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House Co-Sponsorship Memoranda
House of Representatives
Session of 2023 - 2024
Regular Session
MEMORANDUM
| Posted: | August 18, 2023 11:24 AM |
|---|---|
| From: | Representative Perry S. Warren |
| To: | All House members |
| Subject: | Clarifying shareholder rights in Title 15 |
| As legislators, we look for opportunities to strengthen and improve Pennsylvania’s business climate to make it open to starting, growing or relocating a business. One of the ways that we have worked to address economic growth is through Title 15, with the objectives of modernizing and harmonizing Pennsylvania’s corporate laws. In the United States, corporate law is based on state law. By working with a variety of attorneys, agencies and other stakeholders, strategic updates are made to the statute every few years, to ensure that Pennsylvania’s laws harmonize with the laws of other states, making us more welcoming to all businesses. I am proposing legislation that would clean-up some language in several subsections of Title 15. These are technical changes to ensure clarity and continuity. Additionally, the legislation would make a minor change to clarify shareholder rights in certain types of lawsuits called derivative actions. Briefly, derivative actions are lawsuits filed by shareholders either where a director, shareholder, or other officer in the corporation may have engaged in a wrongful activity that may have financially harmed the company’s shareholders, or in cases where a corporation has been damaged but fails to act on its own behalf. These cases often are remedied via a derivative lawsuit. My proposal clarifies Title 15 with respect to derivative suits by providing that if the corporation does not notify the plaintiff within 60 days that a special litigation committee has been formed to address the wrongdoing, then the plaintiff would be able to proceed with a derivative suit. This will be especially helpful for minority shareholders. With this minor change, we will continue our work to ensure that Pennsylvania remains open for business and for the shareholders in those businesses. I hope that you will join me in supporting this proposal. |
Introduced as HB1716
Memo Updated: August 18, 2023 11:25 AM