Amendment 5854 to House Bill 1398 P.N. 2375, Regular Session 2015-2016

H1398B2375A05854 MSP:JSL 02/08/16 #90 A05854

AMENDMENTS TO HOUSE BILL NO. 1398

Sponsor: REPRESENTATIVE A. HARRIS

Printer's No. 2375

Amend Bill, page 1, line 25, by inserting after "on"

derivative actions and

Amend Bill, page 2, lines 46 through 51; page 3, lines 1

through 8; by striking out all of said lines on said pages and

inserting

As to limited liability companies:

repealing existing Subchapters A, B, C, D, E, F, I

and K of Chapter 89 and replacing them with a new Chapter

88 relating to:

general provisions;

formation and filings;

relations of members and managers to persons

dealing with limited liability company;

relations of members to each other and to limited

liability company;

transferable interests and rights of transferees

and creditors;

dissociation;

dissolution and winding up; and

actions by members;

and

revising provisions on restricted professional

companies.

Amend Bill, page 7, line 5, by striking out ", AMENDED OR

ADDED OCTOBER 22, 2014 (P.L.2640, NO.172),"

Amend Bill, page 8, line 13, by striking out "OPTIONAL"

Amend Bill, page 8, line 18, by striking out "OPTIONAL"

Amend Bill, page 14, line 30, by inserting after "(6)"

, 368(j)

Amend Bill, page 15, line 1, by striking out ", ADDED OCTOBER

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22, 2014 (P.L.2640, NO.172),"

Amend Bill, page 15, by inserting between lines 19 and 20

§ 368. Allocation of liabilities in division.

* * *

(j) Taxes.--Any taxes, interest, penalties and public

accounts of the Commonwealth claimed against the dividing

association for periods prior to the effective date of the

division that are settled, assessed or determined prior to or

after the division shall be the liability of all of the

resulting associations and, together with interest thereon,

shall be a lien against the franchises and property of each

resulting association. Upon the application of the dividing

association, the Department of Revenue, with the concurrence of

the Department of Labor and Industry, shall release one or more,

but less than all, of the resulting associations from liability

and liens for all taxes, interest, penalties and public accounts

of the dividing association due the Commonwealth for periods

prior to the effective date of the division if those departments

are satisfied that the public revenues will be adequately

secured.

Amend Bill, page 29, line 13, by striking out all of said

line and inserting

Section 6.1. Sections 1971(a) and 3301(d) of Title 15 are

amended to read:

§ 1971. Voluntary dissolution by shareholders or incorporators.

(a) General rule.--The shareholders or incorporators of a

business corporation that has [not commenced business] never

transacted business or held assets other than money received

from subscriptions for shares may effect the dissolution of the

corporation by filing articles of dissolution in the Department

of State. The articles of dissolution shall be executed in the

name of the corporation by a majority of the incorporators or a

majority in interest of the shareholders and shall set forth:

(1) The name of the corporation and, subject to section

109 (relating to name of commercial registered office

provider in lieu of registered address), the address,

including street and number, if any, of its registered

office.

(2) The statute under which the corporation was

incorporated and the date of incorporation.

(3) That the corporation has [not commenced business]

never transacted business or held assets other than money

received from subscriptions for shares.

(4) That the amount, if any, actually paid in on

subscriptions for its shares, less any part thereof disbursed

for necessary expenses, has been returned to those entitled

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thereto.

(5) That all liabilities of the corporation have been

discharged or that adequate provision has been made therefor.

(6) That a majority of the incorporators or a majority

in interest of the shareholders elect that the corporation be

dissolved.

* * *

§ 3301. Application and effect of chapter.

* * *

(d) Organic [records] rules may not be inconsistent.--A

provision of the articles or bylaws of a benefit corporation may

not relax, be inconsistent with or supersede any provision of

this chapter.

Section 6.2. The definitions of "benefit corporation,"

"independent," "minimum status vote" and "subsidiary" in section

3302 of Title 15 are amended to read:

§ 3302. Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Benefit corporation." A business corporation that [has

elected to become] is subject to this chapter [and whose status

as a benefit corporation has not been terminated].

* * *

"Independent." When a person has no material relationship

with a benefit corporation or any of its subsidiaries, other

than the relationship of serving as the benefit director or

benefit officer. A material relationship between an individual

and a benefit corporation or any of its subsidiaries will be

conclusively presumed to exist if:

(1) the person is or has been within the last three

years an employee of the benefit corporation or any of its

subsidiaries, other than as a benefit officer;

(2) an immediate family member of the person is or has

been within the last three years an executive officer, other

than a benefit officer, of the benefit corporation or any of

its subsidiaries; or

(3) the person, or an association of which the person is

a [director, officer or other manager] governor or officer

or in which the person owns beneficially or of record 5% or

more of the outstanding [equity] interests, owns beneficially

or of record 5% or more of the outstanding shares of the

benefit corporation. The percentage of ownership in an

association shall be calculated as if all outstanding rights

to acquire [equity] interests in the association had been

exercised.

"Minimum status vote." As follows:

(1) In the case of a business corporation, in addition

to any other required approval or vote, the satisfaction of

the following conditions:

(i) The shareholders of every class or series must

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be entitled, as a class, to vote on the corporate action

regardless of a limitation stated in the articles of

incorporation or bylaws on the voting rights of any class

or series.

(ii) The corporate action must be approved by a vote

of the shareholders of each class or series entitled to

cast at least two-thirds of the votes that all

shareholders of the class or series are entitled to cast

on the action.

(2) In the case of a domestic association other than a

business corporation, in addition to any other required

approval, vote or consent, the satisfaction of the following

conditions:

(i) The holders of every class or series of [equity]

interest in the association that are entitled to receive

a distribution of any kind from the association must be

entitled as a class to vote on or consent to the action

regardless of any otherwise applicable limitation on the

voting or consent rights of any class or series.

(ii) The action must be approved by vote or consent

of the holders described in subparagraph (i) entitled to

cast at least two-thirds of the votes or consents that

all of those holders are entitled to cast on the action.

* * *

"Subsidiary." An association in which a person owns

beneficially or of record 50% or more of the outstanding

[equity] interests. The percentage of ownership in an

association shall be calculated as if all outstanding rights to

acquire [equity] interests in the association had been

exercised.

* * *

Section 7. Sections 3321(c), 3322(e), 3323(c), 3325(b) and

4146 of Title 15 are amended to read:

§ 3321. Standard of conduct for directors.

* * *

(1) A director shall not be personally liable, as such,

for monetary damages for any action taken as a director [if

the director performed the duties of his or her office in

compliance with section 1712 and this section.] in the course

of performing the duties specified in subsection (a) unless

the action constitutes self-dealing, willful misconduct or a

knowing violation of law.

(2) A director shall not be personally liable for

monetary damages for failure of the benefit corporation to

pursue or create general public benefit or a specific public

benefit.

* * *

§ 3322. Benefit director.

* * *

[(e) Alternative governance arrangements.--

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(1) The bylaws of a benefit corporation must provide

that the persons or shareholders who perform the duties of

the board of directors include a person with the powers,

duties, rights and immunities of a benefit director if any of

the following apply:

(i) The bylaws of a benefit corporation provide that

the powers and duties conferred or imposed upon the board

of directors shall be exercised or performed by a person

other than the directors under section 1721(a) (relating

to board of directors).

(ii) The bylaws of a statutory close corporation

that is a benefit corporation provide that the business

and affairs of the corporation shall be managed by or

under the direction of the shareholders.

(2) A person that exercises one or more of the powers,

duties or rights of a benefit director under this subsection:

(i) does not need to be independent of the benefit

corporation;

(ii) shall have the immunities of a benefit

director;

(iii) may share the powers, duties and rights of a

benefit director with one or more other persons; and

(iv) shall not be subject to the procedures for

election or removal of directors in Subchapter C of

Chapter 17 unless:

(A) the person is also a director of the benefit

corporation; or

(B) the bylaws make those procedures

applicable.]

* * *

§ 3323. Standard of conduct for officers.

* * *

(1) An officer shall not be personally liable, as such,

for monetary damages for any action taken as an officer [if

the officer performed the duties of the position in

compliance with section 1712(c) and this section.] in the

course of performing the duties specified in subsection (a)

unless the action constitutes self-dealing, willful

misconduct or a knowing violation of law.

(2) An officer shall not be personally liable for

monetary damages for failure of the benefit corporation to

pursue or create general public benefit or a specific public

benefit.

* * *

§ 3325. Right of action.

* * *

(b) Parties with standing.--A benefit enforcement proceeding

may be commenced or maintained only:

(1) directly by the benefit corporation; or

(2) derivatively by:

2016/90MSP/HB1398A05854 - 5 -

(i) a shareholder that owned at least 2% of the

total number of shares of a class or series outstanding

at the time of the act complained of;

(ii) a director;

(iii) a person or group of persons that owns

beneficially or of record 5% or more of the [equity]

interests in an association of which the benefit

corporation is a subsidiary at the time of the act

complained of; or

(iv) such other persons as may be specified in the

articles or bylaws of the benefit corporation.

* * *

Amend Bill, page 38, line 13, by striking out "ANOTHER" and

inserting

an other

Amend Bill, page 38, line 20, by striking out "ANOTHER" and

inserting

an other

Amend Bill, page 40, line 29, by inserting after "REMITTED "

immediately

Amend Bill, page 49, line 24, by striking out ", assessment"

Amend Bill, page 71, line 17, by striking out "2015" and

inserting

2016

Amend Bill, page 71, line 18, by striking out "July 1, 2016"

and inserting

April 1, 2017

Amend Bill, page 71, line 30, by striking out "July 1, 2016"

and inserting

April 1, 2017

Amend Bill, page 72, line 7, by striking out "July 1, 2016"

and inserting

April 1, 2017

Amend Bill, page 72, line 15, by striking out "July 1, 2016"

and inserting

2016/90MSP/HB1398A05854 - 6 -

April 1, 2017

Amend Bill, page 76, line 13, by striking out "optional"

Amend Bill, page 80, line 13, by striking out "optional"

Amend Bill, page 84, line 17, by striking out "optional"

Amend Bill, page 87, lines 29 and 30; page 88, lines 1

through 28; by striking out all of said lines on said pages and

inserting

§ 8423. Partnership property.

Property owned by a partnership is partnership property and

is not owned by the partners individually.

§ 8424. When property is partnership property.

(a) General rule.--Property is owned by a partnership and

not by the partners individually if the property is acquired in

the name of:

(1) the partnership by a transfer to:

(i) the partnership in its name; or

(ii) one or more partners in their capacity as

partners in the partnership, if the name of the

partnership is indicated in the instrument transferring

title to the property; or

(2) one or more partners with an indication in the

instrument transferring title to the property of the person's

capacity as a partner or of the existence of a partnership

but without an indication of the name of the partnership.

(b) Property purchased with partnership assets.--Property is

presumed to be partnership property if purchased with

partnership assets, even if not acquired in the name of the

partnership or of one or more partners with an indication in the

instrument transferring title to the property of the person's

capacity as a partner or of the existence of a partnership.

in the name of one or more of the partners is presumed to be

separate property owned by the individual partner or partners,

even if used for partnership purposes, if the property is

acquired without:

(1) an indication in the instrument transferring title

to the property of the person's capacity as a partner or of

the existence of a partnership; and

(2) use of partnership assets.

Amend Bill, page 96, line 1, by striking out "optional"

Amend Bill, page 102, line 28, by inserting a comma after

"indemnification"

2016/90MSP/HB1398A05854 - 7 -

Amend Bill, page 120, line 22, by striking out "optional"

Amend Bill, page 127, line 20, by striking out "optional"

Amend Bill, page 129, line 23, by striking out "optional"

Amend Bill, page 135, line 19, by striking out "optional"

Amend Bill, page 139, line 22, by striking out "2015" and

inserting

2016

Amend Bill, page 139, line 23, by striking out "July 1, 2016"

and inserting

April 1, 2017

Amend Bill, page 140, line 5, by striking out "July 1, 2016"

and inserting

April 1, 2017

Amend Bill, page 141, line 12, by striking out "July 1, 2016"

and inserting

April 1, 2017

Amend Bill, page 141, line 20, by striking out "July 1, 2016"

and inserting

April 1, 2017

Amend Bill, page 146, line 3, by striking out "8682(b)(2)

(vi)" and inserting

8682(e)

Amend Bill, page 146, line 4, by striking out "optional"

Amend Bill, page 149, lines 4 through 7, by striking out " TO

A PERSON FROM , " in line 4, all of lines 5 and 6 and "VIOLATION

OF LAW" in line 7

Amend Bill, page 149, line 22, by striking out "requirement"

and inserting

2016/90MSP/HB1398A05854 - 8 -

requirements

Amend Bill, page 149, line 23, by striking out "as"

Amend Bill, page 149, line 24, by striking out "and (d)" and

inserting

, (d) and (e)

Amend Bill, page 149, line 24, by striking out "optional"

Amend Bill, page 153, line 28, by striking out "WRITING" and

inserting

record form

Amend Bill, page 160, line 25, by striking out "optional"

Amend Bill, page 162, line 13, by striking out "optional"

Amend Bill, page 169, line 8, by striking out ", limited to

the costs of labor and materials"

Amend Bill, page 199, line 1, by striking out "8663(1)" and

inserting

8663(a)(1)

Amend Bill, page 199, line 12, by striking out "8663(5)" and

inserting

8663(a)(5)

Amend Bill, page 199, line 14, by striking out "8663(6)" and

inserting

8663(a)(6)

Amend Bill, page 207, line 18, by striking out "optional"

Amend Bill, page 210, line 10, by striking out "not commenced

business" and inserting

never transacted business or held assets other than money

received as capital contributions

Amend Bill, page 210, line 19, by striking out "not commenced

business" and inserting

2016/90MSP/HB1398A05854 - 9 -

never transacted business or held assets other than

money received as capital contributions

Amend Bill, page 211, line 9, by striking out "optional"

Amend Bill, page 212, line 1, by inserting after

"proceedings;"

and

Amend Bill, page 212, lines 2 through 12, by striking out all

of lines 2 through 11 and "(vii)" in line 12 and inserting

(vi)

Amend Bill, page 213, by inserting between lines 15 and 16

(e) Certificate of termination.--When all debts, obligations

and other liabilities of the limited partnership have been paid

and discharged or adequate provision has been made therefor and

all of the remaining property and assets of the partnership have

been distributed to the partners, a certificate of termination

shall be delivered to the department for filing along with the

certificates required by section 139 (relating to tax clearance

of certain fundamental transactions). The certificate of

termination shall set forth:

(1) The name of the limited partnership.

(2) Subject to section 109 (relating to name of

commercial registered office provider in lieu of registered

address), the address, including street and number, if any,

of the registered office of the partnership.

(3) That all debts, obligations and other liabilities of

the partnership have been paid and discharged or that

adequate provision has been made therefor.

(4) That all the remaining property and assets of the

partnership have been distributed among its partners in

accordance with their respective rights and interests.

(5) That there are no actions pending against the

partnership in any court or that adequate provision has been

made for the satisfaction of any judgment that may be entered

against it in any pending action.

(6) That the partnership is terminated.

Amend Bill, page 213, line 16, by striking out "(e)" and

inserting

(f)

Amend Bill, page 228, line 16, by inserting a comma after

"shown,"

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Amend Bill, page 234, line 20, by striking out "29 Title"

and inserting

29. Title

Amend Bill, page 235, by inserting between lines 4 and 5

I. Benefit Companies

Amend Bill, page 235, line 19, by striking out "2015" and

inserting

2016

Amend Bill, page 235, line 20, by striking out "July 1, 2016"

and inserting

April 1, 2017

Amend Bill, page 236, line 2, by striking out "July 1, 2016"

and inserting

April 1, 2017

Amend Bill, page 240, line 1, by striking out "optional"

Amend Bill, page 240, line 4, by striking out "8872(b)(2)

(vi)" and inserting

8872(f)

Amend Bill, page 243, lines 6 and 7, by striking out

"(relating to standards of conduct for members) "

Amend Bill, page 243, lines 10 and 11, by striking out

"(relating to standards of conduct for managers) "

Amend Bill, page 243, line 21, by striking out "requirement"

and inserting

requirements

Amend Bill, page 243, line 22, by striking out "as"

Amend Bill, page 243, line 23, by striking out "and" where it

occurs the first time

Amend Bill, page 243, line 23, by inserting after "(e)"

2016/90MSP/HB1398A05854 - 11 -

and (f)

Amend Bill, page 243, line 23, by striking out "optional"

Amend Bill, page 244, by inserting between lines 1 and 2

(19) Vary a provision of Subchapter I (relating to

benefit companies).

Amend Bill, page 244, line 2, by striking out "(19)" and

inserting

(20)

Amend Bill, page 254, line 4, by striking out "optional"

Amend Bill, page 286, line 1, by striking out ", limited to

the costs of labor and material"

Amend Bill, page 292, line 27, by striking out "and" and

inserting

Amend Bill, page 296, line 17, by striking out "optional"

Amend Bill, page 297, line 30, by striking out "optional"

Amend Bill, page 298, lines 28 through 30; page 299, lines 1

through 19; by striking out all of lines 28 through 30 on page

298, all of lines 1 through 18 and "(vii)" in line 19 on page

299 and inserting

(vi)

Amend Bill, page 301, by inserting between lines 3 and 4

(f) Certificate of termination.--When all debts, obligations

and other liabilities of the limited liability company have been

paid and discharged or adequate provision has been made therefor

and all of the remaining property and assets of the company have

been distributed to the members, a certificate of termination

shall be delivered to the department for filing along with the

certificates required by section 139 (relating to tax clearance

of certain fundamental transactions). The certificate of

termination shall set forth:

(1) The name of the limited liability company.

(2) Subject to section 109 (relating to name of

commercial registered office provider in lieu of registered

2016/90MSP/HB1398A05854 - 12 -

address), the address, including street and number, if any,

of the registered office of the company.

(3) That all debts, obligations and other liabilities of

the company have been paid and discharged or that adequate

provision has been made therefor.

(4) That all the remaining property and assets of the

company have been distributed among its members in accordance

with their respective rights and interests.

(5) That there are no actions pending against the

company in any court or that adequate provision has been made

for the satisfaction of any judgment that may be entered

against it in any pending action.

(6) That the company is terminated.

Amend Bill, page 301, line 4, by striking out "(f)" and

inserting

(g)

Amend Bill, page 307, line 12, by striking out "not commenced

business" and inserting

never transacted business or held assets other than money

received as capital contributions

Amend Bill, page 307, line 22, by striking out "not commenced

business" and inserting

never transacted business or held assets other than

money received as capital contributions

Amend Bill, page 309, lines 20 and 21, by striking out ",

UNLESS DEMAND IS EXCUSED UNDER SUBSECTION (B)"

Amend Bill, page 317, by inserting between lines 12 and 13

SUBCHAPTER I

BENEFIT COMPANIES

Sec.

8891. Application and effect of subchapter.

8892. Definitions.

8893. Benefit company status.

8894. Purposes.

8895. Standard of conduct for members.

8896. Standard of conduct for managers and officers.

8897. Right of action.

8898. Annual benefit report.

§ 8891. Application and effect of subchapter.

(a) General rule.--This subchapter shall apply to all

benefit companies.

(b) Limited application of subchapter.--The existence of a

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provision of this subchapter shall not of itself create any

implication that a contrary or different rule of law is or would

be applicable to a limited liability company that is not a

benefit company. This subchapter shall not affect any statute or

rule of law that is or would be applicable to a limited

liability company that is not a benefit company.

otherwise provided in this subchapter, the provisions of Part I

(relating to preliminary provisions) and this chapter shall

apply generally to benefit companies. The provisions of this

subchapter shall control over inconsistent provisions of this

title.

(d) Organic rules may not be inconsistent.--See section

8815(c)(19) (relating to contents of operating agreement).

§ 8892. Definitions.

The following words and phrases when used in this subchapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Benefit company." A limited liability company that is

subject to this subchapter.

"Benefit enforcement proceeding." A claim or action for:

(1) failure to pursue or create the general public

benefit purpose of the benefit company or any specific public

benefit purpose set forth in its certificate of organization;

(2) violation of any obligation, duty or standard of

conduct under this subchapter.

"General public benefit." A material positive impact on

society and the environment, taken as a whole and assessed

against a third-party standard, from the business and operations

of a benefit company.

"Independent." When a person has no material relationship

with a benefit company or any of its subsidiaries. A material

relationship between an individual and a benefit company or any

of its subsidiaries will be conclusively presumed to exist if:

(1) the person is or has been within the last three

years an employee of the benefit company or any of its

subsidiaries;

(2) an immediate family member of the person is or has

been within the last three years an executive officer of the

benefit company or any of its subsidiaries; or

(3) the person, or an association of which the person is

a governor or officer or in which the person owns

beneficially or of record 5% or more of the outstanding

interests, owns beneficially or of record 5% or more of the

outstanding interests of the benefit company. The percentage

of ownership in an association shall be calculated as if all

outstanding rights to acquire interests in the association

had been exercised.

"Minimum status vote." As follows:

(1) In the case of a limited liability company, in

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addition to any other required approval or vote, the

satisfaction of the following conditions:

(i) The members of every class or series must be

entitled, as a class, to vote on the action regardless of

a limitation stated in the certificate of organization or

operating agreement on the voting rights of any class or

series.

(ii) The action must be approved by a vote of the

members of each class or series entitled to cast at least

two-thirds of the votes that all members of the class or

series are entitled to cast on the action.

(2) In the case of a domestic association other than a

limited liability company, in addition to any other required

approval, vote or consent, the satisfaction of the following

conditions:

(i) The holders of every class or series of interest

in the association that are entitled to receive a

distribution of any kind from the association must be

entitled as a class to vote on or consent to the action

regardless of any otherwise applicable limitation on the

voting or consent rights of any class or series.

(ii) The action must be approved by vote or consent

of the holders described in subparagraph (i) entitled to

cast at least two-thirds of the votes or consents that

all of those holders are entitled to cast on the action.

"Specific public benefit." The term shall have the meaning

specified in section 3302 (relating to definitions).

"Subsidiary." The term shall have the meaning specified in

section 3302.

"Third-party standard." A standard for defining, reporting

and assessing overall social and environmental performance which

is:

(1) Comprehensive in that it assesses the effect of the

business and its operations upon the interests listed in

section 8895(a)(1)(ii), (iii), (iv) and (v) (relating to

standard of conduct for members).

(2) Developed by an organization that is independent of

the benefit company and satisfies the following requirements:

(i) Not more than one-third of the members of the

governing body of the organization are representatives of

any of the following:

(A) An association of businesses operating in a

specific industry the performance of whose members is

measured by the standard.

(B) Businesses from a specific industry or an

association of businesses in that industry.

against the standard.

(ii) The organization is not materially financed by

an association or business described in subparagraph (i).

(3) Credible because the standard is developed by a

2016/90MSP/HB1398A05854 - 15 -

person that both:

(i) Has access to necessary expertise to assess

overall social and environmental performance.

(ii) Uses a balanced multistakeholder approach,

including a public comment period of at least 30 days to

develop the standard.

(4) Transparent because the following information is

publicly available:

(i) About the standard:

(A) The criteria considered when measuring the

overall social and environmental performance of a

business.

(B) The relative weightings, if any, of those

criteria.

(ii) About the development and revision of the

standard:

(A) The identity of the directors, officers,

material owners and the governing body of the

organization that developed and controls revisions to

the standard.

(B) The process by which revisions to the

standard and changes to the membership of the

governing body are made.

support for the organization, with sufficient detail

to disclose any relationships that could reasonably

be considered to present a potential conflict of

interest.

§ 8893. Benefit company status.

(a) Formation of benefit company.--A benefit company shall

be formed in accordance with section 8821 (relating to formation

of limited liability company and certificate of organization)

except that its certificate of organization shall also state

that it is a benefit company.

(b) Election of benefit company status.--An existing limited

liability company may elect to become a benefit company by

amending its certificate of organization so that it contains, in

addition to the requirements of section 8821, a statement that

the company is a benefit company. The amendment shall not be

effective unless it is adopted by at least the minimum status

vote.

association that is not a benefit company is a party to a merger

or division or is the exchanging association in an interest

exchange, and the surviving, new or any resulting association in

the merger, division or interest exchange is to be a benefit

company, then the plan of merger, division or interest exchange

shall not be effective unless it is adopted by the association

by at least the minimum status vote.

(d) Termination of benefit company status.--A benefit

company may terminate its status as a benefit company and cease

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to be subject to this subchapter by amending its certificate of

organization to delete the provision required by subsection (a)

or (b) to be stated in the certificate of organization of a

benefit company. The amendment shall not be effective unless it

is adopted by at least the minimum status vote.

(e) Termination of status in a fundamental transaction.--If

a plan would have the effect of terminating the status of a

limited liability company as a benefit company, the plan shall

not be effective unless it is adopted by at least the minimum

status vote. Any sale, lease, exchange or other disposition of

all or substantially all of the assets of a benefit company,

unless the transaction is in the usual and regular course of

business, shall not be effective unless the transaction is

approved by at least the minimum status vote.

§ 8894. Purposes.

(a) General public benefit purpose.--A benefit company shall

have a purpose of creating general public benefit. This purpose

is in addition to its purpose under section 8818(b) (relating to

characteristics of limited liability company).

(b) Optional specific public benefit purpose.--The

certificate of organization of a benefit company may identify

one or more specific public benefits that it is the purpose of

the benefit company to create in addition to its purposes under

subsection (a) and section 8818(b). The identification of a

specific public benefit does not limit the obligation of a

benefit company to create general public benefit.

specific public benefit as provided in subsections (a) and (b)

is in the best interests of the benefit company.

(d) Amendment.--A benefit company may amend its certificate

of organization to add, amend or delete the identification of a

specific public benefit that it is the purpose of the benefit

company to create. The amendment shall not be effective unless

it is adopted by at least the minimum status vote.

(e) Professional companies.--A professional company that is

a benefit company does not violate a restriction on its

permissible purposes or activities by having the purpose to

create general public benefit or a specific public benefit.

§ 8895. Standard of conduct for members.

(a) Consideration of interests.--The members of a member-

managed limited liability company that is a benefit company,

when discharging their duties under this title or under the

operating agreement:

(1) shall consider the effects of any action upon:

(i) the members of the benefit company;

(ii) the employees and work force of the benefit

company and its subsidiaries and suppliers;

(iii) the interests of customers as beneficiaries of

the general or specific public benefit purposes of the

benefit company;

(iv) community and societal considerations,

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including those of any community in which offices or

facilities of the benefit company or its subsidiaries or

suppliers are located;

(v) the local and global environment;

(vi) the short-term and long-term interests of the

benefit company, including benefits that may accrue to

the benefit company from its long-term plans and the

possibility that these interests may be best served by

the continued independence of the benefit company; and

(vii) the ability of the benefit company to

accomplish its general public benefit purpose and any

specific public benefit purpose; and

(2) may consider any other pertinent factors or the

interests of any other group that they deem appropriate; but

(3) shall not be required to give priority to the

interests of any person or group referred to in paragraph (1)

or (2) over the interests of any other person or group unless

the benefit company has stated in its certificate of

organization its intention to give priority to certain

interests related to its accomplishment of its general public

benefit purpose or of a specific public benefit purpose

identified in the certificate.

(b) Coordination with other provisions of law.--The

consideration of interests and factors in the manner required

under subsection (a) shall not constitute a violation of section

8849.1 (relating to standards of conduct for members).

(1) A member shall not be personally liable for monetary

damages for any action taken as a member of a member-managed

limited liability company in the course of performing the

duties specified in subsection (a) unless the action

constitutes self-dealing, willful misconduct or a knowing

violation of law.

(2) A member shall not be personally liable for monetary

damages for failure of the benefit company to pursue or

create general public benefit or a specific public benefit.

(d) Limitation on standing.--A member of a member-managed

limited liability company that is a benefit company does not

have a duty to a person that is a beneficiary of the general

public benefit purpose or a specific public benefit purpose of

the benefit company arising from the status of the person as a

beneficiary.

§ 8896. Standard of conduct for managers and officers.

(a) Managers.--Each manager of a manager-managed limited

liability company that is a benefit company shall consider the

interests and factors described in section 8895(a) (relating to

standard of conduct for members) when discharging his or her

duties under this title and under the operating agreement.

(b) Officers.--If a benefit company has a person serving in

the capacity of an officer, the person shall consider the

interests and factors described in section 8895(a) when

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discharging the person's duties under this title and under the

operating agreement if:

(1) the officer has discretion to act with respect to a

matter; and

(2) it reasonably appears to the officer that the matter

may have a material effect on the creation by the benefit

company of general public benefit or a specific public

benefit identified in the certificate of organization of the

benefit company.

consideration of interests and factors by a manager in the

manner described in subsection (a) shall not constitute a

violation of section 8849.2 (relating to standards of conduct

for managers).

(d) Exoneration from personal liability.--

(1) A manager or officer shall not be personally liable,

as such, for monetary damages for any action taken as a

manager or officer in the course of performing the duties

specified in subsection (a) or (b) unless the action

constitutes self-dealing, willful misconduct or a knowing

violation of law.

(2) A manager or officer shall not be personally liable

for monetary damages for failure of the benefit company to

pursue or create general public benefit or a specific public

benefit.

(e) Limitation on standing.--A manager or officer does not

have a duty to a person that is a beneficiary of the general

public benefit purpose or a specific public benefit purpose of a

benefit company arising from the status of the person as a

beneficiary.

§ 8897. Right of action.

(a) Limitations.--

(1) Except in a benefit enforcement proceeding, no

person may bring an action or assert a claim against a

benefit company or its members, managers or officers with

respect to:

(i) failure to pursue or create general public

benefit or a specific public benefit set forth in its

certificate of organization; or

(ii) violation of a duty or standard of conduct

under this chapter.

(2) A benefit company shall not be liable for monetary

damages under this chapter for any failure of the benefit

company to pursue or create general public benefit or a

specific public benefit.

(b) Parties with standing.--A benefit enforcement proceeding

may be commenced or maintained only:

(1) directly by the benefit company; or

(2) derivatively by:

(i) a member that owned at least 2% of the total

number of interests of a class or series outstanding at

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the time of the act complained of;

(ii) a manager of a manager-managed limited

liability company;

(iii) a person or group of persons that owns

beneficially or of record 5% or more of the interests in

an association of which the benefit company is a

subsidiary at the time of the act complained of; or

(iv) such other persons as may be specified in the

certificate of organization or operating agreement of the

benefit company.

(relating to actions by members) shall apply to derivative

actions under this section.

§ 8898. Annual benefit report.

(a) Contents.--A benefit company must deliver to each member

an annual benefit report, including:

(1) A narrative description of:

(i) the ways in which the benefit company pursued

general public benefit during the year and the extent to

which general public benefit was created;

(ii) the ways in which the benefit company pursued

any specific public benefit that the certificate of

organization states is the purpose of the benefit company

to create and the extent to which that specific public

benefit was created;

(iii) any circumstances that have hindered the

creation by the benefit company of general or specific

public benefit; and

(iv) the process and rationale for selecting or

changing the third-party standard used to prepare the

benefit report.

(2) An assessment of the overall social and

environmental performance of the benefit company against a

third-party standard applied consistently with any

application of that standard in prior benefit reports or

accompanied by an explanation of the reasons for any

inconsistent application. The assessment does not need to be

audited or certified by a third-party standards provider.

(3) A statement of any connection between the

organization that established the third-party standard, or

its directors, officers or any holder of 5% or more of the

governance interests in the organization, and the benefit

company or its members, managers or officers or any holder of

5% or more of the outstanding interests in the benefit

company, including any financial or governance relationship

which might materially affect the credibility of the use of

the third-party standard.

(b) Timing of report.--A benefit company shall annually send

a benefit report to each member either:

(1) within 120 days following the end of the fiscal year

of the benefit company; or

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(2) at the same time that the benefit company delivers

any other annual report to its members.

all of its benefit reports on the public portion of its Internet

website, if any, except that any financial or proprietary

information included in the benefit report may be omitted from

the benefit report as posted.

(d) Availability of copies.--If a benefit company does not

have an Internet website, the benefit company shall provide a

copy of its most recent benefit report, without charge, to any

person that requests a copy, but any financial or proprietary

information included in the benefit report may be omitted from

the copy of the benefit report provided.

(e) Filing of report.--Concurrently with the delivery of the

benefit report to members pursuant to subsection (b), the

benefit company must deliver a copy of the benefit report to the

department for filing, except that any financial or proprietary

information included in the benefit report may be omitted from

the benefit report as filed under this section. The department

shall charge a fee of $70 for filing a benefit report.

Amend Bill, page 318, line 7, by inserting after "(2) "

Subchapters A, B, C, D, E, F, I and K of

Amend Bill, page 318, line 7, by striking out "is" and

inserting

are

Amend Bill, page 318, line 8, by striking out "Section" where

it occurs the second time and inserting

Sections 8995(c), (d) and (e), 8997, 8998(g) and

Amend Bill, page 318, by inserting between lines 8 and 9

§ 8995. Application and effect of subchapter.

* * *

Except as otherwise provided in this subchapter, [this chapter]

Chapter 88 (relating to limited liability companies) shall be

generally applicable to all restricted professional companies.

The specific provisions of this subchapter shall control over

the general provisions of [this chapter] Chapter 88.

(d) Election of restricted professional company status.--At

the time an existing limited liability company that has

previously conducted a business not involving the rendering of a

restricted professional service begins to render one or more

restricted professional services, the company shall amend its

certificate of organization to include [the statement required

by section 8913(7) (relating to certificate of organization)] a

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statement that it is a restricted professional company. For

purposes of sections [8925] 8835 (relating to taxation of

limited liability companies) and 8997, the company shall be

deemed to have become a restricted professional company on the

first day of the taxable year of the company following the

taxable year in which the amendment of its certificate of

organization required by this subsection is filed.

(e) Termination of restricted professional company status.--

Except as provided in this subsection, the status of a

restricted professional company as such shall terminate, and the

company shall cease to be subject to this subchapter, at such

time as it ceases to render any restricted professional

services. Upon ceasing to render any restricted professional

services, the company shall amend its certificate of

organization to delete the statement required by [section

8913(7)] subsection (d). For purposes of sections [8925] 8835

and 8997, the company shall be deemed to have ceased being a

restricted professional company on the first day of the taxable

year of the company following the taxable year in which it

ceased to render any restricted professional services.

§ 8997. Taxation of restricted professional companies.

(a) General rule.--Except as provided in subsection (b) [and

in section 8925(b) (relating to taxation of limited liability

companies)], for the purposes of the imposition by the

Commonwealth or any political subdivision of any tax or license

fee on or with respect to any income, property, privilege,

transaction, subject or occupation, a domestic or qualified

foreign restricted professional company shall be deemed to be a

limited partnership organized and existing under Chapter [85] 86

(relating to limited partnerships), and a member of such a

company, as such, shall be deemed a limited partner of a limited

partnership.

(b) Exception.--A domestic or qualified foreign restricted

professional company shall be subject to section [8925(a)]

8835(a), instead of subsection (a), for the whole of any taxable

year of the company during any part of which the company has:

(1) engaged in any business not permitted by section

8996(a) (relating to purposes of restricted professional

companies);

(3) been a member of a limited liability company.

§ 8998. Annual registration.

* * *

(g) Cross [references.--See section 8907 (relating to

execution of documents) and] reference.--See 18 Pa.C.S. § 4904

(relating to unsworn falsification to authorities).

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