PRIOR PRINTER'S NOS. 222, 656, 1040 PRINTER'S NO. 1243
No. 215 Session of 2001
INTRODUCED BY GREENLEAF, COSTA, LEMMOND, M. WHITE, HOLL,
KITCHEN, STOUT, THOMPSON, WOZNIAK AND O'PAKE,
JANUARY 31, 2001
SENATE AMENDMENTS TO HOUSE AMENDMENTS, JUNE 20, 2001
AN ACT
1 Amending Titles 15 (Corporations and Unincorporated
2 Associations) and 54 (Names) of the Pennsylvania Consolidated
3 Statutes, relating to associations; making revisions,
4 corrections and additions; PROVIDING FOR A FUNCTION OF THE <--
5 DEPARTMENT OF STATE; and making repeals.
6 The General Assembly of the Commonwealth of Pennsylvania
7 hereby enacts as follows:
8 Section 1. Short title.
9 This act shall be known and may be cited as the GAA
10 Amendments Act of (in preparing this act for printing in the
11 Laws of Pennsylvania, the Legislative Reference Bureau shall
12 insert here, in lieu of this statement, the calendar year of
13 enactment of this act).
14 Section 2. Amendment of Title 15.
15 As much of Title 15 as is hereinafter set forth is amended or
16 added to read:
17 § 102. Definitions.
18 Subject to additional or inconsistent definitions contained
19 in subsequent provisions of this title that are applicable to
1 specific provisions of this title, the following words and
2 phrases when used in this title shall have, unless the context
3 clearly indicates otherwise, the meanings given to them in this
4 section:
5 * * *
6 "Limited liability company." A domestic or foreign limited
7 liability company as defined in section 8903 (relating to
8 definitions and index of definitions).
9 "Profession." Includes the performance of any type of
10 personal service to the public that requires as a condition
11 precedent to the performance of the service the obtaining of a
12 license or admission to practice or other legal authorization
13 from the Supreme Court of Pennsylvania or a licensing board or
14 commission under the Bureau of Professional and Occupational
15 Affairs in the Department of State. Except as otherwise
16 expressly provided by law, this definition shall be applicable
17 to this title only and shall not affect the interpretation of
18 any other statute or any local zoning ordinance or other
19 official document heretofore or hereafter enacted or
20 promulgated.
21 "Professional services." Any type of services that may be
22 rendered by a member of a profession within the purview of his
23 profession.
24 * * *
25 § 134. Docketing statement.
26 (a) General rule.--The Department of State may, but shall
27 not be required to, prescribe by regulation one or more official
28 docketing statement forms designed to elicit from a person
29 effecting a filing under this title information that the
30 department has found to be necessary or desirable in connection
20010S0215B1243 - 2 -
1 with the processing of a filing. [A docketing statement
2 submitted with the articles of incorporation or division of a
3 proposed domestic corporation for profit or not-for-profit, the
4 articles of domestication or application for a certificate of
5 authority of a foreign corporation for profit or not-for-profit
6 or the certificate of election of an electing partnership shall
7 set forth, inter alia, the kind or kinds of business in which
8 the association actually intends to engage in this Commonwealth
9 within one year of the submission of the docketing statement. A
10 docketing statement submitted with articles of incorporation,
11 consolidation or division of a domestic corporation not-for-
12 profit or an application for a certificate of authority of a
13 foreign corporation not-for-profit shall set forth with respect
14 to the new corporation or corporations resulting therefrom,
15 inter alia, the statute by or under which it was incorporated,
16 the date of incorporation, the names and residence addresses of
17 its chief executive officer, secretary and treasurer, regardless
18 of the names or titles by which they may be designated, the
19 address of its principal place of business and the amount, if
20 any, of its authorized and issued capital stock.] A form of
21 docketing statement prescribed under this subsection:
22 (1) Shall be published in the Pennsylvania Code.
23 (2) Shall not be integrated into a single document
24 covering the requirements of the filing and its related
25 docketing statement.
26 (3) May be required by the department in connection with
27 a filing only if notice of the requirement appears on the
28 official format for the filing prescribed under section
29 133(d) (relating to physical characteristics and copies of
30 documents).
20010S0215B1243 - 3 -
1 (4) Shall not be required to be submitted on department-
2 furnished forms.
3 (5) Shall not constitute a document filed in, with or by
4 the department for the purposes of this title or any other
5 provision of law except 18 Pa.C.S. § 4904 (relating to
6 unsworn falsification to authorities).
7 (b) Transmission to Department of Revenue.--The department
8 shall note on the docketing statement the fact and date of the
9 filing [of articles of incorporation, consolidation, merger,
10 division, conversion or domestication or certificate of election
11 or issuance of the certificate of authority, as the case may be,
12 upon the docketing statement] to which the docketing statement
13 relates and shall transmit a copy of [it] the docketing
14 statement or the information contained therein to the Department
15 of Revenue. If a docketing statement is not required for a
16 particular filing, the Department of State may transmit a copy
17 of the filing or the information contained therein to the
18 Department of Revenue at no cost to the person effecting the
19 filing.
20 (c) Transmission to other agencies.--If the docketing
21 statement delivered to the Department of State sets forth any
22 kind of business in which a corporation, partnership or other
23 association may not engage without the approval of or a license
24 from any department, board or commission of the Commonwealth,
25 the Department of State shall, upon [the filing of articles of
26 incorporation, consolidation, division or domestication or
27 certificate of election or issuance of the certificate of
28 authority] processing the filing, promptly transmit a copy of
29 the docketing statement or the information contained therein to
30 each such department, board or commission.
20010S0215B1243 - 4 -
1 § 138. Statement of correction.
2 * * *
3 (b) Effect of filing.--
4 * * *
5 (2) A filing under this section shall not have the
6 effect of causing original articles of incorporation of a
7 corporation or a similar type of document creating any other
8 form of association to be stricken from the records of the
9 department but the articles or other document may be
10 corrected under this section.
11 * * *
12 (d) Cross reference.--See section 135 (relating to
13 requirements to be met by filed documents).
14 § 139. Tax clearance of certain fundamental transactions.
15 [A] (a) General rule.--Except as provided in subsection (c),
16 a domestic association shall not file articles or a certificate
17 of merger or consolidation effecting a merger or consolidation
18 into a nonqualified foreign association or articles or a
19 certificate of dissolution or a statement of revival, a
20 qualified foreign association shall not file an application for
21 termination of authority or similar document in the Department
22 of State and a domestic association shall not file articles or a
23 certificate of division dividing solely into nonqualified
24 foreign associations unless the articles, certificate,
25 application or other document are accompanied by clearance
26 certificates from the Department of Revenue and the Office of
27 Employment Security of the Department of Labor and Industry,
28 evidencing the payment by the association of all taxes and
29 charges due the Commonwealth required by law.
30 (b) Tax clearance in judicial proceedings.--Until the
20010S0215B1243 - 5 -
1 clearance certificates described in subsection (a) have been
2 filed with the court:
3 (1) The court shall not order the dissolution of a
4 domestic business corporation, nonprofit corporation or
5 business trust.
6 (2) The court shall not approve a final distribution of
7 the assets of a domestic general partnership, limited
8 partnership, electing partnership or limited liability
9 company if the court is supervising the winding up of the
10 association.
11 (c) Alternative provisions.--If clearance certificates are
12 filed with the court as required under subsection (b), it shall
13 not be necessary to file the clearance certificates with the
14 Department of State.
15 § 155. Disposition of funds.
16 * * *
17 (c) Advisory committee.--The Secretary of the Commonwealth
18 shall appoint a Corporation Bureau Advisory Committee. The
19 committee shall be composed of persons knowledgeable in matters
20 covered by this title and related provisions of law and who have
21 been recommended for appointment to the committee by the
22 organized bar or other organized users of the facilities and
23 services of the bureau. Members shall serve without compensation
24 other than reimbursement for reasonable and necessary expenses
25 in accordance with Commonwealth policy or regulations, shall
26 serve for terms fixed by the [Secretary] secretary and may be
27 reappointed. The Chairman of the committee shall be elected by
28 the committee. The committee shall make recommendations to the
29 Governor with respect to each budget submitted under subsection
30 (b) and may consult with the [Department of State] department in
20010S0215B1243 - 6 -
1 the administration of this title and related provisions of law.
2 The committee, in consultation with the bureau and the
3 department, shall submit, by June 1 of each odd-numbered year, a
4 report to the General Assembly describing its activities under
5 this title and any recommended changes to this title.
6 § 161. Domestication of certain alien associations.
7 * * *
8 (b) Statement of domestication.--The statement of
9 domestication shall be executed by the association and shall set
10 forth in the English language:
11 (1) The name of the association. If the name is in a
12 foreign language, it shall be set forth in Roman letters or
13 characters or Arabic or Roman numerals. If the name is one
14 that is rendered unavailable for use by a corporation by any
15 provision of section 1303(b) or (c) (relating to corporate
16 name), the association shall adopt a new name, in accordance
17 with any procedures for changing the name of the association
18 that are applicable prior to the domestication of the
19 association, and shall set forth the new name in the
20 statement.
21 (2) The name of the jurisdiction under the laws of which
22 and the date on which it was first formed, incorporated or
23 otherwise came into being.
24 (3) The name of the jurisdiction that constituted the
25 seat, siege social or principal place of business or control
26 administration of the association, or any equivalent under
27 applicable law, immediately prior to the filing of the
28 statement.
29 (4) A statement [that upon domestication the association
30 will be a domestic association under the laws of this
20010S0215B1243 - 7 -
1 Commonwealth] of the type of domestic association that the
2 association will be upon domestication.
3 (5) A statement that the filing of the statement of
4 domestication and, if desired, the renunciation of the prior
5 domicile has been authorized (unless its charter or other
6 organic documents require a greater vote) by a majority in
7 interest of the shareholders, members or other proprietors of
8 the association.
9 (6) If the association will be a type of domestic
10 association that is created by a filing in the department,
11 such other provisions as are required to be included in an
12 initial filing to create that type of domestic association,
13 except that it shall not be necessary to set forth the name
14 of the person organizing the association.
15 (7) Any other provision that the association may choose
16 to insert unless this title prohibits the inclusion of such a
17 provision in a filing that creates the type of domestic
18 association that the association will be upon domestication.
19 (c) Execution.--The statement shall be signed on behalf of
20 the association by any authorized person.
21 (d) Effect of domestication.--Upon the filing of the
22 statement of domestication, the association shall be
23 domesticated in this Commonwealth and the association shall
24 thereafter be subject to any applicable provisions of this
25 title[, except Subpart B of Part II (relating to business
26 corporations),] and [to] any other provisions of law applicable
27 to associations existing under the laws of this Commonwealth. If
28 the association will be a type of domestic association that is
29 created by a filing in the department, the statement of
30 domestication shall constitute that filing. The domestication of
20010S0215B1243 - 8 -
1 any association in this Commonwealth pursuant to this section
2 shall not be deemed to affect any obligations or liabilities of
3 the association incurred prior to its domestication.
4 (e) Exclusion.--An association that can be domesticated
5 under [section 4161 (relating to domestication) or 6161
6 (relating to domestication)] any of the following sections shall
7 not be domesticated under this section:
8 Section 4161 (relating to domestication).
9 Section 6161 (relating to domestication).
10 Section 8590 (relating to domestication).
11 Section 8982 (relating to domestication).
12 Section 9501(a)(1)(ii) (relating to application and
13 effect of chapter).
14 (f) Definition.--As used in this section, the term
15 "association," except as restricted by subsection (e), includes
16 any alien 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 entity
20 existing under the laws of any jurisdiction other than this
21 Commonwealth.
22 (g) Cross [reference] references.--See [section] sections
23 134 (relating to docketing statement) and 135 (relating to
24 requirements to be met by filed documents).
25 § 162. Contingent domestication of certain alien associations.
26 * * *
27 (c) Statement of consummation of domestication.--At any time
28 after the filing of a statement of contingent domestication, the
29 association may file in the department a statement of
30 consummation of domestication which shall be executed by the
20010S0215B1243 - 9 -
1 association and shall set forth:
2 (1) The name of the association[. If the name is in a
3 foreign language, it shall be set forth in Roman letters or
4 characters or Arabic or Roman numerals.] as set forth in its
5 statement of contingent domestication.
6 * * *
7 (j) Cross [reference] references.--See [section] sections
8 134 (relating to docketing statement) and 135 (relating to
9 requirements to be met by filed documents).
10 § 1106. Uniform application of subpart.
11 * * *
12 (b) Exceptions.--
13 * * *
14 (3) Subsection (a) shall not adversely affect the rights
15 specifically provided for or saved in this subpart. See:
16 The provisions of section 1524(e) (relating to
17 transitional provision).
18 The provisions of section 1554(c) (relating to
19 transitional provision).
20 The cumulative voting rights set forth in section
21 1758(c)(2) (relating to cumulative voting).
22 The special voting requirements specified in section
23 1931(h) (relating to special requirements).
24 The [special voting requirements specified in section
25 1952(h) (relating to special requirements).] provisions
26 of section 1952(g) and (h) (relating to proposal and
27 adoption of plan of division).
28 The provisions of section 2301(d) (relating to
29 transitional provisions).
30 The provisions of section 2541(a)(2) and (3) and (c)
20010S0215B1243 - 10 -
1 (relating to application and effect of subchapter).
2 The provisions of section 2543(b)(1) and (2)
3 (relating to exceptions generally).
4 The provisions of section 2551(b)(3)(i), (5) and (6)
5 (relating to exceptions).
6 The provisions of section 2553(b)(2) (relating to
7 exception).
8 * * *
9 § 1303. Corporate name.
10 * * *
11 (e) Remedies for violation of section.--The use of a name in
12 violation of this section shall not vitiate or otherwise affect
13 the corporate existence but any court having jurisdiction may
14 enjoin the corporation from using or continuing to use a name in
15 violation of this section, upon the application of:
16 (1) the Attorney General, acting on his own motion or at
17 the instance of any administrative department, board or
18 commission of this Commonwealth; or
19 (2) any person adversely affected.[;
20 may enjoin the corporation from using or continuing to use a
21 name in violation of this section.]
22 (f) Cross references.--See sections 135(e) (relating to
23 distinguishable names) and 1106(b)(2) (relating to uniform
24 application of subpart).
25 § 1304. Required name changes by senior corporations.
26 * * *
27 (b) Enforcement of undertaking to release name.--If a
28 corporation has used a name [which] that is not distinguishable
29 upon the records of the [department] Department of State from
30 the name of another corporation or other association as
20010S0215B1243 - 11 -
1 permitted by section 1303(b)(1) (relating to duplicate use of
2 names) and the other corporation or other association continues
3 to use its name in this Commonwealth and does not change its
4 name, cease to do business, be wound up or withdraw as it
5 proposed to do in its consent or change its name as required by
6 subsection (a), any court having jurisdiction may enjoin the
7 other corporation or other association from continuing to use
8 its name or a name that is not distinguishable therefrom, upon
9 the application of:
10 (1) the Attorney General, acting on his own motion or at
11 the instance of any administrative department, board or
12 commission of this Commonwealth; or
13 (2) any person adversely affected[;
14 may enjoin the other corporation or other association from
15 continuing to use its name].
16 § 1311. Filing of statement of summary of record by certain
17 corporations.
18 (a) General rule.--Where any of the [valid] charter
19 documents of a business corporation are not on file in the
20 Department of State or there is an error in any such document as
21 transferred to the department pursuant to section 140 (relating
22 to custody and management of orphan corporate and business
23 records), and the corporation desires to file any document in
24 the department under any other provision of this subpart or the
25 corporation desires to secure from the department any
26 certificate to the effect that the corporation is a corporation
27 duly incorporated and existing under the laws of this
28 Commonwealth or a certified copy of the articles of the
29 corporation or the corporation desires to correct the text of
30 its charter documents as on file in the department, the
20010S0215B1243 - 12 -
1 corporation shall file in the department a statement of summary
2 of record which shall be executed by the corporation and shall
3 set forth:
4 (1) The name of the corporation and, subject to section
5 109 (relating to name of commercial registered office
6 provider in lieu of registered address), the location,
7 including street and number, if any, of its registered
8 office.
9 (2) The statute by or under which the corporation was
10 incorporated.
11 (3) The name under which, the manner in which and the
12 date on which the corporation was originally incorporated,
13 including the date when and the place where the original
14 articles were recorded.
15 (4) The place or places, including volume and page
16 numbers or their equivalent, where the documents
17 [constituting the currently effective articles are] that are
18 not on file in the department or that require correction in
19 the records of the department were originally filed or
20 recorded, the date or dates of each filing or recording and
21 the correct text of the [currently effective articles.]
22 documents. The information specified in this paragraph may be
23 omitted in a statement of summary of record that is delivered
24 to the department contemporaneously with amended and restated
25 articles of the corporation filed under this subpart.
26 [(5) Each name by which the corporation was known, if
27 any, other than its original name and its current name, and
28 the date or dates on which each change of name of the
29 corporation became effective.
30 (6) In the case of any entity brought within the scope
20010S0215B1243 - 13 -
1 of Chapter 29 (relating to professional corporations) by or
2 pursuant to section 2905 (relating to election of
3 professional associations to become professional
4 corporations), amended and restated articles of incorporation
5 which shall include all of the information required to be set
6 forth in restated articles of a professional corporation.
7 A corporation shall be required to make only one filing under
8 this subsection.]
9 (b) Validation of prior defects in incorporation.--Upon the
10 filing of a statement by a corporation under this section or the
11 transfer to the department of the records relating to a
12 corporation pursuant to section 140, the corporation [named in
13 the statement] shall be deemed to be a validly subsisting
14 corporation to the same extent as if it had been duly
15 incorporated and was existing under this subpart and the
16 department shall so certify regardless of any absence of or
17 defect in the prior proceedings relating to incorporation.
18 (c) Cross [reference] references.--See [section] sections
19 134 (relating to docketing statement), 135 (relating to
20 requirements to be met by filed documents) and 1106(b)(2)
21 (relating to uniform application of subpart).
22 § 1505. Persons bound by bylaws.
23 Except as otherwise provided by section 1713 (relating to
24 personal liability of directors) or any similar provision of
25 law, the bylaws of a business corporation shall operate only as
26 regulations among the shareholders, directors and officers of
27 the corporation and shall not affect contracts or other dealings
28 with other persons unless those persons have actual knowledge of
29 the bylaws.
30 § 1508. Corporate records; inspection by shareholders.
20010S0215B1243 - 14 -
1 (a) Required records.--Every business corporation shall keep
2 complete and accurate books and records of account, minutes of
3 the proceedings of the incorporators, shareholders and directors
4 and a share register giving the names and addresses of all
5 shareholders and the number and class of shares held by each.
6 The share register shall be kept at [either] any of the
7 following locations:
8 (1) the registered office of the corporation in this
9 Commonwealth [or at its];
10 (2) the principal place of business of the corporation
11 wherever situated;
12 (3) any actual business office of the corporation; or
13 [at]
14 (4) the office of [its] the registrar or transfer agent
15 of the corporation. [Any books, minutes or other records may
16 be in written form or any other form capable of being
17 converted into written form within a reasonable time.]
18 (b) Right of inspection by a shareholder.--Every shareholder
19 shall, upon written verified demand stating the purpose thereof,
20 have a right to examine, in person or by agent or attorney,
21 during the usual hours for business for any proper purpose, the
22 share register, books and records of account, and records of the
23 proceedings of the incorporators, shareholders and directors and
24 to make copies or extracts therefrom. A proper purpose shall
25 mean a purpose reasonably related to the interest of the person
26 as a shareholder. In every instance where an attorney or other
27 agent is the person who seeks the right of inspection, the
28 demand shall be accompanied by a verified power of attorney or
29 other writing that authorizes the attorney or other agent to so
30 act on behalf of the shareholder. The demand shall be directed
20010S0215B1243 - 15 -
1 to the corporation:
2 (1) at its registered office in this Commonwealth [or];
3 (2) at its principal place of business wherever
4 situated; or
5 (3) in care of the person in charge of an actual
6 business office of the corporation.
7 (c) Proceedings for the enforcement of inspection by a
8 shareholder.--If the corporation, or an officer or agent
9 thereof, refuses to permit an inspection sought by a shareholder
10 or attorney or other agent acting for the shareholder pursuant
11 to subsection (b) or does not reply to the demand within five
12 business days after the demand has been made, the shareholder
13 may apply to the court for an order to compel the inspection.
14 The court shall determine whether or not the person seeking
15 inspection is entitled to the inspection sought. The court may
16 summarily order the corporation to permit the shareholder to
17 inspect the share register and the other books and records of
18 the corporation and to make copies or extracts therefrom, or the
19 court may order the corporation to furnish to the shareholder a
20 list of its shareholders as of a specific date on condition that
21 the shareholder first pay to the corporation the reasonable cost
22 of obtaining and furnishing the list and on such other
23 conditions as the court deems appropriate. Where the shareholder
24 seeks to inspect the books and records of the corporation, other
25 than its share register or list of shareholders, he shall first
26 establish:
27 (1) That he has complied with the provisions of this
28 section respecting the form and manner of making demand for
29 inspection of the document.
30 (2) That the inspection he seeks is for a proper
20010S0215B1243 - 16 -
1 purpose.
2 Where the shareholder seeks to inspect the share register or
3 list of shareholders of the corporation and he has complied with
4 the provisions of this section respecting the form and manner of
5 making demand for inspection of the documents, the burden of
6 proof shall be upon the corporation to establish that the
7 inspection he seeks is for an improper purpose. The court may,
8 in its discretion, prescribe any limitations or conditions with
9 reference to the inspection or award such other or further
10 relief as the court deems just and proper. The court may order
11 books, documents and records, pertinent extracts therefrom, or
12 duly authenticated copies thereof, to be brought into this
13 Commonwealth and kept in this Commonwealth upon such terms and
14 conditions as the order may prescribe.
15 (d) Certain provisions of articles ineffective.--This
16 section may not be relaxed by any provision of the articles.
17 (e) Cross [reference] references.--See [section] sections
18 107 (relating to form of records), 1512 (relating to
19 informational rights of a director) and 1763(c) (relating to
20 certification by nominee).
21 § 1512. Informational rights of a director.
22 (a) General rule.--To the extent reasonably related to the
23 performance of the duties of the director, including those
24 arising from service as a member of a committee of the board of
25 directors, a director of a business corporation is entitled:
26 (1) in person or by any attorney or other agent, at any
27 reasonable time, to inspect and copy corporate books, records
28 and documents and, in addition, to inspect, and receive
29 information regarding, the assets, liabilities and operations
30 of the corporation and any subsidiaries of the corporation
20010S0215B1243 - 17 -
1 incorporated or otherwise organized or created under the laws
2 of this Commonwealth that are controlled directly or
3 indirectly by the corporation; and
4 (2) to demand that the corporation exercise whatever
5 rights it may have to obtain information regarding any other
6 subsidiaries of the corporation.
7 (b) Proceedings for enforcement of inspection by a
8 director.--If the corporation, or an officer or agent thereof,
9 refuses to permit an inspection or obtain or provide information
10 sought by a director or attorney or other agent acting for the
11 director pursuant to subsection (a) or does not reply to the
12 request within two business days after the request has been
13 made, the director may apply to the court for an order to compel
14 the inspection or the obtaining or providing of the information.
15 The court shall summarily order the corporation to permit the
16 requested inspection or to obtain the information unless the
17 corporation establishes that the information to be obtained by
18 the exercise of the right is not reasonably related to the
19 performance of the duties of the director or that the director
20 or the attorney or agent of the director is likely to use the
21 information in a manner that would violate the duty of the
22 director to the corporation. The order of the court may contain
23 provisions protecting the corporation from undue burden or
24 expense and prohibiting the director from using the information
25 in a manner that would violate the duty of the director to the
26 corporation.
27 (c) Cross references.--See sections 107 (relating to form of
28 records) and 1508 (relating to corporate records; inspection by
29 shareholders) and 42 Pa.C.S. § 2503(7) (relating to right of
30 participants to receive counsel fees).
20010S0215B1243 - 18 -
1 § 1521. Authorized shares.
2 * * *
3 (b) Provisions specifically authorized.--
4 (1) Without limiting the authority contained in
5 subsection (a), a corporation, when so authorized in its
6 articles, may issue classes or series of shares:
7 (i) Subject to the right or obligation of the
8 corporation to redeem any of the shares for the
9 consideration, if any, fixed by or in the manner provided
10 by the articles for the redemption thereof. Unless
11 otherwise provided in the articles, any shares subject to
12 redemption shall be redeemable only pro rata or by lot or
13 by such other equitable method as may be selected by the
14 corporation. [An amendment of the articles to add or
15 amend a provision permitting the redemption of any shares
16 by a method that is not pro rata nor by lot nor otherwise
17 equitable may be effected only pursuant to section 1906
18 (relating to special treatment of holders of shares of
19 same class or series).]
20 (ii) Entitling the holders thereof to cumulative,
21 noncumulative or partially cumulative dividends.
22 (iii) Having preference over any other shares as to
23 dividends or assets or both.
24 (iv) Convertible into shares of any other class or
25 series, or into obligations of the corporation.
26 (2) Any of the terms of a class or series of shares may
27 be made dependent upon:
28 (i) Facts ascertainable outside of the articles if
29 the manner in which the facts will operate upon the terms
30 of the class or series is set forth in the articles. Such
20010S0215B1243 - 19 -
1 facts may include, without limitation, actions or events
2 within the control of or determinations made by the
3 corporation or a representative of the corporation.
4 * * *
5 (d) Status and rights.--Shares of a business corporation
6 shall be deemed personal property. Except as otherwise provided
7 by the articles or, when so permitted by subsection (c), by one
8 or more bylaws adopted by the shareholders, each share shall be
9 in all respects equal to every other share. See section
10 1906(d)(4) (relating to special treatment of holders of shares
11 of same class or series).
12 § 1526. Liability of [subscribers and] shareholders.
13 [A subscriber to, or holder or owner of, shares of a business
14 corporation shall not be under any liability to the corporation
15 or any creditor thereof with respect to the shares other than
16 the personal obligation of a shareholder who has acquired his
17 shares by subscription to comply with the terms of the
18 subscription.] (a) General rule.--A shareholder of a business
19 corporation shall not be liable, solely by reason of being a
20 shareholder, under an order of a court or in any other manner
21 for a debt, obligation or liability of the corporation of any
22 kind or for the acts of any shareholder or representative of the
23 corporation.
24 (b) Professional relationship unaffected.--Subsection (a)
25 shall not afford the shareholders of a business corporation that
26 is not a professional corporation, but that provides
27 professional services, with greater immunity than is available
28 to the officers, shareholders, employees or agents of a business
29 corporation that is a professional corporation. See section 2925
30 (relating to professional relationship retained).
20010S0215B1243 - 20 -
1 (c) Disciplinary jurisdiction unaffected.--A business
2 corporation providing professional services shall be subject to
3 the applicable rules and regulations adopted by, and all the
4 disciplinary powers of, the court, department, board, commission
5 or other government unit regulating the profession in which the
6 corporation is engaged. The court, department, board or other
7 government unit may require that a corporation include in its
8 articles provisions that conform to any rule or regulation
9 heretofore or hereafter promulgated for the purpose of enforcing
10 the ethics of a profession. This subpart shall not affect or
11 impair the disciplinary powers of the court, department, board,
12 commission or other government unit over licensed persons or any
13 law, rule or regulation pertaining to the standards for
14 professional conduct of licensed persons or to the professional
15 relationship between any licensed person rendering professional
16 services and the person receiving professional services.
17 § 1554. Financial reports to shareholders.
18 (a) General rule.--Except as otherwise provided in
19 subsection (d) or unless otherwise agreed between a business
20 corporation and a shareholder, every corporation shall furnish
21 to its shareholders annual financial statements, including at
22 least a balance sheet as of the end of each fiscal year and a
23 statement of income and expenses for the fiscal year. The
24 financial statements shall be prepared on the basis of generally
25 accepted accounting principles, if the corporation prepares
26 financial statements for the fiscal year on that basis for any
27 purpose, and may be consolidated statements of the corporation
28 and one or more of its subsidiaries. The financial statements
29 shall be mailed by the corporation to each of its shareholders
30 entitled thereto within 120 days after the close of each fiscal
20010S0215B1243 - 21 -
1 year and, after the mailing and upon written request, shall be
2 mailed by the corporation to any shareholder or beneficial owner
3 entitled thereto to whom a copy of the most recent annual
4 financial statements has not previously been mailed. In lieu of
5 mailing the statements, the corporation may send them by
6 facsimile, e-mail or other electronic transmission to any
7 shareholder who has supplied the corporation with a facsimile
8 number or address for electronic transmissions for the purpose
9 of receiving financial statements from the corporation.
10 Statements that are audited or reviewed by a certified public
11 accountant or a public accountant shall be accompanied by the
12 report of the accountant; in other cases, each copy shall be
13 accompanied by a statement of the person in charge of the
14 financial records of the corporation:
15 (1) Stating his reasonable belief as to whether or not
16 the financial statements were prepared in accordance with
17 generally accepted accounting principles and, if not,
18 describing the basis of presentation.
19 (2) Describing any material respects in which the
20 financial statements were not prepared on a basis consistent
21 with those prepared for the previous year.
22 * * *
23 § 1571. Application and effect of subchapter.
24 (a) General rule.--Except as otherwise provided in
25 subsection (b), any shareholder (as defined in section 1572
26 (relating to definitions)) of a business corporation shall have
27 the right to dissent from, and to obtain payment of the fair
28 value of his shares in the event of, any corporate action, or to
29 otherwise obtain fair value for his shares, only where this part
30 expressly provides that a shareholder shall have the rights and
20010S0215B1243 - 22 -
1 remedies provided in this subchapter. See:
2 Section 1906(c) (relating to dissenters rights upon
3 special treatment).
4 Section 1930 (relating to dissenters rights).
5 Section 1931(d) (relating to dissenters rights in share
6 exchanges).
7 Section 1932(c) (relating to dissenters rights in asset
8 transfers).
9 Section 1952(d) (relating to dissenters rights in
10 division).
11 Section 1962(c) (relating to dissenters rights in
12 conversion).
13 Section 2104(b) (relating to procedure).
14 Section 2324 (relating to corporation option where a
15 restriction on transfer of a security is held invalid).
16 Section 2325(b) (relating to minimum vote requirement).
17 Section 2704(c) (relating to dissenters rights upon
18 election).
19 Section 2705(d) (relating to dissenters rights upon
20 renewal of election).
21 Section 2904(b) (relating to procedure).
22 Section 2907(a) (relating to proceedings to terminate
23 breach of qualifying conditions).
24 Section 7104(b)(3) (relating to procedure).
25 (b) Exceptions.--
26 (1) Except as otherwise provided in paragraph (2), the
27 holders of the shares of any class or series of shares [that,
28 at] shall not have the right to dissent and obtain payment of
29 the fair value of the shares under this subchapter if, on the
30 record date fixed to determine the shareholders entitled to
20010S0215B1243 - 23 -
1 notice of and to vote at the meeting at which a plan
2 specified in any of section 1930, 1931(d), 1932(c) or 1952(d)
3 is to be voted on, or on the date of the first public
4 announcement that such a plan has been approved by the
5 shareholders by consent without a meeting, the shares are
6 either:
7 (i) listed on a national securities exchange or
8 designated as a national market system security on an
9 interdealer quotation system by the National Association
10 of Securities Dealers, Inc.; or
11 (ii) held beneficially or of record by more than
12 2,000 [shareholders;
13 shall not have the right to obtain payment of the fair value
14 of any such shares under this subchapter.] persons.
15 (2) Paragraph (1) shall not apply to and dissenters
16 rights shall be available without regard to the exception
17 provided in that paragraph in the case of:
18 (i) [Shares converted by a plan if the shares are
19 not converted solely into shares of the acquiring,
20 surviving, new or other corporation or solely into such
21 shares and money in lieu of fractional shares.]
22 (Repealed.)
23 (ii) Shares of any preferred or special class or
24 series unless the articles, the plan or the terms of the
25 transaction entitle all shareholders of the class or
26 series to vote thereon and require for the adoption of
27 the plan or the effectuation of the transaction the
28 affirmative vote of a majority of the votes cast by all
29 shareholders of the class or series.
30 (iii) Shares entitled to dissenters rights under
20010S0215B1243 - 24 -
1 section 1906(c) (relating to dissenters rights upon
2 special treatment).
3 (3) The shareholders of a corporation that acquires by
4 purchase, lease, exchange or other disposition all or
5 substantially all of the shares, property or assets of
6 another corporation by the issuance of shares, obligations or
7 otherwise, with or without assuming the liabilities of the
8 other corporation and with or without the intervention of
9 another corporation or other person, shall not be entitled to
10 the rights and remedies of dissenting shareholders provided
11 in this subchapter regardless of the fact, if it be the case,
12 that the acquisition was accomplished by the issuance of
13 voting shares of the corporation to be outstanding
14 immediately after the acquisition sufficient to elect a
15 majority or more of the directors of the corporation.
16 * * *
17 (g) Computation of beneficial ownership.--For purposes of
18 subsection (b)(1)(ii), shares that are held beneficially as
19 joint tenants, tenants by the entireties, tenants in common or
20 in trust by two or more persons, as fiduciaries or otherwise,
21 shall be deemed to be held beneficially by one person.
22 [(g)] (h) Cross references.--See sections 1105 (relating to
23 restriction on equitable relief), 1904 (relating to de facto
24 transaction doctrine abolished), 1763(c) (relating to
25 determination of shareholders of record) and 2512 (relating to
26 dissenters rights procedure).
27 § 1572. 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:
20010S0215B1243 - 25 -
1 "Corporation." The issuer of the shares held or owned by the
2 dissenter before the corporate action or the successor by
3 merger, consolidation, division, conversion or otherwise of that
4 issuer. A plan of division may designate which one or more of
5 the resulting corporations is the successor corporation for the
6 purposes of this subchapter. The designated successor
7 corporation or corporations in a division shall have sole
8 responsibility for payments to dissenters and other liabilities
9 under this subchapter except as otherwise provided in the plan
10 of division.
11 "Dissenter." A shareholder [or beneficial owner] who is
12 entitled to and does assert dissenters rights under this
13 subchapter and who has performed every act required up to the
14 time involved for the assertion of those rights.
15 * * *
16 "Shareholder." A shareholder as defined in section 1103
17 (relating to definitions), or an ultimate beneficial owner of
18 shares, including without limitation a holder of depository
19 receipts, where the beneficial interest owned includes an
20 interest in the assets of the corporation upon dissolution.
21 § 1702. Manner of giving notice.
22 (a) General rule.--[Whenever written]
23 (1) Any notice [is] required to be given to any person
24 under the provisions of this subpart or by the articles or
25 bylaws of any business corporation[, it may] shall be given
26 to the person either personally or by sending a copy thereof
27 [by] :
28 (i) By first class or express mail, postage prepaid,
29 [or by telegram (with messenger service specified), telex
30 or TWX (with answerback received)] or courier service,
20010S0215B1243 - 26 -
1 charges prepaid, [or by facsimile transmission,] to his
2 postal address [(or to his telex, TWX or facsimile
3 number)] appearing on the books of the corporation or, in
4 the case of directors, supplied by him to the corporation
5 for the purpose of notice. [If the notice is sent by
6 mail, telegraph or courier service, it shall be deemed to
7 have been given to the person entitled thereto when
8 deposited in the United States mail or with a telegraph
9 office or courier service for delivery to that person or,
10 in the case of telex or TWX, when dispatched.] Notice
11 pursuant to this subparagraph shall be deemed to have
12 been given to the person entitled thereto when deposited
13 in the United States mail or with a courier service for
14 delivery to that person.
15 (ii) By facsimile transmission, e-mail or other
16 electronic communication to his facsimile number or
17 address for e-mail or other electronic communications
18 supplied by him to the corporation for the purpose of
19 notice. Notice pursuant to this subparagraph shall be
20 deemed to have been given to the person entitled thereto
21 when sent.
22 (2) A notice of meeting shall specify the [place,] day
23 and hour and geographic location, if any, of the meeting and
24 any other information required by any other provision of this
25 subpart.
26 * * *
27 § 1704. Place and notice of meetings of shareholders.
28 (a) Place.--Meetings of shareholders may be held at such
29 [place] geographic location within or without this Commonwealth
30 as may be provided in or fixed pursuant to the bylaws. Unless
20010S0215B1243 - 27 -
1 otherwise provided in or pursuant to the bylaws, all meetings of
2 the shareholders shall be held [in this Commonwealth at the
3 registered office of the corporation] at the executive office of
4 the corporation wherever situated. If a meeting of the
5 shareholders is held by means of the Internet or other
6 electronic communications technology in a fashion pursuant to
7 which the shareholders have the opportunity to read or hear the
8 proceedings substantially concurrently with their occurrence,
9 vote on matters submitted to the shareholders and pose questions
10 to the directors, the meeting need not be held at a particular
11 geographic location.
12 * * *
13 § 1708. Use of conference telephone [and similar equipment] or
14 other electronic technology.
15 (a) Incorporators and directors.--Except as otherwise
16 provided in the bylaws, one or more persons may participate in a
17 meeting of the incorporators[,] or the board of directors [or
18 the shareholders] of a business corporation by means of
19 conference telephone or [similar communications equipment] other
20 electronic technology by means of which all persons
21 participating in the meeting can hear each other. Participation
22 in a meeting pursuant to this section shall constitute presence
23 in person at the meeting.
24 (b) Shareholders.--Except as otherwise provided in the
25 bylaws, the presence or participation, including voting and
26 taking other action, at a meeting of shareholders, or the
27 expression of consent or dissent to corporate action, by a
28 shareholder by conference telephone or other electronic means,
29 including, without limitation, the Internet, shall constitute
30 the presence of, or vote or action by, or consent or dissent of
20010S0215B1243 - 28 -
1 the shareholder for the purposes of this subpart.
2 § 1709. Conduct of shareholders meeting.
3 (a) Presiding officer.--There shall be a presiding officer
4 at every meeting of the shareholders. The presiding officer
5 shall be appointed in the manner provided in the bylaws or, in
6 the absence of such provision, by the board of directors. If the
7 bylaws are silent on the appointment of the presiding officer
8 and the board fails to designate a presiding officer, the
9 president shall be the presiding officer.
10 (b) Authority of the presiding officer.--Except as otherwise
11 provided in the bylaws, the presiding officer shall determine
12 the order of business and shall have the authority to establish
13 rules for the conduct of the meeting.
14 (c) Procedural standard.--Any action by the presiding
15 officer in adopting rules for, and in conducting, a meeting
16 shall be fair to the shareholders.
17 (d) Closing of the polls.--The presiding officer shall
18 announce at the meeting when the polls close for each matter
19 voted upon. If no announcement is made, the polls shall be
20 deemed to have closed upon the final adjournment of the meeting.
21 After the polls close, no ballots, proxies or votes, nor any
22 revocations or changes thereto, may be accepted.
23 § 1721. Board of directors.
24 (a) General rule.--Unless otherwise provided by statute or
25 in a bylaw adopted by the shareholders, all powers enumerated in
26 section 1502 (relating to general powers) and elsewhere in this
27 subpart or otherwise vested by law in a business corporation
28 shall be exercised by or under the authority of, and the
29 business and affairs of every business corporation shall be
30 managed under the direction of, a board of directors. If any
20010S0215B1243 - 29 -
1 such provision is made in the bylaws, the powers and duties
2 conferred or imposed upon the board of directors by this subpart
3 shall be exercised or performed to such extent and by such
4 person or persons as shall be provided in the bylaws. Persons
5 upon whom the liabilities of directors are imposed by this
6 section shall to that extent be entitled to the rights and
7 immunities conferred by or pursuant to this part and other
8 provisions of law upon directors of a corporation.
9 (b) Cross reference.--See section 2527 (relating to
10 authority of board of directors).
11 § 1727. Quorum of and action by directors.
12 * * *
13 (b) Action by [written] consent.--Unless otherwise
14 restricted in the bylaws, any action required or permitted to be
15 taken at a meeting of the directors may be taken without a
16 meeting if, prior or subsequent to the action, a consent or
17 consents thereto by all of the directors in office is filed with
18 the secretary of the corporation.
19 § 1729. Voting rights of directors.
20 * * *
21 (c) Cross reference.--See section 2526 (relating to voting
22 rights of directors).
23 § 1731. Executive and other committees of the board.
24 (a) Establishment and powers.--Unless otherwise restricted
25 in the bylaws:
26 * * *
27 (2) Any committee, to the extent provided in the
28 resolution of the board of directors or in the bylaws, shall
29 have and may exercise all of the powers and authority of the
30 board of directors except that a committee shall not have any
20010S0215B1243 - 30 -
1 power or authority as to the following:
2 (i) The submission to shareholders of any action
3 requiring approval of shareholders under this subpart.
4 (ii) The creation or filling of vacancies in the
5 board of directors.
6 (iii) The adoption, amendment or repeal of the
7 bylaws.
8 (iv) The amendment or repeal of any resolution of
9 the board that by its terms is amendable or repealable
10 only by the board.
11 (v) Action on matters committed by the bylaws or
12 resolution of the board of directors exclusively to
13 another committee of the board.
14 * * *
15 § 1745. Advancing expenses.
16 Expenses (including attorneys' fees) incurred in defending
17 any action or proceeding referred to in this subchapter may be
18 paid by a business corporation in advance of the final
19 disposition of the action or proceeding upon receipt of an
20 undertaking by or on behalf of the representative to repay the
21 amount if it is ultimately determined that he is not entitled to
22 be indemnified by the corporation as authorized in this
23 subchapter or otherwise. Except as otherwise provided in the
24 bylaws, advancement of expenses shall be authorized by the board
25 of directors. Sections 1728 (relating to interested directors or
26 officers; quorum) and 2538 (relating to approval of transactions
27 with interested shareholders) shall not be applicable to the
28 advancement of expenses under this section.
29 § 1748. Application to surviving or new corporations.
30 [For] (a) General rule.--Except as provided in subsection
20010S0215B1243 - 31 -
1 (b), for the purposes of this subchapter, references to "the
2 corporation" include all constituent corporations absorbed in a
3 consolidation, merger or division, as well as the surviving or
4 new corporations surviving or resulting therefrom, so that any
5 person who is or was a representative of the constituent,
6 surviving or new corporation, or is or was serving at the
7 request of the constituent, surviving or new corporation as a
8 representative of another domestic or foreign corporation for
9 profit or not-for-profit, partnership, joint venture, trust or
10 other enterprise, shall stand in the same position under the
11 provisions of this subchapter with respect to the surviving or
12 new corporation as he would if he had served the surviving or
13 new corporation in the same capacity.
14 (b) Divisions.--Notwithstanding subsection (a), the
15 obligations of a dividing corporation to indemnify and advance
16 expenses to its representatives, whether arising under this
17 subchapter or otherwise, may be allocated in a division in the
18 same manner and with the same effect as any other liability of
19 the dividing corporation.
20 § 1756. Quorum.
21 (a) General rule.--A meeting of shareholders of a business
22 corporation duly called shall not be organized for the
23 transaction of business unless a quorum is present. Unless
24 otherwise provided in a bylaw adopted by the shareholders:
25 * * *
26 (4) If a proxy casts a vote on behalf of a shareholder
27 on any issue other than a procedural motion considered at a
28 meeting of shareholders, the shareholder shall be deemed to
29 be present during the entire meeting for purposes of
30 determining whether a quorum is present for consideration of
20010S0215B1243 - 32 -
1 any other issue.
2 * * *
3 § 1758. Voting rights of shareholders.
4 * * *
5 (b) Procedures for election of directors.--[If the bylaws
6 provide a fair and reasonable procedure for the nomination of
7 candidates for any office, only candidates who have been duly
8 nominated in accordance therewith shall be eligible for
9 election.] Unless otherwise restricted in the bylaws, in
10 elections for directors, voting need not be by ballot unless
11 required by vote of the shareholders before the voting for
12 election of directors begins. The candidates for election as
13 directors receiving the highest number of votes from each class
14 or group of classes, if any, entitled to elect directors
15 separately up to the number of directors to be elected by the
16 class or group of classes shall be elected. If at any meeting of
17 shareholders, directors of more than one class are to be
18 elected, each class of directors shall be elected in a separate
19 election.
20 * * *
21 (e) Advance notice of nominations and other business.--If
22 the bylaws provide a fair and reasonable procedure for the
23 nomination of candidates for election as directors, only
24 candidates who have been duly nominated in accordance therewith
25 shall be eligible for election. If the bylaws impose a fair and
26 reasonable requirement of advance notice of proposals to be made
27 by a shareholder at the annual meeting of the shareholders, only
28 proposals for which advance notice has been properly given may
29 be acted upon at the meeting.
30 § 1759. Voting and other action by proxy.
20010S0215B1243 - 33 -
1 * * *
2 (b) Execution and filing.--Every proxy shall be executed [in
3 writing] or authenticated by the shareholder or by his duly
4 authorized attorney-in-fact and filed with or transmitted to the
5 secretary of the corporation or its designated agent. A
6 shareholder or his duly authorized attorney-in-fact may execute
7 or authenticate a writing or transmit an electronic message
8 authorizing another person to act for him by proxy. A telegram,
9 telex, cablegram, datagram, e-mail, Internet communication or
10 [similar] other means of electronic transmission from a
11 shareholder or attorney-in-fact, or a photographic, facsimile or
12 similar reproduction of a writing executed by a shareholder or
13 attorney-in-fact:
14 (1) may be treated as properly executed or authenticated
15 for purposes of this subsection; and
16 (2) shall be so treated if it sets forth or utilizes a
17 confidential and unique identification number or other mark
18 furnished by the corporation to the shareholder for the
19 purposes of a particular meeting or transaction.
20 (c) Revocation.--A proxy, unless coupled with an interest,
21 shall be revocable at will, notwithstanding any other agreement
22 or any provision in the proxy to the contrary, but the
23 revocation of a proxy shall not be effective until [written]
24 notice thereof has been given to the secretary of the
25 corporation or its designated agent in writing or by electronic
26 transmission. An unrevoked proxy shall not be valid after three
27 years from the date of its execution, authentication or
28 transmission unless a longer time is expressly provided therein.
29 A proxy shall not be revoked by the death or incapacity of the
30 maker unless, before the vote is counted or the authority is
20010S0215B1243 - 34 -
1 exercised, written notice of the death or incapacity is given to
2 the secretary of the corporation or its designated agent.
3 * * *
4 § 1766. Consent of shareholders in lieu of meeting.
5 * * *
6 (b) Partial [written] consent.--If the bylaws so provide,
7 any action required or permitted to be taken at a meeting of the
8 shareholders or of a class of shareholders may be taken without
9 a meeting upon the [written] consent of shareholders who would
10 have been entitled to cast the minimum number of votes that
11 would be necessary to authorize the action at a meeting at which
12 all shareholders entitled to vote thereon were present and
13 voting. The consents shall be filed with the secretary of the
14 corporation.
15 (c) Effectiveness of action by partial [written] consent.--
16 An action taken pursuant to subsection (b) shall not become
17 effective until after at least ten days' [written] notice of the
18 action has been given to each shareholder entitled to vote
19 thereon who has not consented thereto. This subsection may not
20 be relaxed by any provision of the articles.
21 * * *
22 § 1906. Special treatment of holders of shares of same class or
23 series.
24 (a) General rule.--Except as otherwise restricted in the
25 articles, [an amendment or] a plan may contain a provision
26 classifying the holders of shares of a class or series into one
27 or more separate groups by reference to any facts or
28 circumstances that are not manifestly unreasonable and providing
29 mandatory treatment for shares of the class or series held by
30 particular shareholders or groups of shareholders that differs
20010S0215B1243 - 35 -
1 materially from the treatment accorded other shareholders or
2 groups of shareholders holding shares of the same class or
3 series (including a provision modifying or rescinding rights
4 previously created under this section) if:
5 (1) (i) such provision is specifically authorized by a
6 majority of the votes cast by all shareholders entitled
7 to vote on the [amendment or] plan, as well as by a
8 majority of the votes cast by any class or series of
9 shares any of the shares of which are so classified into
10 groups, whether or not such class or series would
11 otherwise be entitled to vote on the [amendment or] plan;
12 and
13 (ii) the provision voted on specifically enumerates
14 the type and extent of the special treatment authorized;
15 or
16 (2) under all the facts and circumstances, a court of
17 competent jurisdiction finds such special treatment is
18 undertaken in good faith, after reasonable deliberation and
19 is in the best interest of the corporation.
20 (b) Statutory voting rights upon special treatment.--Except
21 as provided in subsection (c), if [an amendment or] a plan
22 contains a provision for special treatment, each group of
23 holders of any outstanding shares of a class or series who are
24 to receive the same special treatment under the [amendment or]
25 plan shall be entitled to vote as a special class in respect to
26 the plan regardless of any limitations stated in the articles or
27 bylaws on the voting rights of any class or series.
28 (c) Dissenters rights upon special treatment.--If any
29 [amendment or] plan contains a provision for special treatment
30 without requiring for the adoption of the [amendment or] plan
20010S0215B1243 - 36 -
1 the statutory class vote required by subsection (b), the holder
2 of any outstanding shares the statutory class voting rights of
3 which are so denied, who objects to the [amendment or] plan and
4 complies with Subchapter D of Chapter 15 (relating to dissenters
5 rights), shall be entitled to the rights and remedies of
6 dissenting shareholders provided in that subchapter.
7 (d) Exceptions.--This section shall not apply to:
8 (1) The creation or issuance of securities, contracts,
9 warrants or other instruments evidencing any shares, option
10 rights, securities having conversion or option rights or
11 obligations authorized by section 2513 (relating to disparate
12 treatment of certain persons).
13 (2) A provision of [an amendment or] a plan that offers
14 to all holders of shares of a class or series the same option
15 to elect certain treatment.
16 (3) [An amendment or] A plan that contains an express
17 provision that this section shall not apply or that fails to
18 contain an express provision that this section shall apply.
19 The shareholders of a corporation that proposes [an amendment
20 or] a plan to which this section is not applicable by reason
21 of this paragraph shall have the remedies contemplated by
22 section 1105 (relating to restriction on equitable relief).
23 (4) A provision of a plan that treats all of the holders
24 of a particular class or series of shares differently from
25 the holders of another class or series. A provision of a plan
26 that treats the holders of a class or series of shares
27 differently from the holders of another class or series of
28 shares shall not constitute a violation of section 1521(d)
29 (relating to authorized shares).
30 (e) Definition.--As used in this section, the term "plan"
20010S0215B1243 - 37 -
1 includes:
2 (1) an amendment of the articles that effects a
3 reclassification of shares, whether or not the amendment is
4 accompanied by a separate plan of reclassification; and
5 (2) a resolution recommending that the corporation
6 dissolve voluntarily adopted under section 1972(a) (relating
7 to proposal of voluntary dissolution).
8 § 1912. Proposal of amendments.
9 * * *
10 (c) Terms of amendment.--The resolution or petition may set
11 forth the manner and basis of reclassifying the shares of the
12 corporation. Any of the terms of a plan of reclassification or
13 other action contained in an amendment may be made dependent
14 upon facts ascertainable outside of the amendment if the manner
15 in which the facts will operate upon the terms of the amendment
16 is set forth in the amendment. Such facts may include, without
17 limitation, actions or events within the control of or
18 determinations made by the corporation or a representative of
19 the corporation.
20 § 1914. Adoption of amendments.
21 * * *
22 (b) Statutory voting rights.--Except as provided in this
23 subpart, the holders of the outstanding shares of a class or
24 series of shares shall be entitled to vote as a class in respect
25 of a proposed amendment regardless of any limitations stated in
26 the articles or bylaws on the voting rights of any class or
27 series if [a proposed] the amendment would:
28 (1) authorize the board of directors to fix and
29 determine the relative rights and preferences, as between
30 series, of any preferred or special class;
20010S0215B1243 - 38 -
1 (2) make any change in the preferences, limitations or
2 special rights (other than preemptive rights or the right to
3 vote cumulatively) of the shares of a class or series adverse
4 to the class or series;
5 (3) authorize a new class or series of shares having a
6 preference as to dividends or assets which is senior to the
7 shares of a class or series; [or]
8 (4) increase the number of authorized shares of any
9 class or series having a preference as to dividends or assets
10 which is senior in any respect to the shares of a class or
11 series; or
12 (5) make the outstanding shares of a class or series
13 redeemable by a method that is not pro rata, by lot or
14 otherwise equitable.
15 [then the holders of the outstanding shares of the class or
16 series shall be entitled to vote as a class in respect to the
17 amendment regardless of any limitations stated in the articles
18 or bylaws on the voting rights of any class or series.]
19 (c) Adoption by board of directors.--Unless otherwise
20 restricted in the articles, an amendment of articles shall not
21 require the approval of the shareholders of the corporation if:
22 (1) shares have not been issued;
23 (2) the amendment is restricted to [any] one or more of
24 the following:
25 (i) changing the corporate name;
26 (ii) providing for perpetual existence;
27 (iii) reflecting a reduction in authorized shares
28 effected by operation of section 1552(a) (relating to
29 power of corporation to acquire its own shares) and, if
30 appropriate, deleting all references to a class or series
20010S0215B1243 - 39 -
1 of shares that is no longer outstanding; [or]
2 (iv) adding or deleting a provision authorized by
3 section 1528(f) (relating to uncertificated shares)[.];
4 or
5 (v) adding, changing or eliminating the par value of
6 any class or series of shares if the par value of that
7 class or series does not have any substantive effect
8 under the terms of that or any other class or series of
9 shares;
10 (3) (i) the corporation has only one class or series of
11 voting shares outstanding;
12 (ii) the corporation does not have any class or
13 series of shares outstanding that is:
14 (A) convertible into those voting shares;
15 (B) junior in any way to those voting shares; or
16 (C) entitled to participate on any basis in
17 distributions with those voting shares; and
18 (iii) the amendment is effective solely to
19 accomplish one of the following purposes with respect to
20 those voting shares:
21 [(i)] (A) in connection with effectuating a stock
22 dividend of voting shares on the voting shares, to
23 increase the number of authorized shares [to the extent
24 necessary to permit the board of directors to effectuate
25 a stock dividend in the shares of the corporation] of the
26 voting shares in the same proportion that the voting
27 shares to be distributed in the stock dividend increase
28 the issued voting shares; or
29 [(ii) effectuate a] (B) to split the voting shares
30 and, if desired, increase the number of authorized shares
20010S0215B1243 - 40 -
1 of the voting shares or change the par value of [the
2 authorized] the voting shares, or both, in proportion
3 thereto;
4 (4) to the extent the amendment has not been approved by
5 the shareholders, it restates without change all of the
6 operative provisions of the articles as theretofore amended
7 or as amended thereby; or
8 (5) the amendment accomplishes any combination of
9 purposes specified in this subsection.
10 Whenever a provision of this subpart authorizes the board of
11 directors to take any action without the approval of the
12 shareholders and provides that a statement, certificate, plan or
13 other document relating to such action shall be filed in the
14 Department of State and shall operate as an amendment of the
15 articles, the board upon taking such action may, in lieu of
16 filing the statement, certificate, plan or other document, amend
17 the articles under this subsection without the approval of the
18 shareholders to reflect the taking of such action. An amendment
19 of articles under this subsection shall be deemed adopted by the
20 corporation when it has been adopted by the board of directors
21 pursuant to section 1912 (relating to proposal of amendments).
22 * * *
23 (f) Definition.--As used in this section, the term "voting
24 shares" has the meaning specified in section 2552 (relating to
25 definitions).
26 § 1922. Plan of merger or consolidation.
27 (a) Preparation of plan.--A plan of merger or consolidation,
28 as the case may be, shall be prepared, setting forth:
29 * * *
30 (5) Such other provisions as are deemed desirable.
20010S0215B1243 - 41 -
1 [Any of the terms of the plan may be made dependent upon facts
2 ascertainable outside of the plan if the manner in which the
3 facts will operate upon the terms of the plan is set forth in
4 the plan.]
5 (b) Post-adoption amendment.--A plan of merger or
6 consolidation may contain a provision that the boards of
7 directors of the constituent corporations may amend the plan at
8 any time prior to its effective date, except that an amendment
9 made subsequent to the adoption of the plan by the shareholders
10 of any constituent domestic business corporation shall not
11 change:
12 (1) The amount or kind of shares, obligations, cash,
13 property or rights to be received in exchange for or on
14 conversion of all or any of the shares of the constituent
15 domestic business corporation adversely to the holders of
16 those shares.
17 (2) Any [term] provision of the articles of the
18 surviving or new corporation [to be effected by] as it is to
19 be in effect immediately following consummation of the merger
20 or consolidation, except provisions that may be amended
21 without the approval of the shareholders under section
22 1914(c)(2) (relating to adoption of amendments).
23 (3) Any of the other terms and conditions of the plan if
24 the change would adversely affect the holders of any shares
25 of the constituent domestic business corporation.
26 (c) Proposal.--[Every] Except where the approval of the
27 board of directors is unnecessary under this subchapter, every
28 merger or consolidation shall be proposed in the case of each
29 domestic business corporation by the adoption by the board of
30 directors of a resolution approving the plan of merger or
20010S0215B1243 - 42 -
1 consolidation. Except where the approval of the shareholders is
2 unnecessary under this subchapter, the board of directors shall
3 direct that the plan be submitted to a vote of the shareholders
4 entitled to vote thereon at a regular or special meeting of the
5 shareholders.
6 * * *
7 (e) Reference to outside facts.--Any of the terms of a plan
8 of merger or consolidation may be made dependent upon facts
9 ascertainable outside of the plan if the manner in which the
10 facts will operate upon the terms of the plan is set forth in
11 the plan. Such facts may include, without limitation, actions or
12 events within the control of or determinations made by a party
13 to the plan or a representative of a party to the plan.
14 § 1923. Notice of meeting of shareholders.
15 (a) General rule.--Written notice of the meeting of
16 shareholders that will act on the proposed plan shall be given
17 to each shareholder of record, whether or not entitled to vote
18 thereon, of each domestic business corporation that is a party
19 to the merger or consolidation. There shall be included in, or
20 enclosed with, the notice a copy of the proposed plan or a
21 summary thereof and, if Subchapter D of Chapter 15 (relating to
22 dissenters rights) is applicable to the holders of shares of any
23 class or series, a copy of that subchapter and of section 1930
24 (relating to dissenters rights) shall be furnished to the
25 holders of shares of that class or series. If the surviving or
26 new corporation will be a nonregistered corporation, the notice
27 shall state that a copy of its bylaws, as they will be in effect
28 immediately following the merger or consolidation, will be
29 furnished to any shareholder on request and without cost.
30 * * *
20010S0215B1243 - 43 -
1 § 1924. Adoption of plan.
2 * * *
3 (b) Adoption by board of directors.--
4 (1) Unless otherwise required by its bylaws, a plan of
5 merger or consolidation shall not require the approval of the
6 shareholders of a constituent domestic business corporation
7 if:
8 * * *
9 (ii) immediately prior to the adoption of the plan
10 and at all times thereafter prior to its effective date,
11 another corporation that is a party to the [merger or
12 consolidation] plan owns directly or indirectly 80% or
13 more of the outstanding shares of each class of the
14 constituent corporation; or
15 * * *
16 (3) If a merger or consolidation of a subsidiary
17 corporation with a parent corporation is effected pursuant to
18 paragraph (1)(ii), the plan of merger or consolidation shall
19 be deemed adopted by the subsidiary corporation when it has
20 been adopted by the board of the parent corporation and
21 neither approval of the plan by the board of directors of the
22 subsidiary corporation nor execution of articles of merger or
23 consolidation by the subsidiary corporation shall [not] be
24 necessary.
25 (4) (i) Unless other required by its bylaws, a plan of
26 merger or consolidation providing for the merger or
27 consolidation of a domestic business corporation
28 (referred to in this paragraph as the "constituent
29 corporation") with or into a single indirect wholly owned
30 subsidiary (referred to in this paragraph as the
20010S0215B1243 - 44 -
1 "subsidiary corporation") of the constituent corporation
2 shall not require the approval of the shareholders of
3 either the constituent corporation or the subsidiary
4 corporation if all of the provisions of this paragraph
5 are satisfied.
6 (ii) A merger or consolidation under this paragraph
7 shall satisfy the following conditions:
8 (A) The constituent corporation and the
9 subsidiary corporation are the only parties to the
10 merger or consolidation, other than the resulting
11 corporation, if any, in a consolidation (the
12 corporation that survives or results from the merger
13 or consolidation is referred to in this paragraph as
14 the "resulting subsidiary").
15 (B) Each share or fraction of a share of the
16 capital stock of the constituent corporation
17 outstanding immediately prior to the effective time
18 of the merger or consolidation is converted in the
19 merger or consolidation into a share or equal
20 fraction of a share of capital stock of a holding
21 company having the same designations, rights, powers
22 and preferences and the qualifications, limitations
23 and restrictions as the share of stock of the
24 constituent corporation being converted in the merger
25 or consolidation.
26 (C) The holding company and the resulting
27 subsidiary are each domestic business corporations.
28 (D) Immediately following the effective time of
29 the merger or consolidation, the articles of
30 incorporation and bylaws of the holding company are
20010S0215B1243 - 45 -
1 identical to the articles of incorporation and bylaws
2 of the constituent corporation immediately before the
3 effective time of the merger or consolidation, except
4 for changes that could be made without shareholder
5 approval under section 1914(c) (relating to adoption
6 by board of directors).
7 (E) Immediately following the effective time of
8 the merger or consolidation, the resulting subsidiary
9 is a direct or indirect wholly owned subsidiary of
10 the holding company.
11 (F) The directors of the constituent corporation
12 become or remain the directors of the holding company
13 upon the effective time of the merger or
14 consolidation.
15 (G) The board of directors of the constituent
16 corporation has made a good faith determination that
17 the shareholders of the constituent corporation will
18 not recognize gain or loss for United States Federal
19 Income Tax purposes.
20 (iii) As used in this paragraph only, the term
21 "holding company" means a corporation that, from its
22 incorporation until consummation of the merger or
23 consolidation governed by this paragraph, was at all
24 times a direct wholly owned subsidiary of the constituent
25 corporation and whose capital stock is issued in the
26 merger or consolidation.
27 (iv) If the holding company is a registered
28 corporation, the shares of the holding company issued in
29 connection with the merger or consolidation shall be
30 deemed to have been acquired at the time that the shares
20010S0215B1243 - 46 -
1 of the constituent corporation converted in the merger or
2 consolidation were acquired.
3 (5) A plan of merger or consolidation adopted by the
4 board of directors under this subsection without the approval
5 of the shareholders shall not, by itself, create or impair
6 any rights or obligations on the part of any person under
7 section 2538 (relating to approval of transactions with
8 interested shareholders) or under Subchapters E (relating to
9 control transactions), F (relating to business combinations),
10 G (relating to control-share acquisitions), H (relating to
11 disgorgement by certain controlling shareholders following
12 attempts to acquire control), I (relating to severance
13 compensation for employees terminated following certain
14 control-share acquisitions) and J (relating to business
15 combination transactions - labor contracts) of Chapter 25,
16 nor shall it change the standard of care applicable to the
17 directors under Subchapter B of Chapter 17 (relating to
18 fiduciary duty).
19 * * *
20 § 1929. Effect of merger or consolidation.
21 * * *
22 (b) Property rights.--All the property, real, personal and
23 mixed, and franchises of each of the corporations parties to the
24 merger or consolidation, and all debts due on whatever account
25 to any of them, including subscriptions for shares and other
26 choses in action belonging to any of them, shall be deemed to be
27 [transferred to and] vested in and shall belong to the surviving
28 or new corporation, as the case may be, without further action,
29 and the title to any real estate, or any interest therein,
30 vested in any of the corporations shall not revert or be in any
20010S0215B1243 - 47 -
1 way impaired by reason of the merger or consolidation. The
2 surviving or new corporation shall thenceforth be responsible
3 for all the liabilities of each of the corporations so merged or
4 consolidated. Liens upon the property of the merging or
5 consolidating corporations shall not be impaired by the merger
6 or consolidation and any claim existing or action or proceeding
7 pending by or against any of the corporations may be prosecuted
8 to judgment as if the merger or consolidation had not taken
9 place or the surviving or new corporation may be proceeded
10 against or substituted in its place.
11 (c) Taxes.--Any taxes, interest, penalties and public
12 accounts of the Commonwealth[,] claimed against any of the
13 merging or consolidating corporations [but not] that are
14 settled, assessed or determined prior to or after the merger or
15 consolidation[,] shall be [settled, assessed or determined
16 against] the liability of the surviving or new corporation and,
17 together with interest thereon, shall be a lien against the
18 franchises and property, both real and personal, of the
19 surviving or new corporation.
20 * * *
21 § 1930. Dissenters rights.
22 * * *
23 (b) Plans adopted by directors only.--Except as otherwise
24 provided pursuant to section 1571(c) (relating to grant of
25 optional dissenters rights), Subchapter D of Chapter 15 shall
26 not apply to any of the shares of a corporation that is a party
27 to a merger or consolidation pursuant to section 1924(b)(1)(i)
28 or (4) (relating to adoption by board of directors).
29 * * *
30 § 1931. Share exchanges.
20010S0215B1243 - 48 -
1 (a) General rule.--All the outstanding shares of one or more
2 classes or series of a domestic business corporation, designated
3 in this section as the exchanging corporation, may, in the
4 manner provided in this section, be acquired by any person,
5 designated in this section as the acquiring person, through an
6 exchange of all the shares pursuant to a plan of exchange. The
7 plan of exchange may also provide for the conversion of any
8 other shares of the exchanging corporation into shares, other
9 securities or obligations of any person or cash, property or
10 rights. The procedure authorized by this section shall not be
11 deemed to limit the power of any person to acquire all or part
12 of the shares or other securities of any class or series of a
13 corporation through a voluntary exchange or otherwise by
14 agreement with the holders of the shares or other securities.
15 (b) Plan of exchange.--A plan of exchange shall be prepared,
16 setting forth:
17 (1) The terms and conditions of the exchange.
18 (2) The manner and basis of exchanging or converting the
19 shares of the exchanging corporation into shares or other
20 securities or obligations of the acquiring person, and, if
21 any of the shares of the exchanging corporation are not to be
22 exchanged or converted solely into shares or other securities
23 or obligations of the acquiring person, the shares or other
24 securities or obligations of any other person or cash,
25 property or rights that the holders of the shares of the
26 exchanging corporation are to receive in exchange for, or
27 upon conversion of, the shares and the surrender of any
28 certificates evidencing them, which securities or
29 obligations, if any, of any other person or cash, property
30 and rights may be in addition to or in lieu of the shares or
20010S0215B1243 - 49 -
1 other securities or obligations of the acquiring person.
2 (3) Any changes desired to be made in the articles of
3 the exchanging corporation, which may include a restatement
4 of the articles.
5 (4) Any provisions desired providing special treatment
6 of shares held by any shareholder or group of shareholders as
7 authorized by, and subject to the provisions of, section 1906
8 (relating to special treatment of holders of shares of same
9 class or series). Notwithstanding subsection (a), a plan that
10 provides special treatment may affect less than all of the
11 outstanding shares of a class or series.
12 (5) Such other provisions as are deemed desirable.
13 [Any of the terms of the plan may be made dependent upon facts
14 ascertainable outside of the plan if the manner in which the
15 facts will operate upon the terms of the plan is set forth in
16 the plan.]
17 (c) Proposal and adoption.--The plan of exchange shall be
18 proposed and adopted and may be amended after its adoption and
19 terminated by the exchanging corporation in the manner provided
20 by this subchapter for the proposal, adoption, amendment and
21 termination of a plan of merger except section 1924(b) (relating
22 to adoption by board of directors). There shall be included in,
23 or enclosed with, the notice of the meeting of shareholders to
24 act on the plan a copy or a summary of the plan and, if
25 Subchapter D of Chapter 15 (relating to dissenters rights) is
26 applicable, a copy of the subchapter and of subsection (d). The
27 holders of any class of shares to be [acquired] exchanged or
28 converted pursuant to the plan of exchange shall be entitled to
29 vote as a class on the plan if they would have been entitled to
30 vote on a plan of merger that affects the class in substantially
20010S0215B1243 - 50 -
1 the same manner as the plan of exchange.
2 (d) Dissenters rights in share exchanges.--Any holder of
3 shares that are to be [acquired] exchanged or converted pursuant
4 to a plan of exchange who objects to the plan and complies with
5 the provisions of Subchapter D of Chapter 15 shall be entitled
6 to the rights and remedies of dissenting shareholders therein
7 provided, if any. See section 1906(c) (relating to dissenter
8 rights upon special treatment).
9 (e) Articles of exchange.--Upon adoption of a plan of
10 exchange, as provided in this section, articles of exchange
11 shall be executed by the exchanging corporation and shall set
12 forth:
13 (1) The name and, subject to section 109 (relating to
14 name of commercial registered office provider in lieu of
15 registered address), the location of the registered office,
16 including street and number, if any, of the exchanging
17 corporation.
18 (2) If the plan is to be effective on a specified date,
19 the hour, if any, and the month, day and year of the
20 effective date.
21 (3) The manner in which the plan was adopted by the
22 exchanging corporation.
23 (4) Except as provided in section 1901 (relating to
24 omission of certain provisions from filed plans), the plan of
25 exchange.
26 The articles of exchange shall be filed in the Department of
27 State. See [section] sections 134 (relating to docketing
28 statement) and 135 (relating to requirements to be met by filed
29 documents.
30 * * *
20010S0215B1243 - 51 -
1 (i) Reference to outside facts.--Any of the terms of a plan
2 of exchange may be made dependent upon facts ascertainable
3 outside of the plan if the manner in which the facts will
4 operate upon the terms of the plan is set forth in the plan.
5 Such facts may include, without limitation, actions or events
6 within the control of or determinations made by a party to the
7 plan or a representative of a party to the plan.
8 § 1932. Voluntary transfer of corporate assets.
9 * * *
10 (b) Shareholder approval required.--
11 (1) A sale, lease, exchange or other disposition of all,
12 or substantially all, the property and assets, with or
13 without the goodwill, of a business corporation, if not made
14 pursuant to subsection (a) or (d) or to section 1551
15 (relating to distributions to shareholders) or Subchapter D
16 (relating to division), may be made only pursuant to a plan
17 of asset transfer[.] in the manner provided in this
18 subsection. A corporation selling, leasing or otherwise
19 disposing of all, or substantially all, its property and
20 assets is referred to in this subsection and in subsection
21 (c) as the "transferring corporation."
22 (2) The property or assets of a direct or indirect
23 subsidiary corporation that is controlled by a parent
24 corporation shall also be deemed the property or assets of
25 the parent corporation for the purposes of this subsection
26 and of subsection (c). A merger or consolidation to which
27 such a subsidiary corporation is a party and in which a third
28 party acquires direct or indirect ownership of the property
29 or assets of the subsidiary corporation constitutes an "other
30 disposition" of the property or assets of the parent
20010S0215B1243 - 52 -
1 corporation within the meaning of that term as used in this
2 section.
3 (3) The plan of asset transfer shall set forth the terms
4 and conditions of the sale, lease, exchange or other
5 disposition or may authorize the board of directors to fix
6 any or all of the terms and conditions, including the
7 consideration to be received by the corporation therefor. The
8 plan may provide for the distribution to the shareholders of
9 some or all of the consideration to be received by the
10 corporation, including provisions for special treatment of
11 shares held by any shareholder or group of shareholders as
12 authorized by, and subject to the provisions of, section 1906
13 (relating to special treatment of holders of shares of same
14 class or series). It shall not be necessary for the person
15 acquiring the property or assets of the transferring
16 corporation to be a party to the plan. Any of the terms of
17 the plan may be made dependent upon facts ascertainable
18 outside of the plan if the manner in which the facts will
19 operate upon the terms of the plan is set forth in the plan.
20 Such facts may include, without limitation, actions or events
21 within the control of or determinations made by the
22 corporation or a representative of the corporation.
23 (4) The plan of asset transfer shall be proposed and
24 adopted, and may be amended after its adoption and
25 terminated, by [a business] the transferring corporation in
26 the manner provided in this subchapter for the proposal,
27 adoption, amendment and termination of a plan of merger,
28 except section 1924(b) (relating to adoption by board of
29 directors). The procedures of this subchapter shall not be
30 applicable to the person acquiring the property or assets of
20010S0215B1243 - 53 -
1 the transferring corporation. There shall be included in, or
2 enclosed with, the notice of the meeting of the shareholders
3 of the transferring corporation to act on the plan a copy or
4 a summary of the plan and, if Subchapter D of Chapter 15
5 (relating to dissenters rights) is applicable, a copy of the
6 subchapter and of subsection (c).
7 (5) In order to make effective the plan of asset
8 transfer so adopted, it shall not be necessary to file any
9 articles or other documents in the Department of State.
10 (c) Dissenters rights in asset transfers.--
11 (1) If a shareholder of a transferring corporation that
12 adopts a plan of asset transfer objects to the plan and
13 complies with Subchapter D of Chapter 15, the shareholder
14 shall be entitled to the rights and remedies of dissenting
15 shareholders therein provided, if any.
16 (2) Paragraph (1) shall not apply to a sale pursuant to
17 an order of court having jurisdiction in the premises or a
18 sale [for money on terms requiring] pursuant to a plan of
19 asset transfer that requires that all or substantially all of
20 the net proceeds of sale be distributed to the shareholders
21 in accordance with their respective interests within one year
22 after the date of sale or to a liquidating trust.
23 * * *
24 (g) Presumption.--A corporation will conclusively be deemed
25 not to have sold, leased, exchanged or otherwise disposed of
26 all, or substantially all, of its property and assets, with or
27 without goodwill, if the corporation or any direct or indirect
28 subsidiary controlled by the corporation retains a business
29 activity that represented at the end of its most recently
30 completed fiscal year, on a consolidated basis, at least:
20010S0215B1243 - 54 -
1 (1) 25% of total assets; and
2 (2) 25% of either:
3 (i) income from continuing operations before taxes;
4 or
5 (ii) revenues from continuing operations.
6 § 1952. Proposal and adoption of plan of division.
7 (a) Preparation of plan.--A plan of division shall be
8 prepared, setting forth:
9 (1) The terms and conditions of the division, including
10 the manner and basis of:
11 (i) The reclassification of the shares of the
12 surviving corporation, if there be one, and, if any of
13 the shares of the dividing corporation are not to be
14 converted solely into shares or other securities or
15 obligations of one or more of the resulting corporations,
16 the shares or other securities or obligations of any
17 other person, or cash, property or rights that the
18 holders of such shares are to receive in exchange for or
19 upon conversion of such shares, and the surrender of any
20 certificates evidencing them, which securities or
21 obligations, if any, of any other person or cash,
22 property or rights may be in addition to or in lieu of
23 shares or other securities or obligations of one or more
24 of the resulting corporations.
25 (ii) The disposition of the shares and other
26 securities or obligations, if any, of the new corporation
27 or corporations resulting from the division.
28 (2) A statement that the dividing corporation will, or
29 will not, survive the division.
30 (3) Any changes desired to be made in the articles of
20010S0215B1243 - 55 -
1 the surviving corporation, if there be one, including a
2 restatement of the articles.
3 (4) The articles of incorporation required by subsection
4 (b).
5 (5) Any provisions desired providing special treatment
6 of shares held by any shareholder or group of shareholders as
7 authorized by, and subject to the provisions of, section 1906
8 (relating to special treatment of holders of shares of same
9 class or series).
10 (6) Such other provisions as are deemed desirable.
11 [Any of the terms of the plan may be made dependent upon facts
12 ascertainable outside of the plan if the manner in which the
13 facts will operate upon the terms of the plan is set forth in
14 the plan.]
15 * * *
16 (g) [Action by] Rights of holders of indebtedness.--[Unless
17 otherwise provided by an indenture or other contract by which
18 the dividing corporation is bound, a plan of division shall not
19 require the approval of the holders of any debt securities or
20 other obligations of the dividing corporation or of any
21 representative of the holders, if the transfer of assets
22 effected by the division, if effected by means of a sale, lease,
23 exchange or other disposition, and any related distribution,
24 would not require the approval of the holders or representatives
25 thereof.] If any debt securities, notes or similar evidences of
26 indebtedness for money borrowed, whether secured or unsecured,
27 indentures or other contracts were issued, incurred or executed
28 by the dividing corporation before (the Legislative Reference
29 Bureau shall insert here the effective date of the amendments of
30 this section) and have not been amended subsequent to that date,
20010S0215B1243 - 56 -
1 the liability of the dividing corporation thereunder shall not
2 be affected by the division nor shall the rights of the obligees
3 thereunder be impaired by the division, and each of the
4 resulting corporations may be proceeded against or substituted
5 in place of the dividing corporation as joint and several
6 obligors on such liability, regardless of any provision of the
7 plan of division apportioning the liabilities of the dividing
8 corporation.
9 * * *
10 (i) Reference to outside facts.--Any of the terms of a plan
11 of division may be made dependent upon facts ascertainable
12 outside of the plan if the manner in which the facts will
13 operate upon the terms of the plan is set forth in the plan.
14 Such facts may include, without limitation, actions or events
15 within the control of or determinations made by the dividing
16 corporation or a representative of the dividing corporation.
17 § 1953. Division without shareholder approval.
18 (a) General rule.--Unless otherwise restricted by its bylaws
19 or required by section 1952(f) (relating to action by holders of
20 preferred or special shares), a plan of division that does not
21 alter the state of incorporation of a business corporation,
22 provide for special treatment nor amend in any respect the
23 provisions of its articles (except amendments which under
24 section 1914(c) (relating to adoption by board of directors) may
25 be made without shareholder action) shall not require the
26 approval of the shareholders of the corporation if:
27 (1) the dividing corporation has only one class of
28 shares outstanding and the shares and other securities, if
29 any, of each corporation resulting from the plan are
30 distributed pro rata to the shareholders of the dividing
20010S0215B1243 - 57 -
1 corporation;
2 (2) the dividing corporation survives the division and
3 all the shares and other securities and obligations, if any,
4 of all new corporations resulting from the plan are owned
5 solely by the surviving corporation; or
6 (3) the [transfers] allocation of assets among the
7 resulting corporations effected by the division, if effected
8 by means of a sale, lease, exchange or other disposition,
9 would not require the approval of shareholders under section
10 1932(b) (relating to shareholder approval required).
11 (b) Limitation.--A plan of division adopted by the board of
12 directors under this section without the approval of the
13 shareholders shall not, by itself, create or impair any rights
14 or obligations on the part of any person under section 2538
15 (relating to approval of transactions with interested
16 shareholders) or under Subchapters E (relating to control
17 transactions), F (relating to business combinations), G
18 (relating to control-share acquisitions), H (relating to
19 disgorgement by certain controlling shareholders following
20 attempts to acquire control), I (relating to severance
21 compensation for employees terminated following certain control-
22 share acquisitions) and J (relating to business combination
23 transactions - labor contracts) of Chapter 25, nor shall it
24 change the standard of care applicable to the directors under
25 Subchapter B of Chapter 17 (relating to fiduciary duty).
26 § 1955. Filing of articles of division.
27 (a) General rule.--The articles of division, and the
28 certificates or statement, if any, required by section 139
29 (relating to tax clearance of certain fundamental transactions)
30 shall be filed in the Department of State.
20010S0215B1243 - 58 -
1 (b) Cross [reference] references.--See [section] sections
2 134 (relating to docketing statement) and 135 (relating to
3 requirements to be met by filed documents).
4 § 1957. Effect of division.
5 * * *
6 (b) Property rights; allocations of assets and
7 liabilities.--
8 (1) (i) All the property, real, personal and mixed, and
9 franchises of the dividing corporation, and all debts due
10 on whatever account to it, including subscriptions for
11 shares and other choses in action belonging to it, shall
12 (except as otherwise provided in paragraph (2)), to the
13 extent [transfers] allocations of assets are contemplated
14 by the plan of division, be deemed without further action
15 to be [transferred] allocated to and vested in the
16 resulting corporations on such a manner and basis and
17 with such effect as is specified in the plan, or per
18 capita among the resulting corporations, as tenants in
19 common, if no specification is made in the plan, and the
20 title to any real estate, or interest therein, vested in
21 any of the corporations shall not revert or be in any way
22 impaired by reason of the division.
23 (ii) Upon the division becoming effective, the
24 resulting corporations shall each thenceforth be
25 responsible as separate and distinct corporations only
26 for such liabilities as each corporation may undertake or
27 incur in its own name but shall be liable for the
28 liabilities of the dividing corporation in the manner and
29 on the basis provided in subparagraphs (iv) and (v).
30 (iii) Liens upon the property of the dividing
20010S0215B1243 - 59 -
1 corporation shall not be impaired by the division.
2 (iv) [One] To the extent allocations of liabilities
3 are contemplated by the plan of division, the liabilities
4 of the dividing corporation shall be deemed without
5 further action to be allocated to and become the
6 liabilities of the resulting corporations on such a
7 manner and basis and with such effect as is specified in
8 the plan; and one or more, but less than all, of the
9 resulting corporations shall be free of the liabilities
10 of the dividing corporation to the extent, if any,
11 specified in the plan, if in either case:
12 (A) no fraud [of corporate creditors, or of] on
13 minority shareholders or shareholders without voting
14 rights or violation of law shall be effected thereby,
15 and [if applicable provisions of law are complied
16 with.]
17 (B) the plan does not constitute a fraudulent
18 transfer under 12 Pa.C.S. Ch. 51 (relating to
19 fraudulent transfers).
20 (v) If the conditions in subparagraph (iv) for
21 freeing one or more of the resulting corporations from
22 the liabilities of the dividing corporation, or for
23 allocating some or all of the liabilities of the dividing
24 corporation, are not satisfied, the liabilities of the
25 dividing corporation as to which those conditions are not
26 satisfied shall not be affected by the division nor shall
27 the rights of creditors [thereof or of any person dealing
28 with the corporation] thereunder be impaired by the
29 division and any claim existing or action or proceeding
30 pending by or against the corporation with respect to
20010S0215B1243 - 60 -
1 those liabilities may be prosecuted to judgment as if the
2 division had not taken place, or the resulting
3 corporations may be proceeded against or substituted in
4 [its] place of the dividing corporation as joint and
5 several obligors on [such liability] those liabilities,
6 regardless of any provision of the plan of division
7 apportioning the liabilities of the dividing corporation.
8 (vi) The conditions in subparagraph (iv) for freeing
9 one or more of the resulting corporations from the
10 liabilities of the dividing corporation and for
11 allocating some or all of the liabilities of the dividing
12 corporation shall be conclusively deemed to have been
13 satisfied if the plan of division has been approved by
14 the Department of Banking, the Insurance Department or
15 the Pennsylvania Public Utility Commission in a final
16 order issued after (the Legislative Reference Bureau
17 shall insert here the effective date of the amendments of
18 this section) that has become not subject to further
19 appeal.
20 (2) (i) The [transfer] allocation of any fee or
21 freehold interest or leasehold having a remaining term of
22 30 years or more in any tract or parcel of real property
23 situate in this Commonwealth owned by a dividing
24 corporation (including property owned by a foreign
25 business corporation dividing solely under the law of
26 another jurisdiction) to a new corporation resulting from
27 the division shall not be effective until one of the
28 following documents is filed in the office for the
29 recording of deeds of the county, or each of them, in
30 which the tract or parcel is situated:
20010S0215B1243 - 61 -
1 (A) A deed, lease or other instrument of
2 confirmation describing the tract or parcel.
3 (B) A duly executed duplicate original copy of
4 the articles of division.
5 (C) A copy of the articles of division certified
6 by the Department of State.
7 (D) A declaration of acquisition setting forth
8 the value of real estate holdings in such county of
9 the corporation as an acquired company.
10 (ii) The provisions of 75 Pa.C.S. § 1114 (relating
11 to transfer of vehicle by operation of law) shall not be
12 applicable to [a transfer] an allocation of ownership of
13 any motor vehicle, trailer or semitrailer [from a
14 dividing corporation] to a new corporation under this
15 section or under a similar law of any other jurisdiction
16 but any such [transfer] allocation shall be effective
17 only upon compliance with the requirements of 75 Pa.C.S.
18 § 1116 (relating to issuance of new certificate following
19 transfer).
20 (3) It shall not be necessary for a plan of division to
21 list each individual asset or liability of the dividing
22 corporation to be allocated to a new corporation so long as
23 those assets and liabilities are described in a reasonable
24 manner.
25 (4) Each new corporation shall hold any assets and
26 liabilities allocated to it as the successor to the dividing
27 corporation, and those assets and liabilities shall not be
28 deemed to have been assigned to the new corporation in any
29 manner, whether directly or indirectly or by operation of
30 law.
20010S0215B1243 - 62 -
1 (c) Taxes.--Any taxes, interest, penalties and public
2 accounts of the Commonwealth[,] claimed against the dividing
3 corporation [but not] that are settled, assessed or determined
4 prior to or after the division[,] shall be [settled, assessed or
5 determined against] the liability of any of the resulting
6 corporations and, together with interest thereon, shall be a
7 lien against the franchises and property, both real and
8 personal, of all the corporations. Upon the application of the
9 dividing corporation, the Department of Revenue, with the
10 concurrence of the Office of Employment Security of the
11 Department of Labor and Industry, shall release one or more, but
12 less than all, of the resulting corporations from liability and
13 liens for all taxes, interest, penalties and public accounts of
14 the dividing corporation due the Commonwealth for periods prior
15 to the effective date of the division if those departments are
16 satisfied that the public revenues will be adequately secured.
17 * * *
18 (h) Conflict of laws.--It is the intent of the General
19 Assembly that:
20 (1) The effect of a division of a domestic business
21 corporation shall be governed solely by the laws of this
22 Commonwealth and any other jurisdiction under the laws of
23 which any of the resulting corporations is incorporated.
24 (2) The effect of a division on the assets and
25 liabilities of the dividing corporation shall be governed
26 solely by the laws of this Commonwealth and any other
27 jurisdiction under the laws of which any of the resulting
28 corporations is incorporated.
29 (3) The validity of any allocations of assets or
30 liabilities by a plan of division of a domestic business
20010S0215B1243 - 63 -
1 corporation, regardless of whether or not any of the new
2 corporations is a foreign business corporation, shall be
3 governed solely by the laws of this Commonwealth.
4 (4) In addition to the express provisions of this
5 subsection, this subchapter shall otherwise generally be
6 granted the protection of full faith and credit under the
7 Constitution of the United States.
8 § 1962. Proposal and adoption of plan of conversion.
9 (a) Preparation of plan.--A plan of conversion shall be
10 prepared, setting forth:
11 (1) The terms and conditions of the conversion.
12 (2) A restatement of the articles of the resulting
13 corporation, which articles shall comply with the
14 requirements of this part relating to nonprofit corporations.
15 (3) Any provisions desired providing special treatment
16 of shares held by any shareholder or group of shareholders as
17 authorized by, and subject to the provisions of, section 1906
18 (relating to special treatment of holders of shares of same
19 class or series).
20 (4) Such other provisions as are deemed desirable.
21 [Any of the terms of the plan may be made dependent upon facts
22 ascertainable outside of the plan if the manner in which the
23 facts will operate upon the terms of the plan is set forth in
24 the plan.]
25 * * *
26 (d) Reference to outside facts.--Any of the terms of a plan
27 of conversion may be made dependent upon facts ascertainable
28 outside of the plan if the manner in which the facts will
29 operate upon the terms of the plan is set forth in the plan.
30 Such facts may include, without limitation, actions or events
20010S0215B1243 - 64 -
1 within the control of or determinations made by the corporation
2 or a representative of the corporation.
3 § 1972. Proposal of voluntary dissolution.
4 (a) General rule.--Any business corporation that has
5 commenced business may dissolve voluntarily in the manner
6 provided in this subchapter and wind up its affairs in the
7 manner provided in section 1975 (relating to predissolution
8 provision for liabilities) or Subchapter H (relating to
9 postdissolution provision for liabilities). Voluntary
10 dissolution shall be proposed by the adoption by the board of
11 directors of a resolution recommending that the corporation be
12 dissolved voluntarily. The resolution shall contain a statement
13 either that the dissolution shall proceed under section 1975 or
14 that the dissolution shall proceed under Subchapter H. The
15 resolution may set forth provisions for the distribution to
16 shareholders of any surplus remaining after paying or providing
17 for all liabilities of the corporation, including provisions for
18 special treatment of shares held by any shareholder or group of
19 shareholders as authorized by, and subject to the provisions of,
20 section 1906 (relating to special treatment of holders of shares
21 of same class or series).
22 (b) Submission to shareholders.--The board of directors
23 shall direct that the [question of] resolution recommending
24 dissolution be submitted to a vote of the shareholders of the
25 corporation entitled to vote thereon at a regular or special
26 meeting of the shareholders.
27 * * *
28 § 1973. Notice of meeting of shareholders.
29 (a) General rule.--Written notice of the meeting of
30 shareholders that will consider the [advisability of voluntarily
20010S0215B1243 - 65 -
1 dissolving a] resolution recommending dissolution of the
2 business corporation shall be given to each shareholder of
3 record entitled to vote thereon and the purpose shall be
4 included in the notice of the meeting.
5 * * *
6 § 1975. Predissolution provision for liabilities.
7 (a) Powers of board.--The board of directors of a business
8 corporation that has elected to proceed under this section shall
9 have full power to wind up and settle the affairs of [a
10 business] the corporation in accordance with this section prior
11 to filing articles of dissolution in accordance with section
12 1977 (relating to articles of dissolution).
13 (b) Notice to creditors and taxing authorities.--After the
14 approval by the shareholders of the [proposal] resolution
15 recommending that the corporation dissolve voluntarily, the
16 corporation shall immediately cause notice of the winding up
17 proceedings to be officially published and to be mailed by
18 certified or registered mail to each known creditor and claimant
19 and to each municipal corporation in which [its registered
20 office or principal] it has a place of business in this
21 Commonwealth [is located].
22 (c) Winding up and distribution.--The corporation shall, as
23 speedily as possible, proceed to collect all sums due it,
24 convert into cash all corporate assets the conversion of which
25 into cash is required to discharge its liabilities and, out of
26 the assets of the corporation, discharge or make adequate
27 provision for the discharge of all liabilities of the
28 corporation, according to their respective priorities. Any
29 surplus remaining after paying or providing for all liabilities
30 of the corporation shall be distributed to the shareholders
20010S0215B1243 - 66 -
1 according to their respective rights and preferences. See
2 section 1972(a) (relating to proposal of voluntary dissolution).
3 § 1976. Judicial supervision of proceedings.
4 A business corporation that has elected to proceed under
5 section 1975 (relating to predissolution provision for
6 liabilities), at any time during the winding up proceedings, may
7 apply to the court to have the proceedings continued under the
8 supervision of the court and thereafter the proceedings shall
9 continue under the supervision of the court as provided in
10 Subchapter G (relating to involuntary liquidation and
11 dissolution).
12 § 1977. Articles of dissolution.
13 (a) General rule.--Articles of dissolution and the
14 certificates or statement required by section 139 (relating to
15 tax clearance of certain fundamental transactions) shall be
16 filed in the Department of State when:
17 (1) all liabilities of the business corporation have
18 been discharged, or adequate provision has been made
19 therefor, in accordance with section 1975 (relating to
20 predissolution provision for liabilities), and all of the
21 remaining assets of the corporation have been distributed as
22 provided in section 1975 (or in case its assets are not
23 sufficient to discharge its liabilities, when all the assets
24 have been fairly and equitably applied, as far as they will
25 go, to the payment of such liabilities); or
26 (2) an election to proceed under Subchapter H (relating
27 to postdissolution provision for liabilities) has been made.
28 [See section 134 (relating to docketing statement).]
29 (b) Contents of articles.--The articles of dissolution shall
30 be executed by the corporation and shall set forth:
20010S0215B1243 - 67 -
1 * * *
2 (5) A statement that:
3 (i) [that] all liabilities of the corporation have
4 been discharged or that adequate provision has been made
5 therefor; [or]
6 (ii) [that] the assets of the corporation are not
7 sufficient to discharge its liabilities, and that all the
8 assets of the corporation have been fairly and equitably
9 applied, as far as they will go, to the payment of such
10 liabilities[. An election by]; or
11 (iii) the corporation has elected to proceed under
12 Subchapter H [shall constitute the making of adequate
13 provision for the liabilities of the corporation,
14 including any judgment or decree that may be obtained
15 against the corporation in any pending action or
16 proceeding].
17 * * *
18 (7) [A] In the case of a corporation that has not
19 elected to proceed under Subchapter H, a statement that no
20 actions or proceedings are pending against the corporation in
21 any court, or that adequate provision has been made for the
22 satisfaction of any judgment or decree that may be obtained
23 against the corporation in each pending action or proceeding.
24 (8) [A] In the case of a corporation that has not
25 elected to proceed under Subchapter H, a statement that
26 notice of the winding-up proceedings of the corporation was
27 mailed by certified or registered mail to each known creditor
28 and claimant and to each municipal corporation in which the
29 [registered office or principal place of business of the]
30 corporation has a place of business in this Commonwealth [is
20010S0215B1243 - 68 -
1 located].
2 * * *
3 (d) Cross references.--See sections 134 (relating to
4 docketing statement) and 135 (relating to requirements to be met
5 by filed documents).
6 § 1978. Winding up of corporation after dissolution.
7 * * *
8 (b) Standard of care of directors and officers.--The
9 dissolution of the corporation shall not subject its directors
10 or officers to standards of conduct different from those
11 prescribed by or pursuant to Chapter 17 (relating to officers,
12 directors and shareholders). Directors of a dissolved
13 corporation who have complied with section 1975 (relating to
14 predissolution provision for liabilities) or Subchapter H
15 (relating to postdissolution provision for liabilities) shall
16 not be personally liable to the creditors of the dissolved
17 corporation.
18 § 1979. Survival of remedies and rights after dissolution.
19 (a) General rule.--The dissolution of a business
20 corporation, either under this subchapter or under Subchapter G
21 (relating to involuntary liquidation and dissolution) or by
22 expiration of its period of duration or otherwise, shall not
23 eliminate nor impair any remedy available to or against the
24 corporation or its directors, officers or shareholders for any
25 right or claim existing, or liability incurred, prior to the
26 dissolution, if an action or proceeding thereon is brought on
27 behalf of:
28 (1) the corporation within the time otherwise limited by
29 law; or
30 (2) any other person before or within two years after
20010S0215B1243 - 69 -
1 the date of the dissolution or within the time otherwise
2 limited by this subpart or other provision of law, whichever
3 is less. See sections 1987 (relating to proof of claims),
4 1993 (relating to acceptance or rejection of matured claims)
5 and 1994 (relating to disposition of unmatured claims).
6 [The actions or proceedings may be prosecuted against and
7 defended by the corporation in its corporate name.]
8 * * *
9 (e) Conduct of actions.--An action or proceeding may be
10 prosecuted against and defended by a dissolved corporation in
11 its corporate name.
12 § 1980. Dissolution by domestication.
13 Whenever a domestic business corporation has domesticated
14 itself under the laws of another jurisdiction by action similar
15 to that provided by section 4161 (relating to domestication) and
16 has authorized that action by the vote required by this
17 subchapter for the approval of a proposal that the corporation
18 dissolve voluntarily, the corporation may surrender its charter
19 under the laws of this Commonwealth by filing in the Department
20 of State articles of dissolution under this subchapter
21 containing the statement specified by section [1977(a)(1)]
22 1977(b)(1) through (4) (relating to [preparation of articles).]
23 articles of dissolution). If the corporation as domesticated in
24 the other jurisdiction qualifies to do business in this
25 Commonwealth either prior to or simultaneously with the filing
26 of the articles of dissolution under this section, the
27 corporation shall not be required to file with the articles of
28 dissolution the tax clearance certificates that would otherwise
29 be required by section 139 (relating to tax clearance of certain
30 fundamental transactions).
20010S0215B1243 - 70 -
1 § 1989. Articles of involuntary dissolution.
2 (a) General rule.--In a proceeding under this subchapter,
3 the court shall enter an order dissolving the business
4 corporation when the costs and expenses of the proceeding and
5 all liabilities of the corporation have been discharged, and all
6 of its remaining assets have been distributed to its
7 shareholders or, in case its assets are not sufficient to
8 discharge such costs, expenses and liabilities, when all the
9 assets have been applied, as far as they will go, to the payment
10 of such costs, expenses and liabilities. See section 139(b)
11 (relating to tax clearance in judicial proceedings).
12 (b) Filing.--After entry of an order of dissolution, the
13 office of the clerk of the court of common pleas shall prepare
14 and execute articles of dissolution substantially in the form
15 provided by section 1977 (relating to articles of dissolution),
16 attach thereto a certified copy of the order and transmit the
17 articles and attached order to the Department of State. [A
18 certificate or statement provided for by section 139 (relating
19 to tax clearance of certain fundamental transactions) shall not
20 be required, and the] The department shall not charge a fee in
21 connection with the filing of articles of dissolution under this
22 section. See [section] sections 134 (relating to docketing
23 statement) and 135 (relating to requirements to be met by filed
24 documents).
25 * * *
26 § 1991.1. Authority of board of directors.
27 (a) General rule.--The board of directors of a business
28 corporation that has elected to proceed under this subchapter
29 shall have full power to wind up and settle the affairs of the
30 corporation in accordance with this subchapter both prior to and
20010S0215B1243 - 71 -
1 after the filing of articles of dissolution in accordance with
2 section 1977 (relating to articles of dissolution).
3 (b) Winding up.--The corporation shall, as speedily as
4 possible, proceed to comply with the requirements of this
5 subchapter while simultaneously collecting all sums due it and
6 converting into cash all corporate assets, the conversion of
7 which into cash is required to make adequate provision for its
8 liabilities.
9 § 1992. Notice to claimants.
10 * * *
11 (c) Publication and service of notices.--
12 (1) The notices required by this section shall be
13 officially published at least once a week for two consecutive
14 weeks and, in the case of a corporation having $10,000,000 or
15 more in total assets at the time of its dissolution, at least
16 once in all editions of a daily newspaper with a national
17 circulation.
18 (2) Concurrently with or preceding the publication, the
19 corporation or successor entity shall send a copy of the
20 notice by certified or registered mail, return receipt
21 requested, to each:
22 (i) known creditor or claimant;
23 (ii) holder of a claim described in subsection (b);
24 and
25 (iii) municipal corporation in which [the registered
26 office or principal] a place of business of the
27 corporation in this Commonwealth was located at the time
28 of filing the articles of dissolution in the department.
29 * * *
30 § 1997. Payments and distributions.
20010S0215B1243 - 72 -
1 * * *
2 (b) Disposition.--The claims and liabilities shall be paid
3 in full and any provision for payment shall be made in full if
4 there are sufficient assets. If there are insufficient assets,
5 the claims and liabilities shall be paid or provided for in
6 order of their priority, and, among claims of equal priority,
7 ratably to the extent of funds legally available therefor. Any
8 remaining assets shall be distributed to the shareholders of the
9 corporation according to their respective rights and
10 preferences, except that the distribution shall not be made less
11 than 60 days after the last notice of rejection, if any, was
12 given under section 1993 (relating to acceptance or rejection of
13 matured claims). See section 1972(a) (relating to proposal of
14 voluntary dissolution).
15 * * *
16 [(d) Liability of directors.--Directors of a dissolved
17 corporation or governing persons of a successor entity that has
18 complied with this section shall not be personally liable to the
19 claimants of the dissolved corporation.]
20 § 2105. Termination of nonstock corporation status.
21 * * *
22 (c) Mutual insurance companies.--With respect to the
23 termination of the status of a mutual insurance company as a
24 nonstock corporation, see section 103 (relating to subordination
25 of title to regulatory laws) and [the act of December 10, 1970
26 (P.L.884, No.279), referred to as the Mutual Insurance Company
27 Conversion Law.] Article VIII-A of the act of May 17, 1921
28 (P.L.682, No.284), known as The Insurance Company Law of 1921.
29 § 2524. Consent of shareholders in lieu of meeting.
30 (a) General rule.--An action may be authorized by the
20010S0215B1243 - 73 -
1 shareholders of a registered corporation without a meeting by
2 less than unanimous [written] consent only if permitted by its
3 articles.
4 (b) Effectiveness of action.--An action authorized by the
5 shareholders of a registered corporation without a meeting by
6 less than unanimous [written] consent may become effective
7 immediately upon its authorization, but prompt notice of the
8 action shall be given to those shareholders entitled to vote
9 thereon who have not consented.
10 § 2526. Voting rights of directors.
11 Every director of a registered corporation described in
12 section 2502(1) (relating to registered corporation status)
13 shall be entitled to one vote, except as otherwise provided in:
14 (1) the articles; or
15 (2) a bylaw adopted by the shareholders either:
16 (i) on or before (the Legislative Reference Bureau
17 shall insert here the effective date of this section); or
18 (ii) at a time when the corporation was not a
19 registered corporation described in section 2502(1).
20 § 2527. Authority of board of directors.
21 The authority, powers and functions of the board of directors
22 of a registered corporation described in section 2502(1)
23 (relating to registered corporation status) may not be varied,
24 and a committee of the board of such a corporation may not be
25 established, by a bylaw adopted by the shareholders, unless the
26 bylaw has been adopted:
27 (1) with the approval of the board of directors;
28 (2) on or before (the Legislative Reference Bureau shall
29 insert here the effective date of this section); or
30 (3) at a time when the corporation was not a registered
20010S0215B1243 - 74 -
1 corporation described in section 2502(1).
2 § 2902. Definitions and index of definitions.
3 (a) Definitions.--The following words and phrases when used
4 in this chapter shall have the meanings given to them in this
5 section unless the context clearly indicates otherwise:
6 "Disqualified person." [A] The term "disqualified person" as
7 used in this chapter means a licensed person who for any reason
8 is or becomes legally disqualified (temporarily or permanently)
9 to render the same professional services that the particular
10 professional corporation of which he is an officer, director,
11 shareholder or employee is or was rendering.
12 ["Licensed person." Any natural person who is duly licensed
13 or admitted to practice his profession by a court, department,
14 board, commission or other agency of this Commonwealth or
15 another jurisdiction to render a professional service that is or
16 will be rendered by the professional corporation of which he is,
17 or intends to become, an officer, director, shareholder,
18 employee or agent.
19 "Profession." Includes the performance of any type of
20 personal service to the public that requires as a condition
21 precedent to the performance of the service the obtaining of a
22 license or admission to practice or other legal authorization,
23 including all personal services that prior to the enactment of
24 the act of July 9, 1970 (P.L.461, No.160), known as the
25 Professional Corporation Law, could not lawfully be rendered by
26 means of a corporation. By way of example, and without limiting
27 the generality of the foregoing, the term includes for the
28 purposes of this chapter personal services rendered as an
29 architect, chiropractor, dentist, funeral director, osteopath,
30 podiatrist, physician, professional engineer, veterinarian,
20010S0215B1243 - 75 -
1 certified public accountant or surgeon and, except as otherwise
2 prescribed by general rules, an attorney at law. Except as
3 otherwise expressly provided by law, the definition specified in
4 this paragraph shall be applicable to this chapter only and
5 shall not affect the interpretation of any other statute or any
6 local zoning ordinance or other official document heretofore or
7 hereafter enacted or promulgated.
8 "Professional services." Any type of services that may be
9 rendered by the member of any profession within the purview of
10 his profession.]
11 (b) Index of other definitions.--Other definitions applying
12 to this chapter and the sections in which they appear are:
13 "Licensed person." Section 102 (relating to definitions).
14 "Profession." Section 102.
15 "Professional services." Section 102.
16 § 2904. Election of an existing business corporation to become
17 a professional corporation.
18 * * *
19 (b) Procedure.--The amendment shall be adopted in accordance
20 with the requirements of Subchapter B of Chapter 19 (relating to
21 amendment of articles) [except that the amendment must be
22 approved by the unanimous consent of all shareholders of the
23 corporation regardless of any limitations on voting rights
24 stated in the articles or bylaws]. If any shareholder of a
25 business corporation that proposes to amend its articles to
26 become a professional corporation objects to that amendment and
27 complies with the provisions of Subchapter D of Chapter 15
28 (relating to dissenters rights), the shareholder shall be
29 entitled to the rights and remedies of dissenting shareholders
30 therein provided, if any.
20010S0215B1243 - 76 -
1 § 2922. Stated purposes.
2 * * *
3 (b) Additional powers.--A professional corporation may be [a
4 partner in or a shareholder] an equity owner of a partnership
5 [or], limited liability company, corporation or other
6 association engaged in the business of rendering the
7 professional service or services for which the professional
8 corporation was incorporated.
9 § 2923. Issuance and retention of shares.
10 (a) General rule.--Except as otherwise provided by a
11 statute, rule or regulation applicable to a particular
12 profession, all of the ultimate beneficial owners of shares in a
13 professional corporation [may be beneficially owned, directly or
14 indirectly, only by one or more] shall be licensed persons and
15 any issuance or transfer of shares in violation of this
16 restriction shall be void. A shareholder of a professional
17 corporation shall not enter into a voting trust, proxy or any
18 other arrangement vesting another person (other than [another
19 licensed] a person who is qualified to be a direct or indirect
20 shareholder of the same corporation) with the authority to
21 exercise the voting power of any or all of his shares, and any
22 such purported voting trust, proxy or other arrangement shall be
23 void.
24 (b) Ownership by estate.--Unless a lesser period of time is
25 provided in a bylaw [of the corporation] adopted by the
26 shareholders or in a written agreement among the shareholders of
27 the corporation, the estate of a deceased shareholder may
28 continue to hold shares of the professional corporation for a
29 reasonable period of administration of the estate, but the
30 personal representative of the estate shall not by reason of the
20010S0215B1243 - 77 -
1 retention of shares be authorized to participate in any
2 decisions concerning the rendering of professional service.
3 * * *
4 § 3133. Notice of meetings of members of mutual insurance
5 companies.
6 (a) General rule.--Unless otherwise restricted in the
7 bylaws, persons authorized or required to give notice of an
8 annual meeting of members of a mutual insurance company for the
9 election of directors or of a meeting of members of a mutual
10 insurance company called for the purpose of considering [an]
11 amendment of the articles or bylaws, or both, of the corporation
12 may, in lieu of any written notice of meeting of members
13 required to be given by this subpart, give notice of such
14 meeting by causing notice of such meeting to be officially
15 published. Such notice shall be published each week for at
16 least:
17 (1) Three successive weeks, in the case of an annual
18 meeting.
19 (2) Four successive weeks, in the case of a meeting to
20 consider [an] amendment of the articles or bylaws, or both.
21 * * *
22 § 4123. Requirements for foreign corporation names.
23 * * *
24 (b) Exceptions.--
25 (1) The provisions of section 1303(b) (relating to
26 duplicate use of names) shall not prevent the issuance of a
27 certificate of authority to a foreign business corporation
28 setting forth a name that is [confusingly similar to] not
29 distinguishable upon the records of the department from the
30 name of any other domestic or foreign corporation for profit
20010S0215B1243 - 78 -
1 or corporation not-for-profit, [or of any domestic or foreign
2 limited partnership that has filed a certificate or qualified
3 under Chapter 85 (relating to limited partnerships) or
4 corresponding provisions of prior law,] or of any corporation
5 or other association then registered under 54 Pa.C.S. Ch. 5
6 (relating to corporate and other association names) or to any
7 name reserved or registered as provided in this part, if the
8 foreign business corporation applying for a certificate of
9 authority files in the department [one of the following:
10 (i) A] a resolution of its board of directors
11 adopting a fictitious name for use in transacting
12 business in this Commonwealth, which fictitious name is
13 [not confusingly similar to] distinguishable upon the
14 records of the department from the name of the other
15 corporation or other association or [to] from any name
16 reserved or registered as provided in this part and that
17 is otherwise available for use by a domestic business
18 corporation.
19 [(ii) The written consent of the other corporation
20 or other association or holder of a reserved or
21 registered name to use the same or confusingly similar
22 name and one or more words are added to make the name
23 applied for distinguishable from the other name.]
24 * * *
25 § 4126. Amended certificate of authority.
26 (a) General rule.--After receiving a certificate of
27 authority, a qualified foreign business corporation may, subject
28 to the provisions of this subchapter, change [the name under
29 which it is authorized to transact business in this
30 Commonwealth] or correct any of the information set forth in its
20010S0215B1243 - 79 -
1 application for a certificate of authority or previous filings
2 under this section by filing in the Department of State an
3 application for an amended certificate of authority. The
4 application shall be executed by the corporation and shall
5 state:
6 (1) The name under which the applicant corporation
7 currently holds a certificate of authority to do business in
8 this Commonwealth.
9 [(2) The name of the jurisdiction under the laws of
10 which the corporation is incorporated.
11 (3) The address, including street and number, if any, of
12 its principal office under the laws of the jurisdiction in
13 which it is incorporated.
14 (4)] (2) Subject to section 109 (relating to name of
15 commercial registered office provider in lieu of registered
16 address), the address, including street and number, if any,
17 of its registered office in this Commonwealth.[, which may
18 constitute a change in the address of its registered office.
19 (5) The new name of the corporation and]
20 (3) The information to be changed or corrected.
21 (4) If the application reflects a change in the name of
22 the corporation, the application shall include a statement
23 that either:
24 (i) the change of name reflects a change effected in
25 the jurisdiction of incorporation; or
26 (ii) documents complying with section 4123(b)
27 (relating to exception; name) accompany the application.
28 (b) Issuance of amended certificate of authority.--Upon the
29 filing of the application, the applicant corporation shall be
30 deemed to hold an amended certificate of authority.
20010S0215B1243 - 80 -
1 (c) Cross [reference] references.--See [section] sections
2 134 (relating to docketing statement) and 135 (relating to
3 requirements to be met by filed documents).
4 § 4146. Provisions applicable to all foreign corporations.
5 The following provisions of this subpart shall, except as
6 otherwise provided in this section, be applicable to every
7 foreign corporation for profit, whether or not required to
8 procure a certificate of authority under this chapter:
9 Section 1503 (relating to defense of ultra vires), as to
10 contracts and conveyances [made in] governed by the laws of
11 this Commonwealth and conveyances affecting real property
12 situated in this Commonwealth.
13 Section 1506 (relating to form of execution of
14 instruments), as to instruments or other documents [made or
15 to be performed in] governed by the laws of this Commonwealth
16 or affecting real property situated in this Commonwealth.
17 Section 1510 (relating to certain specifically authorized
18 debt terms), as to obligations (as defined in the section)
19 [executed or effected in] governed by the laws of this
20 Commonwealth or affecting real property situated in this
21 Commonwealth.
22 * * *
23 § 4161. Domestication.
24 * * *
25 (b) Articles of domestication.--The articles of
26 domestication shall be executed by the corporation and shall set
27 forth in the English language:
28 (1) The name of the corporation. If the name is in a
29 foreign language, it shall be set forth in Roman letters or
30 characters or Arabic or Roman numerals. If the name is one
20010S0215B1243 - 81 -
1 that is rendered unavailable by any provision of section
2 1303(b) or (c) (relating to corporate name), the corporation
3 shall adopt, in accordance with any procedures for changing
4 the name of the corporation that are applicable prior to the
5 domestication of the corporation, and shall set forth in the
6 articles of domestication an available name.
7 * * *
8 (c) Cross [reference] references.--See [section] sections
9 134 (relating to docketing statement) and 135 (relating to
10 requirements to be met by filed documents).
11 § 4162. Effect of domestication.
12 (a) General rule.--As a domestic business corporation, the
13 domesticated corporation shall no longer be a foreign business
14 corporation for the purposes of this subpart and shall [have],
15 instead, be a domestic business corporation with all the powers
16 and privileges and [be subject to] all the duties and
17 limitations granted and imposed upon domestic business
18 corporations. [The property, franchises, debts, liens, estates,
19 taxes, penalties and public accounts due the Commonwealth shall
20 continue to be vested in and imposed upon the corporation to the
21 same extent as if it were the successor by merger of the
22 domesticating corporation with and into a domestic business
23 corporation under Subchapter C of Chapter 19 (relating to
24 merger, consolidation, share exchanges and sale of assets).] In
25 all other respects, the domesticated corporation shall be deemed
26 to be the same corporation as it was prior to the domestication
27 without any change in or effect on its existence. Without
28 limiting the generality of the previous sentence, the
29 domestication shall not be deemed to have affected in any way:
30 (1) the right and title of the corporation in and to its
20010S0215B1243 - 82 -
1 assets, property, franchises, estates and choses in action;
2 (2) the liability of the corporation for its debts,
3 obligations, penalties and public accounts due the
4 Commonwealth;
5 (3) any liens or other encumbrances on the property or
6 assets of the corporation; or
7 (4) any contract, license or other agreement to which
8 the corporation is a party or under which it has any rights
9 or obligations.
10 (b) Reclassification of shares.--The shares of the
11 domesticated corporation shall be unaffected by the
12 domestication except to the extent, if any, reclassified in the
13 articles of domestication.
14 § 5303. Corporate name.
15 * * *
16 (b) Duplicate use of names.--The corporate name shall [not
17 be the same as or confusingly similar to] be distinguishable
18 upon the records of the Department of State from:
19 (1) The name of any other domestic corporation for
20 profit or not-for-profit which is either in existence or for
21 which articles of incorporation have been filed but have not
22 yet become effective, or of any foreign corporation for
23 profit or not-for-profit which is either authorized to do
24 business in this Commonwealth or for which an application for
25 a certificate of authority has been filed but which has not
26 yet become effective, [or of any domestic or foreign limited
27 partnership that has filed in the Department of State a
28 certificate or qualified under Chapter 85 (relating to
29 limited partnerships) or under corresponding provisions of
30 prior law,] or the name of any association registered at any
20010S0215B1243 - 83 -
1 time under 54 Pa.C.S. Ch. 5 (relating to corporate and other
2 association names), unless[:
3 (i) where the name is the same or confusingly
4 similar,] the other association:
5 [(A)] (i) has stated that it is about to change
6 its name, or to cease to do business, or is being
7 wound up, or is a foreign association about to
8 withdraw from doing business in this Commonwealth,
9 and the statement and [the] a written consent [of the
10 other association] to the adoption of the name
11 executed by the other association is filed in the
12 Department of State;
13 [(B)] (ii) has filed with the Department of
14 Revenue a certificate of out of existence, or has
15 failed for a period of three successive years to file
16 with the Department of Revenue a report or return
17 required by law and the fact of such failure has been
18 certified by the Department of Revenue to the
19 Department of State;
20 [(C)] (iii) has abandoned its name under the
21 laws of its jurisdiction of incorporation, by
22 amendment, merger, consolidation, division,
23 expiration, dissolution or otherwise, without its
24 name being adopted by a successor in a merger,
25 consolidation, division or otherwise, and an official
26 record of that fact, certified as provided by 42
27 Pa.C.S. § 5328 (relating to proof of official
28 records), is presented by any person to the
29 department; or
30 [(D)] (iv) has had the registration of its name
20010S0215B1243 - 84 -
1 under 54 Pa.C.S. Ch. 5 terminated and, if the
2 termination was effected by operation of 54 Pa.C.S. §
3 504 (relating to effect of failure to make decennial
4 filings), the application for the use of the name is
5 accompanied by a verified statement stating that at
6 least 30 days' written notice of intention to
7 appropriate the name was given to the delinquent
8 association at its [registered office] last known
9 place of business and that, after diligent search by
10 the affiant, the affiant believes the association to
11 be out of existence.[; or
12 (ii) where the name is confusingly similar, the
13 consent of the other association to the adoption of the
14 name is filed in the Department of State.
15 The consent of the association shall be evidenced by a
16 statement to that effect executed by the association.]
17 * * *
18 (e) Remedies for violation of section.--The use of a name in
19 violation of this section shall not vitiate or otherwise affect
20 the corporate existence but any court having jurisdiction may
21 enjoin the corporation from using or continuing to use a name in
22 violation of this section, upon the application of:
23 (1) the Attorney General, acting on his own motion or at
24 the instance of any administrative department, board or
25 commission of this Commonwealth; or
26 (2) any person adversely affected.[;
27 may enjoin the corporation from using or continuing to use a
28 name in violation of this section.]
29 (f) Cross references.--See sections 135(e) (relating to
30 distinguishable names) and 5106(b)(2) (relating to limited
20010S0215B1243 - 85 -
1 uniform application of subpart).
2 § 5304. Required name changes by senior corporations.
3 (a) Adoption of new name upon reactivation.--Where a
4 corporate name is made available on the basis that the
5 corporation or [nonprofit unincorporated] other association
6 [which] that formerly registered [such] the name has failed to
7 file with the Department of Revenue [or in the Department of
8 State] a report or a return required by law or where the
9 corporation or [nonprofit unincorporated] other association has
10 filed with the Department of Revenue a certificate of out of
11 existence, [such] the corporation or other association shall
12 cease to have by virtue of its prior registration any right to
13 the use of [such] the name[, and such]. The corporation or other
14 association, upon withdrawal of the certificate of out of
15 existence or upon the removal of its delinquency in the filing
16 of the required reports or returns, shall make inquiry with the
17 Department of State with regard to the availability of its
18 name[,] and, if [such] the name has been made available to
19 another domestic or foreign corporation for profit or not-for-
20 profit or other association by virtue of [the above] these
21 conditions, shall adopt a new name in accordance with law before
22 resuming its activities.
23 (b) Enforcement of undertaking to release name.--If a
24 corporation has used a name [the same as, or deceptively similar
25 to,] that is not distinguishable upon the records of the
26 Department of State from the name of another corporation or
27 [nonprofit unincorporated] other association as permitted by
28 section 5303(b)(1)[(i)] (relating to duplicate use of names) and
29 the other corporation or [nonprofit unincorporated] other
30 association continues to use its name in this Commonwealth and
20010S0215B1243 - 86 -
1 does not change its name, cease to do business, be wound up, or
2 withdraw as it proposed to do in its consent or change its name
3 as required by subsection (a), any court [of competent] having
4 jurisdiction may enjoin the other corporation or other
5 association from continuing to use its name or a name that is
6 not distinguishable therefrom, upon the application of:
7 (1) the Attorney General, acting on his own motion or at
8 the instance of any administrative department, board or
9 commission of this Commonwealth[,]; or
10 (2) upon the application of any person adversely
11 affected[, may enjoin the other corporation or association
12 from continuing to use its name or a name deceptively similar
13 thereto].
14 § 5311. Filing of statement of summary of record by certain
15 corporations.
16 (a) General rule.--Where any of the [valid] charter
17 documents of a nonprofit corporation are not on file in the
18 Department of State or there is an error in any such document as
19 transferred to the department pursuant to section 140 (relating
20 to custody and management of orphan corporate and business
21 records), and the corporation desires to file any document in
22 the department under any other provision of this [article]
23 subpart or the corporation desires to secure from the department
24 any certificate to the effect that the corporation is a
25 corporation duly incorporated and existing under the laws of
26 this Commonwealth or a certified copy of the articles of the
27 corporation or the corporation desires to correct the text of
28 its charter documents as on file in the department, the
29 corporation shall file in the department a statement of summary
30 of record which shall be executed by the corporation and shall
20010S0215B1243 - 87 -
1 set forth:
2 (1) The name of the corporation and, subject to section
3 109 (relating to name of commercial registered office
4 provides in lieu of registered address), the location,
5 including street and number, if any, of its registered
6 office.
7 (2) The statute by or under which the corporation was
8 incorporated.
9 (3) The name under which, the manner in which and the
10 date on which the corporation was originally incorporated,
11 including the date when and the place where the original
12 articles were recorded.
13 (4) The place or places, including volume and page
14 numbers or their equivalent, where the documents
15 [constituting the currently effective articles are] that are
16 not on file in the department or that require correction in
17 the records of the department were originally filed or
18 recorded, the date or dates of each [such] filing or
19 recording and the correct text of [such currently effective
20 articles] the documents. The information specified in this
21 paragraph may be omitted in a statement of summary of record
22 that is delivered to the department contemporaneously with
23 amended and restated articles of the corporation filed under
24 this subpart.
25 [(5) Each name by which the corporation was known, if
26 any, other than its original name and its current name, and
27 the date or dates on which each change of name of the
28 corporation became effective.
29 A corporation shall be required to make only one filing under
30 this subsection.]
20010S0215B1243 - 88 -
1 (b) Validation of prior defects in incorporation.--Upon the
2 filing of a statement by a corporation under this section or the
3 transfer to the department of the records relating to a
4 corporation pursuant to section 140, the corporation [named in
5 the statement] shall be deemed to be a validly subsisting
6 corporation to the same extent as if it had been duly
7 incorporated and was existing under this subpart and the
8 department shall so certify regardless of any absence of or
9 defect in the prior proceedings relating to incorporation.
10 (c) Cross [reference] references.--See [section] sections
11 134 (relating to docketing statement), 135 (relating to
12 requirements to be met by filed documents) and 5106(b)(2)
13 (relating to uniform application of subpart).
14 § 5503. Defense of ultra vires.
15 (a) General rule.--[No] A limitation upon the business,
16 [purpose or] purposes[,] or powers of a nonprofit corporation,
17 expressed or implied in its articles or bylaws or implied by
18 law, shall not be asserted in order to defend any action at law
19 or in equity between the corporation and a third person, or
20 between a member and a third person, involving any contract to
21 which the corporation is a party or any right of property or any
22 alleged liability of [whatsoever] whatever nature[; but such],
23 but the limitation may be asserted:
24 (1) In an action by a member against the corporation to
25 enjoin the doing of unauthorized acts or the transaction or
26 continuation of unauthorized business. If the unauthorized
27 acts or business sought to be enjoined are being transacted
28 pursuant to any contract to which the corporation is a party,
29 the court may, if all of the parties to the contract are
30 parties to the action[,] and if it deems [such action] the
20010S0215B1243 - 89 -
1 result to be equitable, set aside and enjoin the performance
2 of [such] the contract, and in so doing shall allow to the
3 corporation, or to the other parties to the contract, as the
4 case may be, such compensation as may be [equitable]
5 appropriate for the loss or damage sustained by any of them
6 from the action of the court in setting aside and enjoining
7 the performance of [such] the contract, but anticipated
8 profits to be derived from the performance of the contract
9 shall not be awarded by the court as a loss or damage
10 sustained.
11 (2) In any action by or in the right of the corporation
12 to procure a judgment in its favor against an incumbent or
13 former officer, director or member of an other body of the
14 corporation for loss or damage due to his unauthorized acts.
15 (3) In a proceeding by the Commonwealth under section
16 503 (relating to actions to revoke corporate franchises)[,]
17 or in a proceeding by the Commonwealth to enjoin the
18 corporation from the doing of unauthorized or unlawful
19 business.
20 (b) Conveyances of property by or to a corporation.--[No] A
21 conveyance or transfer by or to a nonprofit corporation of
22 property, real or personal, of any kind or description, shall
23 not be invalid or fail because in making [such] the conveyance
24 or transfer, or in acquiring the property, real or personal,
25 [the board of directors or other body or any of the officers]
26 any representative of the corporation acting within the scope of
27 the actual or apparent authority given to [them] him by the
28 [board of directors or other body, have] corporation has
29 exceeded any of the purposes or powers of the corporation.
30 (c) [Nonqualified foreign corporations.--The provisions of
20010S0215B1243 - 90 -
1 this section shall extend to contracts and conveyances made by
2 nonqualified foreign corporations in this Commonwealth and to
3 conveyances by nonqualified foreign corporations of real
4 property situated in this Commonwealth.] Cross reference.--See
5 section 6146 (relating to provisions applicable to all foreign
6 corporations).
7 § 5505. Persons bound by bylaws.
8 Except as otherwise provided by section 5713 (relating to
9 personal liability of directors) or any similar provision of
10 law, bylaws of a nonprofit corporation shall operate only as
11 regulations among the members, directors, members of an other
12 body and officers of the corporation, and shall not affect
13 contracts or other dealings with other persons, unless those
14 persons have actual knowledge of the bylaws.
15 § 5506. Form of execution of instruments.
16 (a) General rule.--Any form of execution provided in the
17 articles or bylaws to the contrary notwithstanding, any note,
18 mortgage, evidence of indebtedness, contract[,] or other
19 [instrument in writing] document, or any assignment or
20 endorsement thereof, executed or entered into between any
21 nonprofit corporation and any other person, when signed by one
22 or more officers or agents having actual or apparent authority
23 to sign it, or by the president or vice-president and secretary
24 or assistant secretary or treasurer or assistant treasurer of
25 [such] the corporation, shall be held to have been properly
26 executed for and in behalf of the corporation.
27 (b) Seal unnecessary.--[Except as otherwise required by
28 statute, the] The affixation of the corporate seal shall not be
29 necessary to the valid execution, assignment or endorsement by a
30 corporation of any instrument [in writing] or other document.
20010S0215B1243 - 91 -
1 (c) [Nonqualified foreign corporations.--The provisions of
2 this section shall extend to instruments in writing made or to
3 be performed in this Commonwealth by a nonqualified foreign
4 corporation and to instruments executed by nonqualified foreign
5 corporations affecting real property situated in this
6 Commonwealth.] Cross reference.--See section 6146 (relating to
7 provisions applicable to all foreign corporations).
8 § 5508. Corporate records; inspection by members.
9 (a) Required records.--Every nonprofit corporation shall
10 keep [an original or duplicate record] minutes of the
11 proceedings of the members [and], the directors[,] and [of] any
12 other body [exercising powers or performing duties which under
13 this article may be exercised or performed by such other body,
14 the original or a copy of its bylaws, including all amendments
15 thereto to date, certified by the secretary of the corporation],
16 and [an original or] a [duplicate] membership register, giving
17 the names [of the members, and showing their respective] and
18 addresses of all members and the class and other details of the
19 membership of each. [Every such] The corporation shall also keep
20 appropriate, complete and accurate books or records of account.
21 The records provided for in this subsection shall be kept at
22 [either] any of the following locations:
23 (1) the registered office of the corporation in this
24 Commonwealth [or at its];
25 (2) the principal place of business wherever
26 situated[.]; or
27 (3) any actual business office of the corporation.
28 (b) Right of inspection by a member.--Every member shall,
29 upon written verified demand [under oath] stating the purpose
30 thereof, have a right to examine, in person or by agent or
20010S0215B1243 - 92 -
1 attorney, during the usual hours for business for any proper
2 purpose, the membership register, books and records of account,
3 and records of the proceedings of the members, directors and
4 [such] any other body, and to make copies or extracts therefrom.
5 A proper purpose shall mean a purpose reasonably related to the
6 interest of [such] the person as a member. In every instance
7 where an attorney or other agent [shall be] is the person who
8 seeks the right [to] of inspection, the demand [under oath]
9 shall be accompanied by a verified power of attorney or [such]
10 other writing [which] that authorizes the attorney or other
11 agent to so act on behalf of the member. The demand [under oath]
12 shall be directed to the corporation:
13 (1) at its registered office in this Commonwealth [or];
14 (2) at its principal place of business wherever
15 situated[.]; or
16 (3) in care of the person in charge of an actual
17 business office of the corporation.
18 (c) Proceedings for the enforcement of inspection by a
19 member.--If the corporation, or an officer or agent thereof,
20 refuses to permit an inspection sought by a member or attorney
21 or other agent acting for the member pursuant to subsection (b)
22 [of this section] or does not reply to the demand within five
23 business days after the demand has been made, the member may
24 apply to the court for an order to compel [such] the inspection.
25 The court shall determine whether or not the person seeking
26 inspection is entitled to the inspection sought. The court may
27 summarily order the corporation to permit the member to inspect
28 the membership register and the other books and records of the
29 corporation and to make copies or extracts therefrom; or the
30 court may order the corporation to furnish to the member a list
20010S0215B1243 - 93 -
1 of its members as of a specific date on condition that the
2 member first pay to the corporation the reasonable cost of
3 obtaining and furnishing [such] the list and on such other
4 conditions as the court deems appropriate. Where the member
5 seeks to inspect the books and records of the corporation, other
6 than its membership register or list of members, he shall first
7 establish:
8 (1) that he has complied with the provisions of this
9 section respecting the form and manner of making demand for
10 inspection of such document; and
11 (2) that the inspection he seeks is for a proper
12 purpose.
13 Where the member seeks to inspect the membership register or
14 list of members of the corporation and he has complied with the
15 provisions of this section respecting the form and manner of
16 making demand for inspection of [such] the documents, the burden
17 of proof shall be upon the corporation to establish that the
18 inspection he seeks is for an improper purpose. The court may,
19 in its discretion, prescribe any limitations or conditions with
20 reference to the inspection, or award such other or further
21 relief as the court [may deem] deems just and proper. The court
22 may order books, documents and records, pertinent extracts
23 therefrom, or duly authenticated copies thereof, to be brought
24 [within] into this Commonwealth and kept in this Commonwealth
25 upon such terms and conditions as the order may prescribe.
26 (d) Cross references.--See sections 107 (relating to form of
27 records) and 5512 (relating to informational rights of a
28 director).
29 § 5510. [(Reserved).] Certain specifically authorized debt
30 terms.
20010S0215B1243 - 94 -
1 (a) Interest rates.--A nonprofit corporation shall not plead
2 or set up usury, or the taking of more than the lawful rate of
3 interest, or the taking of any finance, service or default
4 charge in excess of any maximum rate therefor provided or
5 prescribed by law, as a defense to any action or proceeding
6 brought against it to recover damages on, or to enforce payment
7 of, or to enforce any other remedy on, any obligation executed
8 or effected by the corporation.
9 (b) Yield maintenance premiums.--A prepayment premium
10 determined by reference to the approximate spread between the
11 yield at issuance, or at the date of amendment of any of the
12 terms, of an obligation of a corporation and the yield at or
13 about such date of an interest rate index of independent
14 significance and contingent upon a change in the ownership of or
15 memberships in the corporation or a default by or other change
16 in the condition or prospects of the corporation or any
17 affiliate of the corporation shall be deemed liquidated damages
18 and shall not constitute a penalty.
19 (c) Definitions.--As used in this section, the following
20 words and phrases shall have the meanings given to them in this
21 subsection:
22 "Affiliate." An affiliate or associate as defined in section
23 2552 (relating to definitions).
24 "Obligation." Includes an installment sale contract.
25 (d) Cross reference.--See section 6146 (relating to
26 provisions applicable to all foreign corporations).
27 § 5512. Informational rights of a director.
28 (a) General rule.--To the extent reasonably related to the
29 performance of the duties of the director, including those
30 arising from service as a member of a committee of the board of
20010S0215B1243 - 95 -
1 directors, a director of a nonprofit corporation is entitled:
2 (1) in person or by any attorney or other agent, at any
3 reasonable time, to inspect and copy corporate books, records
4 and documents and, in addition, to inspect, and receive
5 information regarding, the assets, liabilities and operations
6 of the corporation and any subsidiaries of the corporation
7 incorporated or otherwise organized or created under the laws
8 of this Commonwealth that are controlled directly or
9 indirectly by the corporation; and
10 (2) to demand that the corporation exercise whatever
11 rights it may have to obtain information regarding any other
12 subsidiaries of the corporation.
13 (b) Proceedings for the enforcement of inspection by a
14 director.--If the corporation, or an officer or agent thereof,
15 refuses to permit an inspection or obtain or provide information
16 sought by a director or attorney or other agent acting for the
17 director pursuant to subsection (a) or does not reply to the
18 request within two business days after the request has been
19 made, the director may apply to the court for an order to compel
20 the inspection or the obtaining or providing of the information.
21 The court shall summarily order the corporation to permit the
22 requested inspection or to obtain the information unless the
23 corporation establishes that the information to be obtained by
24 the exercise of the right is not reasonably related to the
25 performance of the duties of the director or that the director
26 or the attorney or agent of the director is likely to use the
27 information in a manner that would violate the duty of the
28 director to the corporation. The order of the court may contain
29 provisions protecting the corporation from undue burden or
30 expense and prohibiting the director from using the information
20010S0215B1243 - 96 -
1 in a manner that would violate the duty of the director to the
2 corporation.
3 (c) Cross references.--See sections 107 (relating to form of
4 records), 5508 (relating to corporate records; inspection by
5 members) and 42 Pa.C.S. § 2503(7) (relating to right of
6 participants to receive counsel fees).
7 § 5552. Liabilities of members.
8 (a) General rule.--[The members of a nonprofit corporation
9 shall not be personally liable for the debts, liabilities or
10 obligations of the corporation.] A member of a nonprofit
11 corporation shall not be liable, solely by reason of being a
12 member, under an order of a court or in any other manner for a
13 debt, obligation or liability of the corporation of any kind or
14 for the acts of any member or representative of the corporation.
15 (b) Obligations of member to corporation.--A member shall be
16 liable to the corporation only to the extent of any unpaid
17 portion of the capital contributions, membership dues or
18 assessments which the corporation may have lawfully imposed upon
19 him, or for any other indebtedness owed by him to the
20 corporation. No action shall be brought by any creditor of the
21 corporation to reach and apply any such liability to any debt of
22 the corporation until after:
23 (1) final judgment [shall have] has been rendered
24 against the corporation in favor of the creditor and
25 execution thereon returned unsatisfied[, or the corporation
26 shall have been adjudged bankrupt, or];
27 (2) a case involving the corporation has been brought
28 under 11 U.S.C. Ch. 7 (relating to liquidation) and a
29 distribution has been made and the case closed or a notice of
30 no assets has been issued; or
20010S0215B1243 - 97 -
1 (3) a receiver [shall have] has been appointed with
2 power to collect debts, and [which] the receiver, on demand
3 of a creditor to bring an action thereon, has refused to sue
4 for [such] the unpaid amount, or the corporation [shall have]
5 has been dissolved or ceased its activities leaving debts
6 unpaid.
7 [No such] (c) Action by a creditor.--An action by a creditor
8 under subsection (b) shall not be brought more than three years
9 after the happening of [any one of such events.] the first to
10 occur of the events listed in subsection (b)(1) through (3).
11 § 5709. Conduct of members meeting.
12 (a) Presiding officer.--There shall be a presiding officer
13 at every meeting of the members. The presiding officer shall be
14 appointed in the manner provided in the bylaws or, in the
15 absence of such provision, by the board of directors. If the
16 bylaws are silent on the appointment of the presiding officer
17 and the board fails to designate a presiding officer, the
18 president shall be the presiding officer.
19 (b) Authority of the presiding officer.--Except as otherwise
20 provided in the bylaws, the presiding officer shall determine
21 the order of business and shall have the authority to establish
22 rules for the conduct of the meeting.
23 (c) Procedural standard.--Any action by the presiding
24 officer in adopting rules for, and in conducting, a meeting
25 shall be fair to the members.
26 (d) Closing of the polls.--The presiding officer shall
27 announce at the meeting when the polls close for each matter
28 voted upon. If no announcement is made, the polls shall be
29 deemed to have closed upon the final adjournment of the meeting.
30 After the polls close, no ballots, proxies or votes, nor any
20010S0215B1243 - 98 -
1 revocations or changes thereto, may be accepted.
2 § 5731. Executive and other committees of the board.
3 (a) Establishment and powers.--Unless otherwise restricted
4 in the bylaws:
5 (1) The board of directors may, by resolution adopted by
6 a majority of the directors in office, establish one or more
7 committees to consist of one or more directors of the
8 corporation.
9 (2) Any [such] committee, to the extent provided in the
10 resolution of the board of directors or in the bylaws, shall
11 have and may exercise all of the powers and authority of the
12 board of directors, except that [no such] a committee shall
13 not have any power or authority as to the following:
14 (i) The submission to members of any action
15 requiring approval of members under this [article]
16 subpart.
17 (ii) The creation or filling of vacancies in the
18 board of directors.
19 (iii) The adoption, amendment or repeal of the
20 bylaws.
21 (iv) The amendment or repeal of any resolution of
22 the board that by its terms is amendable or repealable
23 only by the board.
24 (v) Action on matters committed by the bylaws or a
25 resolution of the board of directors exclusively to
26 another committee of the board.
27 [(2)] (3) The board may designate one or more directors
28 as alternate members of any committee, who may replace any
29 absent or disqualified member at any meeting of the
30 committee. In the absence or disqualification of a member of
20010S0215B1243 - 99 -
1 a committee, the member or members thereof present at any
2 meeting and not disqualified from voting, whether or not he
3 or they constitute a quorum, may unanimously appoint another
4 director to act at the meeting in the place of any [such]
5 absent or disqualified member.
6 (b) Term.--Each committee of the board shall serve at the
7 pleasure of the board.
8 § 5745. Advancing expenses.
9 Expenses (including attorneys' fees) incurred in defending
10 any action or proceeding referred to in this subchapter may be
11 paid by a nonprofit corporation in advance of the final
12 disposition of the action or proceeding upon receipt of an
13 undertaking by or on behalf of the representative to repay the
14 amount if it is ultimately determined that he is not entitled to
15 be indemnified by the corporation as authorized in this
16 subchapter or otherwise. Except as otherwise provided in the
17 bylaws, advancement of expenses shall be authorized by the board
18 of directors. Section 5728 (relating to interested members,
19 directors or officers; quorum) shall not be applicable to the
20 advancement of expenses under this section.
21 § 5748. Application to surviving or new corporations.
22 [For] (a) General rule.--Except as provided in subsection
23 (b), for the purposes of this subchapter, references to "the
24 corporation" include all constituent corporations absorbed in a
25 consolidation, merger or division, as well as the surviving or
26 new corporations surviving or resulting therefrom, so that any
27 person who is or was a representative of the constituent,
28 surviving or new corporation, or is or was serving at the
29 request of the constituent, surviving or new corporation as a
30 representative of another domestic or foreign corporation for
20010S0215B1243 - 100 -
1 profit or not-for-profit, partnership, joint venture, trust or
2 other enterprise, shall stand in the same position under the
3 provisions of this subchapter with respect to the surviving or
4 new corporation as he would if he had served the surviving or
5 new corporation in the same capacity.
6 (b) Divisions.--Notwithstanding subsection (a), the
7 obligations of a dividing corporation to indemnify and advance
8 expenses of its representatives, whether arising under this
9 subchapter or otherwise, may be allocated in a division in the
10 same manner and with the same effect as any other liability of
11 the dividing corporation.
12 § 5758. Voting rights of members.
13 (a) General rule.--Unless otherwise provided in a bylaw
14 adopted by the members, every member of a nonprofit corporation
15 shall be entitled to one vote.
16 (b) Procedures.--The manner of voting on any matter,
17 including changes in the articles or bylaws, may be by ballot,
18 mail or any reasonable means provided in a bylaw adopted by the
19 members. If a bylaw adopted by the members provides a fair and
20 reasonable procedure for the nomination of candidates for any
21 office, only candidates who have been duly nominated in
22 accordance therewith shall be eligible for election. Unless
23 otherwise provided in such a bylaw, in elections for directors,
24 voting shall be by ballot, and the candidates receiving the
25 highest number of votes from each class or group of classes, if
26 any, of members entitled to elect directors separately up to the
27 number of directors to be elected by such class or group of
28 classes shall be elected. If at any meeting of members directors
29 of more than one class are to be elected, each class of
30 directors shall be elected in a separate election.
20010S0215B1243 - 101 -
1 (c) Cumulative voting.--[The members of a nonprofit
2 corporation shall have the right to cumulate their votes for the
3 election of directors only if and to the extent a bylaw adopted
4 by the members so provides.] If a bylaw adopted by the members
5 so provides, in each election of directors of a nonprofit
6 corporation every member entitled to vote shall have the right
7 to multiply the number of votes to which he may be entitled by
8 the total number of directors to be elected in the same election
9 by the members or the class of members to which he belongs and
10 he may cast the whole number of his votes for one candidate or
11 he may distribute them among any two or more candidates.
12 (d) Sale of votes.--No member shall sell his vote or issue a
13 proxy for money or anything of value.
14 (e) Voting lists.--Upon request of a member, the books or
15 records of membership shall be produced at any regular or
16 special meeting of the corporation. If at any meeting the right
17 of a person to vote is challenged, the presiding officer shall
18 require [such] the books or records to be produced as evidence
19 of the right of the person challenged to vote, and all persons
20 who appear by [such] the books or records to be members entitled
21 to vote may vote. See section 6145 (relating to applicability of
22 certain safeguards to foreign corporations).
23 § 5782. Actions against directors, members of an other body and
24 officers.
25 (a) General rule.--Except as provided in subsection (b), in
26 any action or proceeding brought to enforce a secondary right on
27 the part of one or more members of a nonprofit corporation
28 against any present or former officer, director or member of an
29 other body of the corporation because the corporation refuses to
30 enforce rights that may properly be asserted by it, each
20010S0215B1243 - 102 -
1 plaintiff must aver and it must be made to appear that each
2 plaintiff was a member of the corporation at the time of the
3 transaction of which he complains.
4 (b) Exception.--Any member who, except for the provisions of
5 subsection (a), would be entitled to maintain the action or
6 proceeding and who does not meet such requirements may,
7 nevertheless in the discretion of the court, be allowed to
8 maintain the action or proceeding on preliminary showing to the
9 court, by application and upon such verified statements and
10 depositions as may be required by the court, that there is a
11 strong prima facie case in favor of the claim asserted on behalf
12 of the corporation and that without the action serious injustice
13 will result.
14 (c) Security for costs.--In any action or proceeding
15 instituted or maintained by less than the smaller of 50 members
16 of any class or 5% of the members of any class of the
17 corporation, the corporation in whose right the action or
18 proceeding is brought shall be entitled at any stage of the
19 proceedings to require the plaintiffs to give security for the
20 reasonable expenses, including attorney fees, that may be
21 incurred by it in connection therewith or for which it may
22 become liable pursuant to section 5743 (relating to mandatory
23 indemnification), but only insofar as relates to actions by or
24 in the right of the corporation, to which security the
25 corporation shall have recourse in such amount as the court
26 determines upon the termination of the action or proceeding. The
27 amount of security may, from time to time, be increased or
28 decreased in the discretion of the court upon showing that the
29 security provided has or may become inadequate or excessive. The
30 security may be denied or limited in the discretion of the court
20010S0215B1243 - 103 -
1 upon preliminary showing to the court, by application and upon
2 such verified statements and depositions as may be required by
3 the court, establishing prima facie that the requirement of full
4 or partial security would impose undue hardship on plaintiffs
5 and serious injustice would result.
6 (d) Cross reference.--See section 6146 (relating to
7 provisions applicable to all foreign corporations).
8 § 5903. Bankruptcy or insolvency proceedings.
9 (a) General rule.--[Whenever] Unless otherwise provided in
10 the bylaws, whenever a nonprofit corporation is insolvent or in
11 financial difficulty, the board of directors may, by resolution
12 and without the consent of the members, authorize and designate
13 the officers of the corporation to execute a deed of assignment
14 for the benefit of creditors, or file a voluntary petition in
15 bankruptcy, or file an answer consenting to the appointment of a
16 receiver upon a complaint in the nature of an equity action
17 filed by creditors or members, or, if insolvent, file an answer
18 to an involuntary petition in bankruptcy admitting the
19 insolvency of the corporation and its willingness to be adjudged
20 a debtor on that ground.
21 (b) Bankruptcy proceedings.--[A] If authorized pursuant to
22 subsection (a), a nonprofit corporation may participate in
23 proceedings under and in the manner provided by Title 11 of the
24 United States Code (relating to bankruptcy) notwithstanding any
25 contrary provision of its articles or bylaws or this subpart,
26 other than [section] sections 103 (relating to subordination of
27 title to regulatory laws) and 5107 (relating to subordination of
28 subpart to canon law). The corporation shall have full power and
29 authority to put into effect and carry out a plan of
30 reorganization or arrangement and the decrees and orders of the
20010S0215B1243 - 104 -
1 court, or judge or referee relative thereto, and may take any
2 proceeding and do any act provided in the plan or arrangement or
3 directed by such decrees and orders, without further action by
4 its directors or members. Such power and authority may be
5 exercised, and such proceedings and acts may be taken, as may be
6 directed by such decrees or orders, by the trustees or receivers
7 of the corporation appointed in the bankruptcy proceedings, or a
8 majority thereof, or, if none be appointed and acting, by
9 designated officers of the corporation, or by a master or other
10 representative appointed by the court or judge or referee, with
11 the effect as if exercised and taken by unanimous action of the
12 directors and members of the corporation. Without limiting the
13 generality or effect of the foregoing, the corporation may:
14 * * *
15 § 5912. Proposal of amendments.
16 (a) General rule.--Every amendment [to] of the articles of a
17 nonprofit corporation shall be proposed [by]:
18 (1) by the adoption by the board of directors or other
19 body of a resolution setting forth the proposed amendment;
20 (2) unless otherwise provided in the articles, by
21 petition of members entitled to cast at least 10% of the
22 votes [which] that all members are entitled to cast thereon,
23 setting forth the proposed amendment, which petition shall be
24 directed to the board of directors and filed with the
25 secretary of the corporation; or
26 (3) by such other method as may be provided in the
27 bylaws.
28 [The] (b) Submission to members.--Except where the approval
29 of the members is unnecessary under this subchapter, the board
30 of directors or other body [or the petitioning members] shall
20010S0215B1243 - 105 -
1 direct that the proposed amendment be submitted to a vote of the
2 members entitled to vote thereon at a regular or special meeting
3 of the members.
4 [(b)] (c) Form of amendment.--[The resolution or petition
5 shall contain the language of the proposed amendment to the
6 articles by providing that the articles shall be amended so as
7 to read as therein set forth in full, or that any provision
8 thereof be amended so as to read as therein set forth in full,
9 or that the matter stated in the resolution or petition be added
10 to or stricken from the articles. The resolution or petition may
11 set forth the manner and basis of reclassifying the shares of
12 the corporation.] The resolution or petition shall contain the
13 language of the proposed amendment of the articles:
14 (1) by setting forth the existing text of the articles
15 or the provision thereof that is proposed to be amended, with
16 brackets around language that is to be deleted and
17 underscoring under language that is to be added; or
18 (2) by providing that the articles shall be amended so
19 as to read as therein set forth in full, or that any
20 provision thereof be amended so as to read as therein set
21 forth in full, or that the matter stated in the resolution or
22 petition be added to or stricken from the articles.
23 (d) Terms of amendment.--The resolution or petition may set
24 forth the manner and basis of reclassifying the memberships in
25 or shares of the corporation. Any of the terms of a plan of
26 reclassification or other action contained in an amendment may
27 be made dependent upon facts ascertainable outside of the
28 amendment if the manner in which the facts will operate upon the
29 terms of the amendment is set forth in the amendment. Such facts
30 may include, without limitation, actions or events within the
20010S0215B1243 - 106 -
1 control of or determinations made by the corporation or a
2 representative of the corporation.
3 § 5922. Plan of merger or consolidation.
4 (a) Preparation of plan.--A plan of merger or consolidation,
5 as the case may be, shall be prepared, setting forth:
6 (1) The terms and conditions of the merger or
7 consolidation.
8 [(2) The mode of carrying the merger or consolidation
9 into effect.
10 (3)] (2) If the surviving or new corporation is or is to
11 be a domestic nonprofit corporation:
12 (i) any changes desired to be made in the articles,
13 which may include a restatement of the articles in the
14 case of a merger; or
15 (ii) in the case of a consolidation, all of the
16 statements required by this [article] subpart to be set
17 forth in restated articles.
18 [(4)] (3) Such other [details and] provisions as are
19 deemed desirable.
20 (b) Post-adoption amendment.--A plan of merger or
21 consolidation may contain a provision that the boards of
22 directors or other bodies of the constituent corporations may
23 amend the plan at any time prior to its effective date, except
24 that an amendment made subsequent to the adoption of the plan by
25 the members of any constituent corporation shall not change:
26 (1) The term of memberships or the amount or kind of
27 securities, obligations, cash, property or rights to be
28 received in exchange for or on conversion of all or any of
29 the memberships in the constituent corporation.
30 (2) Any term of the articles of the surviving or new
20010S0215B1243 - 107 -
1 corporation to be effected by the merger or consolidation.
2 (3) Any of the terms and conditions of the plan if the
3 change would adversely affect the members of the constituent
4 corporation.
5 [(b)] (c) Proposal.--Every merger or consolidation shall be
6 proposed in the case of each domestic nonprofit corporation
7 [by]:
8 (1) by the adoption by the board of directors or other
9 body of a resolution approving the plan of merger or
10 consolidation;
11 (2) unless otherwise provided in the articles, by
12 petition of members entitled to cast at least 10% of the
13 votes [which] that all members are entitled to cast thereon,
14 setting forth the proposed plan of merger or consolidation,
15 which petition shall be directed to the board of directors
16 and filed with the secretary of the corporation; or
17 (3) by such other method as may be provided in the
18 bylaws.
19 [The] (d) Submission to members.--Except where the
20 corporation has no members entitled to vote thereon, the board
21 of directors or other body [or the petitioning members] shall
22 direct that the plan be submitted to a vote of the members
23 entitled to vote thereon at a regular or special meeting of the
24 members.
25 (e) Party to plan or transaction.--A corporation,
26 partnership, business trust or other association that approves a
27 plan in its capacity as a member or creditor of a merging or
28 consolidating corporation, or that furnishes all or a part of
29 the consideration contemplated by a plan, does not thereby
30 become a party to the plan or the merger or consolidation for
20010S0215B1243 - 108 -
1 the purposes of this subchapter.
2 (f) Reference to outside facts.--Any of the terms of a plan
3 of merger or consolidation may be made dependent upon facts
4 ascertainable outside of the plan if the manner in which the
5 facts will operate upon the terms of the plan is set forth in
6 the plan. Such facts may include, without limitation, actions or
7 events within the control of or determinations made by a party
8 to the plan or a representative of a party to the plan.
9 § 5923. Notice of meeting of members.
10 (a) General rule.--Written notice of the meeting of members
11 that will act on the proposed plan shall[, not less than ten
12 days before the meeting of members called for the purpose of
13 considering the proposed plan,] be given to each member of
14 record, whether or not entitled to vote thereon, of each
15 domestic nonprofit corporation that is a party to the merger or
16 consolidation. There shall be included in, or enclosed with,
17 [such] the notice a copy of the proposed plan or a summary
18 thereof. The notice shall state that a copy of the bylaws of the
19 surviving or new corporation will be furnished to any member on
20 request and without cost.
21 (b) Cross reference.--See Subchapter A of Chapter 57
22 (relating to notice and meetings generally).
23 § 5929. Effect of merger or consolidation.
24 (a) Single surviving or new corporation.--Upon the merger or
25 consolidation becoming effective, the several corporations
26 parties to the [plan of] merger or consolidation shall be a
27 single corporation which, in the case of a merger, shall be
28 [that] the corporation designated in the plan of merger as the
29 surviving corporation[,] and, in the case of a consolidation,
30 shall be the new corporation provided for in the plan of
20010S0215B1243 - 109 -
1 consolidation. The separate existence of all corporations
2 parties to the [plan of] merger or consolidation shall cease,
3 except that of the surviving corporation, in the case of a
4 merger. The surviving or new corporation, as the case may be, if
5 it is a domestic nonprofit corporation, shall not thereby
6 acquire authority to engage in any business or exercise any
7 right [which] that a corporation may not be incorporated under
8 this [article] subpart to engage in or exercise.
9 (b) Property rights.--Except as otherwise provided by order,
10 if any, obtained pursuant to section [5547(b)] 5547(c) (relating
11 to nondiversion of certain property), all the property, real,
12 personal[,] and mixed, and franchises of each of the
13 corporations parties to the [plan of] merger or consolidation,
14 and all debts due on whatever account to any of them, including
15 subscriptions for membership and other choses in action
16 belonging to any of them, shall be [taken and] deemed to be
17 [transferred to and] vested in and shall belong to the surviving
18 or new corporation, as the case may be, without further [act or
19 deed] action, and the title to any real estate, or any interest
20 therein, vested in any of the corporations shall not revert or
21 be in any way impaired by reason of the merger or consolidation.
22 The surviving or new corporation shall thenceforth be
23 responsible for all the liabilities [and obligations] of each of
24 the corporations so merged or consolidated. [No liens] Liens
25 upon the property of the merging or consolidating corporations
26 shall not be impaired by [such] the merger or consolidation, and
27 any claim existing or action or proceeding pending by or against
28 any of [such] the corporations may be prosecuted to judgment as
29 if [such] the merger or consolidation had not taken place, or
30 the surviving or new corporation may be proceeded against or
20010S0215B1243 - 110 -
1 substituted in its place. Any devise, gift or grant contained in
2 any will or other instrument, in trust or otherwise, made before
3 or after such merger or consolidation, to or for any of the
4 constituent corporations, shall inure to the surviving or new
5 corporation, as the case may be, subject to compliance with the
6 requirements of section 5550 (relating to devises, bequests and
7 gifts after certain fundamental changes).
8 (c) Taxes.--Any taxes, interest, penalties and public
9 accounts of the Commonwealth[,] claimed against any of the
10 merging or consolidating corporations[, but not] that are
11 settled, assessed or determined prior to [such] or after the
12 merger or consolidation[,] shall be [settled, assessed or
13 determined against] the liability of the surviving or new
14 corporation[,] and, together with interest thereon, shall be a
15 lien against the franchises and property, both real and
16 personal, of the surviving or new corporation.
17 (d) Articles of incorporation.--In the case of a merger, the
18 articles of incorporation of the surviving domestic nonprofit
19 corporation, if any, shall be deemed to be amended to the
20 extent, if any, that changes in its articles are stated in the
21 plan of merger[; and in]. In the case of a consolidation into a
22 domestic nonprofit corporation, the statements [which] that are
23 set forth in the plan of consolidation, or articles of
24 incorporation set forth therein, shall be deemed to be the
25 articles of incorporation of the new corporation.
26 § 5952. Proposal and adoption of plan of division.
27 (a) Preparation of plan.--A plan of division shall be
28 prepared, setting forth:
29 (1) The terms and conditions of the division, including
30 the manner and basis of:
20010S0215B1243 - 111 -
1 (i) [the] The reclassification of the membership
2 interests or shares [or obligations] of the surviving
3 corporation, if there be one[; and].
4 (ii) [the] The disposition of the membership
5 interests or shares [and] or obligations, if any, of the
6 new corporation or corporations resulting from the
7 division.
8 [(2) The mode of carrying the division into effect.
9 (3)] (2) A statement that the dividing nonprofit
10 corporation will, or will not, survive the division.
11 [(4)] (3) Any changes desired to be made in the articles
12 of the surviving corporation, if there be one, including a
13 restatement of the articles.
14 [(5)] (4) The articles of incorporation required by
15 subsection (b) [of this section].
16 [(6)] (5) Such other [details and] provisions as are
17 deemed desirable.
18 (b) Articles of new corporations.--There shall be included
19 in or annexed to the plan of division:
20 (1) Articles of incorporation, which shall contain all
21 of the statements required by this [article] subpart to be
22 set forth in restated articles, for each of the new domestic
23 nonprofit corporations, if any, resulting from the division.
24 (2) Articles of incorporation, certificates of
25 incorporation[,] or other charter documents for each of the
26 new foreign nonprofit corporations [not-for-profit], if any,
27 resulting from the division.
28 (c) Proposal and adoption.--[The] Except as otherwise
29 provided in section 5953 (relating to division without member
30 approval), the plan of division shall be proposed and adopted,
20010S0215B1243 - 112 -
1 and may be amended after its adoption and terminated, by a
2 domestic nonprofit corporation in the manner provided for the
3 proposal, adoption, amendment and termination of a plan of
4 merger in Subchapter C (relating to merger, consolidation and
5 sale of assets) or, if the dividing corporation is a foreign
6 nonprofit corporation [not-for-profit], in accordance with the
7 laws of the jurisdiction in which it is incorporated[.] and, in
8 the case of a foreign domiciliary corporation, the provisions of
9 this subpart to the extent provided by section 6145 (relating to
10 applicability of certain safeguards to foreign corporations).
11 There shall be included in or enclosed with the notice of the
12 meeting of members that will act on the plan a copy or summary
13 of the plan.
14 (d) Special requirements.--If any provision of the bylaws of
15 a dividing domestic nonprofit corporation adopted before January
16 1, 1972 shall require for the adoption of a plan of merger or
17 consolidation or a plan involving the sale, lease or exchange of
18 all or substantially all of the property and assets of the
19 corporation a specific number or percentage of votes of
20 directors, members, or members of an other body or other special
21 procedures, the plan of division shall not be adopted without
22 such number or percentage of votes or compliance with such other
23 special procedures.
24 (e) Financial status of resulting corporations.--Unless the
25 plan of division provides that the dividing corporation shall
26 survive the division and that all membership interests or shares
27 or obligations, if any, of all new corporations resulting from
28 the plan shall be owned solely by the surviving corporation, no
29 plan of division may be made effective at a time when the
30 dividing corporation is insolvent or when the division would
20010S0215B1243 - 113 -
1 render any of the resulting corporations insolvent.
2 (f) Rights of holders of indebtedness.--If any debt
3 securities, notes or similar evidences of indebtedness for money
4 borrowed, whether secured or unsecured, indentures or other
5 contracts were issued, incurred or executed by the dividing
6 corporation before January 1, 1972, and have not been amended
7 subsequent to that date, the liability of the dividing
8 corporation thereunder shall not be affected by the division nor
9 shall the rights of the obligees thereunder be impaired by the
10 division, and each of the resulting corporations may be
11 proceeded against or substituted in place of the dividing
12 corporation as joint and several obligors on such liability,
13 regardless of any provision of the plan of division apportioning
14 the liabilities of the dividing corporation.
15 (g) Reference to outside facts.--Any of the terms of a plan
16 of division may be made dependent upon facts ascertainable
17 outside of the plan if the manner in which the facts will
18 operate upon the terms of the plan is set forth in the plan.
19 Such facts may include, without limitation, actions or events
20 within the control of or determinations made by the dividing
21 corporation or a representative of the dividing corporation.
22 § 5953. [(Reserved).] Division without member approval.
23 Unless otherwise required by its bylaws or by section 5952
24 (relating to proposal and adoption of plan of division), a plan
25 of division that does not alter the state of incorporation of a
26 nonprofit corporation nor amend in any respect the provisions of
27 its articles, except amendments that under section 5914(b)
28 (relating to adoption in absence of voting members) may be made
29 without member action, shall not require the approval of the
30 members of the corporation if the transfers of assets effected
20010S0215B1243 - 114 -
1 by the division, if effected by means of a sale, lease, exchange
2 or other disposition, would not require the approval of members
3 under section 5930 (relating to voluntary transfer of corporate
4 assets).
5 § 5957. Effect of division.
6 (a) Multiple resulting corporations.--Upon the division
7 becoming effective, the dividing corporation shall be subdivided
8 into the distinct and independent resulting corporations named
9 in the plan of division and, if the dividing corporation is not
10 to survive the division, the existence of the dividing
11 corporation shall cease. The resulting corporations, if they are
12 domestic nonprofit corporations, shall not thereby acquire
13 authority to engage in any business or exercise any right
14 [which] that a corporation may not be incorporated under this
15 [article] subpart to engage in or exercise. Any resulting
16 foreign nonprofit corporation [which] that is stated in the
17 articles of division to be a qualified foreign nonprofit
18 corporation shall be a qualified foreign nonprofit corporation
19 under [this subpart] Article C (relating to foreign nonprofit
20 corporations), and the articles of division shall be deemed to
21 be the application for a certificate of authority and the
22 certificate of authority issued thereon of [such] the
23 corporation.
24 (b) Property rights; allocations of assets and
25 liabilities.--
26 (1) Except as otherwise provided by order, if any,
27 obtained pursuant to section [5547(b)] 5547(c) (relating to
28 nondiversion of certain property)[, all]:
29 (i) All the property, real, personal[,] and mixed,
30 and franchises of the dividing corporation, and all debts
20010S0215B1243 - 115 -
1 due on whatever account to it, including subscriptions
2 for membership and other choses in action belonging to
3 it, shall, to the extent allocations of assets are
4 contemplated by the plan of division, be [taken and]
5 deemed without further [act or deed] action to be
6 [transferred] allocated to and vested in the resulting
7 corporations on such a manner and basis and with such
8 effect as is specified in the plan [of division], or per
9 capita among the resulting corporations, as tenants in
10 common, if no [such] specification is made in the plan[.
11 The], and the title to any real estate, or interest
12 therein, vested in any of the corporations shall not
13 revert or be in any way impaired by reason of the
14 division.
15 (ii) Upon the division becoming effective, the
16 resulting corporations shall each thenceforth be
17 responsible as separate and distinct corporations only
18 for such liabilities [and obligations] as each
19 corporation may undertake or incur in its own name, but
20 shall be liable [inter se] for the [debts and]
21 liabilities of the dividing corporation in the manner and
22 on the basis [specified in the plan of division. No
23 liens] provided in paragraphs (4) and (5).
24 (iii) Liens upon the property of the dividing
25 corporation shall not be impaired by the division.
26 [One] (iv) To the extent allocations of liabilities
27 are contemplated by the plan of division, the liabilities
28 of the dividing corporation shall be deemed without
29 further action to be allocated to and become the
30 liabilities of the resulting corporations on such a
20010S0215B1243 - 116 -
1 manner and basis and with such effect as is specified in
2 the plan; and one or more, but less than all, of the
3 resulting corporations shall be free of [all] the
4 liabilities [and obligations] of the dividing corporation
5 to the extent, if any, specified in the plan, if in
6 either case:
7 (A) no fraud [of corporate creditors or] on
8 members without voting rights [and if no] or
9 violation of law shall be effected thereby[,]; and
10 [if applicable provisions of law are complied with.
11 Otherwise, the liability]
12 (B) the plan does not constitute a fraudulent
13 transfer under 12 Pa.C.S. Ch. 51 (relating to
14 fraudulent transfers).
15 (v) If the conditions in subparagraph (iv) for
16 freeing one or more of the resulting corporations from
17 the liabilities of the dividing corporation, or for
18 allocating some or all of the liabilities of the dividing
19 corporation, are not satisfied, the liabilities of the
20 dividing corporation[, or of its members, directors, or
21 officers,] as to which those conditions are not satisfied
22 shall not be affected by the division[,] nor shall the
23 rights of [the] creditors [thereof or of any person
24 dealing with such corporation] thereunder be impaired by
25 [such] the division[,] and[, except as otherwise provided
26 in this section,] any claim existing or action or
27 proceeding pending by or against [such] the corporation
28 with respect to those liabilities may be prosecuted to
29 judgment as if [such] the division had not taken place,
30 or the resulting corporations may be proceeded against or
20010S0215B1243 - 117 -
1 substituted in [its] place of the dividing corporation as
2 joint and several obligors on [such liability] those
3 liabilities, regardless of any provision of the plan of
4 division apportioning the [debts and] liabilities of the
5 dividing corporation.
6 (2) It shall not be necessary for a plan of division to
7 list each individual asset or liability of the dividing
8 corporation to be allocated to a new corporation so long as
9 those assets and liabilities are described in a reasonable
10 manner.
11 (3) Each new corporation shall hold any assets and
12 liabilities allocated to it as the successor to the dividing
13 corporation, and those assets and liabilities shall not be
14 deemed to have been assigned to the new corporation in any
15 manner, whether directly or indirectly or by operation of
16 law.
17 (c) Taxes.--Any taxes, interest, penalties and public
18 accounts of the Commonwealth[,] claimed against the dividing
19 corporation[, but not] that are settled, assessed or determined
20 prior to [such] or after the division[,] shall be [settled,
21 assessed or determined against] the liability of any of the
22 resulting corporations[,] and, together with interest thereon,
23 shall be a lien against the franchises and property, both real
24 and personal, of all [such] the corporations. [The] Upon the
25 application of the dividing corporation, the Department of
26 Revenue [may, upon the application of the dividing corporation],
27 with the concurrence of the Office of Employment Security of the
28 Department of Labor and Industry, shall release one or more, but
29 less than all, of the resulting corporations from liability and
30 liens for all taxes, interest, penalties and public accounts of
20010S0215B1243 - 118 -
1 the dividing corporation due the Commonwealth [or any other
2 taxing authority] for periods prior to the effective date of the
3 division, if [the Department of Revenue is] those departments
4 are satisfied that the public revenues will be adequately
5 secured.
6 (d) Articles of surviving corporation.--The articles of
7 incorporation of the surviving corporation, if there be one,
8 shall be deemed to be amended to the extent, if any, that
9 changes in its articles are stated in the plan of division.
10 (e) Articles of new corporations.--The statements [which]
11 that are set forth in the plan of division with respect to each
12 new domestic nonprofit corporation and [which] that are required
13 or permitted to be set forth in restated articles of
14 incorporation of corporations incorporated under this [article]
15 subpart, or the articles of incorporation of each new
16 corporation set forth therein, shall be deemed to be the
17 articles of incorporation of each [such] new corporation.
18 (f) Directors and officers.--Unless otherwise provided in
19 the plan, the directors and officers of the dividing corporation
20 shall be the initial directors and officers of each of the
21 resulting corporations.
22 (g) Disposition of memberships.--Unless otherwise provided
23 in the plan, the memberships and other securities or
24 obligations, if any, of each new corporation resulting from the
25 division shall be distributable to:
26 (1) the surviving corporation, if the dividing
27 corporation survives the division; or
28 (2) the members of the dividing corporation pro rata, in
29 any other case.
30 (h) Conflict of laws.--It is the intent of the General
20010S0215B1243 - 119 -
1 Assembly that:
2 (1) The effect of a division of a domestic business
3 corporation shall be governed solely by the laws of this
4 Commonwealth and any other jurisdiction under the laws of
5 which any of the resulting corporations is incorporated.
6 (2) The effect of a division on the assets and
7 liabilities of the dividing corporation shall be governed
8 solely by the laws of this Commonwealth and any other
9 jurisdiction under the laws of which any of the resulting
10 corporations is incorporated.
11 (3) The validity of any allocations of assets or
12 liabilities by a plan of division of a domestic business
13 corporation, regardless of whether or not any of the new
14 corporations is a foreign business corporation, shall be
15 governed solely by the laws of this Commonwealth.
16 (4) In addition to the express provisions of this
17 subsection, this subchapter shall otherwise generally be
18 granted the protection of full faith and credit under the
19 Constitution of the United States.
20 § 5975. Predissolution provision for liabilities.
21 (a) Powers of board.--The board of directors or other body
22 of a nonprofit corporation that has elected to proceed under
23 this section shall have full power to wind up and settle the
24 affairs of [a nonprofit] the corporation in accordance with this
25 section prior to filing articles of dissolution in accordance
26 with section 5977 (relating to articles of dissolution).
27 (b) Notice to creditors and taxing authorities.--After the
28 approval by the members or the board of directors or other body
29 pursuant to section 5974(b) (relating to adoption in absence of
30 voting members) that the corporation dissolve voluntarily, the
20010S0215B1243 - 120 -
1 corporation shall immediately cause notice of the winding up
2 proceedings to be officially published and to be mailed by
3 certified or registered mail to each known creditor and claimant
4 and to each municipal corporation in which [its registered
5 office or principal] it has a place of business in this
6 Commonwealth [is located].
7 (c) Winding up and distribution.--The corporation shall, as
8 speedily as possible, proceed to collect all sums due it,
9 convert into cash all corporate assets the conversion of which
10 into cash is required to discharge its liabilities and, out of
11 the assets of the corporation, discharge or make adequate
12 provision for the discharge of all liabilities of the
13 corporation, according to their respective priorities. Except as
14 otherwise provided in a bylaw adopted by the members or in this
15 subpart or by any other provision of law, any surplus remaining
16 after paying or providing for all liabilities of the corporation
17 shall be distributed to the shareholders, if any, pro rata, or
18 if there be no shareholders, among the members per capita. See
19 section 1972(a) (relating to proposal of voluntary dissolution).
20 § 5976. Judicial supervision of proceedings.
21 (a) General rule.--A nonprofit corporation that has elected
22 to proceed under section 1975 (relating to predissolution
23 provision for liabilities), at any time during the winding up
24 proceedings, may apply to the court to have the proceedings
25 continued under the supervision of the court and thereafter the
26 proceedings shall continue under the supervision of the court as
27 provided in Subchapter G (relating to involuntary liquidation
28 and dissolution).
29 * * *
30 § 5977. Articles of dissolution.
20010S0215B1243 - 121 -
1 * * *
2 (b) Contents of articles.--The articles of dissolution shall
3 be executed by the corporation and shall set forth:
4 * * *
5 (5) A statement that:
6 (i) [that] all liabilities of the corporation have
7 been discharged or that adequate provision has been made
8 therefor; [or]
9 (ii) [that] the assets of the corporation are not
10 sufficient to discharge its liabilities, and that all the
11 assets of the corporation have been fairly and equitably
12 applied, as far as they will go, to the payment of such
13 liabilities[. An election by]; or
14 (iii) the corporation has elected to proceed under
15 Subchapter H [shall constitute the making of adequate
16 provision for the liabilities of the corporation,
17 including any judgment or decree that may be obtained
18 against the corporation in any pending action or
19 proceeding].
20 * * *
21 (7) [A] In the case of a corporation that has not
22 elected to proceed under Subchapter H, a statement that no
23 actions or proceedings are pending against the corporation in
24 any court, or that adequate provision has been made for the
25 satisfaction of any judgment or decree that may be obtained
26 against the corporation in each pending action or proceeding.
27 (8) [A] In the case of a corporation that has not
28 elected to proceed under Subchapter H, a statement that
29 notice of the winding-up proceedings of the corporation was
30 mailed by certified or registered mail to each known creditor
20010S0215B1243 - 122 -
1 and claimant and to each municipal corporation in which the
2 [registered office or principal place of business of the]
3 corporation has a place of business in this Commonwealth [is
4 located].
5 * * *
6 (d) Cross references.--See sections 134 (relating to
7 docketing statement) and 135 (relating to requirements to be met
8 by filed documents).
9 § 5989. Articles of involuntary dissolution.
10 (a) General rule.--In a proceeding under this subchapter,
11 the court shall enter an order dissolving the nonprofit
12 corporation when the order, if any, obtained pursuant to section
13 5547(b) (relating to nondiversion of certain property) has been
14 entered and when the costs and expenses of the proceeding, and
15 all liabilities of the corporation have been discharged, and all
16 of its remaining assets have been distributed to the persons
17 entitled thereto, or, in case its assets are not sufficient to
18 discharge such costs, expenses and liabilities, when all the
19 assets have been applied, as far as they will go, to the payment
20 of such costs, expenses and liabilities. See section 139(b)
21 (relating to tax clearance in judicial proceedings).
22 (b) Filing.--After entry of an order of dissolution, the
23 office of the clerk of the court of common pleas shall prepare
24 and execute articles of dissolution substantially in the form
25 provided by section 5977 (relating to articles of dissolution),
26 attach thereto a certified copy of the order and transmit the
27 articles and attached order to the Department of State. [A
28 certificate or statement provided for by section 139 (relating
29 to tax clearance of certain fundamental transactions) shall not
30 be required, and the] The department shall not charge a fee in
20010S0215B1243 - 123 -
1 connection with the filing of articles of dissolution under this
2 section. See [section] sections 134 (relating to docketing
3 statement) and 135 (relating to requirements to be met by filed
4 documents).
5 * * *
6 § 5991.1. Authority of board of directors.
7 (a) General rule.--The board of directors or other body of a
8 nonprofit corporation that has elected to proceed under this
9 subchapter shall have full power to wind up and settle the
10 affairs of the corporation in accordance with this subchapter
11 both prior to and after the filing of articles of dissolution in
12 accordance with section 5977 (relating to articles of
13 dissolution).
14 (b) Winding up.--The corporation shall, as speedily as
15 possible, proceed to comply with the requirements of this
16 subchapter while simultaneously collecting all sums due it and
17 converting into cash all corporate assets, the conversion of
18 which into cash is required to make adequate provision for its
19 liabilities.
20 § 6126. Amended certificate of authority.
21 (a) General rule.--After receiving a certificate of
22 authority, a qualified foreign nonprofit corporation may,
23 subject to the provisions of this subchapter, change [the name
24 under which it is authorized to transact business in this
25 Commonwealth] or correct any of the information set forth in its
26 application for a certificate of authority or previous filings
27 under this section by filing in the Department of State an
28 application for an amended certificate of authority. The
29 application shall be executed by the corporation and shall
30 state:
20010S0215B1243 - 124 -
1 (1) The name under which the applicant corporation
2 currently holds a certificate of authority to do business in
3 this Commonwealth.
4 [(2) The name of the jurisdiction under the laws of
5 which the corporation is incorporated.
6 (3) The address, including street and number, if any, of
7 its principal office under the laws of the jurisdiction in
8 which it is incorporated.
9 (4)] (2) Subject to section 109 (relating to name of
10 commercial registered office provider in lieu of registered
11 address), the address, including street and number, if any,
12 of its registered office in this Commonwealth. [which may
13 constitute a change in the address of its registered office.
14 (5) The new name of the corporation and]
15 (3) The information to be changed or corrected.
16 (4) If the application reflects a change in the name of
17 the corporation, the application shall include a statement
18 that either:
19 (i) the change of name reflects a change effected in
20 the jurisdiction of incorporation; or
21 (ii) documents complying with section 6123(b)
22 (relating to exceptions) accompany the application.
23 (b) Issuance of amended certificate of authority.--Upon the
24 filing of the application, the applicant corporation shall be
25 deemed to hold an amended certificate of authority.
26 (c) Cross reference.--See section 134 (relating to docketing
27 statement).
28 § 6146. Provisions applicable to all foreign corporations.
29 The following provisions of this subpart shall, except as
30 otherwise provided in this section, be applicable to every
20010S0215B1243 - 125 -
1 foreign corporation not-for-profit, whether or not required to
2 procure a certificate of authority under this chapter:
3 Section 5503 (relating to defense of ultra vires), as to
4 contracts and conveyances governed by the laws of this
5 Commonwealth and conveyances affecting real property situated
6 in this Commonwealth.
7 Section 5506 (relating to form of execution of
8 instruments), as to instruments or other documents governed
9 by the laws of this Commonwealth or affecting real property
10 situated in this Commonwealth.
11 Section 5510 (relating to certain specifically authorized
12 debt terms), as to obligations (as defined in the section)
13 governed by the laws of this Commonwealth or affecting real
14 property situated in this Commonwealth.
15 Section 5782 (relating to actions against directors,
16 members of an other body and officers), as to any action or
17 proceeding brought in a court of this Commonwealth.
18 § 8105. Ownership of certain professional partnerships.
19 Except as otherwise provided by statute, rule or regulation
20 applicable to a particular profession, all of the [partners in]
21 ultimate beneficial owners of the partnership interests in a
22 partnership that renders one or more restricted professional
23 services shall be licensed persons. As used in this section,
24 the term "restricted professional services" shall have the
25 meaning specified in section 8903 (relating to definitions and
26 index of definitions).
27 § 8201. Scope.
28 * * *
29 (e) Prohibited termination.--A registration under this
30 subchapter may not be terminated while the partnership is a
20010S0215B1243 - 126 -
1 bankrupt as that term is defined in section 8903 (relating to
2 definitions and index of definitions). See section 8221(f)
3 (relating to annual registration).
4 (f) Alternative procedure.--In lieu of filing a statement of
5 registration as provided in subsection (a), a limited
6 partnership may register as a registered limited liability
7 partnership by including in its certificate of limited
8 partnership, either originally or by amendment, the statements
9 required by subsection (a)(3) and (4). To terminate its
10 registration, a limited partnership that uses the procedure
11 authorized by this subsection shall amend its certificate of
12 limited partnership to delete the statements required by this
13 subsection.
14 (g) Constructive notice.--Filing under this section shall
15 constitute constructive notice that the partnership is a
16 registered limited liability partnership and that the partners
17 are entitled to the protections from liability provided by this
18 subchapter.
19 [(e)] (h) Cross references.--See sections 134 (relating to
20 docketing statement) and 135 (relating to requirements to be met
21 by filed documents).
22 § 8202. Definitions.
23 The following words and phrases when used in this chapter
24 shall have the meanings given to them in this section unless the
25 context clearly indicates otherwise:
26 * * *
27 "Partner." Includes a person who is or was a partner in a
28 registered limited liability partnership at any time while the
29 registration of the partnership under this subchapter is or was
30 in effect.
20010S0215B1243 - 127 -
1 * * *
2 § 8204. Limitation on liability of partners.
3 (a) General rule.--Except as provided in subsection (b), a
4 partner in a registered limited liability partnership shall not
5 be individually liable directly or indirectly, whether by way of
6 indemnification, contribution or otherwise, for debts and
7 obligations of, or chargeable to, the partnership, whether
8 sounding in contract or tort or otherwise, that arise from any
9 negligent or wrongful acts or misconduct committed by another
10 partner or other representative of the partnership while the
11 registration of the partnership under this subchapter is in
12 effect.
13 (b) Exceptions.--
14 (1) [Subsection (a) shall not apply to any debt or
15 obligation with respect to which the partnership is not in
16 compliance with section 8206(a) (relating to insurance).]
17 (Repealed).
18 * * *
19 (3) Subsection (a) shall not affect in any way:
20 (i) the liability of the partnership itself for all
21 its debts and obligations; [or]
22 (ii) the availability of the entire assets of the
23 partnership to satisfy its debts and obligations; or
24 (iii) any obligation undertaken by a partner in
25 writing to individually indemnify another partner of the
26 partnership or to individually contribute toward a
27 liability of another partner.
28 * * *
29 § 8205. Liability of withdrawing partner.
30 * * *
20010S0215B1243 - 128 -
1 (b) Exceptions.--Subsection (a) shall not affect the
2 liability of a partner:
3 * * *
4 (7) For any obligation undertaken by a partner in
5 writing to individually indemnify another partner of the
6 partnership or to individually contribute toward a liability
7 of another partner.
8 * * *
9 (e) Permissive filing.--Filing under this section is
10 permissive, and failure to make a filing under this section by a
11 partner entitled to do so shall not affect the right of that
12 partner to the limitation on liability provided by section 8204
13 (relating to limitation on liability of partners).
14 (f) Constructive notice.--Filing under this section shall
15 constitute constructive notice that the partner has withdrawn
16 from the partnership and is entitled to the protection from
17 liability provided by this section.
18 (g) Variation of section.--A written provision of the
19 partnership agreement may restrict or condition the application
20 of this section to some or all of the partners of the
21 partnership.
22 (h) Application of section.--A partner in a foreign
23 registered limited liability partnership, regardless of whether
24 or not it has registered to do business in this Commonwealth
25 under section 8211 (relating to foreign registered limited
26 liability partnerships), shall not be entitled to make a filing
27 under this section with regard to that partnership.
28 [(e)] (i) Cross references.--See sections 134 (relating to
29 docketing statement) and 135 (relating to requirements to be met
30 by filed documents).
20010S0215B1243 - 129 -
1 § 8211. Foreign registered limited liability partnerships.
2 (a) Governing law.--Subject to the Constitution of
3 Pennsylvania:
4 (1) The laws of the jurisdiction under which a foreign
5 registered limited liability partnership is organized govern
6 its organization and internal affairs and the liability of
7 its partners, except as provided in subsection (c).
8 (2) A foreign registered limited liability partnership
9 may not be denied registration by reason of any difference
10 between those laws and the laws of this Commonwealth.
11 (b) Registration to do business.--A foreign registered
12 limited liability partnership, regardless of whether or not it
13 is also a foreign limited partnership, shall be subject to
14 Subchapter K of Chapter 85 (relating to foreign limited
15 partnerships) as if it were a foreign limited partnership,
16 except that [the]:
17 (1) Its application for registration shall state that it
18 is a registered limited liability partnership.
19 (2) The name under which [the foreign registered limited
20 liability partnership] it registers and conducts business in
21 this Commonwealth shall comply with the requirements of
22 section 8203 (relating to name).
23 (3) Section 8582(a)(5) and (6) (relating to
24 registration) shall not be applicable to the application for
25 registration of a foreign limited liability partnership that
26 is not a foreign limited partnership.
27 (c) Exception.--The liability of the partners in a foreign
28 registered limited liability partnership shall be governed by
29 the laws of the jurisdiction under which it is organized, except
30 that the partners shall not be entitled to greater protection
20010S0215B1243 - 130 -
1 from liability than is available to the partners in a domestic
2 registered limited liability partnership.
3 § 8221. Annual registration.
4 * * *
5 (e) [Annual fee to be lien] Failure to pay annual fee.--
6 (1) Failure to [pay the annual registration fee imposed]
7 file the certificate of annual registration required by this
8 section [shall not affect the existence or] for five
9 consecutive years shall result in the automatic termination
10 of the status of the registered limited liability partnership
11 as such[, but the]. In addition, any annual registration fee
12 that is not paid when due shall be a lien in the manner
13 provided in this subsection from the time the annual
14 registration fee is due and payable [upon]. If a certificate
15 of annual registration is not filed within 30 days after the
16 date on which it is due, the department shall assess a
17 penalty of $500 against the partnership, which shall also be
18 a lien in the manner provided in this subsection. The
19 imposition of that penalty shall not be construed to relieve
20 the partnership from liability for any other penalty or
21 interest provided for under other applicable law.
22 (2) If the annual registration fee paid by a registered
23 limited liability partnership is subsequently determined to
24 be less than should have been paid because it was based on an
25 incorrect number of general partners or was otherwise
26 incorrectly computed, that fact shall not affect the
27 existence or status of the registered limited liability
28 partnership as such, but the amount of the additional annual
29 registration fee that should have been paid shall be a lien
30 in the manner provided in this subsection from the time the
20010S0215B1243 - 131 -
1 incorrect payment is discovered by the department.
2 (3) The annual registration fee shall bear simple
3 interest from the date that it becomes due and payable until
4 paid. The interest rate shall be that provided for in section
5 806 of the act of April 9, 1929 (P.L.343, No.176), known as
6 The Fiscal Code, with respect to unpaid taxes. The penalty
7 provided for in paragraph (1) shall not bear interest. The
8 payment of interest shall not relieve the registered limited
9 liability partnership from liability for any other penalty or
10 interest provided for under other applicable law.
11 (4) The lien created by this subsection shall attach to
12 all of the property and proceeds thereof of the registered
13 limited liability partnership in which a security interest
14 can be perfected in whole or in part by filing in the
15 department under 13 Pa.C.S. Div. 9 (relating to secured
16 transactions; sales of accounts, contract rights and chattel
17 paper), whether the property and proceeds are owned by the
18 partnership at the time the annual registration fee or any
19 penalty or interest becomes due and payable or whether the
20 property and proceeds are acquired thereafter. Except as
21 otherwise provided by statute, the lien created by this
22 subsection shall have priority over all other liens, security
23 interests or other charges, except liens for taxes or other
24 charges due the Commonwealth. The lien created by this
25 subsection shall be entered on the records of the department
26 and indexed in the same manner as a financing statement filed
27 under 13 Pa.C.S. Div. 9. At the time an annual registration
28 fee, penalty or interest that has resulted in the creation of
29 a lien under this subsection is paid, the department shall
30 terminate the lien with respect to that annual registration
20010S0215B1243 - 132 -
1 fee, penalty or interest without requiring a separate filing
2 by the partnership for that purpose.
3 (5) If the annual registration fee paid by a registered
4 limited liability partnership is subsequently determined to
5 be more than should have been paid for any reason, no refund
6 of the additional fee shall be made.
7 (6) Termination of the status of a registered limited
8 liability partnership as such, whether voluntarily or
9 involuntarily, shall not release it from the obligation to
10 pay any accrued fees, penalties and interest and shall not
11 release the lien created by this subsection.
12 (f) Exception for bankrupt partnerships.--A partnership that
13 would otherwise be required to pay the annual registration fee
14 set forth in subsection (b) shall not be required to pay that
15 fee with respect to any year during any part of which the
16 partnership is a bankrupt as defined in section 8903 (relating
17 to definitions and index of definitions). The partnership shall,
18 instead, indicate on its certificate of annual registration for
19 that year that it is exempt from payment of the annual
20 registration fee pursuant to this subsection. If the partnership
21 fails to file timely a certificate of annual registration, a
22 lien shall be entered on the records of the department pursuant
23 to subsection (e) which shall not be removed until the
24 partnership files a certificate of annual registration
25 indicating its entitlement to an exemption from payment of the
26 annual registration fee as provided in this subsection. See
27 section 8201(e) (relating to scope).
28 § 8359. Right to wind up affairs.
29 Unless otherwise agreed, the partners who have not wrongfully
30 dissolved the partnership, or the legal representative of the
20010S0215B1243 - 133 -
1 last surviving partner, not bankrupt, has the right to wind up
2 the partnership affairs except that any partner, his legal
3 representative or his assignee, upon cause shown, may obtain
4 winding up by the court. See section 139(b) (relating to tax
5 clearance in judicial proceedings).
6 § 8503. Definitions and index of definitions.
7 (a) Definitions.--The following words and phrases when used
8 in this chapter shall have the meanings given to them in this
9 section unless the context clearly indicates otherwise:
10 "Certificate of limited partnership." The certificate
11 referred to in section 8511 (relating to certificate of limited
12 partnership) and the certificate as amended. The term includes
13 any other statements or certificates permitted or required to be
14 filed in the Department of State by sections 108 (relating to
15 change in location or status of registered office provided by
16 agent) and 138 (relating to statement of correction) or this
17 part. If an amendment of the certificate of limited partnership
18 or a certificate of merger or division made in the manner
19 permitted by this chapter restates the certificate in its
20 entirety or if there is a certificate of consolidation,
21 thenceforth the "certificate of limited partnership" shall not
22 include any prior documents and any certificate issued by the
23 department with respect thereto shall so state.
24 * * *
25 "Court." Subject to any inconsistent general rule prescribed
26 by the Supreme Court of Pennsylvania:
27 (1) the court of common pleas of the judicial district
28 embracing the county where the registered office of the
29 limited partnership is or is to be located; or
30 (2) where a limited partnership results from a merger,
20010S0215B1243 - 134 -
1 consolidation, division or other transaction without
2 establishing a registered office in this Commonwealth or
3 withdraws as a foreign limited partnership, the court of
4 common pleas in which venue would have been laid immediately
5 prior to the transaction or withdrawal.
6 ["Department." The Department of State of the Commonwealth.]
7 * * *
8 "Partnership agreement." Any agreement, written or oral, of
9 the partners as to the affairs of a limited partnership and the
10 conduct of its business. [A written partnership agreement:
11 (1) May provide that a person shall be admitted as a
12 limited partner, or shall become an assignee of a partnership
13 interest or other rights or powers of a limited partner to
14 the extent assigned, and shall become bound by the
15 partnership agreement:
16 (i) if such person (or a representative authorized
17 by such person orally, in writing or by other action such
18 as payment for a partnership interest) executes the
19 partnership agreement or any other writing evidencing the
20 intent of such person to become a limited partner or
21 assignee; or
22 (ii) without such execution, if such person (or a
23 representative authorized by such person orally, in
24 writing or by other action such as payment for a
25 partnership interest) complies with the conditions for
26 becoming a limited partner or assignee as set forth in
27 the partnership agreement or any other writing and
28 requests (orally, in writing or by other action such as
29 payment for a partnership interest) that the records of
30 the limited partnership reflect such admission or
20010S0215B1243 - 135 -
1 assignment.
2 (2) Shall not be unenforceable by reason of its not
3 having been signed by a person being admitted as a limited
4 partner or becoming an assignee as provided in paragraph (1)
5 or by reason of its having been signed by a representative as
6 provided in section 8514(b) (relating to attorney-in-fact).
7 (3) May provide that, whenever a provision of this
8 chapter requires the vote or consent of a specified number or
9 percentage of partners or of a class of partners for the
10 taking of any action, a higher number or percentage of votes
11 or consents shall be required for the action. Except as
12 otherwise provided in the partnership agreement, whenever the
13 partnership agreement requires for the taking of any action
14 by the partners or a class of partners a specific number or
15 percentage of votes or consents, the provision of the
16 partnership agreement setting forth that requirement shall
17 not be amended or repealed by any lesser number or percentage
18 of votes or consents of the partners or the class of
19 partners.]
20 * * *
21 "Relax." When used with respect to a provision of the
22 certificate of limited partnership or partnership agreement,
23 means to provide lesser rights for an affected representative or
24 partner.
25 (b) Index of definitions.--Other definitions applying to
26 this chapter and the sections in which they appear are:
27 "Act" or "action." Section 102.
28 "Department." Section 102.
29 "Licensed person." Section 102.
30 "Professional services." Section 102.
20010S0215B1243 - 136 -
1 § 8510. Indemnification.
2 * * *
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 [or failure to act] giving rise to the claim for
6 indemnification is determined by a court to have constituted
7 willful misconduct or recklessness. The certificate of limited
8 partnership or partnership agreement may not provide for
9 indemnification in the case of willful misconduct or
10 recklessness.
11 * * *
12 (f) Mandatory indemnification.--Without regard to whether
13 indemnification or advancement of expenses is provided under
14 subsections (a) and (d), a limited partnership shall be subject
15 to section 8331(2) (relating to rules determining rights and
16 duties of partners).
17 SUBCHAPTER B
18 FORMATION[; CERTIFICATE OF LIMITED PARTNERSHIP]
19 § 8511. Certificate of limited partnership.
20 (a) General rule.--In order to form a limited partnership, a
21 certificate of limited partnership must be executed and filed in
22 the Department of State. The certificate shall set forth:
23 (1) The name of the limited partnership.
24 (2) 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 registered office.
28 (3) The name and business address of each general
29 partner.
30 (4) If a partner's interest in the limited partnership
20010S0215B1243 - 137 -
1 is to be evidenced by a certificate of partnership interest,
2 a statement to that effect.
3 (5) Any other [matters the partners determine to include
4 therein. A provision included in the certificate of limited
5 partnership pursuant to this paragraph shall be deemed to be
6 a provision of the partnership agreement for purposes of any
7 provision of this chapter that refers to a rule as set forth
8 in the partnership agreement.] provision, whether or not
9 specifically authorized by or in contravention of this
10 chapter, that the partners elect to set out in the
11 certificate of limited partnership for the regulation of the
12 internal affairs of the limited partnership, except where a
13 provision of this chapter expressly provides that the
14 certificate of limited partnership shall not relax or
15 contravene any provision on a specified subject.
16 (b) Effective date of formation.--A limited partnership is
17 formed at the time of the filing of the certificate of limited
18 partnership in the department or at any later time specified in
19 the certificate of limited partnership if, in either case, there
20 has been substantial compliance with the requirements of this
21 section or the corresponding provisions of prior law.
22 (c) [Duties of recorders of deeds.--Each recorder of deeds
23 shall continue to keep open for public inspection the record of
24 limited partnership certificates recorded under the statutes
25 supplied by this chapter and by prior law the custody of which
26 has not been transferred to the department pursuant to section
27 140 (relating to custody and management of orphan corporate and
28 business records).] (Repealed).
29 (d) Transitional provision.--A limited partnership formed
30 under prior law shall not be required to set forth in its
20010S0215B1243 - 138 -
1 certificate of limited partnership a registered office or the
2 business address of each general partner until such time as it
3 first amends its certificate of limited partnership under this
4 chapter.
5 (e) Effect of provisions.--A provision of the certificate of
6 limited partnership shall be deemed to be a provision of the
7 partnership agreement for purposes of any provision of this
8 chapter that refers to a rule as set forth in the partnership
9 agreement.
10 [(e)] (f) Cross references.--See sections 134 (relating to
11 docketing statement), 135 (relating to requirements to be met by
12 filed documents) and 8514 (relating to execution of
13 certificates).
14 § 8517. Notice.
15 The fact that a certificate of limited partnership is on file
16 in the Department of State is not notice of any fact other than:
17 (1) that the partnership is a limited partnership and
18 that all partners are limited partners except the persons
19 designated therein as general partners[, but it is not notice
20 of any other fact]; and
21 (2) if it is registered under Chapter 82 (relating to
22 registered limited liability partnerships), that it is also a
23 registered limited liability partnership.
24 § 8519. Filing of certificate of summary of record by limited
25 partnerships formed prior to 1976.
26 (a) General rule.--[Any limited partnership that was not
27 formed under this chapter, has never made any filing under this
28 section or corresponding provisions of prior law and] Where any
29 of the organic documents of a limited partnership are not on
30 file in the Department of State or there is an error in any such
20010S0215B1243 - 139 -
1 document as transferred to the department pursuant to section
2 140 (relating to custody and management of orphan corporate and
3 business records), and the limited partnership desires to file
4 any document in the [Department of State] department under any
5 other provision of this chapter or [that desires] to secure from
6 the department a certified copy of the certificate of limited
7 partnership or to correct the text of its organic documents as
8 on file in the department, the limited partnership shall file in
9 the department a certificate of summary of record which shall
10 set forth:
11 (1) The name of the limited partnership.
12 (2) Subject to section 109 (relating to name of
13 commercial registered office provider in lieu of registered
14 address), the address, including street and number, if any,
15 of its registered office.
16 (3) The statute under which the limited partnership was
17 formed.
18 (4) The name under which, and the date on which, the
19 limited partnership was originally formed, including the date
20 when and the place where the original certificate was
21 recorded.
22 (5) The place or places, including the volume and page
23 numbers or their equivalent, where the documents
24 [constituting the currently effective certificate are] that
25 are not on file in the department or that require correction
26 in the records of the department where originally recorded,
27 the date or dates of each recording and the correct text of
28 the [currently effective certificate] documents. The
29 information specified in this paragraph may be omitted in a
30 certificate of summary of record that is delivered to the
20010S0215B1243 - 140 -
1 department contemporaneously with an amended certificate
2 filed under this chapter that restates the certificate in its
3 entirety.
4 [(6) Each name by which the limited partnership was
5 known, if any, other than its original name and its current
6 name and the date or dates on which each change of name of
7 the partnership became effective.]
8 (b) Cross references.--See sections 134 (relating to
9 docketing statement), 135 (relating to requirements to be met by
10 filed documents) and 8514 (relating to execution of
11 certificates).
12 § 8520. Partnership agreement.
13 (a) Admission of limited partners.--A partnership agreement
14 may provide in writing that a person shall be admitted as a
15 limited partner, or shall become an assignee of a partnership
16 interest or other rights or powers of a limited partner to the
17 extent assigned, and shall become bound by the partnership
18 agreement:
19 (1) if such person (or a representative authorized by
20 such person orally, in writing or by other action such as
21 payment for a partnership interest) executes the partnership
22 agreement or any other writing evidencing the intent of such
23 person to become a limited partner or assignee; or
24 (2) without such execution, if such person (or a
25 representative authorized by such person orally, in writing
26 or by other action such as payment for a partnership
27 interest) complies with the conditions for becoming a limited
28 partner or assignee as set forth in the partnership agreement
29 or any other writing and requests (orally, in writing or by
30 other action such as payment for a partnership interest) that
20010S0215B1243 - 141 -
1 the records of the limited partnership reflect such admission
2 or assignment.
3 (b) Signature by limited partners.--A written partnership
4 agreement shall not be unenforceable by reason of its not having
5 been signed by a person being admitted as a limited partner or
6 becoming an assignee as provided in subsection (a) or by reason
7 of its having been signed by a representative as provided in
8 section 8514(b) (relating to attorney-in-fact).
9 (c) Voting requirements.--A partnership agreement may
10 provide in writing that, whenever a provision of this chapter
11 requires the vote or consent of a specified number or percentage
12 of partners or of a class of partners for the taking of any
13 action, a higher number or percentage of votes or consents shall
14 be required for the action. Except as otherwise provided in the
15 partnership agreement, whenever the partnership agreement
16 requires for the taking of any action by the partners or a class
17 of partners a specific number or percentage of votes or
18 consents, the provision of the partnership agreement setting
19 forth that requirement shall not be amended or repealed by any
20 lesser number or percentage of votes or consents of the partners
21 or the class of partners.
22 (d) Freedom of contract.--A written partnership agreement
23 may contain any provision for the regulation of the internal
24 affairs of the limited partnership agreed to by the partners,
25 whether or not specifically authorized by or in contravention of
26 this chapter, except where this chapter:
27 (1) refers only to a rule as set forth in the
28 certificate of limited partnership; or
29 (2) expressly provides that the partnership agreement
30 shall not relax or contravene any provision on a specified
20010S0215B1243 - 142 -
1 subject.
2 (e) Oral provisions.--A partnership agreement may provide in
3 writing that it cannot be amended or modified except in writing,
4 in which case an oral agreement, amendment or modification shall
5 not be enforceable.
6 (f) Cross reference.--See section 8511(a)(5) (relating to
7 certificate of limited partnership).
8 § 8523. Liability of limited partners to third parties.
9 (a) General rule.--A limited partner is not liable [for the
10 obligations of a limited partnership unless he is also a general
11 partner or, in addition to the exercise of his rights and powers
12 as a limited partner, he participates in the control of the
13 business. However, if the limited partner participates in the
14 control of the business, he is liable only to persons who
15 transact business with the limited partnership reasonably
16 believing, based upon the conduct of the limited partner, that
17 the limited partner is a general partner.], solely by reason of
18 being a limited partner, under an order of a court or in any
19 other manner, for a debt, obligation or liability of the limited
20 partnership of any kind or for the acts of any partner, agent or
21 employee of the limited partnership.
22 (b) [Activities compatible with limited partner status.--A
23 limited partner does not participate in the control of the
24 business within the meaning of subsection (a) solely by doing
25 one or more of the following:
26 (1) Being a contractor for, or an agent or employee of
27 the limited partnership or of a general partner, or being an
28 officer, director, trustee, partner or shareholder of a
29 general partner.
30 (2) Consulting with and advising a general partner with
20010S0215B1243 - 143 -
1 respect to any matter, including, without limitation, the
2 business of the limited partnership.
3 (3) (i) Acting as surety for the limited partnership,
4 or guaranteeing, endorsing or assuming one or more
5 specific obligations of the limited partnership, or a
6 general partner.
7 (ii) Borrowing money from the limited partnership or
8 a general partner.
9 (iii) Lending money to the limited partnership or a
10 general partner.
11 (iv) Providing collateral for the limited
12 partnership or a general partner.
13 (4) Taking any action required or permitted by law to
14 bring, pursue or settle or otherwise terminate a derivative
15 action in the right of the limited partnership.
16 (5) Requesting or attending a meeting of partners.
17 (6) Acting or causing the taking or refraining from the
18 taking of any action, including, without limitation, by
19 proposing, approving, consenting or disapproving, by voting
20 or otherwise, with respect to one or more of the following
21 matters:
22 (i) The dissolution and winding up of the limited
23 partnership, or an election to continue the limited
24 partnership or the business of the limited partnership.
25 (ii) The sale, exchange, lease, mortgage, pledge or
26 other transfer of, or the grant of a security interest
27 in, any asset or assets of the limited partnership.
28 (iii) The incurrence, renewal, refinancing or
29 payment or other discharge of indebtedness by the limited
30 partnership.
20010S0215B1243 - 144 -
1 (iv) A change in the nature of the business.
2 (v) The admission or removal of a general partner.
3 (vi) The admission or removal of a limited partner.
4 (vii) A transaction involving an actual or potential
5 conflict of interest between a general partner and the
6 limited partnership or the limited partners.
7 (viii) An amendment to the partnership agreement or
8 certificate of limited partnership.
9 (ix) The merger or consolidation of the limited
10 partnership.
11 (x) The indemnification of any partner or other
12 person.
13 (xi) Matters related to the business of the limited
14 partnership not otherwise enumerated in this subsection,
15 which the partnership agreement states in writing may be
16 subject to the approval or disapproval of limited
17 partners.
18 (7) Applying for dissolution of the partnership pursuant
19 to section 8572 (relating to judicial dissolution).
20 (8) Winding up the limited partnership pursuant to
21 section 8573 (relating to winding up).
22 (9) In the case of a registered investment company,
23 voting on one or more of the following matters:
24 (i) The approval or termination of investment
25 advisory or underwriting contracts.
26 (ii) The approval of auditors.
27 (iii) Any other matter that by reason of the
28 Investment Company Act of 1940 (54 Stat. 789, 15 U.S.C. §
29 80a-1 et seq.) the general partners consider to be a
30 proper matter for the vote of the holders of voting
20010S0215B1243 - 145 -
1 securities or beneficial interests in the limited
2 partnership.
3 (10) Serving on a committee of the limited partnership
4 or the limited partners.
5 (11) Exercising any right or power permitted to limited
6 partners under this chapter and not specifically enumerated
7 in this subsection.
8 (12) Exercising any other right or power stated in the
9 partnership agreement.] (Repealed).
10 (c) [Enumeration nonexclusive.--The enumeration in
11 subsection (b) does not mean that the possession or exercise of
12 any other powers, or having or acting in other capacities, by a
13 limited partner constitutes participation by him in the control
14 of the business of the limited partnership.] (Repealed).
15 (d) Use of name of limited partner.--A limited partner does
16 not [participate in the control of the business within the
17 meaning of subsection (a)] become liable for the obligations of
18 a limited partnership by reason of the fact that all or any part
19 of the name of the limited partner is included in the name of
20 the limited partnership.
21 (e) [Effect of section.--This section does not create rights
22 or powers of limited partners. Such rights and powers may be
23 created only by the certificate of limited partnership,
24 partnership agreement or any other agreement or other provisions
25 of this chapter.] (Repealed).
26 * * *
27 § 8546. Approval of merger or consolidation.
28 (a) Preparation of plan of merger or consolidation.--A plan
29 of merger or consolidation, as the case may be, shall be
30 prepared, setting forth:
20010S0215B1243 - 146 -
1 * * *
2 (3) The manner and basis of converting the partnership
3 interests of each limited partnership into partnership
4 interests, securities or obligations of the surviving or new
5 limited partnership, as the case may be, and, if any of the
6 partnership interests of any of the limited partnerships that
7 are parties to the [plan] merger or consolidation are not to
8 be converted solely into partnership interests, securities or
9 obligations of the surviving or new limited partnership, the
10 partnership interests, securities or obligations of any other
11 person or cash, property or rights that the holders of such
12 partnership interests are to receive in exchange for, or upon
13 conversion of, such partnership interests, and the surrender
14 of any certificates evidencing them, which securities or
15 obligations, if any, of any other person or cash, property or
16 rights may be in addition to or in lieu of the partnership
17 interests, securities or obligations of the surviving or new
18 limited partnership.
19 (4) 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 (b) Post-adoption amendment of plan of merger or
25 consolidation.--A plan of merger or consolidation may contain a
26 provision that the general partners of the constituent limited
27 partnerships may amend the plan at any time prior to its
28 effective date, except that an amendment made subsequent to any
29 adoption of the plan by the limited partners of any constituent
30 domestic limited partnership shall not change:
20010S0215B1243 - 147 -
1 (1) The amount or kind of partnership interests,
2 obligations, cash, property or rights to be received in
3 exchange for or on conversion of all or any of the
4 partnership interests of the constituent domestic limited
5 partnership adversely to the holders of those partnership
6 interests.
7 (2) Any term of the certificate of limited partnership
8 or partnership agreement of the surviving or new limited
9 partnership [to be effected by] as it is to be in effect
10 immediately following consummation of the merger or
11 consolidation except provisions that may be amended without
12 the approval of the limited partners.
13 (3) Any of the other terms and conditions of the plan if
14 the change would adversely affect the holders of any
15 partnership interests of the constituent domestic limited
16 partnership.
17 * * *
18 (d) Party to plan.--[A limited partnership] An association
19 that approves a plan in its capacity as a partner or creditor of
20 a merging or consolidating limited partnership, or that
21 furnishes all or a part of the consideration contemplated by a
22 plan, does not thereby become a party to the [plan] merger or
23 consolidation for the purposes of this subchapter.
24 (e) Notice of meeting of limited partners.--Notwithstanding
25 any other provision of the partnership agreement, written notice
26 of the meeting of limited partners called for the purpose of
27 considering the proposed plan shall be given to each limited
28 partner of record, whether or not entitled to vote thereon, of
29 each domestic limited partnership that is a party to the [plan]
30 proposed merger or consolidation. There shall be included in, or
20010S0215B1243 - 148 -
1 enclosed with, the notice a copy of the proposed plan or a
2 summary thereof. The provisions of this subsection may not be
3 relaxed by the certificate of limited partnership or partnership
4 agreement.
5 (f) Adoption of plan by limited partners.--The plan of
6 merger or consolidation shall be adopted upon receiving a
7 majority of the votes cast by all limited partners, if any,
8 entitled to vote thereon of each of the domestic limited
9 partnerships that is a party to the [plan] proposed merger or
10 consolidation and, if any class of limited partners is entitled
11 to vote thereon as a class, a majority of the votes cast in each
12 class vote. A proposed plan of merger or consolidation shall not
13 be deemed to have been adopted by the limited partnership unless
14 it has also been approved by the general partners, regardless of
15 the fact that the general partners have directed or suffered the
16 submission of the plan to the limited partners for action.
17 * * *
18 (h) Termination of plan.--Prior to the time when a merger or
19 consolidation becomes effective, the merger or consolidation may
20 be terminated pursuant to provisions therefor, if any, set forth
21 in the plan. If a certificate of merger or consolidation has
22 been filed in the department prior to the termination, a
23 certificate of termination executed by each limited partnership
24 that is a party to the [plan] merger or consolidation, unless
25 the plan permits termination by less than all of the limited
26 partnerships, in which case the certificate shall be executed on
27 behalf of the limited partnership exercising the right to
28 terminate, shall be filed in the department. The certificate of
29 termination shall set forth:
30 (1) A copy of the certificate of merger or consolidation
20010S0215B1243 - 149 -
1 relating to the plan that is terminated.
2 (2) A statement that the plan has been terminated in
3 accordance with the provisions therefor set forth therein.
4 See sections 134 (relating to docketing statement), 135
5 (relating to requirements to be met by filed documents), 138
6 (relating to statement of correction) and 8514 (relating to
7 execution of certificates).
8 * * *
9 (j) Reference to outside facts.--Any of the terms of a plan
10 of merger or consolidation may be made dependent upon facts
11 ascertainable outside of the plan if the manner in which the
12 facts will operate upon the terms of the plan is set forth in
13 the plan. Such facts may include, without limitation, actions or
14 events within the control of or determinations made by a party
15 to the plan or a representative of a party to the plan.
16 § 8549. Effect of merger or consolidation.
17 * * *
18 (b) Property rights.--All the property, real, personal and
19 mixed, of each of the limited partnerships parties to the plan
20 of merger or consolidation, and all debts due on whatever
21 account to any of them, as well as all other things and causes
22 of action belonging to any of them, shall be deemed to be
23 [transferred to and] vested in and shall belong to the surviving
24 or new limited partnership, as the case may be, without further
25 action, and the title to any real estate, or any interest
26 therein, vested in any of the limited partnerships shall not
27 revert or be in any way impaired by reason of the merger or
28 consolidation. The surviving or new limited partnership shall
29 thenceforth be responsible for all the liabilities of each of
30 the limited partnerships so merged or consolidated. Liens upon
20010S0215B1243 - 150 -
1 the property of the merging or consolidating limited
2 partnerships shall not be impaired by the merger or
3 consolidation, and any claim existing or action or proceeding
4 pending by or against any of the limited partnerships may be
5 prosecuted to judgment as if the merger or consolidation had not
6 taken place or the surviving or new limited partnership may be
7 proceeded against or substituted in its place.
8 (c) Taxes.--Any taxes, interest, penalties and public
9 accounts of the Commonwealth claimed against any of the merging
10 or consolidating limited partnerships [but not] that are
11 settled, assessed or determined prior to or after the merger or
12 consolidation shall be [settled, assessed or determined against]
13 the liability of the surviving or new limited partnership and,
14 together with interest thereon, shall be a lien against the
15 property, both real and personal, of the surviving or new
16 limited partnership.
17 * * *
18 § 8553. Voluntary withdrawal of limited partner.
19 (a) General rule.--A limited partner may withdraw from a
20 limited partnership only at the time or upon the happening of
21 events specified in writing in the partnership agreement. [If
22 the partnership agreement does not specify in writing the time
23 or the events upon the happening of which a limited partner may
24 withdraw or a definite time for the dissolution and winding up
25 of the limited partnership, a limited partner may withdraw upon
26 not less than six months' prior written notice to each general
27 partner at his address on the books of the limited partnership.]
28 (b) [Prohibition of withdrawal.--The partnership agreement
29 may provide that a limited partner may not withdraw from the
30 limited partnership or assign a partnership interest in the
20010S0215B1243 - 151 -
1 limited partnership prior to the dissolution and winding up of
2 the limited partnership.] (Repealed).
3 (c) Transitional rule.--This section applies to all limited
4 partnerships formed on or after January 1, 2002. If the
5 partnership agreement of a limited partnership formed before
6 January 1, 2002, did not on December 31, 2001, specify in
7 writing the time or the events upon the happening of which a
8 limited partner could withdraw or a definite time for the
9 dissolution and winding up of the limited partnership, the
10 provisions of this section that were in effect prior to January
11 1, 2002, shall apply until such time, if any, as the partnership
12 agreement is amended in writing after January 1, 2002, to
13 specify:
14 (1) a time or the events upon the happening of which a
15 limited partner may withdraw;
16 (2) a definite time for the dissolution and winding up
17 of the limited partnership; or
18 (3) that this section as effective January 1, 2002,
19 shall apply to the limited partnership.
20 § 8557. [Limitations on distribution.] Distributions and
21 allocation of profits and losses.
22 [A partner may not receive a distribution from a limited
23 partnership to the extent that, after giving effect to the
24 distribution, all liabilities of the limited partnership, other
25 than liabilities to partners on account of their partnership
26 interests and liabilities as to which recourse of creditors is
27 limited to specified property of the limited partnership, exceed
28 the fair value of the partnership assets. The fair value of any
29 property that is subject to a liability as to which recourse of
30 creditors is so limited shall be included in the partnership
20010S0215B1243 - 152 -
1 assets only to the extent that the fair value of the property
2 exceeds that liability.] A limited partnership may from time to
3 time make distributions and allocate the profits and losses of
4 its business to the partners upon the basis stipulated in the
5 partnership agreement or, if not stipulated in the partnership
6 agreement, per capita. The allocation of losses pursuant to this
7 section shall not affect the limitation on liability of limited
8 partners as provided in section 8523 (relating to liability of
9 limited partners to third parties).
10 § 8558. Liability upon return of contribution.
11 * * *
12 (c) Determination of return of contribution.--A partner
13 receives a return of his contribution to the extent that a
14 distribution to him reduces his share of the fair value of the
15 net assets of the limited partnership[, as determined under
16 section 8557 (relating to limitations on distribution),] below
17 the value (as stated or determined in the manner provided in the
18 partnership agreement, if stated or provided for therein) of his
19 contribution (to the extent it has been received by the limited
20 partnership) that has not been distributed to him, and otherwise
21 to the extent of the fair value of the distribution.
22 (d) Fair value of net assets.--For purposes of computing the
23 fair value of the net assets of the limited partnership under
24 subsection (c):
25 (1) liabilities of the limited partnership to partners
26 on account of their partnership interests and liabilities as
27 to which recourse of creditors is limited to specified
28 property of the limited partnership shall not be considered;
29 and
30 (2) the fair value of property that is subject to a
20010S0215B1243 - 153 -
1 liability as to which recourse of creditors is so limited
2 shall be included in the partnership assets only to the
3 extent that the fair value of the property exceeds that
4 liability.
5 § 8571. Nonjudicial dissolution.
6 (a) General rule.--A limited partnership is dissolved and
7 its affairs shall be wound up upon the happening of the first to
8 occur of the following:
9 (1) At the time or upon the happening of events
10 specified in the certificate of limited partnership.
11 (2) At the time or upon the happening of events
12 specified in writing in the partnership agreement.
13 (3) Written consent of all partners.
14 (4) An event of withdrawal of a general partner unless
15 at the time there is at least one other general partner and
16 the written provisions of the partnership agreement permit
17 the business of the limited partnership to be carried on by
18 the remaining general partner and that partner does so. The
19 limited partnership is not dissolved and is not required to
20 be wound up by reason of any event of withdrawal if, within
21 180 days after the withdrawal, [all] a majority in interest,
22 or such greater number as shall be provided in writing in the
23 partnership agreement, of the partners agree in writing to
24 continue the business of the limited partnership or to the
25 appointment of one or more replacement general partners.
26 (5) Entry of an order of judicial dissolution under
27 section 8572 (relating to judicial dissolution).
28 * * *
29 (c) Dissolution by domestication.--Whenever a domestic
30 limited partnership has domesticated itself under the laws of
20010S0215B1243 - 154 -
1 another jurisdiction by action similar to that provided by
2 section 8590 (relating to domestication) and has authorized that
3 action in the manner required by this subchapter for the
4 approval of a proposal that the partnership dissolve
5 voluntarily, the partnership may surrender its certificate of
6 limited partnership under the laws of this Commonwealth by
7 filing in the department a certificate of cancellation under
8 section 8513 (relating to cancellation of certificate). If the
9 partnership, as domesticated in the other jurisdiction,
10 registers to do business in this Commonwealth either prior to or
11 simultaneously with the filing of the certificate of
12 cancellation under this subsection, the partnership shall not be
13 required to file with the certificate of cancellation the tax
14 clearance certificates that would otherwise be required by
15 section 139 (relating to tax clearance of certain fundamental
16 transactions).
17 [(c)] (d) Cross [references] reference.--See [sections 8103
18 (relating to continuation of certain limited partnerships) and]
19 section 8512(b) (relating to events requiring amendment).
20 § 8573. Winding up.
21 Except as otherwise provided in the partnership agreement,
22 the general partners who have not wrongfully dissolved a limited
23 partnership or, if none, the limited partners, or a person
24 approved by the limited partners or, if there is more than one
25 class or group of limited partners, by each class or group of
26 limited partners, in either case by a majority in interest of
27 the limited partners in each class or group, may wind up the
28 affairs of the limited partnership, but the court may wind up
29 the affairs of the limited partnership upon application of any
30 partner, his legal representative or assignee, and in connection
20010S0215B1243 - 155 -
1 therewith, may appoint a liquidating trustee. See section 139(b)
2 (relating to tax clearance in judicial proceedings).
3 § 8577. Proposal and adoption of plan of division.
4 * * *
5 (b) Reference to outside facts.--Any of the terms of the
6 plan may be made dependent upon facts ascertainable outside of
7 the plan if the manner in which the facts will operate upon the
8 terms of the plan is set forth in the plan. Such facts may
9 include, without limitation, actions or events within the
10 control of or determinations made by the dividing limited
11 partnership or a representative of the dividing limited
12 partnership.
13 * * *
14 (e) [Restrictions on certain distributions.--A plan of
15 division may not be made effective if the effect of the plan is
16 to make a distribution to the holders of any class or series of
17 partnership interests of the dividing limited partnership unless
18 the distribution is permitted by section 8557 (relating to
19 limitations on distribution.] (Repealed).
20 (f) [Action by] Rights of holders of indebtedness.--[Unless
21 otherwise provided by an indenture or other contract by which
22 the dividing limited partnership is bound, a plan of division
23 shall not require the approval of the holders of any debt
24 securities or other obligations of the dividing limited
25 partnership or of any representative of the holders if the
26 transfer of assets effected by the division, if effected by
27 means of a sale, lease, exchange or other disposition, and any
28 related distribution would not require the approval of the
29 holders or representatives thereof.] If any such debt
30 securities, notes, similar evidences of indebtedness, indentures
20010S0215B1243 - 156 -
1 or other contracts were issued, incurred or executed by the
2 dividing limited partnership before (the Legislative Reference
3 Bureau shall insert here the effective date of the amendments of
4 this section) and have not been amended subsequent to that date,
5 the liability of the dividing limited partnership thereunder
6 shall not be affected by the division nor shall the rights of
7 the obligees thereunder be impaired by the division, and each of
8 the resulting limited partnerships may be proceeded against or
9 substituted in place of the dividing limited partnership as
10 joint and several obligors on such liability, regardless of any
11 provision of the plan of division apportioning the liabilities
12 of the dividing limited partnership.
13 * * *
14 § 8580. Effect of division.
15 * * *
16 (b) Property rights; allocations of assets and
17 liabilities.--
18 (1) (i) All the property, real, personal and mixed, of
19 the dividing limited partnership, and all debts due on
20 whatever account to it, including subscriptions for
21 partnership interests or other causes of action belonging
22 to it, shall, except as otherwise provided in paragraph
23 (2), to the extent [transfers] allocations of assets are
24 contemplated by the plan of division, be deemed without
25 further action to be [transferred] allocated to and
26 vested in the resulting limited partnerships on such a
27 manner and basis and with such effect as is specified in
28 the plan, or per capita among the resulting limited
29 partnerships, as tenants in common, if no specification
30 is made in the plan, and the title to any real estate or
20010S0215B1243 - 157 -
1 interest therein vested in any of the limited
2 partnerships shall not revert or be in any way impaired
3 by reason of the division.
4 (ii) Upon the division becoming effective, the
5 resulting limited partnerships shall each thenceforth be
6 responsible as separate and distinct limited partnerships
7 only for such liabilities as each limited partnership may
8 undertake or incur in its own name but shall be liable
9 for the liabilities of the dividing limited partnership
10 in the manner and on the basis provided in subparagraphs
11 (iv) and (v).
12 (iii) Liens upon the property of the dividing
13 limited partnership shall not be impaired by the
14 division.
15 (iv) [One] To the extent allocations of liabilities
16 are contemplated by the plan of division, the liabilities
17 of the dividing limited partnership shall be deemed
18 without further action to be allocated to and become the
19 liabilities of the resulting limited partnerships on such
20 a manner and basis and with such effect as is specified
21 in the plan; and one or more but less than all of the
22 resulting limited partnerships shall be free of the
23 liabilities of the dividing limited partnership to the
24 extent, if any, specified in the plan [if no fraud of
25 creditors or partners or violation of law shall be
26 effected thereby and if all applicable provisions of law
27 are complied with.], if in either case:
28 (A) no fraud of partners or violation of law
29 shall be effected thereby; and
30 (B) the plan does not constitute a fraudulent
20010S0215B1243 - 158 -
1 transfer under 12 Pa.C.S. Ch. 51 (relating to
2 fraudulent transfers).
3 (v) If the conditions in subparagraph (iv) for
4 freeing one or more of the resulting limited partnerships
5 from the liabilities of the dividing limited partnership,
6 or for allocating some or all of the liabilities of the
7 dividing limited partnership, are not satisfied, the
8 liabilities of the dividing limited partnership as to
9 which those conditions are not satisfied shall not be
10 affected by the division nor shall the rights of
11 creditors [thereof] thereunder or of any person dealing
12 with the limited partnership be impaired by the division,
13 and any claim existing or action or proceeding pending by
14 or against the limited partnership with respect to those
15 liabilities may be prosecuted to judgment as if the
16 division had not taken place, or the resulting limited
17 partnerships may be proceeded against or substituted in
18 [its] place of the dividing limited partnership as joint
19 and several obligors on [such liability] those
20 liabilities, regardless of any provision of the plan of
21 division apportioning the liabilities of the dividing
22 limited partnership.
23 (vi) The conditions in subparagraph (iv) for freeing
24 one or more of the resulting limited partnerships from
25 the liabilities of the dividing limited partnership and
26 for allocating some or all of the liabilities of the
27 dividing limited partnership shall be conclusively deemed
28 to have been satisfied if the plan of division has been
29 approved by the Pennsylvania Public Utility Commission in
30 a final order issued after (the Legislative Reference
20010S0215B1243 - 159 -
1 Bureau shall insert here the effective date of the
2 amendments of this section) that has become not subject
3 to further appeal.
4 (2) (i) The [transfer] allocation of any fee or
5 freehold interest or leasehold having a remaining term of
6 30 years or more in any tract or parcel of real property
7 situate in this Commonwealth owned by a dividing limited
8 partnership (including property owned by a foreign
9 limited partnership dividing solely under the law of
10 another jurisdiction) to a new limited partnership
11 resulting from the division shall not be effective until
12 one of the following documents is filed in the office for
13 the recording of deeds of the county, or each of them, in
14 which the tract or parcel is situated:
15 (A) A deed, lease or other instrument of
16 confirmation describing the tract or parcel.
17 (B) A duly executed duplicate original copy of
18 the certificate of division.
19 (C) A copy of the certificate of division
20 certified by the Department of State.
21 (D) A declaration of acquisition setting forth
22 the value of real estate holdings in the county of
23 the limited partnership as an acquired company.
24 (ii) The provisions of 75 Pa.C.S. § 1114 (relating
25 to transfer of vehicle by operation of law) shall not be
26 applicable to [a transfer] an allocation of ownership of
27 any motor vehicle, trailer or semitrailer [from a
28 dividing limited partnership] to a new limited
29 partnership under this section or under a similar law of
30 any other jurisdiction, but any such [transfer]
20010S0215B1243 - 160 -
1 allocation shall be effective only upon compliance with
2 the requirements of 75 Pa.C.S. § 1116 (relating to
3 issuance of new certificate following transfer).
4 (3) It shall not be necessary for a plan of division to
5 list each individual asset or liability of the dividing
6 limited partnership to be allocated to a new limited
7 partnership so long as those assets and liabilities are
8 described in a reasonable and customary manner.
9 (4) Each new limited partnership shall hold any assets
10 and liabilities allocated to it as the successor to the
11 dividing limited partnership, and those assets and
12 liabilities shall not be deemed to have been assigned to the
13 new limited partnership in any manner, whether directly or
14 indirectly or by operation of law.
15 (c) Taxes.--Any taxes, interest, penalties and public
16 accounts of the Commonwealth claimed against the dividing
17 limited partnership [but not] that are settled, assessed or
18 determined prior to or after the division shall be [settled,
19 assessed or determined against] the liability of any of the
20 resulting limited partnerships and, together with interest
21 thereon, shall be a lien against the franchises and property,
22 both real and personal, of all the limited partnerships. Upon
23 the application of the dividing limited partnership, the
24 Department of Revenue, with the concurrence of the Office of
25 Employment Security of the Department of Labor and Industry,
26 shall release one or more, but less than all, of the resulting
27 limited partnerships from liability and liens for all taxes,
28 interest, penalties and public accounts of the dividing limited
29 partnership due the Commonwealth for periods prior to the
30 effective date of the division if those departments are
20010S0215B1243 - 161 -
1 satisfied that the public revenues will be adequately secured.
2 * * *
3 (g) Conflict of laws.--It is the intent of the General
4 Assembly that:
5 (1) The effect of a division of a domestic limited
6 partnership shall be governed solely by the laws of this
7 Commonwealth and any other jurisdiction under the laws of
8 which any of the resulting limited partnerships is organized.
9 (2) The effect of a division on the assets and
10 liabilities of the dividing limited partnership shall be
11 governed solely by the laws of this Commonwealth and any
12 other jurisdiction under the laws of which any of the
13 resulting limited partnerships is organized.
14 (3) The validity of any allocations of assets or
15 liabilities by a plan of division of a domestic limited
16 partnership, regardless of whether or not any of the new
17 limited partnerships is a foreign limited partnership, shall
18 be governed solely by the laws of this Commonwealth.
19 (4) In addition to the express provisions of this
20 subsection, this subchapter shall otherwise generally be
21 granted the protection of full faith and credit under the
22 Constitution of the United States.
23 § 8590. Domestication.
24 * * *
25 (b) Certificate of domestication.--The certificate of
26 domestication shall be executed by the limited partnership and
27 shall set forth in the English language:
28 (1) The name of the limited partnership. If the name is
29 in a foreign language, it shall be set forth in Roman letters
30 or characters or Arabic or Roman numerals. If the name is one
20010S0215B1243 - 162 -
1 that is rendered unavailable for use by any provision of
2 section 8505 (relating to name), the limited partnership
3 shall adopt, in accordance with any procedures for changing
4 the name of the limited partnership that are applicable prior
5 to the domestication of the limited partnership, and shall
6 set forth in the certificate of domestication an available
7 name.
8 * * *
9 (c) Effect of domestication.--
10 (1) As a domestic limited partnership, the domesticated
11 limited partnership shall no longer be a foreign limited
12 partnership for the purposes of this chapter and shall [have]
13 instead be a domestic limited partnership with all the powers
14 and privileges and [be subject to] all the duties and
15 limitations granted and imposed upon domestic limited
16 partnerships. [The property, debts, liens, estates, taxes,
17 penalties and public accounts due the Commonwealth shall
18 continue to be vested in and imposed upon the limited
19 partnership to the same extent as if it were the successor by
20 merger of the domesticating limited partnership with and into
21 a domestic limited partnership under Subchapter F (relating
22 to merger and consolidation).] In all other respects, the
23 domesticated limited partnership shall be deemed to be the
24 same limited partnership as it was prior to the domestication
25 without any change in or effect on its existence. Without
26 limiting the generality of the previous sentence, the
27 domestication shall not be deemed to have dissolved the
28 limited partnership or to have affected in any way:
29 (i) the right and title of the limited partnership
30 in and to its assets, property, franchises, estates and
20010S0215B1243 - 163 -
1 choses in action;
2 (ii) the liability of the limited partnership for
3 its debts, obligations, penalties and public accounts due
4 the Commonwealth;
5 (iii) any liens or other encumbrances on the
6 property or assets of the limited partnership; or
7 (iv) any contract, license or other agreement to
8 which the limited partnership is a party or under which
9 it has any rights or obligations.
10 (2) The partnership interests in the domesticated
11 limited partnership shall be unaffected by the domestication
12 except to the extent, if any, reclassified in the certificate
13 of domestication.
14 § 8903. Definitions and index of definitions.
15 (a) Definitions.--The following words and phrases when used
16 in this chapter shall have the meanings given to them in this
17 section unless the context clearly indicates otherwise:
18 * * *
19 ["Department." The Department of State of the Commonwealth.]
20 * * *
21 ["Licensed person." A natural person who is duly licensed or
22 admitted to practice his profession by a court, department,
23 board, commission or other agency of this Commonwealth or
24 another jurisdiction to render a professional service that is or
25 will be rendered by the professional company of which he is or
26 intends to become a manager, member, employee or agent.]
27 "Limited liability company," "domestic limited liability
28 company" or "company." An association that is a limited
29 liability company organized and existing under this chapter.
30 * * *
20010S0215B1243 - 164 -
1 "Operating agreement." Any [agreement of the members as to]
2 rules or procedures adopted for the regulation and governance of
3 the affairs of a limited liability company and the conduct of
4 its business. [The operating agreement need not be in writing
5 except where this chapter refers to a written provision of the
6 operating agreement. The operating agreement may contain any
7 provision for the regulation of the internal affairs of the
8 company agreed to by the members, whether or not specifically
9 authorized by or in contravention of this chapter, except where
10 this chapter:
11 (1) refers only to a rule as set forth in the
12 certificate of organization; or
13 (2) expressly provides that the operating agreement
14 shall not relax or contravene any provision on a specified
15 subject. See sections 8913(8) (relating to certificate of
16 organization) and 8915 (relating to modification by
17 agreement).]
18 * * *
19 ["Professional services." The term shall have the meaning
20 specified in section 2902 (relating to definitions).]
21 * * *
22 (b) Index of other definitions.--Other definitions applying
23 to this chapter and the sections in which they appear are:
24 "Act" or "action." Section 102.
25 "Department." Section 102.
26 "Licensed person." Section 102.
27 "Professional services." Section 102.
28 SUBCHAPTER B
29 ORGANIZATION[; CERTIFICATE OF ORGANIZATION]
30 § 8915. Modification by agreement.
20010S0215B1243 - 165 -
1 The provisions of this chapter are intended to permit a
2 limited liability company to qualify for taxation as an entity
3 that is not an association taxable as a corporation under the
4 Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1
5 et seq.). Notwithstanding the limitations in [the definition of
6 "operating agreement" in section 8903 (relating to definitions)
7 and the limitations in section] sections 8913(8) (relating to
8 certificate of organization) and 8916(b) (relating to operating
9 agreement), the certificate of organization and operating
10 agreement may effect any change in the form of organization of
11 the company, in addition to or in contravention of the
12 provisions of this chapter, that may be necessary to accomplish
13 that purpose.
14 § 8916. Operating agreement.
15 (a) General rule.--The operating agreement of a limited
16 liability company need not be in writing except where this
17 chapter refers to a written provision of the operating
18 agreement. If a written operating agreement provides that it
19 cannot be amended or modified except in writing, an oral
20 agreement, amendment or modification shall not be enforceable.
21 (b) Freedom of contract.--An operating agreement may contain
22 any provision for the regulation of the internal affairs of a
23 limited liability company adopted by the members, whether or not
24 specifically authorized by or in contravention of this chapter,
25 except where this chapter:
26 (1) refers only to a rule as set forth in the
27 certificate of organization; or
28 (2) expressly provides that the operating agreement
29 shall not relax or contravene any provision on a specified
30 subject.
20010S0215B1243 - 166 -
1 (c) Cross references.--See sections 8913(8) (relating to
2 certificate of organization) and 8915 (relating to modification
3 by agreement).
4 § 8922. Liability of members [and managers].
5 (a) General rule.--[Neither] Except as provided in
6 subsection (e), the members of a limited liability company [nor
7 the managers of a company managed by one or more managers are]
8 shall not be liable, solely by reason of being a member [or a
9 manager], under an order of a court or in any other manner for a
10 debt, obligation or liability of the company of any kind or for
11 the acts [or omissions] of any [other] member, manager, agent or
12 employee of the company.
13 (b) Professional relationship unaffected.--Subsection (a)
14 shall not afford members [and managers] of a professional
15 company with greater immunity than is available to the officers,
16 shareholders, employees or agents of a professional corporation.
17 See section 2925 (relating to professional relationship
18 retained).
19 * * *
20 (d) Conflict of laws.--The personal liability of a member of
21 a company to any person or in any action or proceeding for the
22 debts, obligations or liabilities of the company or for the acts
23 [or omissions] of other members, managers, employees or agents
24 of the company shall be governed solely and exclusively by this
25 chapter and the laws of this Commonwealth. Whenever a conflict
26 arises between the laws of this Commonwealth and the laws of any
27 other state with regard to the liability of members of a company
28 organized and existing under this chapter for the debts,
29 obligations and liabilities of the company or for the acts [or
30 omissions] of the other members, managers, employees or agents
20010S0215B1243 - 167 -
1 of the company, the laws of this Commonwealth shall govern in
2 determining such liability.
3 (e) Expansion of liability.--The certificate of organization
4 may provide that some or all of the members shall be liable for
5 some or all of the debts, obligations and liabilities of the
6 company to the extent and under the circumstances provided in
7 the certificate.
8 (f) Medical professional liability.--A professional company
9 shall be deemed to be a partnership for purposes of section 811
10 of the act of October 15, 1975 (P.L.390, No.111), known as the
11 Health Care Services Malpractice Act.
12 [(e)] (g) Cross reference.--See section 8904(b) (relating to
13 rules for cases not provided for in this chapter).
14 § 8924. Limited transferability of membership interest.
15 (a) General rule.--The interest of a member in a limited
16 liability company constitutes the personal estate of the member
17 and may be transferred or assigned as provided in writing in the
18 operating agreement. Unless otherwise provided in writing in
19 the operating agreement, if all of the other members of the
20 company other than the member proposing to dispose of his
21 interest do not approve of the proposed transfer or assignment
22 by unanimous vote or written consent, which approval may be
23 unreasonably withheld by any of the other members, the
24 transferee of the interest of the member shall have no right to
25 participate in the management of the business and affairs of the
26 company or to become a member. The transferee shall only be
27 entitled to receive the distributions and the return of
28 contributions to which that member would otherwise be entitled.
29 (b) Certificate of membership interest.--The certificate of
30 organization may provide that a member's interest in a company
20010S0215B1243 - 168 -
1 may be evidenced by a certificate of membership interest issued
2 by the company [and]. If such provision is made for the issuance
3 of certificates of membership interest, the operating agreement
4 may [also] provide for the assignment or transfer of any
5 membership interest represented by such a certificate and make
6 other provisions with respect to such certificates. [See 13
7 Pa.C.S. § 8102 (relating to definitions and index of
8 definitions).]
9 § 8932. Distributions and allocation of profits and losses.
10 A limited liability company may from time to time [divide]
11 make distributions and allocate the profits and losses of its
12 business [and distribute the same] to [and allocate any losses
13 among] the members of the company upon the basis stipulated in
14 the operating agreement or, if not stipulated in the operating
15 agreement, per capita. The allocation of losses pursuant to this
16 section shall not affect the limitation on liability of members
17 as provided in section 8922 (relating to liability of members).
18 § 8942. Voting.
19 * * *
20 (c) Exception.--An amendment of the certificate of
21 organization that:
22 (1) restates without change all of the operative
23 provisions of the certificate of organization as theretofore
24 in effect;
25 (2) changes the name or registered office of the
26 company; or
27 (3) accomplishes any combination of the foregoing
28 purposes;
29 is not an amendment of the certificate of organization for the
30 purposes of subsection (b). Unless otherwise provided in writing
20010S0215B1243 - 169 -
1 in the operating agreement, an amendment described in this
2 subsection may be made by the affirmative vote of a majority of
3 the managers or, in the case of a company that is not managed by
4 one or more managers, of a majority of the members.
5 * * *
6 § 8943. Duties of managers and members.
7 * * *
8 (b) Companies with managers.--If the certificate of
9 organization provides that the company shall be managed by one
10 or more managers:
11 (1) [Unless otherwise provided in writing in the
12 operating agreement, the provisions of Subchapter B of
13 Chapter 17 (relating to officers, directors and
14 shareholders)] Sections 1711 (relating to alternative
15 provisions) through 1717 (relating to limitation on standing)
16 shall be applicable to representatives of the company. A
17 written provision of the operating agreement may increase,
18 but not relax, the duties of representatives of the company
19 to its members under those sections. For purposes of applying
20 the provisions of those sections, references to the "articles
21 of incorporation," "bylaws," "directors" and "shareholders"
22 shall mean the certificate of organization, operating
23 agreement, managers and members, respectively.
24 (2) A member who is not a manager shall have no duties
25 to the company or to the other members solely by reason of
26 acting in his capacity as a member.
27 § 8944. [Classes of members.] Members.
28 (a) General rule.--A limited liability company may have one
29 or more members.
30 (b) Classes of members.--An operating agreement may provide
20010S0215B1243 - 170 -
1 for:
2 (1) classes or groups of members having such relative
3 rights, powers and duties as the operating agreement may
4 provide;
5 (2) the future creation in the manner provided in the
6 operating agreement of additional classes or groups of
7 members having such relative rights, powers and duties as may
8 from time to time be established, including rights, powers
9 and duties senior to existing classes and groups of members;
10 and
11 (3) the taking of an action, including, without
12 limitation, amendment of the certificate of organization or
13 operating agreement or creation of a class or group of
14 interests in the limited liability company that was not
15 previously outstanding, without the vote or approval of any
16 member or class or group of members.
17 [(b)] (c) Class voting.--The operating agreement may grant
18 to all or certain identified members or a specified class or
19 group of members the right to vote (on a per capita or other
20 basis), separately or with all or any class or group of members,
21 upon any matter.
22 § 8945. Indemnification.
23 * * *
24 (f) Mandatory indemnification.--Without regard to whether
25 indemnification or advancement of expenses is provided under
26 subsections (a) and (d), a limited liability company shall be
27 subject to section 8331(2) (relating to rules determining rights
28 and duties of partners) and both the members and the managers,
29 if any, shall be deemed to be general partners for purposes of
30 applying that section.
20010S0215B1243 - 171 -
1 § 8948. [Dissociation of member limited.] Limitation on
2 dissociation or assignment of membership interest.
3 Notwithstanding anything to the contrary set forth in this
4 part, an operating agreement may provide that a member may not
5 voluntarily dissociate from the limited liability company or
6 assign his membership interest prior to the dissolution and
7 winding-up of the company, and an attempt by a member to
8 dissociate voluntarily from the company or to assign his
9 membership interest in violation of the operating agreement
10 shall be ineffective.
11 § 8957. Approval of merger or consolidation.
12 * * *
13 (b) Reference to outside facts.--Any of the terms of the
14 plan may be made dependent upon facts ascertainable outside of
15 the plan if the manner in which the facts will operate upon the
16 terms of the plan is set forth in the plan. Such facts may
17 include, without limitation, actions or events within the
18 control of or determinations made by a party to the plan or a
19 representative of a party to the plan.
20 (c) [Postadoption] Post-adoption amendment of plan of merger
21 or consolidation.--A plan of merger or consolidation may contain
22 a provision that the managers, if any, of the constituent
23 companies may amend the plan at any time prior to its effective
24 date, except that an amendment made subsequent to any adoption
25 of the plan by the members of any constituent domestic company
26 shall not, without the approval of the members, change:
27 (1) The amount or kind of membership interests,
28 obligations, cash, property or rights to be received in
29 exchange for or on conversion of all or any of the membership
30 interests of the constituent domestic company adversely to
20010S0215B1243 - 172 -
1 the holders of those membership interests.
2 (2) Any [term] provision of the certificate of
3 organization or operating agreement of the surviving or new
4 company [to be effected by] as it is to be in effect
5 immediately following consummation of the merger or
6 consolidation except provisions that may be amended without
7 the approval of the members.
8 (3) Any of the other terms and conditions of the plan if
9 the change would adversely affect the holders of any
10 membership interests of the constituent domestic company.
11 * * *
12 (e) Party to plan.--An association that approves a plan in
13 its capacity as a member or creditor of a merging or
14 consolidating company or that furnishes all or a part of the
15 consideration contemplated by a plan does not thereby become a
16 party to the [plan or the] merger or consolidation for the
17 purposes of this subchapter.
18 * * *
19 (i) Termination of plan.--Prior to the time when a merger or
20 consolidation becomes effective, the merger or consolidation may
21 be terminated pursuant to provisions therefor, if any, set forth
22 in the plan. If a certificate of merger or consolidation has
23 been filed in the department prior to the termination, a
24 certificate of termination executed by each company that is a
25 party to the merger or consolidation, unless the plan permits
26 termination by less than all of the companies, in which case the
27 certificate shall be executed on behalf of the company
28 exercising the right to terminate, shall be filed in the
29 department. The certificate of termination shall set forth:
30 (1) A copy of the certificate of merger or consolidation
20010S0215B1243 - 173 -
1 relating to the plan that is terminated.
2 (2) A statement that the plan has been terminated in
3 accordance with the provisions therefor set forth therein.
4 See sections 134 (relating to docketing statement), 135
5 (relating to requirements to be met by filed documents), 138
6 (relating to statement of correction) and 8907 (relating to
7 execution of documents).
8 * * *
9 § 8959. Effect of merger or consolidation.
10 * * *
11 (b) Property rights.--All the property, real, personal and
12 mixed, of each of the companies parties to the merger or
13 consolidation and all debts due on whatever account to any of
14 them, as well as all other things and causes of action belonging
15 to any of them, shall be deemed to be [transferred to and]
16 vested in and shall belong to the surviving or new company, as
17 the case may be, without further action, and the title to any
18 real estate or any interest therein vested in any of the
19 companies shall not revert or be in any way impaired by reason
20 of the merger or consolidation. The surviving or new company
21 shall thenceforth be responsible for all the liabilities of each
22 of the companies so merged or consolidated. Liens upon the
23 property of the merging or consolidating companies shall not be
24 impaired by the merger or consolidation, and any claim existing
25 or action or proceeding pending by or against any of the
26 companies may be prosecuted to judgment as if the merger or
27 consolidation had not taken place or the surviving or new
28 company may be proceeded against or substituted in its place.
29 (c) Taxes.--Any taxes, interest, penalties and public
30 accounts of the Commonwealth claimed against any of the merging
20010S0215B1243 - 174 -
1 or consolidating companies [but not] that are settled, assessed
2 or determined prior to or after the merger or consolidation
3 shall be [settled, assessed or determined against] the liability
4 of the surviving or new company and, together with interest
5 thereon, shall be a lien against the property, both real and
6 personal, of the surviving or new company.
7 * * *
8 § 8962. Proposal and adoption of plan of division.
9 * * *
10 (b) Reference to outside facts.--Any of the terms of the
11 plan may be made dependent upon facts ascertainable outside of
12 the plan if the manner in which the facts will operate upon the
13 terms of the plan is set forth in the plan. Such facts may
14 include, without limitation, actions or events within the
15 control of or determinations made by the dividing limited
16 liability company or a representative of the dividing limited
17 liability company.
18 * * *
19 (e) [Action by holders of indebtedness.--Unless otherwise
20 provided by an indenture or other contract by which the dividing
21 limited liability company is bound, a plan of division shall not
22 require the approval of the holders of any debt securities or
23 other obligations of the dividing company or of any
24 representative of the holders if the transfer of assets effected
25 by the division, if effected by means of a sale, lease, exchange
26 or other disposition, and any related distribution would not
27 require the approval of the holders or representatives thereof.]
28 (Repealed).
29 § 8965. Effect of division.
30 * * *
20010S0215B1243 - 175 -
1 (b) Property rights; allocations of assets and
2 liabilities.--
3 (1) (i) All the property, real, personal and mixed, of
4 the dividing company and all debts due on whatever
5 account to it, including subscriptions for membership
6 interests and other causes of action belonging to it,
7 shall, except as otherwise provided in paragraph (2), to
8 the extent [transfers] allocations of assets are
9 contemplated by the plan of division, be deemed without
10 further action to be [transferred] allocated to and
11 vested in the resulting companies on such a manner and
12 basis and with such effect as is specified in the plan,
13 or per capita among the resulting companies as tenants in
14 common if no specification is made in the plan, and the
15 title to any real estate or interest therein vested in
16 any of the companies shall not revert or be in any way
17 impaired by reason of the division.
18 (ii) Upon the division becoming effective, the
19 resulting companies shall each thenceforth be responsible
20 as separate and distinct companies only for such
21 liabilities as each company may undertake or incur in its
22 own name but shall be liable for the liabilities of the
23 dividing company in the manner and on the basis provided
24 in subparagraphs (iv) and (v).
25 (iii) Liens upon the property of the dividing
26 company shall not be impaired by the division.
27 (iv) [One] To the extent allocations of liabilities
28 are contemplated by the plan of division, the liabilities
29 of the dividing company shall be deemed without further
30 action to be allocated to and become the liabilities of
20010S0215B1243 - 176 -
1 the resulting companies on such a manner and basis and
2 with such effect as is specified in the plan; and one or
3 more, but less than all, of the resulting companies shall
4 be free of the liabilities of the dividing company to the
5 extent, if any, specified in the plan [if no fraud of
6 creditors or members or violation of law shall be
7 effected thereby and if all applicable provisions of law
8 are complied with.], if in either case:
9 (A) no fraud on members or violation of law
10 shall be effected thereby; and
11 (B) the plan does not constitute a fraudulent
12 transfer under 12 Pa.C.S. Ch. 51 (relating to
13 fraudulent transfers).
14 (v) If the conditions in subparagraph (iv) for
15 freeing one or more of the resulting companies from the
16 liabilities of the dividing company, or for allocating
17 some or all of the liabilities of the dividing company,
18 are not satisfied, the liabilities of the dividing
19 company as to which those conditions are not satisfied
20 shall not be affected by the division nor shall the
21 rights of creditors [thereof] thereunder or of any person
22 dealing with the company be impaired by the division, and
23 any claim existing or action or proceeding pending by or
24 against the company with respect to those liabilities may
25 be prosecuted to judgment as if the division had not
26 taken place, or the resulting companies may be proceeded
27 against or substituted in [its] place of the dividing
28 company as joint and several obligors on [such liability]
29 those liabilities, regardless of any provision of the
30 plan of division apportioning the liabilities of the
20010S0215B1243 - 177 -
1 dividing company.
2 (vi) The conditions in subparagraph (iv) for freeing
3 one or more of the resulting companies from the
4 liabilities of the dividing company and for allocating
5 some or all of the liabilities of the dividing company
6 shall be conclusively deemed to have been satisfied if
7 the plan of division has been approved by the
8 Pennsylvania Public Utility Commission in a final order
9 issued after (the Legislative Reference Bureau shall
10 insert here the effective date of the amendments of this
11 section) that has become not subject to further appeal.
12 (2) (i) The [transfer] allocation of any fee or
13 freehold interest or leasehold having a remaining term of
14 30 years or more in any tract or parcel of real property
15 situate in this Commonwealth owned by a dividing company
16 (including property owned by a foreign limited liability
17 company dividing solely under the law of another
18 jurisdiction) to a new company resulting from the
19 division shall not be effective until one of the
20 following documents is filed in the office for the
21 recording of deeds of the county, or each of them, in
22 which the tract or parcel is situated:
23 (A) A deed, lease or other instrument of
24 confirmation describing the tract or parcel.
25 (B) A duly executed duplicate original copy of
26 the certificate of division.
27 (C) A copy of the certificate of division
28 certified by the Department of State.
29 (D) A declaration of acquisition setting forth
30 the value of real estate holdings in such county of
20010S0215B1243 - 178 -
1 the company as an acquired company.
2 (ii) The provisions of 75 Pa.C.S. § 1114 (relating
3 to transfer of vehicle by operation of law) shall not be
4 applicable to [a transfer] an allocation of ownership of
5 any motor vehicle, trailer or semitrailer [from a
6 dividing company] to a new company under this section or
7 under a similar law of any other jurisdiction but any
8 such [transfer] allocation shall be effective only upon
9 compliance with the requirements of 75 Pa.C.S. § 1116
10 (relating to issuance of new certificate following
11 transfer).
12 (3) It shall not be necessary for a plan of division to
13 list each individual asset or liability of the dividing
14 company to be allocated to a new company so long as those
15 assets and liabilities are described in a reasonable and
16 customary manner.
17 (4) Each new company shall hold any assets and
18 liabilities allocated to it as the successor to the dividing
19 company, and those assets and liabilities shall not be deemed
20 to have been assigned to the new company in any manner,
21 whether directly or indirectly or by operation of law.
22 (c) Taxes.--Any taxes, interest, penalties and public
23 accounts of the Commonwealth claimed against the dividing
24 company [but not] that are settled, assessed or determined prior
25 to or after the division shall be [settled, assessed or
26 determined against] the liability of any of the resulting
27 companies and, together with interest thereon, shall be a lien
28 against the franchises and property, both real and personal, of
29 all the companies. Upon the application of the dividing company,
30 the Department of Revenue, with the concurrence of the Office of
20010S0215B1243 - 179 -
1 Employment Security of the Department of Labor and Industry,
2 shall release one or more, but less than all, of the resulting
3 companies from liability and liens for all taxes, interest,
4 penalties and public accounts of the dividing company due the
5 Commonwealth for periods prior to the effective date of the
6 division if those departments are satisfied that the public
7 revenues will be adequately secured.
8 * * *
9 (h) Conflict of laws.--It is the intent of the General
10 Assembly that:
11 (1) The effect of a division of a domestic limited
12 liability company shall be governed by the laws of this
13 Commonwealth and any other jurisdiction under the laws of
14 which any of the resulting companies is organized.
15 (2) The effect of a division on the assets and
16 liabilities of the dividing company shall be governed solely
17 by the laws of this Commonwealth and any other jurisdiction
18 under the laws of which any of the resulting companies is
19 organized.
20 (3) The validity of any allocation of assets or
21 liabilities by a plan of division of a domestic limited
22 liability company, regardless of whether or not any of the
23 new companies is a foreign limited liability company, shall
24 be governed solely by the laws of this Commonwealth.
25 (4) In addition to the express provisions of this
26 subsection, this subchapter shall otherwise generally be
27 granted the protection of full faith and credit under the
28 Constitution of the United States.
29 § 8971. Dissolution.
30 (a) General rule.--limited liability company is dissolved
20010S0215B1243 - 180 -
1 and its affairs shall be wound up upon the happening of the
2 first to occur of the following events:
3 (1) At the time or upon the happening of events
4 specified in the certificate of organization.
5 (2) At the time or upon the happening of events
6 specified in writing in the operating agreement.
7 (3) [By] Except as otherwise provided in the operating
8 agreement, by the unanimous written agreement or consent of
9 all members.
10 (4) [Upon] Except as otherwise provided in writing in
11 the operating agreement, upon a member becoming a bankrupt or
12 executing an assignment for the benefit of creditors or the
13 death, retirement, insanity, resignation, expulsion or
14 dissolution of a member or the occurrence of any other event
15 that terminates the continued membership of a member in the
16 company unless the business of the company is continued by
17 the vote or consent of [all] a majority in interest, or such
18 greater number as shall be provided in writing in the
19 operating agreement, of the remaining members given within
20 [90] 180 days following such event [or under a right to do so
21 stated in the operating agreement].
22 (5) Entry of an order of judicial dissolution under
23 section 8972 (relating to judicial dissolution).
24 [(b) Cross reference.--See section 8103 (relating to
25 continuation of certain limited partnerships and limited
26 liability companies).]
27 (b) Perpetual existence.--The certificate of organization
28 may provide that the company shall have perpetual existence, in
29 which case subsection (a)(4) shall not be applicable to the
30 company.
20010S0215B1243 - 181 -
1 § 8973. Winding up.
2 * * *
3 (b) Judicial supervision.--The court may wind up the affairs
4 of the company upon application of any member, his legal
5 representative or assignee and, in connection therewith, may
6 appoint a liquidating trustee. See section 139(b) (relating to
7 tax clearance in judicial proceedings).
8 § 8974. Distribution of assets upon dissolution.
9 (a) General rule.--In settling accounts after dissolution,
10 the liabilities of the limited liability company shall be
11 entitled to payment in the following order:
12 (1) Those to creditors, including members or managers
13 who are creditors, in the order of priority as provided by
14 law, in satisfaction of the liabilities of the company,
15 whether by payment or the making of reasonable provision for
16 payment thereof, other than liabilities for distributions to
17 members under section 8932 (relating to distributions and
18 allocation of profits and losses) or 8933 (relating to
19 distributions upon an event of dissociation).
20 (2) Unless otherwise provided in the operating
21 agreement, to members and former members in satisfaction of
22 liabilities for distributions under section 8932 or 8933.
23 (3) Unless otherwise provided in the operating
24 agreement, to members in respect of:
25 (i) Their contributions to capital.
26 (ii) Their share of the profits and other
27 compensation by way of income on their contributions.
28 * * *
29 § 8978. Dissolution by domestication.
30 Whenever a domestic limited liability company has
20010S0215B1243 - 182 -
1 domesticated itself under the laws of another jurisdiction by
2 action similar to that provided by section 8982 (relating to
3 domestication) and has authorized that action by the vote
4 required by this subchapter for the approval of a proposal that
5 the company dissolve voluntarily, the company may surrender its
6 certificate of organization under the laws of this Commonwealth
7 by filing in the Department of State a certificate of
8 dissolution under section 8975 (relating to certificate of
9 dissolution). In lieu of the statements required by section
10 8975(a)(2) through (4), the certificate of dissolution shall set
11 forth a statement that the company has domesticated itself under
12 the laws of another jurisdiction. If the company, as
13 domesticated in the other jurisdiction, registers to do business
14 in this Commonwealth either prior to or simultaneously with the
15 filing of the certificate of dissolution under this section, the
16 company shall not be required to file with the certificate of
17 dissolution the tax clearance certificates that would otherwise
18 be required by section 139 (relating to tax clearance of certain
19 fundamental transactions).
20 § 8982. Domestication.
21 * * *
22 (b) Certificate of domestication.--The certificate of
23 domestication shall be executed by the company and shall set
24 forth in the English language:
25 (1) The name of the company. If the name is in a foreign
26 language, it shall be set forth in Roman letters or
27 characters or Arabic or Roman numerals. If the name is one
28 that is rendered unavailable for use by any provision of
29 section 8905 (relating to name), the company shall adopt, in
30 accordance with any procedures for changing the name of the
20010S0215B1243 - 183 -
1 company that are applicable prior to the domestication of the
2 company, and shall set forth in the certificate of
3 domestication, an available name.
4 * * *
5 (c) Effect of domestication.--
6 (1) As a domestic limited liability company, the
7 domesticated company shall no longer be a foreign limited
8 liability company for the purposes of this chapter and shall
9 [have] instead be a domestic limited liability company with
10 all the powers and privileges and [be subject to] all the
11 duties and limitations granted and imposed upon domestic
12 limited liability companies. [The property, debts, liens,
13 estates, taxes, penalties and public accounts due the
14 Commonwealth shall continue to be vested in and imposed upon
15 the company to the same extent as if it were the successor by
16 merger of the domesticating company with and into a domestic
17 limited liability company under Subchapter G (relating to
18 mergers and consolidations).] In all other respects, the
19 domesticated limited liability company shall be deemed to be
20 the same limited liability company as it was prior to the
21 domestication without any change in or effect on its
22 existence. Without limiting the generality of the previous
23 sentence, the domestication shall not be deemed to have
24 dissolved the company or to have affected in any way:
25 (i) the right and title of the company in and to its
26 assets, property, franchises, estates and choses in
27 action;
28 (ii) the liability of the company for its debts,
29 obligations, penalties and public accounts due the
30 Commonwealth;
20010S0215B1243 - 184 -
1 (iii) any liens or other encumbrances on the
2 property or assets of the company; or
3 (iv) any contract, license or other agreement to
4 which the company is a party or under which it has any
5 rights or obligations.
6 (2) The [shares of] membership interests in the
7 domesticated company shall be unaffected by the domestication
8 except to the extent, if any, reclassified in the certificate
9 of domestication.
10 § 8996. Restrictions.
11 * * *
12 (b) Ownership and governance of restricted professional
13 companies.--Except as otherwise provided by a statute, rule or
14 regulation applicable to a particular profession, all of the
15 [members] ultimate beneficial owners of membership interests in
16 and all of the managers, if any, of a restricted professional
17 company shall be licensed persons.
18 * * *
19 (d) Application.--For purposes of applying subsection (a):
20 * * *
21 (3) The practice of the restricted professional service
22 of law shall be deemed to include the following activities
23 when conducted incidental to the practice of law:
24 (i) serving as an attorney-in-fact, guardian,
25 custodian, executor, personal representative, trustee or
26 fiduciary;
27 (ii) serving as a director or trustee of a
28 corporation for profit or not-for-profit, manager of a
29 limited liability company or a similar position with any
30 other form of association;
20010S0215B1243 - 185 -
1 (iii) testifying, teaching, lecturing or writing
2 about any topic related to the law;
3 (iv) serving as a master, receiver, arbitrator or
4 similar official;
5 (v) providing actuarial, insurance, investment,
6 estate and trust administration, tax return preparation,
7 financial and other similar services and advice; and
8 (vi) conducting intellectual property and other real
9 and personal property title searches and providing other
10 title insurance agency services.
11 § 8998. Annual registration.
12 * * *
13 (f) Annual fee to be lien.--
14 (1) Failure to [pay the annual registration fee imposed]
15 file the certificate of annual registration required by this
16 section shall not affect the existence or status of the
17 restricted professional company as such, but the annual
18 registration fee that would have been payable shall be a lien
19 in the manner provided in this subsection from the time the
20 annual registration fee is due and payable [upon]. If a
21 certificate of annual registration is not filed within 30
22 days after the date on which it is due, the department shall
23 assess a penalty of $500 against the company, which shall
24 also be a lien in the manner provided in this subsection. The
25 imposition of that penalty shall not be construed to relieve
26 the company from liability for any other penalty or interest
27 provided for under other applicable law.
28 (2) If the annual registration fee paid by a restricted
29 professional company is subsequently determined to be less
30 than should have been paid because it was based on an
20010S0215B1243 - 186 -
1 incorrect number of members or was otherwise incorrectly
2 computed, that fact shall not affect the existence or status
3 of the restricted professional company as such, but the
4 amount of the additional annual registration fee that should
5 have been paid shall be a lien in the manner provided in this
6 subsection from the time the incorrect payment is discovered
7 by the department.
8 (3) The annual registration fee shall bear simple
9 interest from the date that it becomes due and payable until
10 paid. The interest rate shall be that provided for in section
11 806 of the act of April 9, 1929 (P.L.343, No.176), known as
12 The Fiscal Code, with respect to unpaid taxes. The penalty
13 provided for in paragraph (1) shall not bear interest. The
14 payment of interest shall not relieve the restricted
15 professional company from liability for any other penalty or
16 interest provided for under other applicable law.
17 (4) The lien created by this subsection shall attach to
18 all of the property and proceeds thereof of the restricted
19 professional company in which a security interest can be
20 perfected, in whole or in part, by filing in the department
21 under 13 Pa.C.S. Div. 9 (relating to secured transactions;
22 sales of accounts, contract rights and chattel paper),
23 whether the property and proceeds are owned by the company at
24 the time the annual registration fee or any penalty or
25 interest becomes due and payable or whether the property and
26 proceeds are acquired thereafter. Except as otherwise
27 provided by statute, the lien created by this subsection
28 shall have priority over all other liens, security interests
29 or other charges, except liens for taxes or other charges due
30 the Commonwealth. The lien created by this subsection shall
20010S0215B1243 - 187 -
1 be entered on the records of the department and indexed in
2 the same manner as a financing statement filed under 13
3 Pa.C.S. Div. 9. At the time an annual registration fee,
4 penalty or interest that has resulted in the creation of
5 [the] a lien under this subsection is paid, the department
6 shall terminate the lien with respect to that annual
7 registration fee, penalty or interest without requiring a
8 separate filing by the company for that purpose.
9 (5) If the annual registration fee paid by a restricted
10 professional company is subsequently determined to be more
11 than should have been paid for any reason, no refund of the
12 additional fee shall be made.
13 * * *
14 § 9502. Creation, status and termination of business trusts.
15 (a) Creation.--A business trust may be created in real or
16 personal property, or both, with power in the trustee [or a
17 majority of the trustees]:
18 (1) To receive title to, hold, buy, sell, exchange,
19 transfer and convey real and personal property for the use of
20 the business trust.
21 (2) To take, receive, invest or disburse the receipts,
22 earnings, rents, profits or returns from the trust estate.
23 (3) To carry on and conduct any lawful business
24 designated in the deed or other instrument of trust, and
25 generally to do any lawful act in relation to such trust
26 property that any individual owning the same absolutely might
27 do.
28 (4) To merge with another business trust or other
29 association, to divide or to engage in any other fundamental
30 or other transaction contemplated by the deed or other
20010S0215B1243 - 188 -
1 instrument of trust.
2 (b) Term.--Except as otherwise provided in the instrument, a
3 business trust shall have perpetual existence.
4 (c) Separate entity.--A business trust is a separate legal
5 entity. Except as otherwise provided in the instrument, title to
6 real and personal property may be held in the name of the trust,
7 without in any manner diminishing the rights, powers and duties
8 of the trustees as provided in subsection (a).
9 (d) Termination.--Except as otherwise provided in the
10 instrument:
11 (1) The business trust may not be terminated, dissolved
12 or revoked by a beneficial owner or other person.
13 (2) The death, incapacity, dissolution, termination or
14 bankruptcy of a beneficial owner or a trustee shall not
15 result in the termination, dissolution or revocation of the
16 business trust.
17 (e) Contents of instrument.--The instrument may contain any
18 provision for the regulation of the internal affairs of the
19 business trust included in the instrument by the settlor, the
20 trustee or the beneficiaries in accordance with the applicable
21 procedures for the adoption or amendment of the instrument.
22 § 9503. Documentation of trust.
23 (a) General rule.--A business trust shall not be valid
24 unless created by deed of trust or other written instrument
25 subscribed by one or more individuals, associations or other
26 entities. The trustees of a business trust shall promptly cause
27 the instrument or any amendment thereof, except an amendment
28 solely effecting or reflecting the substitution of or other
29 change in the trustees, to be filed in the Department of State.
30 [The failure to effect the filing shall not affect the validity
20010S0215B1243 - 189 -
1 of a business trust. A trustee who violates the requirements of
2 this subsection shall be liable for a civil penalty in the
3 amount of $1,000 payable to the department.]
4 * * *
5 § 9505. [Succession of trustees.] Trustees.
6 (a) Succession of trustees.--An instrument may provide for
7 the succession of title to [the] any trust property not titled
8 in the name of the trust to a successor trustee, in case of the
9 death, resignation, removal or incapacity of any trustee. In the
10 case of any such succession, the title to [the] such trust
11 property shall at once vest in the succeeding trustee.
12 (b) Nature of service.--Service as the trustee of a business
13 trust by an association that is not a banking institution shall
14 not be deemed to constitute acting as a fiduciary for purposes
15 of the act of November 30, 1965 (P.L.847, No.356), known as the
16 Banking Code of 1965.
17 § 9506. Liability of trustees and beneficiaries.
18 (a) General rule.--[Liability to third parties for any act,
19 omission or obligation of a trustee of a business trust when
20 acting in such capacity shall extend to so much of the trust
21 estate as may be necessary to discharge such liability, but
22 personal liability shall not attach to the trustee or the
23 beneficiaries of the trust for any such act, omission or
24 liability.]
25 (1) Except as otherwise provided in the instrument, the
26 beneficiaries of a business trust shall be entitled to the
27 same limitation of personal liability as is extended to
28 shareholders in a domestic business corporation.
29 (2) Except as otherwise provided in the instrument, the
30 trustees of a trust, as such, shall not be personally liable
20010S0215B1243 - 190 -
1 to any person for any act or obligation of the trust or any
2 other trustee.
3 (3) An obligation of a trust based upon a writing may be
4 limited to a specific fund or other identified pool or group
5 of assets of the trust.
6 * * *
7 (f) Permissible beneficiaries.--Except as otherwise provided
8 by a statute, rule or regulation applicable to a particular
9 profession, all of the [beneficiaries of] ultimate beneficial
10 owners of interests in a business trust that renders one or more
11 restricted professional services shall be licensed persons. As
12 used in this subsection, the term "restricted professional
13 services" shall have the meaning specified in section 8903
14 (relating to definitions and index of definitions).
15 * * *
16 (h) Medical professional liability.--A business trust shall
17 be deemed to be a professional corporation for purposes of
18 section 811 of the act of October 15, 1975 (P.L.390, No.111),
19 known as the Health Care Services Malpractice Act.
20 Section 3. Amendment of Title 54.
21 As much of Title 54 as is hereinafter set forth is amended or
22 added to read:
23 § 302. Definitions.
24 The following words and phrases when used in this chapter
25 shall have, unless the context clearly indicates otherwise, the
26 meanings given to them in this section:
27 "Business." Any commercial or professional activity.
28 "Entity." Any individual or any corporation, association,
29 partnership, joint-stock company, business trust, syndicate,
30 joint adventureship or other combination or group of persons,
20010S0215B1243 - 191 -
1 regardless of whether it is organized or formed under the laws
2 of this Commonwealth or any other jurisdiction.
3 "Proper name." [The] When used with respect to an
4 association of a type listed in the following paragraphs, the
5 term means the name set forth in:
6 (1) the articles of incorporation, for a corporation;
7 (2) the statement of registration, for a limited
8 liability partnership;
9 (3) the certificate of limited partnership, for a
10 limited partnership;
11 (4) the statement of election, for an electing
12 partnership;
13 (5) the certificate of organization, for a limited
14 liability company;
15 (6) the articles of association, for a professional
16 association;
17 (7) the deed of trust or other trust instrument, if any,
18 that has been filed in the Department of State, for a
19 business trust; or
20 * * *
21 § 503. Decennial filings required.
22 * * *
23 (b) Exceptions.--Subsection (a) shall not apply to any of
24 the following:
25 (1) A corporation or other association [which] that
26 during the [preceding] ten years ending on December 31 of the
27 year in which a filing would otherwise be required under
28 subsection (a) has made any filing in the department pursuant
29 to a provision of this title or 15 Pa.C.S. (relating to
30 corporations and unincorporated associations), other than:
20010S0215B1243 - 192 -
1 (i) a report required by subsection (a); or
2 (ii) a filing [required by] under:
3 (A) 15 Pa.C.S. § 1305 (relating to reservation
4 of corporate name);
5 (B) 15 Pa.C.S. § 5305 (relating to reservation
6 of corporate name);
7 (C) 15 Pa.C.S. § 8203(b) (relating to name);
8 (D) 15 Pa.C.S. § 8505(b) (relating to name); or
9 (E) 15 Pa.C.S. § 8905(b) (relating to name).
10 (2) A corporation whose name is registered pursuant to
11 section 501(a)(4) (relating to register established).
12 (3) A corporation [which] that has had officer
13 information forwarded to the department by the Department of
14 Revenue during the preceding ten years under 15 Pa.C.S. §
15 1110 (relating to annual report information).
16 [(b.1) Exemption.--An entity which made a filing after
17 December 31, 1989, and before January 1, 1991, pursuant to a
18 provision of this title or 15 Pa.C.S. (relating to corporations
19 and unincorporated associations) shall be exempt from the 2001
20 decennial filing. For purposes of this subsection, none of the
21 following shall be considered a filing:
22 (1) A filing under:
23 (i) 15 Pa.C.S. § 1305;
24 (ii) 15 Pa.C.S. § 5305;
25 (iii) 15 Pa.C.S. § 8203(b);
26 (iv) 15 Pa.C.S. § 8505(b); or
27 (v) 15 Pa.C.S. § 8905(b).
28 (2) A name registration under section 501(a)(4).
29 (3) Forwarding of information to the department by the
30 Department of Revenue under 15 Pa.C.S. § 1110.]
20010S0215B1243 - 193 -
1 (c) Exemptions.--An association shall be exempt from the
2 2001 decennial filing if the association made a filing:
3 (1) After December 31, 1989 and before January 1, 1992,
4 pursuant to a provision of this title or 15 Pa.C.S. other
5 than a filing under:
6 (i) 15 Pa.C.S. § 1305;
7 (ii) 15 Pa.C.S. § 5305;
8 (iii) 15 Pa.C.S. § 8203(b);
9 (iv) 15 Pa.C.S. § 8505(b); or
10 (v) 15 Pa.C.S. § 8905(b).
11 (2) Under this section during the year 2000.
12 [(c) Cross reference] (d) Cross references.--See 15 Pa.C.S.
13 §§ 134 (relating to docketing statement) and 135 (relating to
14 requirements to be met by filed documents).
15 § 1314. Decennial filings required. * * *
16 (b) Requirement satisfied by other filings.--Subsection (a)
17 shall not apply to a registrant which during the [preceding] ten
18 years ending on December 31 of the year in which a filing would
19 otherwise be required under subsection (a) has made any filing
20 with the department under this chapter other than a report
21 required by subsection (a).
22 * * *
23 § 1515. Decennial filings required.
24 * * *
25 (b) Requirement satisfied by other filings.--Subsection (a)
26 shall not apply to a registrant which during the [preceding] ten
27 years ending on December 31 of the year in which a filing would
28 otherwise be required under subsection (a) has made any filing
29 with the department under this chapter other than a report
30 required by subsection (a).
20010S0215B1243 - 194 -
1 * * *
2 SECTION 3.1. THE DEPARTMENT OF STATE IS AUTHORIZED TO <--
3 PRESCRIBE A FEE SCHEDULE TO IMPLEMENT 13 PA.C.S. § 9525. THE
4 FOLLOWING APPLY TO THE FEE SCHEDULE:
5 (1) THE FEE SCHEDULE SHALL BE PUBLISHED IN THE
6 PENNSYLVANIA BULLETIN.
7 (2) THE FEE SCHEDULE IS NOT A REGULATION AND IS NOT
8 SUBJECT TO:
9 (I) SECTION 612 OF THE ACT OF APRIL 9, 1929
10 (P.L.177, NO.175), KNOWN AS THE ADMINISTRATIVE CODE OF
11 1929;
12 (II) THE ACT OF JULY 31, 1968 (P.L.769, NO.240),
13 REFERRED TO AS THE COMMONWEALTH DOCUMENTS LAW;
14 (III) SECTION 204(B) OF THE ACT OF OCTOBER 15, 1980
15 (P.L.950, NO.164), KNOWN AS THE COMMONWEALTH ATTORNEYS
16 ACT; OR
17 (IV) THE ACT OF JUNE 25, 1982 (P.L.633, NO.181),
18 KNOWN AS THE REGULATORY REVIEW ACT.
19 (3) THE FEE SCHEDULE SHALL EXPIRE ON THE EARLIER OF:
20 (I) SEPTEMBER 30, 2001; OR
21 (II) THE EFFECTIVE DATE OF REGULATIONS PROMULGATED
22 UNDER 13 PA.C.S. § 9525(D).
23 Section 4. Repeals.
24 The following acts and parts of acts are repealed TO THE <--
25 EXTENT SPECIFIED:
26 As much as reads ", and act as the attorney-in-fact and <--
27 (1) AS MUCH AS READS ", AND ACT AS THE ATTORNEY-IN-FACT <--
28 AND authorized agent of such corporations for the service of
29 process thereon" in section 806 of the act of April 9, 1929
30 (P.L.177, No.175), known as The Administrative Code of 1929,
20010S0215B1243 - 195 -
1 ABSOLUTELY. <--
2 Section 404(b) of the act of December 19, 1990 (P.L.834, <--
3 (2) SECTION 404(B) OF THE ACT OF DECEMBER 19, 1990 <--
4 (P.L.834, No.198), known as the GAA Amendments Act of 1990,
5 insofar as it applies to 15 Pa.C.S. §§ 1745 and 5745.
6 15 Pa.C.S. §§ 5543.1,5546.1, 5764.1, 8103 and 8206. <--
7 (3) SECTION 30(2) OF THE ACT OF JUNE 8, 2001 (P.L.123, <--
8 NO.18), KNOWN AS THE UNIFORM COMMERCIAL CODE MODERNIZATION
9 ACT OF 2001, ABSOLUTELY.
10 (4) 15 PA.C.S. §§ 5543.1, 5546.1, 5764.1, 8103 AND 8206,
11 ABSOLUTELY.
12 Section 5. Effective date.
13 This act shall take effect in 60 days. AS FOLLOWS: <--
14 (1) THE FOLLOWING PROVISIONS SHALL TAKE EFFECT
15 IMMEDIATELY:
16 (I) SECTION 3.1 OF THIS ACT.
17 (II) SECTION 4(3) OF THIS ACT.
18 (III) THIS SECTION.
19 (2) THE REMAINDER OF THIS ACT SHALL TAKE EFFECT IN 60
20 DAYS.
L21L15JS/20010S0215B1243 - 196 -