No.124), §101 (63 P.S. §1401-101).
13 Subsection (b) is derived from act of July 12, 1972 (P.L.769,
14 No.182), §1 (former 71 P.S. §803.1).
15 15 Pa.C.S. §152: Definition of "ancillary transaction" is a
16 generalization of act of July 12, 1972 (P.L.769, No.182), §2
17 (former 71 P.S. §803.2). Definition of "Bureau Augmentation
18 Account" is patterned after act of July 1, 1978 (P.L.800,
19 No.124), §301 (63 P.S. §1401-301).
20 15 Pa.C.S. §153: Derived generally from act of July 12, 1972
21 (P.L.769, No.182), §§3 through 5 (former 71 P.S. §§803.3 through
22 803.5). Subsection (a)(13) is a reenactment of act of December
23 21, 1988 (P.L.1444, No.177), §105 (15 P.S. §20105). Subsection
24 (a)(14) is substantially a reenactment of former 15 Pa.C.S.
25 §152(h) (first sentence).
26 15 Pa.C.S. §154: Subsections (a) and (b) are derived from
27 act of July 12, 1972 (P.L.769, No.182), §6 (former 71 P.S.
28 §803.6). Subsection (c) is patterned after, inter alia, act of
29 December 27, 1974 (P.L.995, No.326), §13(e) (63 P.S.
30 §485.13(e)), as added by act of May 9, 1986 (P.L.166, No.54),
19900S1761B2459 - 412 -
1 §1.
2 15 Pa.C.S. §155: Subsection (a) is patterned after act of
3 July 1, 1978 (P.L.700, No.124), §301 (63 P.S. §1401-301).
4 Subsection (b) is patterned after act of July 3, 1987 (P.L.459,
5 No.9A), §1005 and similar food and forage provisions of prior
6 general appropriation acts.
7 15 Pa.C.S. §161: Section renumbered from former §151 to
8 conform to new 15 Pa.C.S. Subch. 1C. Exclusion in subsection (e)
9 of associations that may be domesticated under 15 Pa.C.S. §6161
10 is new. Requirement in subsection (f) that associations be
11 foreign is new.
12 15 Pa.C.S. §162: Section renumbered from former §152 to
13 conform to new 15 Pa.C.S. Subch. 1C. Subparagraphs (b)(1)(ii)
14 and (b)(3)(ii) are new. Conforming changes to section numbers in
15 cross references in subsections (b)(2) and (f)(2). The first
16 clause of subsection (d)(2) is new. Title of filings changed.
17 Provision in subsection (e) on filing documents by telecopy or
18 other similar means omitted as supplied by 15 Pa.C.S. §135(d).
19 Paragraph (f)(2) is new. Filing fee in subsection (h) deleted as
20 supplied by new 15 Pa.C.S. §153(a)(14).
21 15 Pa.C.S. §511: Subsection (a) is derived from former 15
22 Pa.C.S. Subch. 5B. Subsection (b) is a reenactment of former 15
23 Pa.C.S. §511(g), except that business corporations and nonprofit
24 corporations are excluded from the scope of the section. Compare
25 15 Pa.C.S. §§1711 and 5711.
26 15 Pa.C.S. §512: Subsections (a) and (b) are a reenactment
27 of former 15 Pa.C.S. §511(a), except that business corporations
28 and nonprofit corporations are excluded from the scope of the
29 section. Subsection (c) is patterned after former 15 Pa.C.S.
30 §1732(c). Compare 15 Pa.C.S. §§1712 and 5712.
19900S1761B2459 - 413 -
1 15 Pa.C.S. §513: Substantially a reenactment of former 15
2 Pa.C.S. §512, except that business corporations and nonprofit
3 corporations are excluded from the scope of the section. Compare
4 15 Pa.C.S. §§1713 and 5713.
5 15 Pa.C.S. §514: New. Patterned after 15 Pa.C.S. §§1714 and
6 5714.
7 15 Pa.C.S. §515: Substantially a reenactment of former 15
8 Pa.C.S. §511(d) (except last two sentences), (e), (f) and (h)
9 except that business corporations and nonprofit corporations are
10 excluded from the scope of the section. Compare 15 Pa.C.S.
11 §§1715 and 5715.
12 15 Pa.C.S. §516: Reenactment of former 15 Pa.C.S. §511(b)
13 and (c) except that business corporations and nonprofit
14 corporations are excluded from the scope of the section. Compare
15 15 Pa.C.S. §§1716 and 5716.
16 15 Pa.C.S. §517: Derived from last two sentences of former
17 15 Pa.C.S. §511(d). Business corporations and nonprofit
18 corporations are excluded from the scope of the section and the
19 section is extended to the alternative standard. Compare 15
20 Pa.C.S. §§1717 and 5717.
21 15 Pa.C.S. §518: Substantially a reenactment of former 15
22 Pa.C.S. §513, except that business corporations and nonprofit
23 corporations are excluded from the scope of the section.
24 15 Pa.C.S. §521: 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 17 Pa.C.S. §501(a)(4).
29 15 Pa.C.S. §522: Section made inapplicable to insurance
30 corporations. See 15 Pa.C.S. §1102, and Division II and section
19900S1761B2459 - 414 -
1 401(b) of the act of , 1990 (P.L. , No. ), known
2 as the GAA Amendments Act. Section also made inapplicable to
3 credit unions. See 17 Pa.C.S. §712(a).
4 15 Pa.C.S. §523: Section made inapplicable to insurance
5 corporations. See 15 Pa.C.S. §1102, and Division II and section
6 401(b) of the act of , 1990 (P.L. , No. ), known
7 as the GAA Amendments Act. Section also made inapplicable to
8 credit unions. See 15 Pa.C.S. §715.
9 15 Pa.C.S. §1102: Former subsection (c)(3) deleted, making
10 insurance corporations subject to 15 Pa.C.S. Subpart IIB. See
11 Division II and section 401(b) of the act of , 1990
12 (P.L. , No. ), known as the GAA Amendments Act.
13 15 Pa.C.S. §1103: Definition of "credit union" conformed to
14 15 Pa.C.S. §7902. Definition of "distribution" clarified with
15 respect to issuance of options, rights or warrants and upstream
16 guarantees. Definition of "entitled to vote" clarified. Citation
17 in definition of "foreign insurance corporation" corrected.
18 Definitions of "insurance corporation" and "qualified foreign
19 business corporation" conformed to 15 Pa.C.S. §1102. Provision
20 on exchange of shares for other securities or obligations in
21 definition of "reclassification" is new. Definitions of
22 "Exchange Act," "Internal Revenue Code of 1986," "Investment
23 Company Act of 1940," "mutual insurance company," "relax" and
24 "Securities Act of 1933" are new.
25 15 Pa.C.S. §1104: Section references conformed to new 15
26 Pa.C.S. Subch. 1C, and reference to 15 Pa.C.S. §140 added.
27 References to 15 Pa.C.S. §§511-513 omitted.
28 15 Pa.C.S. §1106: Conforming changes made to subsection
29 (b)(3). Subsection (b)(4) is new.
30 15 Pa.C.S. §1108: Section renumbered from former §1107.
19900S1761B2459 - 415 -
1 15 Pa.C.S. §1109: Section renumbered from former §1108.
2 15 Pa.C.S. §1110: Derived from act of March 4, 1971 (P.L.6,
3 No.2), §403(a)(3)(last sentence) (72 P.S. §7403(a)(3)(last
4 sentence)). Compare new 15 Pa.C.S. §5110.
5 15 Pa.C.S. §1303: References added in subsection (b)(1) to
6 filings that have not yet become effective. Reference in
7 subsection (b)(1) to limited partnership filings that block
8 corporate names limited to those filed in the Department of
9 State. Provision in subsection (b)(1)(i)(B) that failure to make
10 a required filing in the Department of State for three years
11 makes name available omitted. Name of document evidencing
12 consent of an association to use of similar name changed to
13 "statement." Subsection (c)(1)(iii) conformed to the inclusion
14 of insurance corporations within the scope of Subpart IIB, and
15 patterned in part after former 15 Pa.C.S. §2121(b). See 15
16 Pa.C.S. §1102, and Division II and section 401(b) of the act of
17 , 1990 (P.L. , No. ), known as the GAA Amendments
18 Act. Subsection (c)(1)(v) is new.
19 15 Pa.C.S. §1306: Subsection (b) is new. Subsection (c)
20 redesignated from last sentence of subsection (a).
21 15 Pa.C.S. §1504: References to a contrary provision of the
22 articles and to subsection (d) and 15 Pa.C.S. §§1713 and 1725
23 added in subsection (b). Rule of subsection (d) conformed to 15
24 Pa.C.S. §1914(e).
25 15 Pa.C.S. §1505: Reference to 15 Pa.C.S. §1713 substituted
26 for references to 15 Pa.C.S. §§512 and 1721(e) and 42 Pa.C.S.
27 §8364.
28 15 Pa.C.S. §1508: Former subsection (d) deleted. As to new
29 subsection (d), see 15 Pa.C.S. §1306(a)(8). Subsection (e) is
30 new.
19900S1761B2459 - 416 -
1 15 Pa.C.S. §1510: Subsection (b) and definition of
2 "affiliate" in subsection (c) are new.
3 15 Pa.C.S. §1521: Last sentence of subsection (b)(1)(i) is
4 new. Test for a distribution under subsection (b)(3) limited to
5 15 Pa.C.S. §1551(b)(2). Requirement that a provision of the
6 articles conferring a specifically enforceable right to a
7 distribution refer to subsection (b)(3) made optional if an
8 express reference to specific enforceability is set forth.
9 15 Pa.C.S. §1524: Reference to use of shares or other
10 securities or obligations of the issuing corporation as
11 consideration for shares added in subsection (a)(1). Exception
12 as to subsection (e) added in subsection (c). Date changed in
13 subsection (e) to conform to general effective date of the
14 General Association Act of 1988.
15 15 Pa.C.S. §1525: Reference in subsection (c) to 15 Pa.C.S.
16 Subch. 17B substituted for reference to 15 Pa.C.S. §1721. Rule
17 of subsection (e) limited to shares sold pursuant to a plan.
18 Required vote in subsection (e) conformed to vote required
19 generally. Cf. 15 Pa.C.S. §1757(a).
20 15 Pa.C.S. §1528: Reference to 15 Pa.C.S. §1524(d) added in
21 subsection (d). Subsection (f) amended to require provision
22 creating uncertificated shares to be in the articles rather than
23 the bylaws. But see new 15 Pa.C.S. §1914(c)(2)(iv).
24 15 Pa.C.S. §1530: Subsection (b) is new. Former subsections
25 (b) and (c) relating to preexisting preemptive rights omitted.
26 15 Pa.C.S. §1551: Effect of a provision on par value
27 clarified in subsection (a). Factors that the board may consider
28 when applying the test of subsection (b)(2) clarified in
29 subsection (c). Date of distribution clarified in subsection
30 (d). Subsection (e) conformed to Revised Model Business
19900S1761B2459 - 417 -
1 Corporation Act §6.40(f) (1984). Subsection (g) is new.
2 15 Pa.C.S. §1553: References in subsection (a) to 15 Pa.C.S.
3 §§1712 and 1713 substituted for references to 15 Pa.C.S.
4 §1721(b) and (e). Subsection (e) is new. Cf. 15 Pa.C.S.
5 §1306(a)(8).
6 15 Pa.C.S. §1554: Subsection (c) clarified. Subsection (d)
7 is new.
8 15 Pa.C.S. §1571: References to 15 Pa.C.S. §§2705(c) and
9 7104(b)(3) added in subsection (a) and conforming change made in
10 subsection (e). Rule of subsection (b)(2) limited to situations
11 in which subsection (b)(1) applies to conform to other
12 exceptions to the availability of dissenters rights (e.g. 15
13 Pa.C.S. §2537). Subsection (b)(2)(iii) is new. Subsection (f) is
14 new. Cf. 15 Pa.C.S. §1306(a)(8).
15 15 Pa.C.S. §1572: The last two sentences of the definition
16 of "corporation" are new.
17 15 Pa.C.S. §1576: References to timely action added in
18 subsection (a).
19 15 Pa.C.S. §1577: Subsections (c) and (d) clarified.
20 15 Pa.C.S. §1578: Subsection (b) clarified.
21 15 Pa.C.S. §1701: Subsection (b) is new. Compare 15 Pa.C.S.
22 §1306(a)(8).
23 15 Pa.C.S. §1702: Subsection (a) clarified. Final exception
24 in subsection (b) regarding a required notice that has not been
25 given is new. Subsections (c) and (d) are new.
26 15 Pa.C.S. §1703: First sentence of subsection (b) limited
27 to regular meetings. Second sentence of subsection (b) limited
28 to special meetings.
29 15 Pa.C.S. §1704: Requirement in first sentence of
30 subsection (c) that a notice comply with the express
19900S1761B2459 - 418 -
1 requirements of Subpart IIB is new. The second sentence of
2 subsection (c) is new and is intended to make clear that State
3 law does not duplicate the disclosure requirements of 18 CFR
4 §240.10b-5. Compare Stroud v. Milliken Enterprises, Inc., 552
5 A.2d 476 (Del. 1989).
6 15 Pa.C.S. §1705: Omission of requirement in subsection (a)
7 that waiver of notice of special meeting of shareholders specify
8 the general nature of the business to be transacted patterned
9 after Delaware General Corporation Law §229.
10 15 Pa.C.S. §1708: Reference to a contrary bylaw is new.
11 15 Pa.C.S. §1711: Reenactment of former 15 Pa.C.S. §1721(j),
12 except that subsections (b)(2) and (c) are new. Compare 15
13 Pa.C.S. §§511 and 5711.
14 15 Pa.C.S. §1712: Subsections (a) and (b) are substantially
15 a reenactment of former 15 Pa.C.S. §1721(b). Compare 15 Pa.C.S.
16 §§512 and 5712. Subsection (c) is a reenactment of former 15
17 Pa.C.S. §1732(c). Compare 15 Pa.C.S. §§512(c) and 5712(c).
18 15 Pa.C.S. §1713: Reenactment of former 15 Pa.C.S. §1721(h),
19 except the last sentence of subsection (b) which is new. Compare
20 15 Pa.C.S. §§513 and 5713.
21 15 Pa.C.S. §1714: Substantially a reenactment of former 15
22 Pa.C.S. §1721(i) except that the provision is limited to
23 directors generally competent to act. Compare 15 Pa.C.S. §§514
24 and 5714.
25 15 Pa.C.S. §1715: Reenactment of former 15 Pa.C.S. §1721(e),
26 (f), (g) and (k). Compare 15 Pa.C.S. §§515 and 5715.
27 15 Pa.C.S. §1716: Reenactment of former 15 Pa.C.S. §1721(c)
28 and (d). Compare 15 Pa.C.S. §§516 and 5716.
29 15 Pa.C.S. §1717: Derived from last two sentences of former
30 15 Pa.C.S. §1721(e), which are extended to alternative standard.
19900S1761B2459 - 419 -
1 Compare 15 Pa.C.S. §§517 and 5717.
2 15 Pa.C.S. §1721: The last sentence is new. Former
3 subsections (b) through (l) omitted as supplied by 15 Pa.C.S.
4 §§1711-1717.
5 15 Pa.C.S. §1722: Subsection (b) is new.
6 15 Pa.C.S. §1723: Subsection (b) is new.
7 15 Pa.C.S. §1724: Reference in subsection (b) to a contrary
8 provision of the articles is new.
9 15 Pa.C.S. §1725: The last sentence of subsection (a) is
10 derived from act of May 5, 1933 (P.L.364, No.106) §403 (first
11 sentence) (former 15 P.S. §1403 (first sentence)). Reference to
12 type of classified board clarified in subsection (b)(2). Cross
13 reference in subsection (d) to 15 Pa.C.S. §1758(c) is new.
14 15 Pa.C.S. §1726: Subsection (a)(5) is new. Reference in
15 subsection (c) to 15 Pa.C.S. Subch. 17F substituted for
16 reference to 15 Pa.C.S. Subch. 17E. Subsection (e) is new.
17 15 Pa.C.S. §1732: Former subsection (c) omitted as supplied
18 by 15 Pa.C.S. §1712(c). Subsection (c) is new.
19 15 Pa.C.S. §1746: Reference to 15 Pa.C.S. §2538 in
20 subsection (a) substituted for reference to repealed section.
21 The last sentence of subsection (b) is new. Compare 15 Pa.C.S.
22 §1306(a)(8). Former subsection (d) omitted.
23 15Pa.C.S. §1747: Former subsection (b) omitted.
24 15 Pa.C.S. §1755: Reference to contrary provision of the
25 articles in second sentence of subsection (a) is new. Subsection
26 (d) is new.
27 15 Pa.C.S. §1756: Reference to 15 Pa.C.S. §3124 in
28 subsection (c) is new.
29 15 Pa.C.S. §1757: Provision on class vote in subsection (a)
30 is new.
19900S1761B2459 - 420 -
1 15 Pa.C.S. §1758: Last sentence of subsection (a) amended to
2 provide enabling legislation for restrictions of the type
3 regulated by Rule 19c-4(d) under the Securities Exchange Act of
4 1934 (17 CFR 240.19c-4(d)). Availability of voting by ballot
5 limited to situations where it is required by vote of the
6 shareholders.
7 15 Pa.C.S. §1759: The second sentence of subsection (b) is
8 patterned in part after Tex. Bus. Corp. Act §2.29. Subsection
9 (e) is new.
10 15 Pa.C.S. §1763: Provisions on record date for determining
11 shareholders entitled to call a special meeting or to propose an
12 amendment of the articles added in subsection (b)(2).
13 15 Pa.C.S. §1765: Subsection (b) is new.
14 15 Pa.C.S. §1766: Provision restricting implementation of
15 subsection (b) to the articles in the case of a registered
16 corporation deleted to conform to amended 15 Pa.C.S. §2524.
17 15 Pa.C.S. §1767: Introductory clause added and reference to
18 15 Pa.C.S. §1981 corrected in subsection (a). Subsections
19 (b)(2), (d) and (e) are new.
20 15 Pa.C.S. §1770: Omitted.
21 15 Pa.C.S. §1791: Cross reference in subsection (b) changed
22 from 15 Pa.C.S. §4145 to 15 Pa.C.S. §3138.
23 15 Pa.C.S. §1792: Cross reference in subsection (c) changed
24 from 15 Pa.C.S. §4145 to 15 Pa.C.S. §3138.
25 15 Pa.C.S. §1793: Cross reference in subsection (c) changed
26 from 15 Pa.C.S. §4145 to 15 Pa.C.S. §3138.
27 15 Pa.C.S. §1901: Subsection (a)(2) is new.
28 15 Pa.C.S. §1903: Reference to "debtor" substituted for
29 "bankrupt" in subsection (a). The last three sentences of
30 subsection (b) and subsection (c) are derived from act of May 5,
19900S1761B2459 - 421 -
1 1933 (P.L.364, No.106) §320 (former 15 P.S. §1320).
2 15 Pa.C.S. §1905: References to dissolution of the
3 corporation and approval by the board are new. Reference to
4 consent of shareholders added.
5 15 Pa.C.S. §1906: Reference in subsection (a) to a provision
6 of the articles restricting the use of special treatment is new.
7 References to groups clarified in subsection (a)(1)(i) and (b).
8 Subsection (d)(2) and(3) are new.
9 15 Pa.C.S. §1911: Reference to special treatment added in
10 subsection (a)(4). Subsection (c) is new.
11 15 Pa.C.S. §1912: Cross reference to 15 Pa.C.S. §1106(b)(4)
12 added in subsection (a).
13 15 Pa.C.S. §1914: References to preemptive rights and
14 cumulative voting in subsection (b)(2) are new. Former paragraph
15 (b)(3) omitted. Subsection (c)(2)(iv) is new. Reference in
16 subsection (e) to a provision in a bylaw adopted by the
17 shareholders changed to a provision in the articles.
18 15 Pa.C.S. §1921: The application of subsection (c) to share
19 exchanges, the requirement in subsection (c) that a domestic
20 business corporation be a party or resulting entity and the last
21 two sentences of subsection (c) are new.
22 15 Pa.C.S. §1922: Reference to special treatment in
23 subsection (a)(4) clarified. Reference in subsection (d) to a
24 partnership, business trust or other association that approves a
25 plan is new.
26 15 Pa.C.S. §1923: Restriction in subsection (a) on
27 furnishing a copy of 15 Pa.C.S. Subch. 15D to classes or series
28 entitled to dissent is new.
29 15 Pa.C.S. §1924: Required vote in subsection (a) conformed
30 to 15 Pa.C.S. §1914(a). Applicability of subsection (b)(1)(i)
19900S1761B2459 - 422 -
1 clarified.
2 15 Pa.C.S. §1931: Subsection (b)(2) clarified. Use of
3 special treatment in connection with a division clarified in
4 subsection (b)(4). Subsection (h) is new (compare 15 Pa.C.S.
5 §1952(h)).
6 15 Pa.C.S. §1952: Reference to special treatment in
7 subsection (a)(5) clarified. Application of subsection (h) to
8 proposal of division clarified. Date changed in subsection (h)
9 to conform to general effective date of the General Association
10 Act of 1988.
11 15 Pa.C.S. §1954: Former subparagraph (4)(ii) omitted.
12 15 Pa.C.S. §1957: Subsection (g) is new.
13 15 Pa.C.S. §1962: Reference to special treatment in
14 subsection (a)(3) clarified.
15 15 Pa.C.S. §1972: Section divided into two subsections.
16 15 Pa.C.S. §1974: Required vote in subsection (a) conformed
17 to 15 Pa.C.S. §1914(a).
18 15 Pa.C.S. §2101: Subsection (a)(3) is new. See 15 Pa.C.S.
19 §1102, and Division II and section 401(b) of the act of
20 , 1990 (P.L. , No. ), known as the GAA Amendments
21 Act.
22 15 Pa.C.S. §2105: Subsection (c) is new.
23 15 Pa.C.S. §2121: Cross reference in subsection (b)
24 substituted for provision transferred to 15 Pa.C.S.
25 §1303(c)(1)(iii).
26 15 Pa.C.S. §2301: Applicability of subsection (d) conformed
27 to effective date of 15 Pa.C.S. Ch.23.
28 15 Pa.C.S. §2304: Citation for Securities Act of 1933
29 omitted in subsection (a).
30 15 Pa.C.S. §2309: Name of document filed under subsection
19900S1761B2459 - 423 -
1 (a)(1) changed to "statement."
2 15 Pa.C.S. §2334: Subsection (b)(1)(iii) clarified.
3 15 Pa.C.S. §2502: Last sentence of paragraph (1) and
4 references to management companies are new.
5 15 Pa.C.S. §2524: Subsection (a) clarified. Compare 15
6 Pa.C.S. §1766(b).
7 15 Pa.C.S. §2525: New.
8 15 Pa.C.S. §2526: New.
9 15 Pa.C.S. §2538: Derived from former 15 Pa.C.S. §1770, as
10 added by the act of December 21, 1988 (P.L.1444, No.177).
11 15 Pa.C.S. §2541: Subsection (a)(2) is amended and (a)(3) is
12 new.
13 15 Pa.C.S. §2543: Subsection (b)(2)(iv)-(vi) and (3) are
14 new.
15 15 Pa.C.S. §2552: Definition of "Exchange Act" transferred
16 to 15 Pa.C.S. §1103.
17 15 Pa.C.S. §2554: Paragraph (1) expanded to cover share
18 exchanges and divisions.
19 15 Pa.C.S. §2561: Reference in subsection (b)(2)(iii) to
20 adoption of an articles amendment at any time that the
21 corporation is not a registered corporation described in section
22 2502(1)(i) is new. Subsections (b)(2)(i)(A)(II), (b)(2)(i)(B),
23 (b)(2)(ii), (b)(5)(xi) and (d)(4) are new. Reference in
24 subsection (e) to 15 Pa.C.S. §2565 substituted for reference to
25 15 Pa.C.S. §2564.
26 15 Pa.C.S. §2562: Reference in paragraph (2) of definition
27 of "disinterested shares" to 15 Pa.C.S. §2565(c) substituted for
28 reference to 15 Pa.C.S. §2564(c). Definition of "Exchange Act"
29 omitted as supplied by 15 Pa.C.S. §1103. Reference in definition
30 of "proxy solicitation" to 15 Pa.C.S. §2563(b)(3) substituted
19900S1761B2459 - 424 -
1 for reference to 15 Pa.C.S. §2562.1(b)(3).
2 15 Pa.C.S. §2563: Section renumbered from former §2562.1.
3 Reference in subsection (a)(1) to 15 Pa.C.S. §2564 substituted
4 for reference to 15 Pa.C.S. §2563. Subsection (b)(4) is new.
5 15 Pa.C.S. §2564: Section renumbered from former §2563.
6 15 Pa.C.S. §2565: Section renumbered from former §2564.
7 Section number cross references conformed to renumbering of
8 Subchapter 25G.
9 15 Pa.C.S. §2566: Section renumbered from former §2565.
10 Reference in subsection (a)(8) to 15 Pa.C.S. §2564 substituted
11 for reference to 15 Pa.C.S. §2563.
12 15 Pa.C.S. §2567: Section renumbered from former §2566.
13 Section number cross references conformed to renumbering of
14 Subchapter 25G.
15 15 Pa.C.S. §2568: Section renumbered from former §2567.
16 15 Pa.C.S. §2571: Reference in subsection (b)(2)(iii) to
17 adoption of an articles amendment at any time that the
18 corporation is not a registered corporation described in section
19 2502(1)(i) is new. Subsection (b)(2)(i)(A)(II), (b)(2)(i)(B),
20 (b)(2)(ii), (b)(6)(iii) and (8) are new.
21 15 Pa.C.S. §2573: Reference in definition of "proxy
22 solicitation" to 15 Pa.C.S. §2574(b)(3) substituted for
23 reference to 15 Pa.C.S. §2573.1(b)(3).
24 15 Pa.C.S. §2574: Section renumbered from former §2573.1.
25 Subsection (c) is new.
26 15 Pa.C.S. §2575: Section renumbered from former §2574.
27 15 Pa.C.S. §2576: Section renumbered from former §2575.
28 15 Pa.C.S. §2581: Section number cross references in
29 definition of "control-share approval" conformed to renumbering
30 of Subchapter 25G and in 15 Pa.C.S. §2561(b)(2).
19900S1761B2459 - 425 -
1 15 Pa.C.S. §2701: Derived from former 15 Pa.C.S. §2701(a)
2 and (b). Subsection (c) patterned in part after 15 Pa.C.S.
3 §2501(c).
4 15 Pa.C.S. §2702: Derived from former 15 Pa.C.S. §2701(c).
5 15 Pa.C.S. §2703: New.
6 15 Pa.C.S. §2704: Derived from former 15 Pa.C.S. §§2702,
7 2703(a) and 2704.
8 15 Pa.C.S. §2705: Derived from former 15 Pa.C.S. §2703(b).
9 15 Pa.C.S. §2711: Subsection (a) is substantially a
10 reenactment of former 15 Pa.C.S. §2721. Subsection (b) is new.
11 15 Pa.C.S. §2712: Reenactment of former 15 Pa.C.S. §2722.
12 15 Pa.C.S. §2721: Derived from former 15 Pa.C.S. §2711. Cf.
13 15 Pa.C.S. §2701(c).
14 15 Pa.C.S. §2722: Substantially a reenactment of former 15
15 Pa.C.S. §2712.
16 15 Pa.C.S. §2923: Reference to beneficial ownership added in
17 subsection (a). Former subsection (b) omitted.
18 15 Pa.C.S. §3101: Patterned after 15 Pa.C.S. §2901.
19 15 Pa.C.S. §3102: Derived from 15 Pa.C.S. §1103 ("insurance
20 corporation").
21 15 Pa.C.S. §3121: Derived from act of May 17, 1921 (P.L.682,
22 No.284), §303 (former 40 P.S. §423).
23 15 Pa.C.S. §3122: Compare act of May 17, 1921 (P.L.682,
24 No.284), §421 (former 40 P.S. §591).
25 15 Pa.C.S. §3131: Derived from act of May 17, 1921 (P.L.682,
26 No.284), §308 (former 40 P.S. §429). Subsection (b) also derived
27 from act of May 17, 1921 (P.L.682, No.284), §208 (former 40 P.S.
28 §388).
29 15 Pa.C.S. §3132: Derived from act of May 17, 1921 (P.L.682,
30 No.284), §314 (former 40 P.S. §437).
19900S1761B2459 - 426 -
1 15 Pa.C.S. §3133: Derived from act of May 17, 1921 (P.L.682,
2 No.284), §§304 and 322(b) (former 40 P.S. §§424 and 445(b)).
3 15 Pa.C.S. §3134: Derived from act of May 17, 1921 (P.L.682,
4 No.284), §303 (former 40 P.S. §423).
5 15 Pa.C.S. §3135: Patterned after act of May 5, 1933
6 (P.L.364, No.106) §504A (former 15 P.S. §1504(A). Derived from
7 act of March 5, 1903 (P.L.14, No.17) (15 P.S. §429). See also
8 act of March 28, 1820 (P.L.169, No.113), §1.
9 15 Pa.C.S. §3136: Derived from act of May 17, 1921 (P.L.682,
10 No.284), §303 (former 40 P.S. §423).
11 15 Pa.C.S. §3137: New.
12 15 Pa.C.S. §3138: New.
13 15 Pa.C.S. §4101: Reference to insurance corporations
14 deleted from subsection (a). Applicability of subsection (b)(1)
15 clarified. Former subsection (c) omitted. See 15 Pa.C.S. §1102,
16 and Division II and section 401(b) of the act of ,
17 1990 (P.L. , No. ), known as the GAA Amendments Act.
18 15 Pa.C.S. §4121: Subsection (c) is new. See 15 Pa.C.S.
19 §1102, and Division II and section 401(b) of the act of
20 , 1990 (P.L. , No. ), known as the GAA Amendments
21 Act.
22 15 Pa.C.S. §4123: Reference to 15 Pa.C.S. §1306(c)(1)(iii)
23 in subsection (a) deleted. The requirement in subsection
24 (b)(1)(i) that a name be otherwise available and subsection
25 (b)(2) are new.
26 15 Pa.C.S. §4125: Requirement that Department of State issue
27 a certificate of authority to do business deleted.
28 15 Pa.C.S. §4126: Requirement that Department of State issue
29 an amended certificate of authority to do business deleted.
30 15 Pa.C.S. §4128: Subsection (c) is new. See 15 Pa.C.S.
19900S1761B2459 - 427 -
1 §1102, and Division II and section 401(b) of the act of ,
2 1990 (P.L. , No. ), known as the GAA Amendments Act.
3 15 Pa.C.S. §4129: Requirement in subsection (a)(5) that
4 application for termination of authority state that official
5 publication of notice has been effected is new.
6 15 Pa.C.S. §4142: Subsection (c) is new.
7 15 Pa.C.S. §4146: Applicability of 15 Pa.C.S. §1782 limited
8 to actions or proceedings brought in the courts of this
9 Commonwealth.
10 15 Pa.C.S. §4161: Renunciation of original charter made
11 optional in subsection (b)(6).
12 15 Pa.C.S. §5103: The following definitions are new: "act,"
13 "corporation for profit," "corporation not-for-profit," "court,"
14 "department," "domestic corporation for profit," "domestic
15 corporation not-for-profit," "foreign corporation for profit,"
16 "foreign corporation not-for-profit," "foreign nonprofit
17 corporation" and "relax." Definition of "articles" patterned
18 after 15 Pa.C.S. §1103.
19 15 Pa.C.S. §5104: Section references conformed to new 15
20 Pa.C.S. Subch. 1C. References to former 15 Pa.C.S. §§511-513
21 omitted. References to §§140 and 2552 added.
22 15 Pa.C.S. §5110: Derived from act of November 15, 1972
23 (P.L.1063, No.271), §8 (15 Pa.C.S.A. §101 note).
24 15 Pa.C.S. §5301: Reference to a purpose of fraternal
25 benefit omitted in subsection (a). Subsection (b) is new.
26 15 Pa.C.S. §5303: Patterned after 15 Pa.C.S. §1303.
27 15 Pa.C.S. §5305: Patterned after 15 Pa.C.S. §1305.
28 15 Pa.C.S. §5306: Patterned after 15 Pa.C.S. §1306, except
29 that articles are not permitted to relax or be inconsistent with
30 the statute.
19900S1761B2459 - 428 -
1 15 Pa.C.S. §5311: Patterned after 15 Pa.C.S. §1311.
2 15 Pa.C.S. §5341: Patterned after 15 Pa.C.S. §1341.
3 15 Pa.C.S. §5502: Patterned after 15 Pa.C.S. §1502.
4 15 Pa.C.S. §5504: Patterned after 15 Pa.C.S. §1504.
5 15 Pa.C.S. §5505: Patterned after 15 Pa.C.S. §1505.
6 15 Pa.C.S. §5507: Patterned after 15 Pa.C.S. §1507.
7 15 Pa.C.S. §5701: Cross reference to 15 Pa.C.S. §5707(a) is
8 new.
9 15 Pa.C.S. §5702: Subsections (a), (b) and (c) are patterned
10 after 15 Pa.C.S. §1702. Subsections (d), (e) and (f) are derived
11 from former 15 Pa.C.S. §5702.1.
12 15 Pa.C.S. §5703: Patterned after 15 Pa.C.S. §1703.
13 15 Pa.C.S. §5704: Patterned after 15 Pa.C.S. §1704.
14 15 Pa.C.S. §5705: Patterned after 15 Pa.C.S. §1705.
15 15 Pa.C.S. §5706: Patterned after 15 Pa.C.S. §1706.
16 15 Pa.C.S. §5707: Patterned after 15 Pa.C.S. §1707.
17 15 Pa.C.S. §5708: Patterned after 15 Pa.C.S. §1708.
18 15 Pa.C.S. §5711: Reenactment of former 15 Pa.C.S. §511(g),
19 limited to nonprofit corporations. Compare new 15 Pa.C.S. §§511
20 and 1711.
21 15 Pa.C.S. §5712: Subsections (a) and (b) are a reenactment
22 of former 15 Pa.C.S. §511(a), limited to nonprofit corporations.
23 Compare new 15 Pa.C.S. §§512 and 1712. Subsection (c) is
24 patterned after former 15 Pa.C.S. §1732(c). Compare new 15
25 Pa.C.S. §1712(c).
26 15 Pa.C.S. §5713: Reenactment of former 15 Pa.C.S. §512,
27 limited to nonprofit corporations. Compare new 15 Pa.C.S. §§513
28 and 1713.
29 15 Pa.C.S. §5714: Patterned after former 15 Pa.C.S. §1721(i)
30 and limited to directors generally competent to act. Compare new
19900S1761B2459 - 429 -
1 15 Pa.C.S. §§514 and 1714.
2 15 Pa.C.S. §5715: Substantially a reenactment of former 15
3 Pa.C.S. §511(d) (except last two sentences), (e), (f) and (h),
4 limited to nonprofit corporations. Compare new 15 Pa.C.S. §§515
5 and 1715.
6 15 Pa.C.S. §5716: Reenactment of former 15 Pa.C.S. §511(b)
7 and (c), limited to nonprofit corporations. Compare new 15
8 Pa.C.S. §§516 and 1716.
9 15 Pa.C.S. §5717: Derived from last two sentences of former
10 15 Pa.C.S. §511(d), limited to nonprofit corporations and
11 extended to alternative standard. Compare new 15 Pa.C.S. §§517
12 and 1717.
13 15 Pa.C.S. §5721: Patterned after 15 Pa.C.S. §1721.
14 15 Pa.C.S. §5732: Patterned after 15 Pa.C.S. §1732.
15 15 Pa.C.S. §5734: Scope of section expanded to cover members
16 of an other body individually and to incorporate law applicable
17 to directors generally.
18 15 Pa.C.S. §5741: Patterned after 15 Pa.C.S. §1741.
19 15 Pa.C.S. §5742: Patterned after 15 Pa.C.S. §1742.
20 15 Pa.C.S. §5743: Patterned after 15 Pa.C.S. §1743.
21 15 Pa.C.S. §5744: Patterned after 15 Pa.C.S. §1744.
22 15 Pa.C.S. §5745: Patterned after 15 Pa.C.S. §1745.
23 15 Pa.C.S. §5746: Patterned after 15 Pa.C.S. §1746.
24 15 Pa.C.S. §5747: Patterned after 15 Pa.C.S. §1747.
25 15 Pa.C.S. §5748: Patterned after 15 Pa.C.S. §1748.
26 15 Pa.C.S. §5749: Patterned after 15 Pa.C.S. §1749.
27 15 Pa.C.S. §5750: Patterned after 15 Pa.C.S. §1750.
28 15 Pa.C.S. §5758: The first sentence of subsection (b) is
29 new and is intended to overrule Spaches v. Wright, 547 A.2d 415
30 (Pa. Super. 1988). The amendments to subsection (b) are made
19900S1761B2459 - 430 -
1 retroactive to February 13, 1972, by section 404(b)(3) of the
2 act of , 1990 (P.L. , No. ), known as the GAA
3 Amendments Act, without affecting any judgments that become
4 final prior to the enactment of that act. The last sentence of
5 subsection (b) is new.
6 15 Pa.C.S. §5901: Patterned after 15 Pa.C.S. §1901.
7 15 Pa.C.S. §5902: Patterned after 15 Pa.C.S. §1902.
8 15 Pa.C.S. §5903: Patterned after 15 Pa.C.S. §1903.
9 15 Pa.C.S. §5905: Patterned after 15 Pa.C.S. §1905.
10 15 Pa.C.S. §5915: Patterned after 15 Pa.C.S. §1915.
11 15 Pa.C.S. §5916: Patterned after 15 Pa.C.S. §1916.
12 15 Pa.C.S. §5926: Patterned after 15 Pa.C.S. §1926.
13 15 Pa.C.S. §5954: Patterned after 15 Pa.C.S. §1954.
14 15 Pa.C.S. §5963: Patterned after 15 Pa.C.S. §1963.
15 15 Pa.C.S. §5971: Patterned after 15 Pa.C.S. §1971.
16 15 Pa.C.S. §5972: Patterned after 15 Pa.C.S. §1972.
17 15 Pa.C.S. §5973: Patterned after 15 Pa.C.S. §1973.
18 15 Pa.C.S. §5974: Patterned after 15 Pa.C.S. §1974.
19 15 Pa.C.S. §5974.1: Omitted.
20 15 Pa.C.S. §5974.2: Omitted.
21 15 Pa.C.S. §5975: Patterned after 15 Pa.C.S. §1975.
22 15 Pa.C.S. §5976: Patterned after 15 Pa.C.S. §1976.
23 15 Pa.C.S. §5977: Patterned after 15 Pa.C.S. §1977.
24 15 Pa.C.S. §5978: Patterned after 15 Pa.C.S. §1978.
25 15 Pa.C.S. §5979: Patterned after 15 Pa.C.S. §1979.
26 15 Pa.C.S. §5989: Patterned after 15 Pa.C.S. §1989.
27 15 Pa.C.S. §5991: Patterned after 15 Pa.C.S. §1991.
28 15 Pa.C.S. §5992: Patterned after 15 Pa.C.S. §1992.
29 15 Pa.C.S. §5993: Patterned after 15 Pa.C.S. §1993.
30 15 Pa.C.S. §5994: Patterned after 15 Pa.C.S. §1994.
19900S1761B2459 - 431 -
1 15 Pa.C.S. §5995: Patterned after 15 Pa.C.S. §1995.
2 15 Pa.C.S. §5996: Patterned after 15 Pa.C.S. §1996.
3 15 Pa.C.S. §5997: Patterned after 15 Pa.C.S. §1997.
4 15 Pa.C.S. §5998: Patterned after 15 Pa.C.S. §1998.
5 15 Pa.C.S. §6121: Patterned after 15 Pa.C.S. §4121.
6 15 Pa.C.S. §6122: Patterned after 15 Pa.C.S. §4122.
7 15 Pa.C.S. §6123: Patterned after 15 Pa.C.S. §4123.
8 15 Pa.C.S. §6124: Patterned after 15 Pa.C.S. §4124.
9 15 Pa.C.S. §6125: Patterned after 15 Pa.C.S. §4125.
10 15 Pa.C.S. §6126: Patterned after 15 Pa.C.S. §4126.
11 15 Pa.C.S. §6127: Patterned after 15 Pa.C.S. §4127.
12 15 Pa.C.S. §6128: Patterned after 15 Pa.C.S. §4128.
13 15 Pa.C.S. §6129: Patterned after 15 Pa.C.S. §4129.
14 15 Pa.C.S. §6130: Patterned after 15 Pa.C.S. §4130.
15 15 Pa.C.S. §6131: Patterned after 15 Pa.C.S. §4131.
16 15 Pa.C.S. §6144: Patterned after 15 Pa.C.S. §4144.
17 15 Pa.C.S. §6145: Reference in subsection (c)(11) to 15
18 Pa.C.S. Subch. 57G substituted for reference to 15 Pa.C.S.
19 Subch. 57F.
20 15 Pa.C.S. §6161: Patterned after 15 Pa.C.S. §4161.
21 15 Pa.C.S. §6162: Patterned after 15 Pa.C.S. §4162.
22 15 Pa.C.S. §7102: Subsections (b)(2)(ii) and (d) are new.
23 The reference to Title 17 in subsection (c) is new.
24 15 Pa.C.S. §7103: Subsection (b) conformed to new 15 Pa.C.S.
25 §7307.
26 15 Pa.C.S. §7104: New.
27 15 Pa.C.S. §7105: New.
28 15 Pa.C.S. §7106: New.
29 15 Pa.C.S. §7107: New.
30 15 Pa.C.S. §7301: Subsection (a) is derived from act of June
19900S1761B2459 - 432 -
1 21, 1937 (P.L.1969, No.389), §1 (15 P.S. §12401). Subsection (b)
2 is derived from the act of July 30, 1975 (P.L.113, No.57), (15
3 P.S. §3277).
4 15 Pa.C.S. §7302: Subsection (a) is new. Subsection (b) is
5 derived from act of June 21, 1937 (P.L.1969, No.389), §38 (15
6 P.S. §12438).
7 15 Pa.C.S. §7303: Derived from act of June 21, 1937
8 (P.L.1969, No.389), §2 (15 P.S. §12402). The balance of the
9 definition of "person" appears in 1 Pa.C.S. §1991.
10 15 Pa.C.S. §7304: Derived from act of June 21, 1937
11 (P.L.1969, No.389), §5 (15 P.S. §12405).
12 15 Pa.C.S. §7305: Reenactment of act of June 21, 1937
13 (P.L.1969, No.389), §3 (15 P.S. §12403).
14 15 Pa.C.S. §7306: Derived from act of June 21, 1937
15 (P.L.1969, No.389), §6(a) (15 P.S. §12406(a)).
16 15 Pa.C.S. §7307: Substantially a reenactment of act of June
17 21, 1937 (P.L.1969, No.389), §7 (15 P.S. §12407).
18 15 Pa.C.S. §7308: Derived from act of June 21, 1937
19 (P.L.1969, No.389), §36 (15 P.S. §12436). No corresponding
20 provision is considered necessary for new Title 15 in general
21 because of the applicability of 1 Pa.C.S. §1928. This section is
22 not intended to imply that any other section of new Title 15 is
23 not to be construed liberally.
24 15 Pa.C.S. §7321: Derived from act of June 21, 1937
25 (P.L.1969, No.389), §§4 and 6(b) (15 P.S. §§12404 and 12406(b)).
26 The requirement of prior law for approval of the members after
27 60 days' notice for the authorization of debt is eliminated in
28 view of the repeal in 1956 of former section 7 of Article 16 of
29 the Constitution of 1874. Balance of former section 4 supplied
30 by 15 Pa.C.S. §5502.
19900S1761B2459 - 433 -
1 15 Pa.C.S. §7322: Reenactment of act of June 21, 1937
2 (P.L.1969, No.389), §11 (15 P.S. §12411).
3 15 Pa.C.S. §7323: Substantially a reenactment of act of June
4 21, 1937 (P.L.1969, No.389), §12 (15 P.S. §12412).
5 15 Pa.C.S. §7324: Reenactment of act of June 21, 1937
6 (P.L.1969, No.389), §13 (15 P.S. §12413).
7 15 Pa.C.S. §7325: Derived from act of June 21, 1937
8 (P.L.1969, No.389), §§14 and 15 (15 P.S. §§12414 and 12415).
9 Balance of sections supplied by 15 Pa.C.S. §§5704 and 5755.
10 15 Pa.C.S. §7326: Reenactment of act of June 21, 1937
11 (P.L.1969, No.389), §16 (15 P.S. §12416).
12 15 Pa.C.S. §7327: Reenactment of act of June 21, 1937
13 (P.L.1969, No.389), §17 (15 P.S. §12417).
14 15 Pa.C.S. §7328: Derived from act of June 21, 1937
15 (P.L.1969, No.389), §18 (15 P.S. §12418). Reference to the
16 bylaws is added.
17 15 Pa.C.S. §7329: Derived from act of June 21, 1937
18 (P.L.1969, No.389), §§19, 20 and 21 (15 P.S. §§12419, 12420 and
19 12421). Balance of sections supplied by 15 Pa.C.S. §§5721, 5722,
20 5724, 5725(a) and 5730.
21 15 Pa.C.S. §7330: Reenactment of act of June 1, 1937
22 (P.L.1969, No.389), §26 (15 P.S. §12426).
23 15 Pa.C.S. §7331: Derived from act of June 21, 1937
24 (P.L.1969, No.389), §§28 and 29.1 (15 P.S. §§12428 and 12429a).
25 Balance of sections supplied by 15 Pa.C.S. Ch. 59C.
26 15 Pa.C.S. §7332: Derived from act of June 21, 1937
27 (P.L.1969, No.389), §29 (15 P.S. §12429). Balance of section
28 supplied by 15 Pa.C.S. Ch. 59F.
29 15 Pa.C.S. §7333: Substantially a reenactment of act of June
30 21, 1937 (P.L.1969, No.389), §31 (15 P.S. §12431).
19900S1761B2459 - 434 -
1 15 Pa.C.S. §7334: Derived from act of June 21, 1937
2 (P.L.1969, No.389), §32 (15 P.S. §12432).
3 15 Pa.C.S. §7335: Derived from act of June 21, 1937
4 (P.L.1969, No.389), §33 (15 P.S. §12433). The reference to the
5 act of December 5, 1972 (P.L.1280, No.284) (70 P.S. §1-101 et
6 seq.) is added.
7 15 Pa.C.S. §7351: Derived from act of July 30, 1975
8 (P.L.113, No.57), §§1.1 and 9 (15 P.S. §§3277.1 and 3285).
9 15 Pa.C.S. §7352: Derived from act of July 30, 1975
10 (P.L.113, No.57), §2 (15 P.S. §3278). The definition of
11 "association or cooperative corporation" is supplied by 15
12 Pa.C.S. §7302.
13 15 Pa.C.S. §7353: Reenactment of act of July 30, 1975
14 (P.L.113, No.57), §3 (15 P.S. §3279).
15 15 Pa.C.S. §7354: Substantially a reenactment of act of July
16 30, 1975 (P.L.113, No.57), §4 (15 P.S. §3280).
17 15 Pa.C.S. §7355: Substantially a reenactment of act of July
18 30, 1975 (P.L.113, No.57), §5 (15 P.S. §3281).
19 15 Pa.C.S. §7356: Reenactment of act of July 30, 1975
20 (P.L.113, No.57), §6 (15 P.S. §3282).
21 15 Pa.C.S. §7357: Reenactment of act of July 30, 1975
22 (P.L.113, No.57), §7 (15 P.S. §3283).
23 15 Pa.C.S. §7358: Substantially a reenactment of act of July
24 30, 1975 (P.L.113, No.57), §8 (15 P.S. §3284).
25 15 Pa.C.S. §7359: Substantially a reenactment of act of July
26 30, 1975 (P.L.113, No.57), §10 (15 P.S. §3286).
27 15 Pa.C.S. §7501: Derived from act of June 12, 1968
28 (P.L.173, No.94), §1 (15 P.S. §12101).
29 15 Pa.C.S. §7502: Derived from act of June 12, 1968
30 (P.L.173, No.94), §§4, 5 and 33 (15 P.S. §§12104, 12105 and
19900S1761B2459 - 435 -
1 12133).
2 15 Pa.C.S. §7503: Derived from act of June 12, 1968
3 (P.L.173, No.94), §4 (15 P.S. §12104). The definition of
4 "person" appears in 1 Pa.C.S. §1991. The definitions of
5 "delegate" and "department" are added.
6 15 Pa.C.S. §7504: Derived from act of June 12, 1968
7 (P.L.173, No.94), §§2 and 3 (15 P.S. §§12102 and 12103). The
8 last clause of the first sentence of subsection (a) is not
9 intended to imply that any other section of new Title 15 is not
10 to be construed liberally. No provision for liberal construction
11 is considered necessary for Title 15 in general because of the
12 applicability of 1 Pa.C.S. §1928.
13 15 Pa.C.S. §7505: Derived from act of June 12, 1968
14 (P.L.173, No.94), §8 (15 P.S. §12108). Requirement of prior law
15 for Pennsylvania citizenship changed to the requirement set
16 forth in the text.
17 15 Pa.C.S. §7506: Substantially a reenactment of act of June
18 12, 1968 (P.L.173, No.94), §9 (15 P.S. §12109).
19 15 Pa.C.S. §7507: Derived from act of June 12, 1968
20 (P.L.173, No.94), §10 (15 P.S. §12110). Balance of section
21 supplied by the provisions of Part II of Title 15 made
22 applicable by this section. See 15 Pa.C.S. §§1306 and 5306.
23 15 Pa.C.S. §7521: Derived from act of June 12, 1968
24 (P.L.173, No.94), §12 (15 P.S. §12112). See 15 Pa.C.S. §§1502
25 and 5502.
26 15 Pa.C.S. §7522: Derived from act of June 12, 1968
27 (P.L.173, No.94), §12.2(a) (last sentence) (15 P.S. §12112.2(a)
28 (last sentence)). Balance of section supplied by 15 Pa.C.S.
29 §§1508 and 5508.
30 15 Pa.C.S. §7523: Substantially a reenactment of act of June
19900S1761B2459 - 436 -
1 12, 1968 (P.L.173, No.94), §13 (15 P.S. §12113).
2 15 Pa.C.S. §7524: Derived from act of June 12, 1968
3 (P.L.173, No.94), §14 (15 P.S. §12114). The first clause of
4 subsection (f) is patterned in general after Ohio Rev. Code Ann.
5 §1729.10(F) (Page Supp. 1981). Although payment of a dividend in
6 excess of 8% will not be a violation of this section, payment of
7 such a dividend by a corporation not organized on the one
8 member/one vote principle may fail to qualify for the antitrust
9 exemptions contained in the Capper-Volstead Act, 7 U.S.C. §291.
10 Provisions on the form of membership and share certificates are
11 supplied by 15 Pa.C.S. §§1528 and 5753. Provision on preemptive
12 rights is supplied by 15 Pa.C.S. §1530.
13 15 Pa.C.S. §7525: Substantially a reenactment of act of June
14 12, 1968 (P.L.173, No.94), §15 (15 P.S. §12115). Reference to
15 the board of directors in subsection (a) is omitted as supplied
16 by 15 Pa.C.S. §1502(c).
17 15 Pa.C.S. §7526: Substantially a reenactment of act of June
18 12, 1968 (P.L.173, No.94), §16 (15 P.S. §12116).
19 15 Pa.C.S. §7527: Derived from act of June 12, 1968
20 (P.L.173, No.94), §18 (15 P.S. §12118). Provisions on proxy
21 voting are supplied by 15 Pa.C.S. §§1759 and 5759.
22 15 Pa.C.S. §7528: Derived from act of June 12, 1968
23 (P.L.173, No.94), §19 (15 P.S. §12119). Provisions on
24 organizational meeting of incorporators and notice of meetings
25 of members or delegates are supplied, respectively, by 15
26 Pa.C.S. §§1320 and 5320 and 15 Pa.C.S. §§1704 and 5704.
27 15 Pa.C.S. §7529: Derived from act of June 12, 1968
28 (P.L.173, No.94), §§20 and 29 (15 P.S. §§12120 and 12129). See
29 15 Pa.C.S. Chs. 19 and 59.
30 15 Pa.C.S. §7530: Substantially a reenactment of act of June
19900S1761B2459 - 437 -
1 12, 1968 (P.L.173, No.94), §21 (15 P.S. §12121). See 15 Pa.C.S.
2 §1504 and 5504.
3 15 Pa.C.S. §7531: Derived from act of June 12, 1968
4 (P.L.173, No.94), §§22(a), (c), (d) and 27(d) (15 P.S.
5 §§12122(a), (c), (d) and 12127(d)). Provisions of former
6 subsection 22(b) are supplied by 15 Pa.C.S. §§1703, 1724, 1725,
7 1727, 5703, 5724, 5725 and 5727. Compare 15 Pa.C.S. §5754.
8 15 Pa.c.S. §7532: Reenactment of act of June 12, 1968
9 (P.L.173, No.94), §24(a) (15 P.S. §12124(a)). Provision for the
10 removal of officers is supplied by 15 Pa.C.S. §§1733 and 5733.
11 15 Pa.C.S. §7533: Reenactment of act of June 12, 1968
12 (P.L.173, No.94), §23 (15 P.S. §12123).
13 15 Pa.C.S. §7534: Substantially a reenactment of act of June
14 12, 1968 (P.L.173, No.94), §25 (15 P.S. §12125).
15 15 Pa.C.S. §7535: Substantially a reenactment of act of June
16 12, 1968 (P.L.173, No.94), §§17 and 26 (15 P.S. §§12117 and
17 12126). See 15 Pa.C.S. §§1526 and 5553. Reference in subsection
18 (a) to "money or other property delivered by the member to the
19 association" is intended to include patronage, capital retains,
20 reserves, surplus to capital and all other proceeds attributable
21 thereto.
22 15 Pa.C.S. §7536: Derived from act of June 12, 1968
23 (P.L.173, No.94), §27(a), (b), (c) and (e) (15 P.S. §12127(a),
24 (b), (c) and (e)).
25 15 Pa.C.S. §7537: Substantially a reenactment of act of June
26 12, 1968 (P.L.173, No.94), §28 (15 P.S. §12128), except that the
27 last sentence is omitted as obsolete.
28 15 Pa.C.S. §7538: Substantially a reenactment of act of June
29 12, 1968 (P.L.173, No.94), §30 (15 P.S. §12130).
30 15 Pa.C.S. §7701: New.
19900S1761B2459 - 438 -
1 15 Pa.C.S. §7702: Section renumbered from former 15 Pa.C.S.
2 §7701.
3 15 Pa.C.S. §7703: Section renumbered from former 15 Pa.C.S.
4 §7702.
5 15 Pa.C.S. §7704: Section renumbered from former 15 Pa.C.S.
6 §7703. Provisions on approval of articles deleted in subsections
7 (b) and (c). Subsection (d) is derived from former 15 Pa.C.S.
8 §7704.
9 15 Pa.C.S. §7720: References to recording and approval of
10 amendments deleted in subsection (b). Reference to 15 Pa.C.S.
11 §134 in subsection (b) is new.
12 15 Pa.C.S. §7721: Reference to chapter in subsection (b)(3)
13 is new.
14 15 Pa.C.S. §7726: Patterned after 15 Pa.C.S. §7538.
15 15 Pa.C.S. §7727: Section renumbered from former 15 Pa.C.S.
16 §7726. Reference to June 19, 1989 in subsection (a) is new.
17 15 Pa.C.S. §8102: Reference to credit union in subsection
18 (b)(2) is new.
19 15 Pa.C.S. §8103: Derived from former 15 Pa.C.S. §8571.
20 15 Pa.C.S. §8503: Reference to merger, consolidation or
21 other transaction in paragraph (2) of the definition of "court"
22 is new.
23 15 Pa.C.S. §8511: Subsections (a)(4) and (d) are new.
24 15 Pa.C.S. §8512: Former subsection (b)(4) deleted.
25 15 Pa.C.S. §8516: Subsection (b) is new.
26 15 Pa.C.S. §8545: References in subsection (c) to business
27 trusts clarified. The last sentence of subsection (c) is new.
28 15 Pa.C.S. §8558: Period of limitations in subsection (b)
29 reduced from four years. Cf. 15 Pa.C.S. §1553(d).
30 15 Pa.C.S. §8562: Subsection (b) amended to require
19900S1761B2459 - 439 -
1 authorization of certificated partnership interests to be in
2 certificate of limited partnership. See section 404(b)(3) of the
3 act of , 1990 (P.L. , No. ), known as the GAA Amendments
4 Act. Cross reference in subsection (b) to 13 Pa.C.S. §8102 is
5 new.
6 15 Pa.C.S. §8571: Former subsection (c) (and cross reference
7 thereto in subsection (a)) omitted as supplied by new 15 Pa.C.S.
8 §8103. Cross reference to 15 Pa.C.S §8103 added.
9 15 Pa.C.S. §8575: Period of limitations in subsection (a)(2)
10 reduced from four years. Compare 15 Pa.C.S. §1979(a)(2).
11 15 Pa.C.S. §8701: Limited partners removed from scope of
12 subsection (a)(3).
13 15 Pa.C.S. §9102: Typographical correction.
14 15 Pa.C.S. §9501: Subsection (a)(2) is new and is intended
15 as a clarification of existing law.
16 15 Pa.C.S. §9502: Paragraph (4) is new.
17 15 Pa.C.S. §9503: Provisions on filing of instrument in
18 subsection (a) are new. Permissible period of duration in
19 subsection (d) extended to in perpetuity and the Rule Against
20 Perpetuities made inapplicable. See Howe v. Morse, 174 Mass 491
21 at 503-4, 55 N.E. 213 at 214 (1899).
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.
26 15 Pa.C.S. §9507: New.
27 Section 201: New.
28 Section 202: Subsection (a) patterned after N.J.S.A. 17:18-
29 8. Subsection (b) is patterned in part after N.J.S.A. 17B:18-
30 43(b), except for requirement of prior approval by the Insurance
19900S1761B2459 - 440 -
1 Department. Subsection (c) is derived from act of May 17, 1921
2 (P.L.682, No.284) §§405.2(b) and 603 (40 P.S. §§505.2(b) and
3 723).
4 Section 203: Derived from act of May 17, 1921 (P.L.682,
5 No.284) §§211 (last clause) and 754(2) (40 P.S. §§401 (last
6 clause) and 910-54(2)).
7 Section 204: Subsection (a) derived from act of May 17, 1921
8 (P.L.682, No.284) §§322 and 325 (40 P.S. §§445 and 448).
9 Subsection (b) is new. Subsection (c) is substantially a
10 reenactment of act of May 17, 1921 (P.L.682, No.284) §327 (40
11 P.S. §450).
12 Section 205: Subsection (a) is a generalization of act of
13 May 17, 1921 (P.L.682, No.284) §§331, 333, 337.5(c), 338, 751
14 and 752 (40 P.S. §§454, 456, 459.5(c), 460, 910-51 and 910-52)
15 except that in the case of voluntary dissolution review by the
16 Insurance Department is substituted for review by the Attorney
17 General. Subsection (b) derived from act of May 17, 1921
18 (P.L.682, No.284) §§331, 333, 337.5(c), 751 and 752 (40 P.S.
19 §§454, 456, 459.5(c), 910-51 and 910-52). Subsection (c) derived
20 from act of May 17, 1921 (P.L.682, No.284) §§751 and 752 (40
21 P.S. §§910-51 and 910-52). Subsection (d) derived from act of
22 May 17, 1921 (P.L.682, No.284), §337 (40 P.S. §459a). Subsection
23 (e) is derived from act of May 17, 1921 (P.L.682, No.284), §332
24 (last sentence) (40 P.S. §455 (last sentence)). Subsection (f)
25 derived from act of May 17, 1921 (P.L.682, No.284), §338 (sixth
26 sentence) (40 P.S. §460 (sixth sentence)). Section 337.6 of the
27 act of May 17, 1921 (P.L.682, No.284) (40 P.S. §459.6) has not
28 been repealed and will continue to apply independently of the
29 provisions of section 205.
30 Section 206: Derived from act of May 17, 1921 (P.L.682,
19900S1761B2459 - 441 -
1 No.284), §325 (40 P.S. §448).
2 Section 207: Patterned after 40 Pa.C.S. §6102(c)-(f).
3 Section 208: New. Intended to preserve the regulatory status
4 of entities such as limited life insurance companies and mutual
5 fire insurance companies incorporated under special acts.
6 Section 301: New.
7 Section 302: The source notes for new Title 17 are as
8 follows:
9 17 Pa.C.S. §101: Derived from act of September 20, 1961
10 (P.L.1548, No.658), §1 (15 P.S. §12301).
11 17 Pa.C.S. §102: Derived from act of September 20, 1961
12 (P.L.1548, No.658), §2 (15 P.S. §12302).
13 17 Pa.C.S. §103: Derived from act of September 20, 1961
14 (P.L.1548, No.658), §§2 and 30 (15 P.S. §§12302 and 12330).
15 17 Pa.C.S. §104: Substantially a reenactment of the act of
16 September 20, 1961 (P.L.1548, No.658), §30 (15 P.S. §12330).
17 17 Pa.C.S. §301: Substantially a reenactment of first and
18 last paragraphs of act of September 20, 1961 (P.L.1548, No.658),
19 §2 (15 P.S. §12302).
20 17 Pa.C.S. §302: Substantially a reenactment of act of
21 September 20, 1961 (P.L.1548, No.658), §3A (15 P.S. §12303A).
22 17 Pa.C.S. §303: Reenactment of act of September 20, 1961
23 (P.L.1548, No.658), §3B (15 P.S. §12303B), except that the
24 requirement of an acknowledgment of the articles of
25 incorporation is deleted.
26 17 Pa.C.S. §304: Substantially a reenactment of act of
27 September 20, 1961 (P.L.1548, No.658), §3C, D and E (15 P.S.
28 §12303C, D and E), except that the requirement that the
29 Department of State issue a certificate of incorporation is
30 deleted and the filing of the articles by the department
19900S1761B2459 - 442 -
1 constitutes conclusive evidence of the fact of incorporation.
2 17 Pa.C.S. §305: Reenactment of act of September 20, 1961
3 (P.L.1548, No.658), §11 (15 P.S. §12311).
4 17 Pa.C.S. §501: Substantially a reenactment of act of
5 September 20, 1961 (P.L.1548, No.658), §5A, B and B.1 (15 P.S.
6 §12305A, B and B.1), except subsection (a)(4) which is derived
7 from 15 Pa.C.S. §521.
8 17 Pa.C.S. §502: Substantially a reenactment of act of
9 September 20, 1961 (P.L.1548, No.658), §5C and D (15 P.S.
10 §12305C and D).
11 17 Pa.C.S. §503: Reenactment of act of September 20, 1961
12 (P.L.1548, No.658), §7 (15 P.S. §12307).
13 17 Pa.C.S. §504: Reenactment of act of September 20, 1961
14 (P.L.1548, No.658), §8 (15 P.S. §12308).
15 17 Pa.C.S. §505: Substantially a reenactment of act of
16 September 20, 1961 (P.L.1548, No.658), §15 (15 P.S. §12315).
17 Obsolete matter deleted.
18 17 Pa.C.S. §506: Reenactment of act of September 20, 1961
19 (P.L.1548, No.658), §16 (15 P.S. §12316).
20 17 Pa.C.S. §507: Reenactment of act of September 20, 1961
21 (P.L.1548, No.658), §17 (15 P.S. §12317).
22 17 Pa.C.S. §508: Substantially a reenactment of act of
23 September 20, 1961 (P.L.1548, No.658), §17D, E and F.
24 17 Pa.C.S. §509: Reenactment of act of September 20, 1961
25 (P.L.1548, No.658), §18 (15 P.S. §12318).
26 17 Pa.C.S. §510: Substantially a reenactment of act of
27 September 20, 1961 (P.L.1548, No.658), §19 (15 P.S. §12319).
28 17 Pa.C.S. §511: Reenactment of act of September 20, 1961
29 (P.L.1548, No.658), §20 (15 P.S. §12320).
30 17 Pa.C.S. §512: Reenactment of act of September 20, 1961
19900S1761B2459 - 443 -
1 (P.L.1548, No.658), §21 (15 P.S. §12321).
2 17 Pa.C.S. §513: Reenactment of act of September 20, 1961
3 (P.L.1548, No.658), §22 (15 P.S. §12322).
4 17 Pa.C.S. §514: Reenactment of act of September 20, 1961
5 (P.L.1548, No.658), §23 (15 P.S. §12323).
6 17 Pa.C.S. §515: Reenactment of act of September 20, 1961
7 (P.L.1548, No.658), §24 (third through last sentences) (15 P.S.
8 §12324 (third through last sentences)).
9 17 Pa.C.S. §516: Reenactment of act of September 20, 1961
10 (P.L.1548, No.658), §29 (15 P.S. §12329), except that a verified
11 statement is substituted for an affidavit.
12 17 Pa.C.S. §517: Substantially a reenactment of act of
13 September 20, 1961 (P.L.1548, No.658), §31 (15 P.S. §12331).
14 17 Pa.C.S. §701: Reenactment of act of September 20, 1961
15 (P.L.1548, No.658), §6 (15 P.S. §12306).
16 17 Pa.C.S. §702: Reenactment of act of September 20, 1961
17 (P.L.1548, No.658), §9 (first and second sentences) (15 P.S.
18 §12309 (first and second sentences)).
19 17 Pa.C.S. §703: Reenactment of act of September 20, 1961
20 (P.L.1548, No.658), §9 (third and fourth sentences) (15 P.S.
21 §12309 (third and fourth sentences)).
22 17 Pa.C.S. §704: Reenactment of act of September 20, 1961
23 (P.L.1548, No.658), §26 (15 P.S. §12326).
24 17 Pa.C.S. §705: Reenactment of act of September 20, 1961
25 (P.L.1548, No.658), §24 (first and second sentences) (15 P.S.
26 §12324 (first and second sentences)).
27 17 Pa.C.S. §706: Reenactment of act of September 20, 1961
28 (P.L.1548, No.658), §10 (15 P.S. §12310).
29 17 Pa.C.S. §707: Substantially a reenactment of act of
30 September 20, 1961 (P.L.1548, No.658), §12A (except first
19900S1761B2459 - 444 -
1 through seventh sentences) (15 P.S. §12312A (except first
2 through seventh sentences)).
3 17 Pa.C.S. §708: Substantially a reenactment of act of
4 September 20, 1961 (P.L.1548, No.658), §12A (first through
5 seventh sentences) and B (first sentence) (15 P.S. §12312A
6 (first through seventh sentences) and §12312B (first sentence)).
7 17 Pa.C.S. §709: Reenactment of act of September 20, 1961
8 (P.L.1548, No.658), §12B (except first sentence) (15 P.S.
9 §12312B (except first sentence)).
10 17 Pa.C.S. §710: Reenactment of act of September 20, 1961
11 (P.L.1548, No.658), §12C (15 P.S. §12312C).
12 17 Pa.C.S. §711: Substantially a reenactment of act of
13 September 20, 1961 (P.L.1548, No.658), §12D.
14 17 Pa.C.S. §712: Derived from 15 Pa.C.S. §522 and act of
15 September 20, 1961 (P.L.1548, No.658), §12E.
16 17 Pa.C.S. §713: Substantially a reenactment of act of
17 September 20, 1961 (P.L.1548, No.658), §13 (15 P.S. §12313).
18 17 Pa.C.S. §714: Reenactment of act of September 20, 1961
19 (P.L.1548, No.658), §14 (15 P.S. §12314).
20 17 Pa.C.S. §715: Derived from 15 Pa.C.S. §523.
21 17 Pa.C.S. §901: Reenactment of act of September 20, 1961
22 (P.L.1548, No.658), §4 (first through third sentences) (15 P.S.
23 §12304 (first through third sentences)).
24 17 Pa.C.S. §902: Reenactment of act of September 20, 1961
25 (P.L.1548, No.658), §4 (last sentence) (15 P.S. §12304 (last
26 sentence)), except only one signature is required and the
27 requirement of a verification is deleted.
28 17 Pa.C.S. §903: Reenactment of act of September 20, 1961
29 (P.L.1548, No.658), §4 (fourth sentence) (15 P.S. §12301 (fourth
30 sentence)), except that the requirement that the Department of
19900S1761B2459 - 445 -
1 State issue a certificate of amendment is deleted.
2 17 Pa.C.S. §904: Substantially a reenactment of act of
3 September 20, 1961 (P.L.1548, No.658), §25 (15 P.S. §12325).
4 17 Pa.C.S. §1101: Substantially a reenactment of act of
5 September 20, 1961 (P.L.1548, No.658), §27A (15 P.S. §12327A),
6 except that a certificate of vote by any officer is substituted
7 for an affidavit of vote by two officers, including the
8 secretary.
9 17 Pa.C.S. §1102: Substantially a reenactment of act of
10 September 20, 1961 (P.L.1548, No.658), §27B (15 P.S. §12327B),
11 except that the requirement that the Department of State issue a
12 certificate of conversion is deleted.
13 17 Pa.C.S. §1103: Reenactment of act of September 20, 1961
14 (P.L.1548, No.658), §27C (first sentence) (15 P.S. §12327C
15 (first sentence)).
16 17 Pa.C.S. §1104: Derived from act of September 20, 1961
17 (P.L.1548, No.658), §27C(1) (15 P.S. §12327C(1)). The absence of
18 a vote by members where the domestic credit union is the
19 surviving institution has been clarified, the reference to
20 Federal and out-of-State procedures has been patterned after 15
21 Pa.C.S. §1925, and the nomenclature "adopted" has been
22 substituted for "ratified."
23 17 Pa.C.S. §1105: Substantially a reenactment of act of
24 September 20, 1961 (P.L.1548, No.658), §27C(2), (3) and (4) (15
25 P.S. §12327C(2), (3) and (4)), except that the absence of a vote
26 by members where the domestic credit union is the surviving
27 institution is clarified, execution of the articles requires
28 only one signature, the requirements of affixation of a
29 corporate seal and that the Department of State issue a
30 certificate of merger or consolidation deleted, the continued
19900S1761B2459 - 446 -
1 applicability of Chapter 15 (relating to out-of-State credit
2 unions) is clarified and the nomenclature "adopted" has been
3 substituted for "ratified."
4 17 Pa.C.S. §1301: Reenactment of act of September 20, 1961
5 (P.L.1548, No.658), §28A (15 P.S. §12328A).
6 17 Pa.C.S. §1302: Substantially a reenactment of act of
7 September 20, 1961 (P.L.1548, No.658), §28B (15 P.S. §12328B),
8 except that execution of the certificate requires only on
9 signature, the requirement of verification is deleted and
10 nomenclature "credit union" is substituted for "association."
11 17 Pa.C.S. §1303: Substantially a reenactment of act of
12 September 20, 1961 (P.L.1548, No.658), §28C (15 P.S. §12328C).
13 The term "successive weeks" is defined in 1 Pa.C.S. §1909.
14 17 Pa.C.S. §1304: Reenactment of act of September 20, 1961
15 (P.L.1548, No.658), §28D (15 P.S. §12328D).
16 17 Pa.C.S. §1305: Patterned after 15 Pa.C.S. §1989.
17 17 Pa.C.S. §1501: Substantially a reenactment of act of
18 September 20, 1961 (P.L.1548, No.658), §31.1A. Compare 15
19 Pa.C.S. §4101(b)(1)(iii).
20 17 Pa.C.S. §1502: Substantially a reenactment of act of
21 September 20, 1961 (P.L.1548, No.658), §31.1B, except that a
22 reference to 42 Pa.C.S. §5301 is substituted for the former
23 practice of designating agents for service of process.
24 17 Pa.C.S. §1503: Substantially a reenactment of act of
25 September 20, 1961 (P.L.1548, No.658), §31.1C and D.
26 17 Pa.C.S. §1504: Substantially a reenactment of act of
27 September 20, 1961 (P.L.1548, No.658), §31.1E. The words "as a
28 credit union" added to make clear that a revocation under this
29 section does not operate as a revocation under 15 Pa.C.S. §4128
30 with respect to activities other than credit union activities.
19900S1761B2459 - 447 -
1 Section 303: New.
2 Section 304: New.
3 Section 305: The source notes for new 24 Pa.C.S. Pts. I and
4 III are as follows:
5 24 Pa.C.S. §102: New.
6 24 Pa.C.S. §6501: Derived from act of May 5, 1933 (P.L.289,
7 No.105), §211 (15 P.S. §7211) and act of May 7, 1937 (P.L.585,
8 No.150), §2 (24 P.S. §2422).
9 24 Pa.C.S. §6502: Substantially a reenactment of act of May
10 5, 1933 (P.L.289, No.105), §312A (15 P.S. §7312A) and act of May
11 7, 1937 (P.L.585, No.150), §1 (24 P.S. §2421).
12 24 Pa.C.S. §6503: Derived from act of May 5, 1899 (P.L.253,
13 No.148) (24 P.S. §§2491-92), act of May 5, 1933 (P.L.289,
14 No.105), §§211, 312 and 902(4) (15 P.S. §§7211, 7312 and
15 7902(4), act of May 7, 1937 (P.L.585, No.150), §2 (24 P.S.
16 §2422), and act of November 15, 1972 (P.L.1063, No.271), §3 (24
17 P.S. §2426).
18 24 Pa.C.S. §6504: Derived from act of November 15, 1972
19 (P.L.1063, No.271), §4 (24 P.S. §2427).
20 24 Pa.C.S. §6505: Substantially a reenactment of act of May
21 5, 1899 (P.L.253, No.148) (24 P.S. §§2491-92) and act of May 5,
22 1933 (P.L.289, No.105), §312B (15 P.S. §7312B).
23 24 Pa.C.S. §6506: Derived from act of May 5, 1933 (P.L.289,
24 No.105) §312C (15 P.S. §7312C).
25 24 Pa.C.S. §6507: Derived from act of May 7, 1937 (P.L.585,
26 No.150), §3 (24 P.S. §2423).
27 24 Pa.C.S. §6508: Derived from act of May 7, 1937 (P.L.585,
28 No.150), §4 (24 P.S. §2424).
29 24 Pa.C.S. §6509: Derived from act of May 7, 1937 (P.L.585,
30 No.150), §5 (24 P.S. §2425).
19900S1761B2459 - 448 -
1 Section 306: New. The provisions repealed by subsection (a)
2 are supplied by the act as follows:
3 Official Superseding
4 Citation Provision
5 (unless otherwise noted)
6 42 Pa.C.S. §8361 Omitted
7 42 Pa.C.S. §8362 Omitted
8 42 Pa.C.S. §8363(a) 15 Pa.C.S. §§512(a), (b), 1712(a), (b),
9 5712(a)
10 (b) 15 Pa.C.S. §§516(a), 1716(a), 5716(a)
11 (c) 15 Pa.C.S. §§516(b), 1716(b), 5716(b)
12 42 Pa.C.S. §8364 15 Pa.C.S. §§513, 1713, 5713
13 42 Pa.C.S. §8365 15 Pa.C.S. §§518, 1718, 5718
14 42 Pa.C.S. §8366 Bill §404(b)
15 42 Pa.C.S. §8367 Bill §404(b)
16 Section 307: New. 54 Pa.C.S. §311(f)(5) and (6) are
17 patterned after 15 Pa.C.S §1303(c)(2)(iv) and (c)(1)(v),
18 respectively.
19 Section 308: New.
20 Section 309: New. The unofficial citations of the statutes
21 affected by this section are as follows:
22 Unofficial
23 Act Section Citation
24 1921, No.284 337.6 40 P.S. §459.6
25 1947, No.140 2 63 P.S. §9.2
26 8.4 63 P.S. §9.8d
27 8.6 63 P.S. §9.8f
28 1966, (1965), No.581 2471.1(b) 53 P.S. §47471.1(b)
29 2471.2(k) 53 P.S. §47471.2(k)
30 DIVISION IV
19900S1761B2459 - 449 -
1 Section 401(a): The provisions repealed by this subsection
2 are supplied by this act as follows (an asterisk indicates that
3 a provision is repealed in part):
4 Repealed Unofficial Superseding
5 Act Section Citation Provision of
6 Title 15
7 (unless otherwise noted)
8 1899, No.148 1 24 P.S. §2491 24 Pa.C.S. §§6503,
9 6505
10 2 24 P.S. §2492 24 Pa.C.S. §§6503,
11 6505
12 1929, No.175 618A* 71 P.S. § * Ch. 1C
13 1933, No.105 211 15 P.S. §7211 24 Pa.C.S. §6501
14 312A 15 P.S. §7312A 24 Pa.C.S. §6502
15 312B 15 P.S. §7312B 24 Pa.C.S. §6503
16 312C 15 P.S. §7312C 24 Pa.C.S. §6504
17 902(4) 15 P.S. §7902(4) 6123(a)
18 1937, No.150 1 24 P.S. §2421 24 Pa.C.S. §6502
19 2 24 P.S. §2422 24 Pa.C.S. §§6501,
20 6503
21 3 24 P.S. §2423 24 Pa.C.S. §6507
22 4 24 P.S. §2424 24 Pa.C.S. §6508
23 5 24 P.S. §2425 24 Pa.C.S. §6509
24 6 Repealer
25 1937, No.389 1 15 P.S. §12401 7301(a)
26 2 15 P.S. §12402 7303
27 3 15 P.S. §12403 7305
28 4 15 P.S. §12404 5502, 7321
29 5 15 P.S. §12405 7304
30 6(a) 15 P.S. §12406(a) 7306(a)
19900S1761B2459 - 450 -
1 6(b) 15 P.S. §12406(b) 7321
2 7 15 P.S. §12407 7307
3 8 15 P.S. §12408 5318
4 9 15 P.S. §12409 5319
5 10 15 P.S. §12410 5320
6 11 15 P.S. §12411 7322
7 12 15 P.S. §12412 7323
8 13 15 P.S. §12413 7324
9 14 15 P.S. §12414 5704, 5755, 7325
10 15 15 P.S. §12415 5704, 7325(c)
11 16 15 P.S. §12416 7326
12 17 15 P.S. §12417 7327
13 18 15 P.S. §12418 7328
14 19 15 P.S. §12419 5721, 5722, 7329(a)
15 20 15 P.S. §12420 5724, 5725, 5730,
16 7329(a)
17 21 15 P.S. §12421 7329(b)
18 22 15 P.S. §12422 5727
19 23 15 P.S. §12423 5703, 5705
20 23.1 15 P.S. §12423.1 511, 512, 5721
21 23.2 15 P.S. §12423.2 513, Subch. 57C
22 24 15 P.S. §12424 5732, 5733
23 25 15 P.S. §12425 5731
24 26 15 P.S. §12426 7330
25 27 15 P.S. §12427 Ch.59B
26 28 15 P.S. §12428 Ch.59C, 7331(a)
27 29 15 P.S. §12429 Ch.59F, 7332
28 29.1 15 P.S. §12429(a) 5930, 7331(b)
29 30 15 P.S. §12430 105
30 31 15 P.S. §12431 7333
19900S1761B2459 - 451 -
1 32 15 P.S. §12432 7334
2 33 15 P.S. §12433 7335
3 34 15 P.S. §12434 Obsolete
4 35 15 P.S. §12435 Obsolete
5 36 15 P.S. §12436 7308
6 37 15 P.S. §12437 1 Pa.C.S. §1925
7 38 15 P.S. §12438 7302(b)
8 39 - Effective date
9 1967, No.345 513 7 P.S. §6020-73 522
10 1968, No.94 1 15 P.S. §12101 7501
11 2 15 P.S. §12102 7504
12 3 15 P.S. §12103 7504
13 4 15 P.S. §12104 7502(a), 7503
14 5 15 P.S. §12105 7502
15 6 15 P.S. §12106 1 Pa.C.S. §1976
16 7 15 P.S. §12107 133, 135
17 8 15 P.S. §12108 7505
18 9 15 P.S. §12109 7506
19 10 15 P.S. §12110 1306, 5306, 7507
20 11 15 P.S. §12111 1308, 5308
21 12 15 P.S. §12112 1502, 5502, 7521
22 12.1 15 P.S. §12112.1 1741 et seq.
23 5741 et seq.
24 12.2 15 P.S. §12112.2 1508, 5508, 7522
25 13 15 P.S. §12113 7523
26 14(a) 15 P.S. §12114(a) 7524(a), (b), (c)
27 14(b) 15 P.S. §12114(b) 7524(d)
28 14(c) 15 P.S. §12114(c) 7524(e)
29 14(d) 15 P.S. §12114(d) 7524(a)
30 14(e) 15 P.S. §12114(e) 1528, 5753
19900S1761B2459 - 452 -
1 14(f) 15 P.S. §12114(f) 7524(f)
2 14(g) 15 P.S. §12114(g) 1530
3 15 15 P.S. §12115 7525
4 16 15 P.S. §12116 7526
5 17 15 P.S. §12117 1526, 5553, 7535
6 18 15 P.S. §12118 1759, 5759, 7527
7 19 15 P.S. §12119 1310, 1704, 5310,
8 5704, 7528
9 20 15 P.S. §12120 7529
10 21 15 P.S. §12121 1504, 5504, 7530
11 22(a) 15 P.S. §12122(a) 7531(a)
12 22(b) 15 P.S. §12122(b) 1703, 1724, 1725,
13 1727, 5703, 5724,
14 5725, 5727
15 22(c) 15 P.S. §12122(c) 7531(b)
16 22(d) 15 P.S. §12122(d) 7531(c)
17 23 15 P.S. §12123 7533
18 24(a) 15 P.S. §12124(a) 7532
19 24(b) 15 P.S. §12214(b) 1733, 5733
20 25 15 P.S. §12125 7534
21 26 15 P.S. §12126 7535
22 27(a) 15 P.S. §12127(a) 7536(a), (b)
23 27(b) 15 P.S. §12127(b) 7536(c)
24 27(c) 15 P.S. §12127(c) 7536(d)
25 27(d) 15 P.S. §12127(d) 7531(d)
26 27(e) 15 P.S. §12127(e) 7536(e)
27 28 15 P.S. §12128 7537
28 29 15 P.S. §12129 Chs.19, 59, 7529
29 30 15 P.S. §12130 7538
30 31 15 P.S. §12131 7102
19900S1761B2459 - 453 -
1 32 - Repealed 1972
2 33 15 P.S. §12133 7502
3 34 15 P.S. §12134 Obsolete
4 35 15 P.S. §12135 1 Pa.C.S. §1925
5 36 - Effective date
6 1971, No.2 403
7 (a)(3)* 72 P.S. §7403(a)(3) 1110
8 1972, No.271 3 15 Pa.C.S.A. §101 note 24 Pa.C.S. §6503
9 4 15 Pa.C.S.A. §101 note 24 Pa.C.S. §6504
10 8 15 Pa.C.S.A. §101 note 5110
11 1975, No.57 1 15 P.S. §3277 7301(b)
12 1.1 15 P.S. §3277.1 7351(a)
13 2 15 P.S. §3278 7352
14 3 15 P.S. §3279 7353
15 4 15 P.S. §3280 7354
16 5 15 P.S. §3281 7355
17 6 15 P.S. §3282 7356
18 7 15 P.S. §3283 7357
19 8 15 P.S. §3284 7358
20 9 15 P.S. §3285 7351(b)
21 10 15 P.S. §3286 7359
22 11 15 P.S. §3287 7302(b)
23 12 - Effective date
24 1977, No.38 201* 40 P.S. §1141-201* 5306
25 1988, No.177 105 15 P.S. §20105 153(a)(13)
26 301 15 P.S. §20301 Bill §403
27 304(a)(6)15 P.S. §20304(a)(6) 8103
28 304(b) 15 P.S. §20304(b) Bill §404(b)
29 Section 401(b): The provisions repealed by this subsection
30 are supplied by this act as follows (an asterisk indicates that
19900S1761B2459 - 454 -
1 a provision is repealed in part):
2 Repealed Unofficial Superseding
3 Act Section Citation Provision of
4 Title 15
5 (unless otherwise noted)
6 1865, No.1119 1 15 P.S. §424 1703(a), 1704(a)
7 1869, No.30 1 15 P.S. §405 1727(a)
8 1874, No.118 1 15 P.S. §103 1309
9 1887, No.274 1 15 P.S. §406 1724
10 2 - Validating
11 section
12 3 - Repealed 1959
13 1891, No.77 1 15 P.S. §408 1730
14 1901, No.51 1 15 P.S. §403 1723
15 15 P.S. §404 1723
16 1901, No.298 1 15 P.S. §110 1502
17 2 - Repealer
18 1903, No.17 1 15 P.S. §429 1759, 3135
19 2 - Repealer
20 1905, No.26 1 15 P.S. §428 1760, 1761
21 1913, No.222 1 15 P.S. §751 1551, 3122
22 2 - Repealer
23 1921, No.28 1 15 P.S. §422 1755
24 2 15 P.S. §423 1704
25 1921, No.284 104 40 P.S. §364 Omitted
26 106 40 P.S. §366 501(a)
27 203 40 P.S. §383 103, 1301, 1302,
28 1306, 1502, 1507(a),
29 Bill §§202, 203
30 204 40 P.S. §384 1303(c)(1)(iii)
19900S1761B2459 - 455 -
1 and ICL §301.1
2 205* 40 P.S. §385* 1306, 1521, 1523,
3 1524
4 207 40 P.S. §387 1306, 1502(a)(1)
5 208 40 P.S. §388 Subch. 17B, 3131,
6 Bill §203
7 209 40 P.S. §389 1524, 2103
8 210* 40 P.S. §400* 1306(a)(8)
9 211 40 P.S. §401 103, Subch.13A,
10 Bill §203
11 213 40 P.S. §403 Subch. 1A, 1308,
12 1309, 42 Pa.C.S.
13 Subch. 61A
14 214 40 P.S. §404 Omitted
15 301.2 40 P.S. §421.2 1521
16 302 40 P.S. §422 1521, 1523, 1524,
17 1528, 1529, 1530
18 303 40 P.S. §423 1502(a)(3), 1504,
19 3121, 3134, 3136
20 304 40 P.S. §424 Subch. 17A, 1755,
21 3133
22 305 40 P.S. §426 1756, 3134
23 306 40 P.S. §427 1760, 1764(b),
24 1765
25 307 40 P.S. §428 1760
26 308* 40 P.S. §429* 1722, 1723, 1724,
27 1725(b)(1),
28 1758(b), 3131
29 309 40 P.S. §432 1758, 1759, 1765
30 310 40 P.S. §433 1758(c)
19900S1761B2459 - 456 -
1 311 40 P.S. §434 1755(b)(1), (c),
2 1756(b)(1)
3 312 40 P.S. §435 1502(c), 1721,
4 1727, 1730
5 313 40 P.S. §436 1765
6 314* 40 P.S. §437* 1502(a)(16), 1732,
7 3132
8 315 40 P.S. §438 1502(a)(13)
9 316 40 P.S. §439 1502(a)(14)
10 322* 40 P.S. §445* Subch. 19B, §3133,
11 Sec. 102 §204
12 323 40 P.S. §446 Subchs. 15B, 19B
13 324 40 P.S. §447 Subchs. 15B, 17A,
14 17D, 19B
15 325 40 P.S. §448 1522, Subch. 19B,
16 Bill §206
17 326 40 P.S. §449 1525(e), 1530,
18 Bill §205
19 327 40 P.S. §450 Subch. 19B, Bill
20 §204(b)
21 328 40 P.S. §451 Subch. 19B, Bill
22 §204(b)
23 329 40 P.S. §452 Subch. 19B, Bill
24 §204(b)
25 330 40 P.S. §453 1758(b), 1763,
26 1764
27 331 40 P.S. §454 Subch. 19B, Bill
28 §205
29 332 40 P.S. §455 Subch. 19C, Bill
30 §205
19900S1761B2459 - 457 -
1 333 40 P.S. §456 Subch. 19C, Bill
2 §205
3 334 40 P.S. §457 1927, 1928, 1929
4 335 40 P.S. §458 42 Pa.C.S.
5 Subch. 61A
6 336 40 P.S. §459 Subch. 15D, 1930
7 337 40 P.S. §459a Subch. 19C, Bill
8 §205, 42 Pa.C.S.
9 §§5301(a)(2)(i),
10 5322
11 337.5 40 P.S. §459.5 1924(b)(1)(ii),
12 1931, Bill §205
13 338 40 P.S. §460 139, Subchs. 19F,
14 19H, Bill §205
15 340 40 P.S. §462 Ch. 41
16 341 40 P.S. §463 Ch. 41
17 343 40 P.S. §465 4141(b), GAA
18 §302(c)
19 344 40 P.S. §466 1502(a)(2)
20 352 40 P.S. §477 1911(a)(5), 1914
21 355 40 P.S. §477c 1502(a)(12), (19)
22 532 40 P.S. §672 Subch. 19B, 3133
23 Bill §204
24 607* 40 P.S. §727* 1306(a)(8)
25 608 40 P.S. §728 Omitted
26 751 40 P.S. §910-51 Subch. 19C, Bill
27 §§205, 206
28 752 40 P.S. §910-52 Subch. 15B, Bill
29 §§205, 206
30 1923, No.8 1 15 P.S. §905 Obsolete
19900S1761B2459 - 458 -
1 2 15 P.S. §905 note Validating
2 section
3 3 15 P.S. §906 42 Pa.C.S. §6103
4 42 Pa.C.S. §6104
5 1923, No.443 1 15 P.S. §601 1523
6 2 15 P.S. §602 1530(b)
7 3 - Repealer
8 1925, No.131 1 15 P.S. §102 Obsolete
9 2 - Validating
10 section
11 3 - Repealer
12 1925, No.329 1 15 P.S. §401 1505
13 2 15 P.S. §402 1506
14 1925, No.368 1 15 P.S. §701 1502(a), 1525,
15 1530
16 2 15 P.S. §702 Omitted
17 3 - Repealer
18 1927, No.260 1 41 P.S. §2 1510, 5510
19 2 - Repealer
20 1929, No.341 1 40 P.S. §430 1722, 1723
21 2 40 P.S. §431 1758(b)
22 3 40 P.S. §425 Subch. 17A, 1755,
23 3133
24 4 40 P.S. §425
25 note Omitted
26 5 - Repealer
27 1929, No.401 1 15 P.S. §411 1763
28 2 15 P.S. §412 1763
29 3 15 P.S. §413 1763
30 4 - Repealer
19900S1761B2459 - 459 -
1 1945, No.249 1 15 P.S. §901 1502, 7 P.S.
2 §6020-101,
3 7 P.S.
4 §201(a)(vii)
5 2 - Effective date
6 1951, No.184 5 40 P.S. §623.5 1704, 1723, 1724
7 1725, 1755
8 1953, No.280 1 15 P.S. §703 1525, 7 P.S.
9 §1409
10 1963, No.434 1 40 P.S. §553 1306(a)(8)
11 2 40 P.S. §554 Validating
12 provision
13 3 - Repealer
14 Section 401(c): New.
15 Section 401(d): The provisions repealed by this subsection
16 are supplied by this act as follows:
17 Repealed Unofficial Superseding
18 Act Section Citation Provision of
19 Title 17
20 1961, No.658 1 15 P.S. §12301 101
21 2 15 P.S. §12302 102, 103, 301
22 3A 15 P.S. §12303A 302
23 3B 15 P.S. §12303B 303
24 3C 15 P.S. §12303C 304
25 4 15 P.S. §12304 102
26 5A 15 P.S. §12305A 501(a)
27 5B 15 P.S. §12305B 501(b)
28 5C 15 P.S. §12305C 502(a)
29 5D 15 P.S. §12305D 502(b)
30 6 15 P.S. §12306 701
19900S1761B2459 - 460 -
1 7 15 P.S. §12307 503
2 8 15 P.S. §12308 504
3 9 15 P.S. §12309 702, 703
4 10 15 P.S. §12310 706
5 11 15 P.S. §12311 305
6 12A 15 P.S. §12312A 707, 708
7 12B 15 P.S. §12312B 708, 709
8 12C 15 P.S. §12312C 710
9 13 15 P.S. §12313 713
10 14 15 P.S. §12314 714
11 15 15 P.S. §12315 505
12 16 15 P.S. §12316 506
13 17 15 P.S. §12317 507
14 18 15 P.S. §12318 509
15 19 15 P.S. §12319 510
16 20 15 P.S. §12320 511
17 21 15 P.S. §12321 512
18 22 15 P.S. §12322 513
19 23 15 P.S. §12323 514(a)
20 24 15 P.S. §12324 515, 705
21 25 15 P.S. §12325 904
22 26 15 P.S. §12326 704
23 27A 15 P.S. §12327A 1101
24 27B 15 P.S. §12327B 1102
25 27C 15 P.S. §12327C 1103, 1104, 1105
26 28A 15 P.S. §12328A 1301
27 28B 15 P.S. §12328B 1302
28 28C 15 P.S. §12328C 1303
29 28D 15 P.S. §12328D 1304
30 29 15 P.S. §12329 516
19900S1761B2459 - 461 -
1 30 15 P.S. §12330 103, 104
2 31 15 P.S. §12331 517
3 32 15 P.S. §12332 Repealer
4 33 15 P.S. §12333 Effective date
5 Section 401(e): New.
6 Section 402: New. Patterned after section 303 of the act of
7 December 21, 1988 (P.L.1444, No.177), known as the General
8 Association Act of 1988.
9 Section 403: Derived from section 301 of the act of December
10 21, 1988 (P.L.1444, No.177), known as the General Association
11 Act of 1988.
12 Section 404: New.
G26L15DGS/19900S1761B2459 - 462 -