Regular Session 2021-2022 House Bill 2057 P.N. 3299

PRIOR PRINTER'S NOS. 2364, 2424

PRINTER'S NO. 3299

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

2057

Session of

2021

INTRODUCED BY ROAE, KNOWLES, BRIGGS, SCHEMEL, BERNSTINE, COX,

GALLOWAY, KLUNK, BIZZARRO, JOZWIAK, LONGIETTI, SAINATO AND

WARREN, NOVEMBER 5, 2021

AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES,

JUNE 22, 2022

AN ACT

Amending Titles 15 (Corporations and Unincorporated

Associations) and 54 (Names) of the Pennsylvania Consolidated

Statutes,

in general provisions, further providing for definitions, for

form of records, for delivery of document, for functions of

Department of State, for processing of documents by

Department of State, for court to pass upon rejection of

documents by Department of State, for statement of correction

and for tax clearance of certain fundamental transactions,

providing for annual report and further providing for short

title and application of subchapter and for fee schedule;

in entities generally, further providing for requirements for

names generally, for required name changes by senior

associations and for registration of name of nonregistered

foreign association and providing for ratification of

defective entity actions;

in entity transactions, further providing for definitions, for

relationship of chapter to other provisions of law, for

nature of transactions, for excluded entities and

transactions, for approval by business corporation, for

interest exchange authorized, for statement of conversion and

effectiveness, for approval of division, for division without

interest holder approval, for effect of division, for

allocation of liabilities in division and for domestication

authorized and providing for administrative dissolution or

cancellation;

in foreign associations, further providing for governing law,

for activities not constituting doing business, for

noncomplying name of foreign association, for required

withdrawal on certain transactions and for termination of

registration;

in corporations, further providing for application and effect of

subchapter, for standard of care and justifiable reliance,

for personal liability of directors, for notation of dissent,

for exercise of powers generally, for alternative standard,

for limitation on standing and for actions by shareholders or

members to enforce a secondary right and providing for

renunciation of business opportunities;

in general provisions relating to business corporations, further

providing for application of subpart and for definitions and

repealing provisions relating to annual report information;

in incorporation, further providing for articles of

incorporation;

in corporate powers, duties and safeguards, further providing

for general powers, for adoption, amendment and contents of

bylaws, for persons bound by bylaws, for registered office,

for corporate records and inspection by members, for bylaws

and other powers in emergency and for informational rights of

a director, providing for forum selection provisions and

further providing for authorized shares, for stock rights and

options, for transfer of securities and restrictions, for

power of corporation to acquire its own shares, for liability

for unlawful dividends and other distributions and for

application and effect of subchapter;

in officers, directors and shareholders, further providing for

manner of giving notice, for place and notice of meetings of

shareholders, for use of conference telephone or other

electronic technology, for conduct of shareholders meeting,

for alternative provisions, for standard of care and

justifiable reliance, for personal liability of directors,

for notation of dissent, for exercise of powers generally,

for alternative standard, for limitation on standing and for

inconsistent articles ineffective, providing for renunciation

of business opportunities, further providing for board of

directors, for qualifications of directors, for term of

office of directors, for selection of directors, for quorum

of and action by directors, for interested directors or

officers and quorum, for compensation of directors, for

executive and other committees of the board and for officers,

providing for officer's standard of care and justifiable

reliance and for personal liability of officers and further

providing for mandatory indemnification, for duration and

extent of coverage, for time of holding meetings of

shareholders, for quorum, for voting rights of shareholders,

for determination of shareholders of record, for voting

lists, for consent of members in lieu of meeting, for

derivative action, for eligible shareholder plaintiffs and

security for costs and for special litigation committee;

in fundamental changes, further providing for proposal of

fundamental transactions, for amendment of articles

authorized, for proposal of amendments for adoption of

amendments, for voluntary transfer of corporate assets and

for survival of remedies and rights after dissolution;

in nonstock corporations, further providing for election of an

existing business corporation to become a nonstock

corporation and for termination of nonstock corporation

status;

in registered corporations, further providing for call of

special meetings of shareholders, for adjournment of meetings

of shareholders, for consent of shareholders in lieu of

meeting, and for notice of shareholder meetings, providing

for qualifications of directors, and further providing for

20210HB2057PN3299 - 2 -

application and effect of subchapter, for definitions, for

business combination, for application and effect of

subchapter, for definitions, for voting rights of shares

acquired in a control-share, for procedure for establishing

voting rights of control shares, for application and effect

of subchapter and for definitions;

in benefit corporations, further providing for standard of

conduct for directors, for benefit director and for standard

of conduct for officers;

in general provisions relating to nonprofit corporations,

further providing for definitions and repealing provisions

relating to annual report;

in incorporation, further providing for articles of

incorporation;

in corporate powers duties and safeguards, further providing for

adoption, amendment and contents of bylaws, for persons bound

by bylaws, for registered office, for corporate records and

inspection by members, for bylaws and other powers in

emergency and for informational rights of a director,

providing for forum selection provisions, and further

providing for authority to take and hold trust property;

in officers, directors and members, further providing for manner

of giving notice, for place and notice of meetings of

members, for use of conference telephone or other electronic

technology, for conduct of members meeting, for alternative

provisions, for standard of care and justifiable reliance,

for personal liability of directors, for notation of dissent,

for exercise of powers generally, for alternative standard

and for limitation on standing, providing for renunciation of

corporate opportunities, further providing for board of

directors, for term of office of directors, for selection of

directors, for quorum of and action by directors, for

interested directors or officers and quorum, for compensation

of directors, for executive and other committees of the board

and for officers, providing for officer's standard of care

and justifiable reliance and for personal liability of

officers and further providing for mandatory indemnification,

for duration and extent of coverage, for time of holding

meetings of members, for quorum, for voting rights of

members, for determination of members of record, for consent

of members in lieu of meeting, for derivative action, for

eligible member plaintiffs and security for costs and for

special litigation committee;

in amendments, sale of assets and dissolution, further providing

for amendment of articles authorized, for proposal of

amendments and for survival of remedies and rights after

dissolution;

in electric cooperative corporations, further providing for

merger, consolidation, division or sale of assets;

in general partnerships, further providing for short title and

application of chapter, for partner's rights and duties and

for rights to information;

in limited partnerships, further providing for short title and

application of chapter, for signing of filed documents, for

registered office, for limited partner rights to information,

for general partner rights to information, for derivative

action, for security for costs and for special litigation

committee;

in limited liability companies, further providing for formation

of limited liability company and certificate of organization,

20210HB2057PN3299 - 3 -

for registered office, for rights to information, for

derivative action, for security for costs, for special

litigation committee, for standard of conduct for members and

for standard of conduct for managers and officers;

in limited liability companies, further providing for

application and effect of subchapter;

in business trusts, further providing for registered office;

in general provisions, further providing for definitions and for

execution of documents;

in fictitious names, further providing for definitions, for

registration, for contracts entered into by entity using

unregistered fictitious name and for effect of registration;

in corporate and other association names, repealing provisions

relating to register established, to certain additions to

to make filings, to late filings and to voluntary termination

of registration by corporations and other associations;

and making editorial changes.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. The definition of "court" in section 102(a) of

Title 15 of the Pennsylvania Consolidated Statutes is amended,

the subsection is amended by adding definitions and the section

is amended by adding a subsection to read:

§ 102. Definitions.

(a) Defined terms.--Subject to additional or inconsistent

definitions contained in subsequent provisions of this title

that are applicable to specific provisions of this title, the

following words and phrases when used in this title shall have,

unless the context clearly indicates otherwise, the meanings

given to them in this section:

* * *

"Affiliate." A person that directly, or indirectly through

one or more intermediaries, controls, is controlled by or is

under common control with a specified person.

"Associate." When used to indicate a relationship with any

person:

(1) a corporation or other association of which the

person is a governor or officer, or is, directly or

20210HB2057PN3299 - 4 -

indirectly, the beneficial owner of interests entitling the

person to cast at least 10% of the votes that all interest

holders would be entitled to cast in an election of governors

of the corporation or other association;

(2) a trust or other estate in which the person has a

substantial beneficial interest or as to which the person

serves as trustee or in a similar fiduciary capacity; and

(3) a relative or spouse of the person, or a relative of

the spouse, who has the same home as the person.

* * *

"Conversion." A transaction authorized by Subchapter E of

Chapter 3 (relating to conversion).

* * *

"Court." [Subject] Either:

(1) the court or courts specified in a bylaw of a

domestic business corporation or domestic nonprofit

corporation under section 1513 (relating to forum selection

provisions) or section 5513 (relating to forum selection

provisions) with respect to an internal corporate claim as

defined in that section; or

(2) subject to any inconsistent general rule prescribed

by the Supreme Court of Pennsylvania:

[(1)] (i) the court of common pleas of the judicial

district embracing the county where the registered office

of the corporation or other association is or is to be

located; or

[(2)] (ii) where an association results from a

merger, division or other transaction without

establishing a registered office in this Commonwealth or

withdraws as a foreign corporation or association, the

20210HB2057PN3299 - 5 -

court of common pleas in which venue would have been laid

immediately prior to the transaction or withdrawal.

* * *

"Division." A transaction authorized by Subchapter F of

Chapter 3 (relating to division).

* * *

"Domestication." A transaction authorized by Subchapter G of

Chapter 3 (relating to domestication).

* * *

"Interest exchange." A transaction authorized by Subchapter

D of Chapter 3 (relating to interest exchange).

* * *

"Merger." A transaction in which two or more merging

associations are combined into a surviving association pursuant

to a document filed by the department or similar office in

another jurisdiction.

* * *

"Recklessness." Conduct that involves a conscious disregard

of a substantial and unjustifiable risk. The risk must be of

such a nature and degree that, considering the nature and intent

of the actor's conduct and the circumstances known to the actor,

its conscious disregard involves a gross deviation from the

standard of conduct that a reasonable person would observe in

the actor's situation.

* * *

"Restricted professional services." The following

professional services: chiropractic, dentistry, law, medicine

and surgery, optometry, osteopathic medicine and surgery,

podiatric medicine, public accounting, psychology or veterinary

medicine.

20210HB2057PN3299 - 6 -

* * *

"conversion," "division," "domestication," "interest exchange"

or "merger," when used in this title, shall include a

transaction that has substantively the same effect, however

denominated under the law of a foreign jurisdiction.

Section 2. Sections 107(a), 113 and 132(d) of Title 15 are

amended to read:

§ 107. Form of records.

(a) General rule.--Information maintained [by] or

administered by or on behalf of a corporation or other

association in the regular course of its business or activities,

including shareholder or membership records, books of account

and minute books, may be kept in record form.

* * *

§ 113. Delivery of document.

(a) Permissible means.--Permissible means of delivery of a

document in record form include:

(1) personal delivery;

(2) mail;

(3) conventional commercial practice; and

(4) electronic transmission.

(b) Delivery to department.--Delivery to the department of a

document in record form is effective only on receipt by the

department.

than this title, the department may deliver a document in record

form to a person by delivering it:

(1) in person to the person that submitted it for

filing;

20210HB2057PN3299 - 7 -

(2) to the address of the person's registered office;

(3) to the principal office address of the person; or

(4) to another address the person provides to the

department for delivery.

(d) Delivery by electronic communication.--The department

may deliver documents in record form to an address for email or

other electronic communications supplied to the department by a

person until the person notifies the department in record form

that the person no longer wishes to have documents delivered to

that address.

§ 132. Functions of Department of State.

* * *

[(d) Notice of decennial filings.--Whenever a decennial

filing is required by Title 54 to be made in the department, the

department shall, not earlier than the November 1 prior to the

commencement of the decennial year wherever practicable, give

notice by mail to the registrant or other party of the decennial

filing requirement, which notice shall be accompanied by

appropriate application blanks or forms. Failure by the

department to give notice to any party, or failure by any party

to receive notice, of a decennial filing requirement shall not

relieve any party of the obligation to make the decennial

filing.]

Section 3. Section 136(a) of Title 15 is amended and the

section is amended by adding a subsection to read:

§ 136. Processing of documents by Department of State.

(a) Filing of documents.--[If] Except as provided in

subsection (f), if a document conforms to section 135 (relating

to requirements to be met by filed documents) the Department of

State shall forthwith file the document, certify that the

20210HB2057PN3299 - 8 -

document has been filed by endorsing upon the document the fact

and date of filing, make and retain a copy thereof and return

the document or a copy thereof so endorsed to or upon the order

of the person who delivered the document to the department.

* * *

(f) Rejection of document.--The department may reject a

document for filing if the department reasonably believes the

document:

(1) is being filed fraudulently; or

(2) may be used to accomplish a fraudulent, criminal or

unlawful purpose.

Section 4. Sections 137(a), 138(a) and (b) and 139(c)(2) of

Title 15 are amended to read:

§ 137. Court to pass upon rejection of documents by Department

of State.

(a) General rule.--Whenever the Department of State rejects

a document delivered for filing under this [title or fails to

make available a certified duplicate copy within the time

provided by section 136(b) (relating to immediate certified

copy):

(1) the original document or copies thereof;

(2) the statement, if any, of the department made under

section 136(b)(1)(ii); and

(3) any other papers relating thereto;]

title, the original document or a copy thereof and any papers

relating thereto may be delivered to the prothonotary or clerk

of the court vested by or pursuant to Title 42 (relating to

judiciary and judicial procedure) with jurisdiction of appeals

from the department. Immediately the prothonotary or clerk shall

transmit the papers to the court without formality or expense to

20210HB2057PN3299 - 9 -

the person who delivered the original document to the

department. The question of the eligibility of the document for

filing [in] by the department shall thereupon, at the earliest

possible time, be heard by a judge of the court, without jury,

in the court or in chambers. The finding of the court, or any

judge thereof, that the document is eligible for filing [in] by

the department shall be final and the department shall act in

accordance therewith. The true intent of this section is to

secure for applicants an immediate hearing in court and a

determination by the court without delay or expense to the

applicants.

* * *

§ 138. Statement of correction.

(a) Filing of statement.--Whenever any document authorized

or required to be delivered to the department for filing by any

provision of this title has been so filed and is an inaccurate

record of the action therein referred to or was defectively or

erroneously executed, the document may be corrected by

delivering to the department for filing a statement of

correction. The statement of correction, except as provided in

subsection (c), shall be signed by the association or other

person that delivered the inaccurate, defective or erroneous

document for filing and shall set forth:

(1) The name of the association or other person and,

subject to section 109 (relating to name of commercial

registered office provider in lieu of registered address),

the location, including street and number, if any, of its

registered or other office.

(2) The statute by or under which the association was

formed, or the preceding filing was made, in the case of a

20210HB2057PN3299 - 10 -

filing that does not constitute a part of the public organic

record of an association.

(3) [The] Either:

(i) the inaccuracy or defect to be corrected[.]; or

(ii) the portion of the document requiring

correction in corrected form.

(4) [The portion of the document requiring correction in

corrected form or, if] If the document was erroneously

executed, a statement that the original document shall be

deemed reexecuted or [stricken from the records of the

department] not effective ab initio, as the case may be.

(b) Effect of filing.--

(1) The [corrected document] correction shall be

effective:

(i) Upon filing [in] of the statement of correction

by the department, as to those persons who are

substantially and adversely affected by the correction.

(ii) As of the date the original document was

effective, as to all other persons.

(2) A filing under this section:

(i) shall not have the effect of causing [the

original public organic record of an association to be

stricken from the records of the department, but] either

of the following to cease being effective:

(A) the first public organic record of a

domestic association that creates the association

under any provision of this title other than Chapter

3 (relating to entity transactions); or

(B) the registration under Subchapter B of

Chapter 4 (relating to registration) of a foreign

20210HB2057PN3299 - 11 -

association; but

(ii) may be used to correct the public organic

record [may be corrected under this section] or

registration.

* * *

§ 139. Tax clearance of certain fundamental transactions.

* * *

clearance certificates with the Department of State:

* * *

(2) With articles of dissolution under section 1971

(relating to voluntary dissolution by shareholders or

incorporators) or 5971 (relating to voluntary dissolution by

members or incorporators).

* * *

Section 5. Title 15 is amended by adding a section to read:

§ 146. Annual report.

(a) Required contents.--A domestic filing entity, domestic

limited liability partnership, domestic electing partnership

that is not a limited partnership or registered foreign

association must deliver to the department for filing an annual

report signed by the entity or association that states:

(1) its name and jurisdiction of formation;

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

commercial registered office provider in lieu of registered

address), the address of its registered office, if any,

including street and number, if any, in this Commonwealth;

(3) the name of at least one governor;

(4) the names and titles of the persons who are its

principal officers, if any, as determined by its governors;

20210HB2057PN3299 - 12 -

(5) the address of its principal office, including

street and number, if any, wherever located; and

(6) its entity number or similar identifier issued by

the department.

(b) Date of information.--Information in an annual report

must be current as of the date the report is delivered to the

department for filing.

the department for filing each year, beginning with the calendar

year after which an entity or association first becomes subject

to this section, and:

(1) before July 1 in the case of a domestic or foreign

corporation for profit or not-for-profit;

(2) before October 1 in the case of a domestic or

foreign limited liability company; and

(3) on or before December 31 in the case of any other

form of domestic or foreign association.

(d) Rejection of report.--If an annual report does not

contain the information required by this section, the department

must:

(1) reject the report;

(2) notify promptly in record form the reporting entity

or association in a record of the rejection; and

(3) return the report for correction.

(e) Modification of prior filings.--If an annual report

contains information about the registered office which differs

from the information shown in the records of the department

immediately before the report is delivered to the department for

filing, the address of the registered office of the entity or

association delivering the report to the department for filing

20210HB2057PN3299 - 13 -

will be deemed to be changed to the address set forth in the

report effective as of the filing of the report.

(f) Change of information.--The information in an annual

report may be changed by delivering to the department an annual

report which includes a statement that the report contains a

change in the information previously included in a report for

that year. The department may not charge a fee for filing a

report or processing a change under this subsection.

(g) Notice by department.--The department annually must

deliver notice to each association required to file an annual

report under this section of the annual report filing

requirement at least two months before the annual report is due .

Failure by the department to deliver notice to any party, or

failure by any party to receive notice, of an annual report

filing requirement does not relieve the party of the obligation

to make the annual report filing.

(h) Transitional provision.--This section shall take effect

on (insert the date that is one year after the effective date of

this act).

Section 6. Section 151(b) of Title 15 is amended to read:

§ 151. Short title and application of subchapter.

* * *

(b) Application.--This subchapter contains an enumeration of

fees to be charged by the [Corporation Bureau of the department]

bureau for services performed under this title or any other

provision of law relating to corporations or associations and

under Titles 13 (relating to commercial code), 17 (relating to

credit unions) and 54 (relating to names).

Section 7. Section 153(b) of Title 15 is amended and

subsection (a) is amended by adding paragraphs to read:

20210HB2057PN3299 - 14 -

§ 153. Fee schedule.

(a) General rule.--The nonrefundable fees of the bureau,

including fees for the public acts and transactions of the

Secretary of the Commonwealth administered through the bureau,

shall be as follows:

* * *

(18) Annual report of domestic or foreign

association:

(i) Annual report delivered to the bureau by a

nonprofit corporation or a limited partnership or

limited liability company with a not-for-profit

purpose........................................... 0

(ii) Annual report delivered to the bureau

electronically.................................... 0 7

(iii) Annual report not delivered to the

bureau electronically............................. 0 7

(19) Reinstatement of domestic association:

(i) Application for reinstatement delivered to

the bureau electronically.......................... 35

(ii) Application for reinstatement not

delivered to the bureau electronically............. 40

(iii) Additional fee required by section

383(a)(4)(ii) (relating to reinstatement) for each

annual report not previously paid.................. 15

(20) Statement of validation:

(i) Statement of validation, any filing fee

referred to in section 227(c) (relating to

statement of validation), plus.................... 75

(ii) (Reserved).

(b) Daily listings.--The bureau may provide listings or

20210HB2057PN3299 - 15 -

<--<--

copies [of microfilm], or both, of complete daily filings of any

class of documents or papers for a fee of 25¢ per filing listed

or set forth therein.

* * *

Section 8. Section 202(b)(1) of Title 15 is amended and

subsection (b) is amended by adding a paragraph to read:

§ 202. Requirements for names generally.

* * *

(b) Duplicate use of names.--Except as provided in

subsection (f), the proper name of a covered association must be

distinguishable on the records of the department from the

following:

(1) The proper name of another covered association [or

the name of an association registered at any time under 54

Pa.C.S. Ch. 5 (relating to corporate and other association

names)], unless the covered association [or other

association] has:

(i) stated that it is about to change its name, is

about to cease to do business, is being wound up or is a

foreign association about to withdraw from doing business

in this Commonwealth, and the statement and a consent to

the adoption of the name are delivered to the department

for filing;

(ii) filed a tax return or certificate with the

Department of Revenue indicating that the covered

association or other association is out of existence or

has failed for a period of three successive years to file

with the Department of Revenue a report or return

required by law and the fact of the failure has been

certified by the Department of Revenue to the Department

20210HB2057PN3299 - 16 -

of State;

(iii) abandoned its name under the laws of its

jurisdiction of formation, by amendment, merger,

consolidation, division, expiration, dissolution or

otherwise, without its name being adopted by a successor,

and an official record of that fact, certified as

provided under 42 Pa.C.S. § 5328 (relating to proof of

official records), is presented by a person to the

department.[; or

(iv) had the registration of its name under 54

Pa.C.S. Ch. 5 terminated.]

(1.1) Paragraph (1) does not apply to protect the proper

name of another covered association during the time while:

(i) the association is administratively dissolved

under Subchapter H of Chapter 3 (relating to

administrative dissoluti on or cancellation), if the

association is a domestic filing entity;

(ii) the statement of registration of the

association is canceled under Subchapter H of Chapter 3,

if the association is a domestic limited liability

partnership; or

(iii) the statement of election of the association

is canceled under Subchapter H of Chapter 3, if the

association is an electing partnership.

* * *

Section 9. Sections 207(a) and (b) and 209(a) and (b) of

Title 15 are amended to read:

§ 207. Required name changes by senior associations.

(a) Loss of rights to name.--A covered association shall

cease to have the exclusive right to its proper name [if the

20210HB2057PN3299 - 17 -

association]:

(1) [has failed to file in the Department of Revenue a

report or a return required by law;

(2)] while it is administratively dissolved under

Subchapter H of Chapter 3 (relating to administrative

dissoluti on or cancellation), if the association is a

domestic filing entity;

(2) while its statement of registration is canceled

under Subchapter H of Chapter 3, if the association is a

domestic limited liability partnership;

(3) while its statement of election is canceled under

Subchapter H of Chapter 3, if the association is an electing

partnership; or

(4) if it has filed in the Department of Revenue a tax

return or certificate indicating that it is out of existence.

[; or

(3) has failed to file the most recent required

decennial filing under 54 Pa.C.S. § 503 (relating to

decennial filings required).]

(b) Adoption of new name on [reactivation] reinstatement.--

Upon the removal of the reason why a covered association has

lost the exclusive right to its proper name under subsection

(a), the association shall make inquiry with the Department of

State with regard to the availability of its name and, if the

name has been appropriated by another person, the covered

association shall adopt a new name in accordance with law before

resuming its activities.

* * *

§ 209. Registration of name of nonregistered foreign

association.

20210HB2057PN3299 - 18 -

(a) General rule.--A nonregistered foreign association may

and other association names) if the name] a name that is

available for use by a registered foreign association pursuant

to section 206 (relating to requirements for foreign association

names) by delivering to the department for filing an application

for registration of name, signed by the association, setting

forth:

(1) The name of the association.

(2) The address, including street and number, if any, of

the principal office of the association.

(3) The name being registered.

(b) Annual renewal.--An association that has in effect [a

registration of its] the registration of a name may renew the

registration from year to year by annually delivering to the

department for filing an application for renewal setting forth

the facts required to be set forth in an original application

for registration. A renewal application may be filed between

October 1 and December 31 in each year and shall extend the

registration for the following calendar year.

* * *

Section 10. The heading of Subchapter B of Chapter 2 of

Title 15 is amended to read:

SUBCHAPTER B

[(Reserved)]

RATIFICATION OF DEFECTIVE

ENTITY ACTIONS

Section 11. Subchapter B of Chapter 2 of Title 15 is amended

by adding sections to read:

§ 221. Definitions.

20210HB2057PN3299 - 19 -

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:

"Applicable rule." A statute, rule or regulation regulating

the procedures for seeking or obtaining authorization or

approval of an entity action. The term includes this title and

the provisions of prior organic laws applicable to a domestic

entity and an entity action subject to this subchapter.

"Date of the defective entity action." The date, or the

approximate date if the exact date is unknown, the defective

entity action was purported to have become effective.

"Defective entity action." An overissue or any other entity

action purportedly taken that is and, at the time the entity

action was purportedly effective, would have been within the

power of the entity, but due to a failure of authorization of

the entity action:

(1) is void or voidable;

(2) cannot be determined not to be void or voidable by

the governors of the ratifying entity or previous entity; or

(3) otherwise does not operate fully in the manner

intended at the time the entity action was purported to have

become effective.

"Entity action." An action taken by or on behalf of a

domestic entity, including any action taken by the incorporator

or organizer, the governors or a committee of the governors, an

officer or other agent of the entity or the interest holders and

any action taken by or on behalf of a previous entity pursuant

to a plan or plan agreement providing for the formation or

augmentation of the domestic entity.

"Failure of authorization." Either:

20210HB2057PN3299 - 20 -

(1) the failure of an entity action to have been

authorized, adopted, approved or otherwise effected in

compliance with the organic rules, a resolution of the

governors, an applicable rule, a plan, a plan agreement or a

governance agreement or the disclosure set forth in a proxy

or consent solicitation statement regarding the approval or

authorization of the entity action; or

(2) a circumstance where the governors cannot determine

that an entity action was validly authorized, approved or

otherwise effected in compliance with paragraph (1).

"Formation or augmentation." The formation of an entity

pursuant to a plan or the vesting of property, liabilities,

rights, privileges, immunities or powers in an entity pursuant

to a plan.

"Governance agreement." An agreement regarding the

governance of an entity or the transfer of interests in the

entity to which the entity and at least one interest holder are

parties or are stated or intended beneficiaries.

"Overissue." The purported issuance:

(1) with respect to a domestic business corporation, of:

(i) shares of a class or series of a business

corporation in excess of the number of shares of the

class or series the corporation has the power to issue

under its articles of incorporation at the time of the

issuance; or

(ii) shares of any class or series that is not at

the time authorized for issuance by the articles of

incorporation of a business corporation; or

(2) with respect to any type of domestic entity other

than a business corporation, of:

20210HB2057PN3299 - 21 -

(i) interests of any type in excess of the number of

interests of that type the entity has the power to issue

under its organic rules at the time of the issuance; or

(ii) interests of any type that is not at the time

authorized for issuance by the organic rules of the

entity.

"Plan." A plan as defined in section 312 or a plan of asset

transfer under section 1932 or other sale, lease, exchange or

other disposition of all or substantially all assets, in each

case approved or adopted or implemented by an entity or by a

previous entity.

"Plan agreement." An agreement providing for the adoption or

implementation of a plan to which the entity is a party or

providing for the formation or augmentation of the entity.

"Previous entity." In the case of ratification of the

formation or augmentation of a domestic entity pursuant to a

plan, each entity that adopted, approved or implemented the

plan, other than the ratifying entity.

"Putative interests." The shares or interests of any class,

series or type, including shares or interests issued upon

exercise of rights, options, warrants or other securities

convertible into shares or interests , that purportedly were

created or issued as a result of a defective entity action.

"Ratifying entity." The domestic entity whose governors or

interest holders have ratified a defective entity action or who

seek review under section 228 of a defective entity action that

has not been ratified.

"Valid interests." The shares or interests of any class,

series or type that have been duly authorized and validly issued

in accordance with all applicable rules, including as a result

20210HB2057PN3299 - 22 -

of ratification or validation under this subchapter.

"Validation effective time." With respect to a defective

entity action ratified under this subchapter, means the later

of:

(1) the time at which the ratification of the defective

entity action is approved in accordance with this subchapter

by either:

(i) the interest holders; or

(ii) the governors, if approval of the interest

holders is not required; and

(2) the time at which any statement of validation filed

in accordance with section 227 (relating to statement of

validation) becomes effective.

§ 222. Nonexclusivity.

Ratification or validation under this subchapter is not the

exclusive means of ratifying or validating a defective entity

action, and the absence or failure of ratification or validation

in accordance with this subchapter does not, of itself, affect

the validity or effectiveness of any entity action properly

ratified under common law or otherwise, nor does it create a

presumption that an entity action is or was a defective entity

action or void or voidable.

§ 223. Ratification of defective entity actions.

(a) Action by governors.--To ratify a defective entity

action under this subchapter other than the ratification of an

election of the initial governors under subsection (b), the

governors of the ratifying entity must take an action, in

accordance with section 224 (relating to action on

ratification), stating:

(1) the defective entity action to be ratified and, if

20210HB2057PN3299 - 23 -

the defective entity action involved the issuance of putative

interests, the number and type of putative interests

purportedly issued;

(2) the date of the defective entity action;

(3) the nature of the failure of authorization with

respect to the defective entity action to be ratified; and

(4) that the governors approve the ratification of the

defective entity action.

(b) Election of initial governors.--In the event that the

defective entity action to be ratified relates to the election

of the initial governors of an entity, a majority of the persons

who, at the time of the ratification, are exercising the powers

of the governors may take an action stating:

(1) the name of each person who first took action in the

name of the entity as the initial governors of the entity;

(2) the earlier of the date on which each person first

took action or was purported to have been elected as an

initial governor; and

(3) that the ratification of the election of each person

as an initial governor is approved.

organic rules, a resolution of the governors, an applicable

rule, a plan, a plan agreement or a governance agreement

requires action by the interest holders or would have required

action by the interest holders of the entity or of a previous

entity at the date of the occurrence of the defective entity

action, and that required action by the interest holders has not

previously been obtained, the ratification of the defective

entity action approved in the action taken by the governors

under subsection (a) shall be submitted to the interest holders

20210HB2057PN3299 - 24 -

for action in accordance with section 224.

(d) Abandonment of ratification.--Unless otherwise provided

in the action taken by the governors under subsection (a), after

the action by the governors has been taken and, whether or not

the action has been approved by the interest holders, the

governors may abandon the ratification at any time before the

validation effective time without further action of the interest

holders.

§ 224. Action on ratification.

(a) Quorum and required vote of governors.--The quorum and

voting requirements applicable to a ratifying action by the

governors under section 223 (relating to ratification of

defective entity actions) shall be the quorum and voting

requirements applicable to the entity action proposed to be

ratified at the time the ratifying action is taken.

(b) Notice to interest holders.--If the ratification of the

defective entity action requires action by the interest holders

under section 223(c), and if the action is to be taken at a

meeting, the entity must give notice to each holder of

interests, regardless of whether entitled to vote, as of the

record date for notice of the meeting and as of the date of the

occurrence of the defective entity action. If the ratification

relates to an overissue, the entity must give notice to the

holders of both valid and putative interests. The entity is not

required to give a notice otherwise required by this subsection

to holders of valid or putative interests whose identities or

addresses for notice cannot be determined from the records of

the entity. The notice must state that the purpose, or one of

the purposes, of the meeting is to consider ratification of a

defective entity action and must be accompanied by:

20210HB2057PN3299 - 25 -

(1) either a copy of the action taken by the governors

in accordance with section 223 or the information required by

section 223(a)(1) ,(2), (3) and (4); and

(2) a statement that any claim that the ratification of

the defective entity action and any putative interests issued

as a result of the defective entity action should not be

effective, or should be effective only on certain conditions,

must be brought within 120 days after the applicable

validation effective time.

provided in subsection (d) with respect to the voting

requirements to ratify the election of governors, the quorum and

voting requirements applicable to the approval by the interest

holders required by section 223(c) shall be the quorum and

voting requirements applicable to the entity action proposed to

be ratified at the time of the interest holder approval, except

that the presence or approval of interests of any class or

series of which no interests are then outstanding, or of any

person that is no longer an interest holder, shall not be

required.

(d) Election of governors.--Action by interest holders

ratifying the election of governors requires either:

(1) that the votes cast within the voting group favoring

ratification exceed the votes cast opposing ratification of

the election at a meeting at which a quorum is present; or

(2) in the case of directors or a class of directors of

a business corporation elected by cumulative voting, that the

votes cast against ratification not be sufficient to elect

one or more directors to the board or to the class.

(e) Putative interests.--The following apply to putative

20210HB2057PN3299 - 26 -

interests:

(1) Putative interests on the record date for

determining the interest holders entitled to vote on any

matter submitted to interest holders under section 223(c)

shall be entitled to vote and shall be counted for quorum

purposes in any vote to approve the ratification of the

matter if:

(i) they are shares of a registered corporation

described in section 2502(1) (relating to registered

corporation status); and

(ii) have been held of record in fungible bulk by a

registered clearing agency or its nominee, acting as

securities intermediary.

(2) In all other cases, putative interests on the record

date for determining the interest holders entitled to vote on

any matter submitted to interest holders under section 223(c)

(and without giving effect to any ratification of putative

interests that becomes effective as a result of the vote) are

not entitled to vote and do not count for quorum purposes in

any vote to approve the ratification of a defective entity

action.

(f) Required amendment.--If the approval under this section

of putative interests would result in an overissue, in addition

to the approval required by section 223, approval of an

amendment to the organic rules of the entity to increase the

number of interests of an authorized class or series or to

authorize the creation of a class or series of interests so

there will be no over issue is also required.

§ 225. Optional notice.

(a) General rule.--If interest holder approval is not

20210HB2057PN3299 - 27 -

required under section 223(c) (relating to ratification of

defective entity actions) or if notice has not been given in

accordance with section 224(b) (relating to action on

ratification), the ratifying entity nonetheless may give notice

of an action taken under section 223 to each interest holder,

including the holders of both valid and putative interests,

regardless of whether entitled to vote, as of both:

(1) the date of the action by the governors; and

(2) the date of the defective entity action ratified.

(b) Contents.--The notice shall contain:

(1) either a copy of the action taken by the governors

in accordance with section 223(a) or (b) or the information

required by section 223(a)(1), (2), (3) and (4) or section

223(b)(1), (2) and (3), as applicable; and

(2) a statement that any claim that the ratification of

the defective entity action and any putative interests issued

as a result of the defective entity action should not be

effective, or should be effective only on certain conditions,

must be brought within 120 days after the giving of the

notice.

be given to holders of valid and putative interests whose

identities or addresses for notice cannot be determined from the

records of the entity.

(d) Notice by registered corporations.--A notice given by a

registered corporation under this section may be given by means

of a publicly available filing with the United States Securities

and Exchange Commission.

§ 226. Effect of ratification.

(a) General rule.--A defective entity action is not void or

20210HB2057PN3299 - 28 -

voidable, or deprived of full effect, as a result of its failure

of authorization if ratified in accordance with this subchapter,

unless the court determines under section 228 (relating to

judicial proceedings regarding validity of entity actions) that

the ratification was not valid.

(b) Specific aspects of validation.--Subject to a court

determination under section 228 that the ratification was not

valid, from and after the validation effective time of a

defective entity action, and without regard to the 120-day

period during which a claim may be brought under section 228:

(1) The defective entity action is not void or voidable,

or deprived of full effect, as a result of its failure of

authorization, and is duly authorized and a valid entity

action effective as of the date when the defective entity

action was taken.

(2) The issuance of each putative interest or fraction

of a putative interest purportedly issued pursuant to the

defective entity action is not void or voidable, and each

putative interest or fraction of a putative interest is an

identical, duly authorized and validly issued interest or

fraction of an interest as of the time it was purportedly

issued.

(3) Any entity action taken subsequent to the defective

entity action in reliance on the defective entity action

having been validly effected is duly authorized and valid as

of the time taken. Any subsequent defective entity action

resulting directly or indirectly from the original defective

entity action, if the failure of authorization of the

subsequent defective entity action relates solely to the

defective entity action ratified under this subchapter, is

20210HB2057PN3299 - 29 -

duly authorized and valid as of the time taken.

(4) If a document was previously filed by the department

in respect of the defective entity action, any statement in

the document to the effect that the defective entity action

was validly approved in accordance with applicable rules is

deemed stricken from the document.

§ 227. Statement of validation.

(a) General rule.--If a defective entity action ratified

under this subchapter would have required under any other

section of this title a filing in accordance with this title,

the ratifying entity shall deliver to the department for filing

a statement of validation in accordance with this section,

regardless of whether a filing was previously made in respect of

the defective entity action and in lieu of a filing otherwise

required by this title. The statement of validation shall serve

to amend or substitute for any other filing with respect to the

defective entity action required by this title.

(b) Contents.--The statement of validation must be signed by

the ratifying entity and set forth:

(1) the name of the ratifying entity;

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

commercial registered office provider in lieu of registered

address), the address of its registered office, including

street and number, if any, in this Commonwealth;

(3) the defective entity action that is the subject of

the statement of validation (including, in the case of any

defective entity action involving the issuance of putative

interests, the number and type of putative interests issued

and the date or dates upon which the putative interests were

purported to have been issued);

20210HB2057PN3299 - 30 -

(4) the date of the defective entity action;

(5) the nature of the failure of authorization in

respect of the defective entity action;

(6) a statement that the defective entity action was

ratified in accordance with this subchapter, including the

date on which the governors ratified the defective entity

action and the date, if any, on which the interest holders

approved the ratification of the defective entity action; and

(7) the following information with respect to previous

documents delivered to the department by the ratifying entity

or by a previous entity:

(i) if a document was previously filed by the

department in respect to the defective entity action and

no changes to the filing are required to give effect to

the ratification of the defective entity action, the

statement of validation must:

(A) state the name of the entity filing the

statement of validation and the statute under which

it was incorporated or formed;

(B) state the name, title and filing date of the

filing previously made and any previous statement of

correction to that filing; and

previously made, together with any previous statement

of correction to that filing.

(ii) if a document was previously filed by the

department in respect to the defective entity action and

the filing requires a change to give effect to the

ratification of the defective entity action, the

statement of validation must:

20210HB2057PN3299 - 31 -

(A) state the name of the entity filing the

statement of validation and the statute under which

it was incorporated or formed;

(B) state the name, title and filing date of the

filing previously made and any previous statement of

correction to that filing;

information required to be included under the

applicable section or sections of this title to give

effect to the defective entity action; and

(D) state the date and time that the filing

attached to the statement of validation is deemed to

have become effective; or

(iii) if a document was not previously filed by the

department in respect to the defective entity action and

the defective entity action would have required a filing

under any other section of this title, the statement of

validation must:

(A) state the name of the entity filing the

statement of validation and the statute under which

it was incorporated or formed;

(B) have attached a document containing all of

the information required to be included under the

applicable section or sections of this title to give

effect to the defective entity action; and

deemed to have become effective.

required under section 153 (relating to fee schedule) for the

statement of validation, if the statement of validation relates

20210HB2057PN3299 - 32 -

to a situation described in subsection (b)(7)(iii), the entity

shall also pay a fee equal to the filing fee for that document

required by section 153 at the time the statement of validation

is delivered for filing.

§ 228. Judicial proceedings regarding validity of entity

actions.

(a) Standing.--Subject to subsection (f), review of a

ratification under this subchapter or of a defective entity

action may be commenced in the court by:

(1) the ratifying entity; or

(2) a person that, at the time of the defective action

or its ratification, was:

(i) a successor to the ratifying entity;

(ii) a governor of the ratifying entity;

(iii) an interest holder or beneficial owner of an

interest in the ratifying entity or in a previous entity;

(iv) materially and adversely affected by the

ratification.

(b) Parties.--No other party in addition to the ratifying

entity need be joined in order for the court to adjudicate the

matter. In an action filed by the ratifying entity, the court

may require notice of the action be provided to other persons

specified by the court and permit such other persons to

intervene in the action.

section, the court may:

(1) determine the validity and effectiveness of a

ratification under this subchapter;

(2) determine the validity and effectiveness of any

20210HB2057PN3299 - 33 -

defective entity action not ratified under this subchapter;

and

(3) establish conditions upon the validity or

effectiveness of a ratification or defective entity action

reviewed by the court.

(d) Time limitation.--Notwithstanding any other provision of

applicable law, an action asserting that the ratification of a

defective entity action and any putative interests issued as a

result of the ratification of the defective entity action should

not be valid must be brought within 120 days after notice has

been given as provided in section 224(b) (relating to action on

ratification) or 225 (relating to optional notice).

(e) Effect on validation effective time.--The validation

effective time shall not be affected by the filing or pendency

of a judicial proceeding under this section or otherwise, unless

otherwise ordered by the court.

(f) Exclusivity.--An action to review a ratification under

this subchapter may be brought only by a person identified in

subsection (a) and only in the court.

§ 229. Limitation on voiding certain defective entity actions.

(a) Bar on voiding certain defective entity actions.--

Subject to subsection (d), after the expiration of the

applicable period set forth in subsection (c):

(1) a defective entity action other than an overissue is

not void or voidable as the result of the failure of

authorization and is a valid entity action effective as of

the date of the defective entity action;

(2) any entity action taken subsequent to the defective

entity action in reliance on the defective entity action

having been validly effected is valid as of the time taken;

20210HB2057PN3299 - 34 -

and

(3) any subsequent defective entity action resulting

directly or indirectly from the original defective entity

action is duly authorized and valid as of the time taken, if

the failure of authorization of the subsequent defective

entity action relates solely to the defective entity action

referred to in paragraph (1).

(b) Bar on voiding certain overissues.--Subject to

subsection (d), after the expiration of the applicable period

set forth in subsection (c):

(1) an overissue is not void or voidable on the basis of

having been in excess of the number of interests of the class

or series that the domestic entity had the power to issue or

on the basis of the entity's lack of authority to issue

interests of the class or series, and is a valid entity

action effective as of the date of the overissue;

(2) the putative interests are duly authorized and

validly issued valid interests;

(3) any entity action taken subsequent to the overissue

in reliance on the overissue having been validly effected is

valid as of the time taken; and

(4) any subsequent defective entity action resulting

directly or indirectly from the original overissue is duly

authorized and valid as of the time taken, if the failure of

authorization of the subsequent defective entity action

relates solely to the defective entity action referred to in

paragraph (1).

section shall be the shortest of:

(1) in the case of a defective entity action taken by a

20210HB2057PN3299 - 35 -

registered corporation, two years from the date when the

registered corporation, or any successor or any person

directly or indirectly owning all the shares of the

registered corporation or of any successor to the registered

corporation, has disclosed the defective entity action in a

public filing with the Securities and Exchange Commission;

(2) six years from the date when:

(i) the defective entity action is set forth in or

implemented or purported to be implemented through the

public organic record of the entity taking the action; or

(ii) disclosure in record form of the occurrence of

the defective entity action is received by the person or

persons whose authorization would have been necessary for

the entity action not to have been defective; or

(iii) in the case of an overissue of shares of a

business corporation, disclosure in record form is given

to all shareholders in the manner set forth in section

1702 (relating to manner of giving notice) of the fact of

the issuance of the putative interests or of the

existence of the putative interests resulting from the

overissue; and

(3) 21 years after the defective entity action.

(d) Application to court to void defective entity action.--

To the extent that relief is available under other applicable

law, a person entitled to assert under applicable law that a

defective entity action is void or voidable may, before the

expiration of the applicable period set forth in this section,

file an action for relief declaring or otherwise establishing

that the defective entity action is void or voidable. If such an

action is filed, the operation of subsection (a) or subsection

20210HB2057PN3299 - 36 -

(b) shall be suspended until the final resolution of the action,

and, to the extent that relief is obtained, subsection (a) and

subsection (b) shall not apply.

(e) Other relief not affected.--The operation of subsections

(a) and (b) and the time periods set forth in subsection (c) do

not affect the availability of relief under applicable law other

than this subchapter relating to a defective entity action not

predicated on:

(1) a failure of authorization under this title relating

thereto;

(2) a lack of power or authority under section 1521

(relating to authorized shares) or the organic rules

resulting in an overissue; or

(3) the asserted void or voidable status of the

defective entity action.

(f) No tolling.--The operation of subsection (c) is not

tolled by reason of any person's unawareness of the failure of

authorization of the defective entity action or other grounds,

other than, in the case of subsections (c)(1) and (c)(2), active

and deliberate fraud, concealment or forgery proven by clear and

convincing evidence.

(g) Presumptions.--For purposes of this section, the

governors and interest holders of the entity are deemed to have

acted in reliance on the defective entity action in authorizing

subsequent entity actions unless clear and convincing evidence

demonstrates a lack of such reliance. For purposes of subsection

(c)(2)(ii) and (iii), a contemporaneous record in record form of

the giving of disclosure by a governor, officer or agent of the

entity is presumptive evidence of the giving and receipt of such

disclosure.

20210HB2057PN3299 - 37 -

(h) Amendment of organic rules following overissue.--After

the expiration of the applicable period applicable to an

overissue, the domestic entity may, and within a reasonable

period after a request in record form of a holder of formerly

putative interests resulting from an overissue must, adopt an

amendment to its organic rules:

(1) increasing the number of interests of the class or

series that includes the formerly putative interests to the

minimum number necessary for the entity's organic rules to

set forth the power of the entity to have issued the total

number of issued interests of the class or series held by all

interest holders; or

(2) otherwise amending its organic rules to the extent

necessary to authorize the creation and issuance of the class

or series of formerly putative interests.

(i) Effectiveness of section.--In the case of a defective

entity action occurring before (insert the effective date of

this act):

(1) the operation of subsections (a) and (b) is

suspended until (insert the first anniversary of the

effective date of this act), notwithstanding any expiration

of the applicable period set forth in subsection (c);

(2) despite any expiration of the applicable period set

forth in subsection (c), a person entitled to assert under

applicable law that a defective entity action is void or

voidable may file an action under subsection (d) if the

action is filed on or before (insert the first anniversary of

the effective date of this act);

(3) any action pending on (insert the effective date of

this act), seeking relief on the grounds that a defective

20210HB2057PN3299 - 38 -

entity action is void or voidable, including any relief that

may be obtained in the action, is not affected by this

section;

(4) any final judgment relating to the defective entity

action that had become no longer subject to appeal before

(insert the effective date of this act) is not affected by

this section; and

(5) this section shall otherwise apply with full

retroactive effect to a defective entity action.

Section 12. The definitions of "conversion," "division,"

"domestication," "interest exchange" and "merger" in section

312(a) and (b) of Title 15 are amended to read:

§ 312. Definitions.

(a) Definitions.--The following words and phrases when used

in this chapter shall have the meanings given to them in this

subsection unless the context clearly indicates otherwise:

* * *

["Conversion." A transaction authorized by Subchapter E

(relating to conversion).]

* * *

["Division." A transaction authorized by Subchapter F

(relating to division).]

* * *

["Domestication." A transaction authorized by Subchapter G

(relating to domestication).

"Interest exchange." A transaction authorized by Subchapter

D (relating to interest exchange).]

* * *

["Merger." A transaction in which two or more merging

associations are combined into a surviving association pursuant

20210HB2057PN3299 - 39 -

to a document filed by the department or similar office in

another jurisdiction.]

* * *

(b) Index of definitions.--Following is a nonexclusive list

of definitions in section 102 (relating to definitions) that

apply to this chapter:

"Act" or "action."

"Banking institution."

"Conversion."

"Department."

"Dissenters rights."

"Division."

"Domestic entity."

"Domestication."

"Entity."

"Filing entity."

"Foreign entity."

"Governor."

"Interest."

"Interest exchange."

"Interest holder."

"Merger."

"Obligation."

"Organic law."

"Organic rules."

"Private organic rules."

"Property."

"Public organic record."

"Record form."

"Registered foreign association."

20210HB2057PN3299 - 40 -

"Representative."

"Sign."

"Transfer."

"Type."

Section 13. Sections 313 and 315(a) of Title 15 are amended

to read:

§ 313. Relationship of chapter to other provisions of law.

[(a) Antitakeover provisions.--]A transaction under this

chapter to which a [registered] business corporation is a party

may not impair any right or obligation that a person has under,

and may not make applicable or inapplicable to the corporation,

any provision of section 2538 (relating to approval of

transactions with interested shareholders) or 2539 (relating to

adoption of plan of merger by board of directors) or Subchapters

E (relating to control transactions), F (relating to business

combinations), G (relating to control-share acquisitions), H

(relating to disgorgement by certain controlling shareholders

following attempts to acquire control), I (relating to severance

compensation for employees terminated following certain control-

share acquisitions) and J (relating to business combination

transactions - labor contracts) of Chapter 25, nor shall it

change the standard of care applicable to the directors under

Subchapter B of Chapter 17 (relating to fiduciary duty) unless,

in addition to the requirements of this chapter:

(1) If the corporation does not survive the transaction,

the transaction satisfies any requirements of the provision

applicable to the transaction.

(2) If the corporation survives the transaction, the

approval of the transaction is by a vote of the shareholders

or directors which would be sufficient to impair the right or

20210HB2057PN3299 - 41 -

obligation under the provision or make [the corporation

subject to] the provision[.

(b) Transitional provision.--

(1) This subsection applies to a transaction of a type

authorized by this chapter if:

(i) prior to July 1, 2015, a step has been taken to

effectuate the transaction; but

(ii) the transaction does not take effect by July 1,

2015.

(2) Except as set forth in paragraph (3), the

transaction shall remain subject to the former provisions of

law supplied by this chapter until the transaction:

(i) is abandoned; or

(ii) takes effect.

(3) Notwithstanding paragraph (2), if the plan provides

that this chapter applies to the transaction, this chapter

shall apply to the transaction after June 30, 2015.]

applicable or inapplicable to the corporation or change the

standard of care. A transaction that causes the corporation

to cease to be a registered corporation or to cease to be a

registered corporation described in a particular provision

shall not be considered a transaction rendering the provision

inapplicable to the corporation for purposes of this section.

§ 315. Nature of transactions.

(a) General rule.--The fact that a sale or conversion of the

interests in or assets of an association or a transaction under

[a particular subchapter] this chapter or other law produces a

result that could be accomplished in any other manner permitted

by a different [subchapter] set of provisions of this chapter or

other law shall not be a basis for recharacterizing the sale,

20210HB2057PN3299 - 42 -

conversion or transaction as a different form of sale,

conversion or transaction under [any other subchapter or other

law] this chapter.

* * *

Section 14. Section 318(a) is amended by adding a paragraph

to read:

§ 318. Excluded entities and transactions.

(a) Excluded entities.--The following entities may not

participate in a transaction under this chapter:

* * *

(3) A credit union.

* * *

Section 15. Section 321(a), (c) and (f) of Title 15 are

amended and the section is amended by adding a subsection to

read:

§ 321. Approval by business corporation.

(a) Proposal of plan.--Except where the approval of the

board of directors is unnecessary pursuant to section 330

(relating to alternative means of approval of transactions), a

plan shall be proposed in the case of a domestic business

corporation by the adoption by the board of directors of a

resolution approving the plan[.] and, in the case of an offer

referred to in subsection (f), recommending that the

shareholders tender their shares to the offeror in response to

the offer. Except where the approval of the shareholders is

unnecessary under this chapter, the board of directors shall

direct that the plan be submitted to a vote of the shareholders

entitled to vote thereon at a regular or special meeting of the

shareholders.

* * *

20210HB2057PN3299 - 43 -

section 1757 (relating to action by shareholders) or subsection

(d) or (f), a plan shall be adopted by a domestic business

corporation that is a party to the transaction under the plan

upon receiving the affirmative vote of a majority of the votes

cast by all shareholders entitled to vote on the plan and, if

any class or series of shares is entitled to vote thereon as a

class, the affirmative vote of a majority of the votes cast in

each class vote. The holders of any class or series of shares of

a domestic business corporation that is a party to a transaction

under a plan that would effect any change in the articles of the

corporation shall be entitled to vote as a class on the plan if

they would have been entitled to a class vote under the

provisions of section 1914 (relating to adoption of amendments)

had the change been accomplished under Subchapter B of Chapter

19 (relating to amendment of articles). Except as provided in

section 330, a proposed plan shall not be deemed to have been

adopted by a domestic business corporation unless it has also

been approved by the board of directors, regardless of the fact

that the board has directed or suffered the submission of the

plan to the shareholders for action.

* * *

(f) Two-step transactions.--Unless the articles of

incorporation of a registered corporation otherwise provide,

approval by its shareholders of a plan of merger or interest

exchange is not required if the transaction complies with the

following:

(1) The plan of merger or interest exchange:

(i) permits or requires the merger or interest

exchange to be effected under this subsection; and

20210HB2057PN3299 - 44 -

(ii) provides that, if the merger or interest

exchange is to be effected under this subsection, the

merger or interest exchange will be effected as soon as

practicable following the satisfaction of the requirement

set forth in paragraph (6).

(2) Another party to the merger, the acquiring

association in the interest exchange, or a parent of another

party to the merger or the acquiring association in the

interest exchange, makes an offer to purchase, on the terms

provided in the plan of merger or interest exchange, all of

the outstanding shares of the corporation that, absent this

subsection, would be entitled to vote on the plan of merger

or interest exchange, except that:

(i) the offer may exclude shares that are:

(A) owned at the commencement of the offer by

the corporation, the offeror, any parent of the

offeror, or any wholly owned subsidiary of any of the

foregoing; or

(B) described in paragraph (6)(iii); and

(ii) the offer may be subject to a specific minimum

number of shares or percentage of shares being tendered

and any other conditions permitted by applicable law.

(3) The offer discloses that the plan of merger or

interest exchange provides that the merger or interest

exchange will be effected as soon as practicable following

the satisfaction of the requirement set forth in paragraph

(6) and that the shares of the corporation that are not

tendered in response to the offer will be treated as set

forth in paragraph (8).

(4) The board has not rescinded its recommendation at

20210HB2057PN3299 - 45 -

the time the offer closes.

(5) The offeror purchases all shares properly tendered

in response to the offer and not properly withdrawn.

(6) On the close of the offer, the shares listed below

are collectively entitled to cast at least the minimum number

of votes on the merger or interest exchange that, absent this

subsection, would be required by this chapter and by the

articles of incorporation for the approval of the merger or

interest exchange by the shareholders generally and also by

any shares entitled to vote as a separate voting group on the

merger or interest exchange at a meeting at which all shares

entitled to vote on the approval were present and voted:

(i) shares purchased by the offeror in accordance

with the offer;

(ii) shares otherwise owned by the offeror or by any

parent of the offeror or any wholly owned subsidiary of

any of the foregoing; and

(iii) shares subject to an agreement that they are

to be transferred, contributed or delivered to the

offeror, any parent of the offeror, or any wholly owned

subsidiary of any of the foregoing in exchange for shares

or interests in such offeror, parent or subsidiary.

(7) The offeror or a wholly owned subsidiary of the

offeror merges with or into, or effects an interest exchange

in which it acquires shares of, the corporation.

(8) Each outstanding share of each class or series of

shares of the corporation that the offeror is offering to

purchase in accordance with the offer, and that is not

purchased in accordance with the offer, is to be converted in

the merger into, or into the right to receive, or is to be

20210HB2057PN3299 - 46 -

exchanged in the interest exchange for, or for the right to

receive, the same amount and type of securities, interests,

obligations, rights, cash, or other property to be paid or

exchanged in accordance with the offer for each share of that

class or series of shares that is tendered in response to the

offer, except that the following shares of the corporation

need not be converted into or exchanged for the consideration

described in this paragraph:

(i) shares owned by the corporation;

(ii) shares described in paragraph (6)(ii) or (iii);

and

(iii) shares as to which the shareholde r, as defined

in section 1572 (relating to definitions), h as perfected

dissenters rights under Subchapter D of Chapter 15

(relating to dissenters rights).

(9) As used in this subsection:

(i) "offer" means the offer referred to in paragraph

(2);

(ii) "offeror" means the person making the offer;

(iii) "parent" of an association means a person that

owns, directly or indirect ly, through one or more wholly

owned subsidiaries, all of the outstanding shares of or

interests in that association;

(iv) shares tendered in response to the offer shall

be deemed to have been "purchased" in accordance with the

offer at the earliest time as of which:

(A) the offeror has irrevocably accepted those

shares for payment; and

(B) either:

(I) in the case of shares represented by

20210HB2057PN3299 - 47 -

certificates, the offeror or the offeror's

designated depository or other agent has

physically received the certificates representing

those shares; or

(II) in the case of shares without

certificates, those shares have been transferred

into the account of the offeror or its designated

depository or other agent, or an agent's message

relating to those shares has been received by the

offeror or its designated depository or other

agent; and

(v) "wholly owned subsidiary" of a person means an

association of or in which that person owns, directly or

indirect ly, through one or more wholly owned

subsidiaries, al l of the outstanding shares or interests.

[(f)] (g) Cross references.--See:

Subchapter A of Chapter 17 (relating to notice and

meetings generally).

Section 2512 (relating to dissenters rights procedure).

Section 2539 (relating to adoption of plan of merger by

board of directors).

Section 3304(b) (relating to election of benefit

corporation status).

Section 3305(b) (relating to termination of benefit

corporation status).

Section 16. Sections 341(a) and (e), 355(b)(8), 363(c) and

364 of Title 15 are amended to read:

§ 341. Interest exchange authorized.

(a) General rule.--Except as provided in section 318

(relating to excluded entities and transactions) or this

20210HB2057PN3299 - 48 -

section, by complying with this subchapter:

(1) A domestic or foreign association may acquire all of

one or more classes or series of the issued and outstanding

interests of a domestic entity in exchange for interests,

securities, obligations, money, other property, rights to

acquire interests or securities or any combination of the

foregoing.

(2) A domestic entity may acquire all of one or more

classes or series of the issued and outstanding interests of

a foreign association in exchange for interests, securities,

obligations, money, other property, rights to acquire

interests or securities or any combination of the foregoing.

* * *

(e) Transitional provision.--A reference in either of the

following to a share exchange [in] means an interest exchange:

(1) in a provision of the organic rules of a domestic

business corporation which took effect before July 1, 2015[,

shall be deemed to include an interest exchange.]; or

(2) a statute of this Commonwealth that took effect

before July 1, 2015.

* * *

§ 355. Statement of conversion; effectiveness.

* * *

(b) Contents.--A statement of conversion shall contain all

of the following:

* * *

[(8) If the converted association is a nonregistered

foreign association, one of the following:

(i) The street and mailing addresses of its

registered agent and registered office in its

20210HB2057PN3299 - 49 -

jurisdiction of formation if it is a filing entity.

(ii) The street and mailing address of its principal

office if it is not a filing entity.]

* * *

§ 363. Approval of division.

* * *

division adopted under section 364, if a shareholder of a

domestic business corporation that is to be a dividing

association objects to the plan of division and complies with

Subchapter D of Chapter 15 (relating to dissenters rights), the

shareholder shall be entitled to dissenters rights to the extent

provided in that subchapter. See sections 317 (relating to

contractual dissenters rights in entity transactions) and 329

(relating to special treatment of interest holders).

* * *

§ 364. Division without interest holder approval.

(a) General rule.--Unless otherwise restricted by its

organic rules, a plan of division of a domestic dividing

association shall not require the approval of the interest

holders of the dividing association if all of the following are

satisfied:

(1) The plan does not do any of the following:

(i) alter the jurisdiction of formation of the

dividing association;

(ii) provide for special treatment; or

(iii) amend in any respect the provisions of the

[public organic record] organic rules of the dividing

association, except amendments [which] that may be made

without the approval of the interest holders.

20210HB2057PN3299 - 50 -

(2) Either:

(i) the dividing association survives the division

and all the interests [and other securities and

obligations, if any, of all of] in the new associations

are owned solely by the dividing association; or

(ii) the interests in each new association are

distributed as provided in subsection (b).

(3) The organic rules of each new association do not

change the rights, duties or obligations of the interest

holders or governors from those of the interest holders or

governors of the dividing association, regardless of whether

the dividing association survives the division.

(b) Distribution of interests.--The requirements for

distributing interests in each new association referred to in

subsection (a)(2)(ii) are as follows:

(1) if the dividing association is not a limited

partnership, the dividing association has only one class of

interests outstanding and the interests [and other securities

and obligations, if any, of] in each new association and any

securities issued by a new association are distributed pro

rata to the interest holders of the dividing association; or

(2) if the dividing association is a limited

partnership:

(i) it has only one class of general partners and

one class of limited partners;

(ii) each new association is a limited partnership;

and

(iii) all of the following apply:

(A) the general partner interests in each new

association are distributed pro rata to the general

20210HB2057PN3299 - 51 -

partners of the dividing limited partnership;

(B) the limited partner interests in each new

association are distributed pro rata to the limited

partners of the dividing limited partnership; and

new associations are distributed to any of the

interest holders of the dividing limited partnership.

Section 17. Section 367(a)(1), (3) and (6) and (f)

introductory paragraph of Title 15 are amended and the section

is amended by adding a subsection to read:

§ 367. Effect of division.

(a) General rule.--When a division becomes effective, all of

the following apply:

(1) If the dividing association is to survive the

division:

(i) It continues to exist.

(ii) Its public organic record, if any, is amended

as provided in the statement of division.

(iii) Its private organic rules that are to be in

record form, if any, are amended to the extent provided

in the plan of division.

(iv) Except as otherwise provided by law, all of its

rights, privileges, immunities and powers continue to be

vested in it without change.

* * *

(3) With respect to each new association, all of the

following apply:

(i) It comes into existence.

(ii) [It holds any] Any property allocated to it [as

the successor to the dividing association, and not by

20210HB2057PN3299 - 52 -

transfer, whether directly or indirectly, or by operation

of law.] vests in the new association without reversion

or impairment, and the division shall not constitute a

transfer, directly or indirectly, of any of that

property.

(iii) Its public organic record, if any, and private

organic rules are effective.

(iv) If it is a limited liability partnership, its

statement of registration is effective.

(v) If it is a limited liability limited partnership

and is not using the alternative procedure in section

8201(f) (relating to scope), its statement of

registration is effective.

(vi) If it is an electing partnership, its statement

of election is effective.

(vii) Except as otherwise provided by law, all of

the rights, privileges, immunities and powers of the

dividing association necessary or desirable for the

conduct of the affairs of the new association vest in it

without change.

* * *

(6) The liabilities of the dividing association are

allocated between or among the resulting associations as

provided in section 368 (relating to allocation of

liabilities in division) [and the resulting associations to

which liabilities are allocated are liable for those

liabilities as successors to the dividing association, and

not by transfer, whether directly, indirectly or by operation

of law.] and the division shall not constitute a transfer,

directly or indirectly, of any of those liabilities.

20210HB2057PN3299 - 53 -

* * *

(f) Real property.--Except with regard to the real property

of a dividing association that is a domestic nonprofit

corporation, the allocation of any fee or freehold interest or

leasehold having a remaining term of 30 years or more in any

tract or parcel of real property situate in this Commonwealth

owned by a dividing association, including property owned by a

foreign association dividing solely under the laws of another

jurisdiction, to a new association is not effective until one of

the following documents is filed [in] by the office for the

recording of deeds of the county, or each of them, in which the

tract or parcel is situated:

* * *

(j) Distribution tests not applicable.--An allocation,

directly or indirectly, of property, liabilities or interests in

a division is not a distribution for purposes of the organic law

of the dividing association or any of the resulting

associations.

Section 18. Sections 368(a)(2), (b), (d) and (e) and 371(a)

of Title 15 are amended to read:

§ 368. Allocation of liabilities in division.

(a) General rule.--Except as provided in this section, when

a division becomes effective, a resulting association is

responsible:

* * *

(2) Individually for the liabilities of the dividing

association that are allocated to or remain the liability of

that resulting association to the extent specified in the

plan of division, but not for liabilities allocated in the

plan to another resulting association.

20210HB2057PN3299 - 54 -

* * *

(b) Joint and several liability.--If [an allocation of

property or liabilities] the allocation of a liability in a

division is [ineffective or voidable pursuant to fraudulent

transfer or similar law, both] determined by the court as

defined in section 102 (relating to definitions) to be

ineffective or voidable under 12 Pa.C.S. Ch. 51 (relating to

voidable transactions) as of the effective date of the

division, all of the following apply:

(1) The [allocations of liabilities] allocation of the

liability in the plan of division [are] is ineffective and

the [liabilities of the dividing association become

liabilities] liability becomes the liability of all of the

resulting associations, jointly and severally.

(2) The validity and effectiveness of the division are

not affected [thereby.] by the action or proceeding or the

determination of the court.

* * *

(d) Application of [fraudulent transfer] voidable

transactions law.--In applying [the law governing fraudulent

transfers] 12 Pa.C.S. Ch. 51 to a division under subsection (b):

(1) [The law] 12 Pa.C.S. Ch. 51 applies to the dividing

association as follows:

(i) If it does not survive the division, it is not

subject to that [law] chapter.

(ii) If it survives the division, it is subject to

that [law] chapter only in its capacity as a resulting

association.

(2) [The law] 12 Pa.C.S. Ch. 51 applies to each

resulting association as follows:

20210HB2057PN3299 - 55 -

(i) The association is treated as a debtor.

(ii) [The liabilities] Each liability allocated to

the association [are] is treated as an obligation

incurred by the debtor.

(iii) The association is treated as not having

received a reasonably equivalent value in exchange for

incurring the obligation.

(iv) The property allocated to the association is

treated as remaining property.

[(e) Distribution tests not applicable.--A direct or

indirect allocation of property or liabilities in a division is

not a distribution for purposes of the organic law of the

dividing association or any of the resulting associations.]

(3) The remedy of joint and several liability under

subsection (b)(1) is deemed to be the remedy of avoidance of

the transfer or obligation under 12 Pa.C.S. § 5107(a)(1)

(relating to remedies of creditor).

* * *

§ 371. Domestication authorized.

(a) Domestic entities.--Except as provided in section 318

(relating to excluded entities and transactions), by complying

with this chapter, a domestic entity may become a [domestic]

domesticated entity of the same type in a foreign jurisdiction

if the domestication is authorized by the laws of the foreign

jurisdiction.

* * *

Section 19. Chapter 3 of Title 15 is amended by adding a

subchapter to read:

SUBCHAPTER H

ADMINISTRATIVE DISSOLUTION OR CANCELLATION

20210HB2057PN3299 - 56 -

Sec.

381. Grounds for administrative dissolution or cancellation.

382. Procedure and effect.

383. Reinstatement.

384. Rejection of reinstatement.

§ 381. Grounds for administrative dissolution or cancellation.

(a) General rule.--The department may commence a proceeding

under section 382 (relating to procedure and effect) to

administratively dissolve a domestic filing entity or cancel the

statement of registration of a domestic limited liability

partnership or the statement of election of an electing

partnership that is not also a limited partnership if the entity

does not deliver an annual report to the department within six

months after the annual report is due.

(b) Transitional provision.--Subsection (a) applies with

respect to annual reports due on or after (insert the date that

is three years after the effective date of section 146 pursuant

to section 146(h)).

§ 382. Procedure and effect.

(a) Notice of initial determination.--If the department

determines that grounds exist under section 381 (relating to

grounds for administrative dissolution or cancellation) for

administratively dissolving a domestic filing entity or

canceling the statement of registration of a domestic limited

liability partnership or the statement of election of an

electing partnership that is not also a limited partnership, the

department must deliver to the entity a notice of the

department's determination at the entity's registered office, if

any, and the address of the entity's principal office as shown

in its most recently filed annual report.

20210HB2057PN3299 - 57 -

(b) Dissolution or cancellation.--If an entity does not

deliver to the department for filing, within 60 days after

delivery of the notice required by subsection (a), the required

annual report or demonstrate to the satisfaction of the

department that the annual report was delivered to the

department, the department must:

(1) if the entity is a domestic filing entity,

administratively dissolve the entity by filing a statement of

administrative dissolution that states the effective date of

dissolution, which shall not be less than 60 days after the

date of delivery of the notice required by subsection (a);

(2) if the entity is a domestic limited liability

partnership or an electing partnership that is not also a

limited partnership, administratively cancel its statement of

registration or statement of election by filing a statement

of administrative cancellation that states the effective date

of cancellation.

deliver a copy of the statement of administrative dissolution or

statement of administrative cancellation to the entity at its

registered office, if any, and the address of its principal

office as shown in its most recently filed annual report.

(d) Effect of dissolution.--A domestic filing entity that is

administratively dissolved:

(1) continues its existence as the same type of entity

but may not carry on any activities except as necessary to

wind up its activities and affairs and liquidate its assets

in the manner provided in its organic law or to apply for

reinstatement under section 383 (relating to reinstatement);

(2) continues to be managed by or under the direction of

20210HB2057PN3299 - 58 -

its governors, who:

(i) continue as such;

(ii) have full power to wind up its activities and

affairs or apply for reinstatement; and

(iii) remain subject to the same standards of

conduct as before administrative dissolution; and

(3) is not currently subsisting for purposes of section

145 (relating to subsistence certificate) during the period

it is administratively dissolved.

(e) Effect of cancellation.--A domestic limited liability

partnership or electing partnership that is not also a limited

partnership and whose statement of registration or statement of

election is administratively canceled continues its existence as

a general partnership but not as a limited liability partnership

or electing partnership.

§ 383. Reinstatement.

(a) Application for reinstatement.--An entity that has been

the subject of action under section 382(b) (relating to

procedure and effect) may deliver to the department an

application for reinstatement along with the reinstatement fee

required by section 153 (relating to fee schedule). The

application must be signed by the entity and state:

(1) the name of the entity at the time of the action

under section 382 and, if needed, a name that is available

under Subchapter A of Chapter 2 (relating to names);

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

commercial registered office provider in lieu of registered

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

if any, of the entity's registered office;

(3) the principal office of the entity at the time of

20210HB2057PN3299 - 59 -

the application for restatement; and

(4) either:

(i) that the grounds for action under section 382

did not exist; or

(ii) that the most recent annual report not

previously filed is attached to the application for

reinstatement along with the fee for each of the annual

reports that should have been paid under section 153.

(b) Action by department.--If the department determines that

an application under subsection (a) meets the requirements of

that subsection and is accompanied by any payment required by

subsection (a)(4)(ii), the department shall:

(1) cancel the prior action under section 382 by filing

a statement of reinstatement that includes the effective date

of reinstatement within 30 days after receipt by the

department of the application; and

(2) deliver a copy to the entity.

section is effective, the following rules apply:

(1) Except as provided in paragraphs (4) and (5), the

reinstatement relates back to and takes effect as of the

effective date of the administrative dissolution or

cancellation.

(2) The activities of the entity between the date of its

administrative dissolution and the date of its reinstatement

are valid as if the administrative dissolution had never

occurred.

(3) If the entity is a limited liability partnership,

limited liability limited partnership or electing

partnership, its statement of registration, the provisions of

20210HB2057PN3299 - 60 -

its certificate of limited partnership required by section

8201(f) (relating to scope) or its statement of election is

reinstated as if its administrative cancellation had never

occurred.

(4) If the application for reinstatement includes a name

other than the name of the entity at the time of the

administrative dissolution or cancellation because the

original name is no longer available under Subchapter A of

Chapter 2, the statement of reinstatement shall have the

effect of amending:

(i) if the entity is a domestic filing entity, its

public organic record to provide for the new name;

(ii) if the entity is a domestic limited liability

partnership, its statement of registration to provide for

the new name; or

(iii) if the entity is a electing partnership that

is not also a limited partnership, its statement of

election to provide for the new name.

(5) The rights of a person arising out of an act in

reliance on the administrative dissolution or revocation of

the statement of registration or statement of election before

the reinstatement is effective are not affected.

(d) Cross reference.--See section 153(a)(19).

§ 384. Rejection of reinstatement.

(a) Notice of rejection.--If the department rejects an

entity's application for reinstatement under section 383

(relating to reinstatement) or fails to reinstate the entity

within the time required by section 383(b)(1), the department

shall deliver to the entity a notice in record form that

explains the reasons for the rejection or failure.

20210HB2057PN3299 - 61 -

(b) Cross reference.--See section 137 (relating to court to

pass upon rejection of documents by Department of State).

Section 20. Section 402(a) of Title 15 is amended and the

section is amended by adding subsections to read:

§ 402. Governing law.

(a) General rule.--The laws of the jurisdiction of formation

of a foreign association [governs] govern the following:

(1) The internal affairs of the association.

(2) [The] Except as provided in subsection (h), the

liability that a person has solely as an interest holder or

governor for a debt, obligation or other liability of the

association.

(3) The liability of a series or protected cell of [a

foreign] the association.

* * *

(h) Exception.--Subsection (a)(2) does not relieve a

governor or interest holder of a foreign association from a

liability under the laws of this Commonwealth other than this

title to which a governor or interest holder of a domestic

association of the same type would be subject.

(i) Duties.--Except as otherwise provided in section 411(b)

(relating to registration to do business in this Commonwealth),

every nonregistered foreign association doing business in this

Commonwealth shall be subject to the same liabilities,

restrictions, duties and penalties now or hereafter imposed upon

a registered foreign association.

Section 21. Section 403(a)(7) and (10) of Title 15 are

amended and subsection (a) is amended by adding paragraphs to

read:

§ 403. Activities not constituting doing business.

20210HB2057PN3299 - 62 -

(a) General rule.--Activities of a foreign filing

association or foreign limited liability partnership that do not

constitute doing business in this Commonwealth under this

chapter shall include the following:

* * *

(7) Creating [or], acquiring or incurring obligations,

indebtedness, mortgages or security interests in property.

* * *

[(10) Owning, without more, property.]

* * *

(12) Acquiring, owning, holding, leasing as a lessee,

conveying and transferring, without more and whether as

fiduciary or otherwise:

(i) real estate and mortgages and other liens

thereon; or

(ii) personal property and security interests

therein.

(13) Conducting operations or performing work or

services in good faith in response to a disaster or emergency

event.

* * *

Section 22. Section 414 of Title 15 is amended by adding a

subsection to read:

§ 414. Noncomplying name of foreign association.

* * *

(d) Use of permitted names.--The doing of business by a

registered foreign association using a name permitted by

subsection (a) has the same force and effect as doing business

using the proper name of the association under the laws of its

jurisdiction of formation.

20210HB2057PN3299 - 63 -

Section 23. Sections 417(a)(1), (b) introductory paragraph

and (1) and (c) are amended, 419(a) and 511(a) of Title 15 are

amended and the sections are amended by adding subsections to

read:

§ 417. Required withdrawal on certain transactions.

(a) Application of section.--This section shall apply to a

registered foreign association that has been:

(1) a nonsurviving party to a merger in which the

survivor is a [nonregistered] foreign association;

* * *

(b) Statement of withdrawal.--A registered foreign

association described in subsection (a) shall deliver a

statement of withdrawal [and the certificates required by

section 139 (relating to tax clearance of certain fundamental

transactions)] to the department for filing. The statement shall

[be signed by the dissolved or converted association and] state

as follows:

(1) In the case of a foreign association that has

completed winding up, was not the survivor of a merger in

which the survivor was a foreign association or was a

dividing association that did not survive the division, all

of the following:

(i) The name under which the association is

registered to do business in this Commonwealth and its

jurisdiction of formation.

(ii) That the association withdraws its registration

to do business in this Commonwealth.

(iii) The nature of the transaction that requires it

to make a filing under this section.

* * *

20210HB2057PN3299 - 64 -

to the department for filing shall be accompanied by the

certificates required by section 139 (relating to tax clearance

of certain fundamental transactions), except that those

certificates shall not be required if the statement is being

delivered for filing by a registered foreign association that

was not the survivor of a merger in which the survivor is

another registered foreign association.

(d) Signature.--The statement of withdrawal shall be signed

by:

(1) the surviving association in the merger;

(2) a resulting association in the division;

(3) the dissolved association; or

(4) the converted or domesticated association.

[(c)] (e) Cross references.--See sections 134 (relating to

docketing statement) and 135 (relating to requirements to be met

by filed documents).

§ 419. Termination of registration.

(a) General rule.--The department may terminate the

registration of a registered foreign association in the manner

provided in subsections (b) and (c) if the department finds that

the association:

(1) has not amended its registration when required by

section 413 (relating to amendment of foreign registration

statement); [or]

(2) has been administratively, voluntarily or

involuntarily dissolved under the laws of its jurisdiction of

formation[.]; or

(3) has failed to deliver to the department for filing

an annual report under section 146 (relating to annual

20210HB2057PN3299 - 65 -

report) within six months after it is due.

* * *

(e) Transitional provision.--Subsection (a)(3) shall apply

with respect to annual reports due on or after (insert the date

that is the third anniversary of the effective date of this

act).

§ 511. Application and effect of subchapter.

(a) General rule.--This subchapter [shall apply] applies to

and the terms "corporation" or "domestic corporation" in this

subchapter [shall mean a domestic corporation except] mean:

(1) A [business corporation as defined in section 1103

(relating to definitions)] banking institution.

(2) A [nonprofit corporation as defined in section 5103

(relating to definitions)] credit union.

(3) A fraternal benefit society.

* * *

bylaws providing that section 515 or corresponding provisions of

prior law shall not be applicable to the corporation may be

rescinded pursuant to the procedures required by the organic law

of the corporation and the articles and bylaws at the time of

the rescission to amend the articles or bylaws.

Section 24. Section 512 of Title 15 is amended to read:

§ 512. Standard of care [and], justifiable reliance and

business judgment rule.

(a) Directors.--A director of a domestic corporation shall

stand in a fiduciary relation to the corporation and shall

perform [his duties as] the duties of a director, including

[his] duties as a member of any committee of the board upon

which [he] the director may serve, in good faith, in a manner

20210HB2057PN3299 - 66 -

[he] the director reasonably believes to be in the best

interests of the corporation and with such care, including

[reasonable inquiry,] the skill and diligence[, as] that a

person of ordinary prudence would use under similar

circumstances[.] and reasonable inquiry into those issues

required by the statutes of this Commonwealth to be considered

in the circumstances and those interests and factors listed in

section 515(a) (relating to exercise of powers generally) or

516(a) (relating to alternative standard) that the director

considers appropriate. This subsection is subject to subsection

(d) where applicable.

(a.1) Justifiable reliance.--In performing [his duties] the

duties of a director, and in satisfying the requirements of

subsection (d), a director [shall be] is entitled to rely in

good faith on information, opinions, reports or statements,

including financial statements and other financial data, in each

case prepared or presented by any of the following:

(1) One or more officers or employees of the corporation

or an affiliate of the corporation whom the director

reasonably believes to be reliable and competent in the

matters presented.

(2) Counsel, public accountants or other persons as to

matters which the director reasonably believes to be within

the professional or expert competence of such person.

(3) A committee of the board upon which [he] the

director does not serve, duly designated in accordance with

law, as to matters within its designated authority, which

committee the director reasonably believes to merit

confidence.

(b) Effect of actual knowledge.--A director [shall not be]

20210HB2057PN3299 - 67 -

is not considered to be acting in good faith [if he has] under

subsection (a.1) if the director has actual knowledge concerning

the matter [in question that would cause his] that causes the

director to believe reliance [to be] is unwarranted.

an officer shall perform his duties as an officer in good faith,

in a manner he reasonably believes to be in the best interests

of the corporation and with such care, including reasonable

inquiry, skill and diligence, as a person of ordinary prudence

would use under similar circumstances. A person who so performs

his duties shall not be liable by reason of having been an

officer of the corporation.

(d) Business judgment rule.--A director or officer who makes

a business judgment in good faith fulfills the duties under this

section if:

(1) the subject of the business judgment does not

involve self-dealing by the director or officer or an

associate or affiliate of the director or officer;

(2) the director or officer is informed with respect to

the subject of the business judgment to the extent the

director or officer reasonably believes to be appropriate

under the circumstances; and

(3) the director or officer rationally believes that the

business judgment is in the best interests of the

corporation.

(e) Burden of proof.--A person challenging the conduct of a

director or officer as violating the duty of care under this

section has the burden of proving:

(1) a breach of the duty of care, including that a

requirement for the fulfillment of that duty under subsection

20210HB2057PN3299 - 68 -

(d) has not been met; and

(2) in a damage action, that the breach was the legal

cause of damage suffered by the corporation.

Section 25. Section 513(a)(1) and (c) of Title 15 are

amended and the section is amended by adding a subsection to

read:

§ 513. Personal liability of directors.

(a) General rule.--If a bylaw adopted by the shareholders

entitled to vote or members entitled to vote of a domestic

corporation so provides, a director shall not be personally

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

unless:

(1) the director has breached or failed to perform the

duties of [his office] a director under this subchapter; and

* * *

adopted under subsection (a) does not affect its application

with respect to an act by a director occurring before the

amendment or repeal unless the provision in effect at the time

of the act explicitly authorizes its amendment or repeal after

an act has occurred.

[(c)] (d) Cross reference.--See 42 Pa.C.S. § 8332.5

(relating to corporate representatives).

Section 26. Sections 514, 515(b), (d) and (e)(1)(i), 516,

517 and 523 of Title 15 are amended to read:

§ 514. [Notation of dissent] Presumption of assent.

A director of a domestic corporation who is present at a

meeting of its board of directors, or of a committee of the

board, at which action on any corporate matter is taken on which

the director is generally competent to act, shall be presumed to

20210HB2057PN3299 - 69 -

have assented to the action taken unless [his dissent] the

director's dissent, abstention or vote against the matter is

entered in the minutes of the meeting or unless [he files his

written dissent] the director delivers to the secretary of the

meeting before the adjournment a dissent in record form to the

action [with the secretary of the meeting before the adjournment

thereof] or transmits the dissent [in writing] in record form to

the secretary of the corporation immediately after the

adjournment of the meeting. The right to dissent shall not apply

to a director who voted in favor of the action. Nothing in this

subchapter shall bar a director from asserting that minutes of

the meeting incorrectly omitted [his dissent] the director's

dissent, abstention or vote against if, promptly upon receipt of

a copy of such minutes, [he] the director notifies the secretary

[in writing] of the corporation in record form of the asserted

omission or inaccuracy.

§ 515. Exercise of powers generally.

* * *

(b) Consideration of interests and factors.--The board of

directors, committees of the board and individual directors

shall not be required, in considering the best interests of the

corporation or the effects of any action, to regard any

corporate interest or the interests of any particular group

affected by such action as a dominant or controlling interest or

factor. The consideration of interests and factors in the manner

described in this subsection and in subsection (a) shall not

constitute a violation of section 512 (relating to standard of

care [and], justifiable reliance and business judgment rule).

* * *

(d) Presumption.--[Absent breach of fiduciary duty, lack of

20210HB2057PN3299 - 70 -

good faith or self-dealing, any act as the board of directors, a

committee of the board or an individual director shall be

presumed to be in the best interests of the corporation.] In

assessing whether the standard set forth in section 512 has been

satisfied, there shall not be any greater obligation to justify,

or higher burden of proof with respect to, any act as the board

of directors, any committee of the board or any individual

director relating to or affecting an acquisition or potential or

proposed acquisition of control of the corporation than is

applied to any other act as a board of directors, any committee

of the board or any individual director. Notwithstanding section

512(d) and the preceding [provisions] provision of this

subsection, any act as the board of directors, a committee of

the board or an individual director relating to or affecting an

acquisition or potential or proposed acquisition of control to

which a majority of the disinterested directors shall have

assented shall be presumed to satisfy the standard set forth in

section 512, unless it is proven by clear and convincing

evidence that the disinterested directors did not assent to such

act in good faith after reasonable investigation.

(e) Definition.--The term "disinterested director" as used

in subsection (d) and for no other purpose means:

(1) A director of the corporation other than:

(i) A director who has a direct or indirect

financial or other interest in the person acquiring or

seeking to acquire control of the corporation or who is

an affiliate or associate[, as defined in section 2552

(relating to definitions),] of, or was nominated or

designated as a director by, a person acquiring or

seeking to acquire control of the corporation.

20210HB2057PN3299 - 71 -

* * *

§ 516. Alternative standard.

(a) General rule.--In discharging the duties of their

respective positions, the board of directors, committees of the

board and individual directors of a domestic corporation may, in

considering the best interests of the corporation, consider the

effects of any action upon employees, upon suppliers and

customers of the corporation and upon communities in which

offices or other establishments of the corporation are located,

and all other pertinent factors. The consideration of those

factors shall not constitute a violation of section 512

(relating to standard of care [and], justifiable reliance and

business judgment rule).

[(b) Presumption.--Absent breach of fiduciary duty, lack of

good faith or self-dealing, actions taken as a director shall be

presumed to be in the best interests of the corporation.]

alternative provisions).

§ 517. Limitation on standing.

The duty of the board of directors, committees of the board

and individual directors under section 512 (relating to standard

of care [and], justifiable reliance and business judgment rule)

is solely to the domestic corporation and not to any

shareholder, member or creditor or any other person or group,

and may be enforced directly by the corporation or may be

enforced [by a shareholder or member, as such,] by an action in

the right of the corporation, and may not be enforced directly

by a shareholder, member or creditor or by any other person or

group. Notwithstanding the preceding sentence, sections 515(a)

and (b) (relating to exercise of powers generally) and 516(a)

20210HB2057PN3299 - 72 -

(relating to alternative standard) do not impose upon the board

of directors, committees of the board and individual directors

any legal or equitable duties, obligations or liabilities or

create any right or cause of action against, or basis for

standing to sue, the board of directors, committees of the board

and individual directors.

§ 523. Actions by shareholders or members to enforce a

secondary right.

(a) General rule.--[In any action brought to enforce a

secondary right on the part of one or more shareholders or

members against any officer or director or former officer or

director of a banking institution, because the corporation

refuses to enforce rights which may properly be asserted by it,

the plaintiff or plaintiffs must aver and it must be made to

appear that the plaintiff or each plaintiff was a shareholder or

was a member of the corporation at the time of the transaction

of which he complains or that his stock or membership devolved

upon him by operation of law from a person who was a shareholder

or member at that time.

(b) Security for costs.--In any such action instituted or

maintained by a holder or holders of less than 5% of the

outstanding shares of any class of the corporation or voting

trust certificates therefor, or by a member or members of a

corporation organized without capital stock which has

outstanding contracts or accounts with its members if the value

of the contracts or accounts held or owned by the member or

members instituting or maintaining the suit is less than 5% of

the value of all the contracts or accounts outstanding, the

corporation in whose right the action is brought shall be

entitled, at any stage of the proceedings, to require the

20210HB2057PN3299 - 73 -

plaintiff or plaintiffs to give security for the reasonable

expenses, including attorneys' fees, which may be incurred by

the corporation in connection therewith or for which it may

become liable pursuant to section 522 (relating to

indemnification of authorized representatives) (but only insofar

as relates to mandatory indemnification in actions by or in the

right of the corporation) to which security the corporation

shall have recourse in such amount as the court having

jurisdiction shall determine upon the termination of the action.

The amount of the security may, from time to time, be increased

or decreased in the discretion of the court having jurisdiction

of the action upon showing that the security provided has or is

likely to become inadequate or excessive. The security may be

denied or limited by the court if the court finds after an

evidentiary hearing that undue hardship on plaintiffs and

serious injustice would result.] A banking institution shall be

governed by the provisions of Subchapter F of Chapter 17

(relating to derivative actions).

the provisions of Subchapter F of Chapter 17, the following

words and phrases shall have the meanings given to them in this

subsection:

"Director." Includes any individual performing the function

of director, regardless of title.

"Member." Includes depositors in a mutual banking

institution.

"Shares." Includes outstanding contracts or accounts of

members in a mutual banking institution.

Section 27. Title 15 is amended by adding a section to read:

§ 524. Renunciation of business opportunities.

20210HB2057PN3299 - 74 -

The articles of incorporation, or an action of the board of

directors, may renounce any interest or expectancy of a banking

institution in, or in being offered an opportunity to

participate in, a specified business opportunity or specified

classes or categories of business opportunities that are

presented to the corporation or to one or more of its directors,

officers, shareholders or members.

Section 28. Section 1102(c)(3) of Title 15 is amended to

read:

§ 1102. Application of subpart.

* * *

following corporations, whether proposed or existing, except as

otherwise expressly provided in this subpart or as otherwise

provided by statute applicable to the corporation:

* * *

[(3) A savings association.]

* * *

Section 29. The definitions of "board of directors" or

"board," "bylaws," "dissolve" or "dissolution," "distribution,"

"entitled to vote" and "officer" in section 1103(a) and (b) of

Title 15 are amended and subsection (a) is amended by adding a

definition to read:

§ 1103. Definitions.

(a) General definitions.--Subject to additional definitions

contained in subsequent provisions of this subpart that are

applicable to specific provisions of this subpart, the following

words and phrases when used in Part I (relating to preliminary

provisions) or in this subpart shall have the meanings given to

them in this section unless the context clearly indicates

20210HB2057PN3299 - 75 -

otherwise:

* * *

"Board of directors" or "board." The persons selected under

section 1725 (relating to selection of directors) irrespective

of the name by which the group is designated in the articles.

See section 1731(c) (relating to [status of committee action]

executive and other committees of the board).

* * *

"Bylaws." See section 1504(c) (relating to [bylaw provisions

in articles] adoption, amendment and contents of bylaws).

* * *

"Dissolve" or "dissolution." The termination of corporate

existence effected by:

(1) filing of articles of dissolution in the department

under this subpart by the corporation or by the office of the

clerk of the court of common pleas;

(2) expiration of the term of existence of a corporation

by reason of any limitation contained in its articles;

(3) forfeiture by proclamation of the Governor under

section 1704 of the act of April 9, 1929 (P.L.343, No.176),

known as The Fiscal Code, or otherwise;

(4) filing of a certified copy of a decree of

dissolution in the department under the former act of April

9, 1856 (P.L.293, No.308), entitled "Supplement to the acts

relating to incorporations by the Courts of Common Pleas," or

otherwise; or

(5) judgment of ouster, upon proceedings in quo

warranto, under former provisions of law.

"Distribution." A direct or indirect transfer of money or

other property (except its own shares or options, rights or

20210HB2057PN3299 - 76 -

warrants to acquire its own shares) or incurrence of

indebtedness by a corporation to or for the benefit of any or

all of its shareholders in respect of any of its shares whether

by dividend or by purchase, redemption or other acquisition of

its shares or otherwise. Neither the making of, nor payment or

performance upon, a guaranty or similar arrangement by a

corporation for the benefit of any or all of its shareholders

nor a direct or indirect transfer or allocation of assets or

liabilities effected under Chapter 3 (relating to entity

transactions) or Subchapter B or C of Chapter 19 (relating to

fundamental changes) with the approval of the shareholders shall

constitute a distribution for the purposes of this subpart.

* * *

"Entitled to vote." Those persons entitled to vote on the

matter under either the bylaws of the corporation or any

applicable controlling provision of law. The term includes those

persons entitled at the time to vote on the matter under a plan

or the terms of a fundamental transaction where dissenters

rights are not available under section 1571(b)(2)(ii) (relating

to [exceptions] application and effect of subchapter).

* * *

"Officer." Includes assistant officer. If a corporation is

in the hands of a custodian, receiver, trustee or like official,

the term includes that official or any person appointed by that

official to act as an officer for any purpose under this

subpart.

* * *

"Share register." Records administered by or on behalf of a

corporation in which the names of all of its shareholders, the

address of each shareholder, the number and class of shares

20210HB2057PN3299 - 77 -

registered in the name of each shareholder and all issuances and

transfers of shares are recorded.

* * *

(b) Index of other definitions.--The following is a

nonexclusive list of words and phrases which when used in this

subpart shall have the meanings given to them in section 102

(relating to definitions):

"Act" or "action."

"Banking institution" or "domestic banking institution."

"Conversion."

"Corporation for profit."

"Corporation not-for-profit."

"Court."

"Credit union."

"Department."

"Dissenters rights."

"Division."

"Domestic corporation for profit."

"Domestic corporation not-for-profit."

"Domestication."

"Execute."

"Foreign corporation for profit."

"Foreign corporation not-for-profit."

"Insurance corporation" or "domestic insurance corporation."

"Interest exchange."

"Internal Revenue Code of 1986."

"Merger."

"Obligation."

"Officially publish."

"Record form."

20210HB2057PN3299 - 78 -

"Representative."

["Savings association" or "domestic savings association."]

"Sign."

Section 30. Section 1110 of Title 15 is repealed:

[§ 1110. Annual report information.

The Department of State shall make available as public

information for inspection and copying the names of the

president, vice-president, secretary and treasurer and the

address of the principal office of corporations for profit as

annually forwarded to the department by the Department of

Revenue pursuant to section 403(a)(3) of the act of March 4,

1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.]

Section 31. Sections 1306(a)(5) and (b) and 1502(a)(18) of

Title 15 are amended to read:

§ 1306. Articles of incorporation.

(a) General rule.--Articles of incorporation shall be signed

by each of the incorporators and shall set forth in the English

language:

* * *

(5) The name [and address, including street and number,

if any,] of each of the incorporators.

* * *

(b) Other provisions authorized.--A provision of the

original articles or a provision of the articles approved by the

shareholders, in either case adopted under subsection (a)(8)

(ii), may relax or be inconsistent with and supersede any

provision of Chapter 3 (relating to entity transactions), 13

(relating to incorporation), 15 (relating to corporate powers,

duties and safeguards), 17 (relating to officers, directors and

shareholders) or 19 (relating to fundamental changes) concerning

20210HB2057PN3299 - 79 -

the subjects specified in subsection (a)(8)(ii), except where a

provision of those chapters expressly provides that the articles

shall not relax or be inconsistent with any provision on a

specified subject. [Notwithstanding the foregoing, the articles

may provide greater rights for shareholders than are authorized

by any provision of those chapters that otherwise provides that

the articles shall not relax or be inconsistent with any

provision on a specified subject.] Notwithstanding the

foregoing:

(1) A provision of those chapters prohibiting the

articles from relaxing or being inconsistent with any

provision of those chapters on a specified subject does not

apply to an agreement between or among the shareholders

relating to that subject.

(2) The articles may provide greater rights for

shareholders than are authorized by any provision of those

chapters that otherwise provides that the articles shall not

relax or be inconsistent with any provision on a specified

subject.

* * *

§ 1502. General powers.

(a) General rule.--Subject to the limitations and

restrictions imposed by statute or contained in its articles,

every business corporation shall have power:

* * *

(18) To accept, reject, respond to or take no action in

respect of an actual or proposed acquisition, divestiture,

tender offer, takeover or other fundamental change under

Chapter 3 (relating to entity transactions) or 19 (relating

to fundamental changes) or otherwise.

20210HB2057PN3299 - 80 -

* * *

Section 32. Section 1504(b) and (c) of Title 15 are amended

and the section is amended by adding a subsection to read:

§ 1504. Adoption, amendment and contents of bylaws.

* * *

(b) Exception.--Except as otherwise provided in section

1310(a) (relating to organization meeting), or in the articles

to the extent authorized by section 1306(b) (relating to other

provisions authorized), the board of directors shall not have

the authority to adopt or change a bylaw on any subject that is

committed expressly to the shareholders by any of the provisions

of this subpart. See:

Subsection (d) (relating to amendment of voting provisions).

Section 1521 (relating to authorized shares).

Section 1713 (relating to personal liability of directors).

Section 1721 (relating to board of directors).

Section 1725 (relating to selection of directors).

Section 1726 (relating to removal of directors).

Section 1729 (relating to voting rights of directors).

Section 1735 (relating to personal liability of officers).

Section 1756 (relating to quorum).

Section 1757 (relating to action by shareholders).

Section 1765 (relating to judges of election).

Section 2105 (relating to termination of nonstock corporation

status).

Section 2122 (relating to classes of membership).

Section 2124 (relating to voting rights of members).

Section 2302 (relating to definition of minimum vote).

Section 2321 (relating to shares).

Section 2322 (relating to share transfer restrictions).

20210HB2057PN3299 - 81 -

Section 2325 (relating to sale option of estate of

shareholder).

Section 2332 (relating to management by shareholders).

Section 2334 (relating to appointment of provisional director

in certain cases).

Section 2337 (relating to option of shareholder to dissolve

corporation).

Section 2923 (relating to issuance and retention of shares).

(b.1) Restated bylaws.--Subsection (b) does not prohibit the

board of directors from including in restated bylaws, without

substantive change, a bylaw adopted by the shareholders, and

such a restated provision continues to have the status of a

bylaw adopted by the shareholders.

and bylaws.--Where any provision of this subpart or any other

provision of law refers to a rule as set forth in the bylaws of

a corporation or in a bylaw adopted by the shareholders, the

reference shall be construed to include and be satisfied by any

rule on the same subject as set forth in the articles of the

corporation. Where any provision of this subpart or any other

provision of law refers to a rule as set forth in the articles

of a corporation or prohibits the articles from setting forth a

rule, the contemplated rule may not be included in a bylaw or a

bylaw adopted by the shareholders.

* * *

Section 33. Section 1505 of Title 15 is amended to read:

§ 1505. Persons bound by bylaws.

Except as otherwise provided by section 1713 (relating to

personal liability of directors) or any similar provision of

law, the bylaws of a business corporation [shall operate only as

20210HB2057PN3299 - 82 -

regulations among] are binding on the shareholders, directors

and officers of the corporation [and] with respect to its

internal affairs whether or not a shareholder, director or

officer has actual knowledge of the provisions of the bylaws,

but a bylaw shall not affect contracts or other dealings with

other persons unless those persons have actual knowledge of the

[bylaws] bylaw.

Section 34. Section 1507(b) introductory paragraph and (d)

of Title 15 are amended and the section is amended by adding a

subsection to read:

§ 1507. Registered office.

* * *

(b) Statement of change of registered office.--After

incorporation, a change of the location of the registered office

may be authorized at any time by the board of directors. Before

the change of location becomes effective, the corporation

[either] shall include the change in an annual report under

section 146 (relating to annual report), amend its articles

under the provisions of this subpart to reflect the change [in

location or shall file in] or deliver to the Department of State

for filing a statement of change of registered office executed

by the corporation setting forth:

* * *

(d) Effect of statement.--A statement regarding the

registered office of a corporation set forth in a document filed

in the department pursuant to this section shall operate as an

amendment of the articles.

[(d)] (e) Cross reference.--See section 134 (relating to

docketing statement).

Section 35. Sections 1508 and 1509 of Title 15 are amended

20210HB2057PN3299 - 83 -

to read:

§ 1508. Corporate records; inspection by shareholders.

(a) Required records.--Every business corporation shall keep

complete and accurate books and records of account, minutes of

the proceedings of the incorporators, shareholders and directors

and a share register. [giving the names and addresses of all

shareholders and the number and class of shares held by each.

The share register shall be kept at any of the following

locations:

(1) the registered office of the corporation in this

Commonwealth;

(2) the principal place of business of the corporation

wherever situated;

(3) any actual business office of the corporation; or

(4) the office of the registrar or transfer agent of the

corporation.]

(b) Right of inspection by a shareholder.--[Every

shareholder shall, upon written verified demand stating the

purpose thereof, have a] On demand, in compliance with the

requirements in subsection (b.1), a shareholder has the right to

examine, in person or by agent or attorney, during the usual

hours for business for any proper purpose, the share register,

books and records of account, and [records of the proceedings

of] minutes of, and consents in lieu of meetings by, the

incorporators, shareholders and directors and to make copies or

extracts therefrom.

(b.1) Contents and delivery of demand.--All of the following

apply to a demand under subsection (b):

(1) A proper purpose shall mean a purpose reasonably

related to the interest of the person as a shareholder.

20210HB2057PN3299 - 84 -

(2) In every instance where an attorney or other agent

is the person who seeks the right of inspection, the demand

shall be accompanied by a verified power of attorney or other

[writing] document in record form that authorizes the

attorney or other agent to so act on behalf of the

shareholder.

(3) The demand must be:

(i) made in good faith;

(ii) in record form; and

(iii) verified.

(4) The demand must describe with reasonable

particularity:

(i) the purpose of the shareholder; and

(ii) the records the shareholder desires to inspect

and how the records relate to the purpose of the

shareholder.

(5) The demand [shall be directed] must be delivered to

the corporation:

[(1)] (i) at its registered office in this

Commonwealth;

[(2)] (ii) at its principal place of business

wherever situated; [or]

[(3)] (iii) in care of the person in charge of an

actual business office of the corporation[.]; or

(iv) in care of the secretary of the corporation at

the most recent address of the secretary shown in the

records of the department.

shareholder.--If the corporation, or an officer or agent

thereof, refuses to permit an inspection sought by a shareholder

20210HB2057PN3299 - 85 -

or attorney or other agent acting for the shareholder pursuant

to subsection (b) or does not reply to the demand within five

business days after the demand has been [made] received, the

shareholder may [apply to] file an action in the court for an

order to compel the inspection. The court [shall] is hereby

vested with exclusive jurisdiction to determine whether or not

the person seeking inspection is entitled to the inspection

sought. The court may summarily order the corporation to permit

the shareholder to inspect the share register and the other

books and records of the corporation and to make copies or

extracts therefrom, or the court may order the corporation to

furnish to the shareholder a list of its shareholders as of a

specific date on condition that the shareholder first pay to the

corporation the reasonable cost of obtaining and furnishing the

list and on such other conditions as the court deems

appropriate.

(c.1) Burden of proof.--Where [the shareholder seeks to

inspect the books and records of the corporation, other than its

share register or list of shareholders, he shall first

establish:

(1) That he] a shareholder has complied with the

provisions of this section respecting the form and manner of

making demand for inspection [of the document.

(2) That the inspection he seeks is for a proper

purpose.

Where] and the shareholder seeks to inspect:

(1) the share register or list of shareholders of the

corporation [and he has complied with the provisions of this

section respecting the form and manner of making demand for

inspection of the documents], the burden of proof shall be

20210HB2057PN3299 - 86 -

upon the corporation to establish that the inspection he

seeks is for an improper purpose[.]; or

(2) the books and records of the corporation, other than

the share register or list of shareholders, the burden of

proof shall be upon the shareholder to establish that the

inspection the shareholder seeks is for a proper purpose.

(c.2) Available relief.--The court may, in its discretion,

prescribe any limitations or conditions with reference to the

inspection or award such other or further relief as the court

deems just and proper. The court may order books, documents and

records, pertinent extracts therefrom, or duly authenticated

copies thereof, to be brought into this Commonwealth and kept in

this Commonwealth upon such terms and conditions as the order

may prescribe.

(c.3) Right to bylaws.--Every shareholder shall have the

right to receive, promptly after demand and without charge, a

copy in record form of the currently effective text of the

bylaws. If the corporation does not provide a shareholder with a

copy of the bylaws as required by this subsection, the

shareholder may file an action in the court for an order to

compel the production. The court shall summarily order the

corporation to provide a copy of the bylaws unless the

corporation establishes that the person seeking the bylaws is

not a shareholder.

(d) Certain provisions of articles ineffective.--This

section may not be relaxed by any provision of the articles.

(e) Reasonable restrictions permitted.--The corporation may

impose reasonable restrictions and conditions on access to and

use of information to be furnished under this section, including

designating information confidential and imposing nondisclosure

20210HB2057PN3299 - 87 -

and safeguarding obligations on the recipient. In a dispute

concerning the reasonableness of a restriction, condition or

obligation under this subsection, the corporation has the burden

of proving reasonableness.

[(e)] (f) Cross references.--See sections 107 (relating to

form of records), 1512 (relating to informational rights of a

director) [and], 1763(c) (relating to certification by nominee)

[.] and 2511 (relating to fina ncial reports to shareholders) a nd

42 Pa.C.S. § 2503(7) and (9) (relating to right of participants

to receive counsel fees).

§ 1509. Bylaws and other powers in emergency.

(a) General rule.--Except as otherwise restricted in the

bylaws, the board of directors of any business corporation may

adopt emergency bylaws, subject to repeal or change by action of

the shareholders, which shall, notwithstanding any different

provisions of law or of the articles or bylaws, be effective

during [any emergency resulting from an attack on the United

States, a nuclear disaster or another catastrophe as a result of

which a quorum of the board cannot readily be assembled] an

emergency. The emergency bylaws may make any provision that may

be appropriate for the circumstances of the emergency,

including:

(1) Procedures for calling meetings of the board.

(2) Quorum requirements for meetings of the board.

(3) Procedures for designating additional or substitute

directors.

(b) Lines of succession; head office.--The board of

directors or the officers, if authorized by the board of

directors, either before or during any emergency, may:

(1) provide, and from time to time modify, lines of

20210HB2057PN3299 - 88 -

succession in the event that during the emergency any or all

officers or agents of the corporation shall for any reason be

rendered incapable of discharging their duties [and may,];

and

(2) effective in the emergency, change the head offices

or designate several alternative head offices or regional

offices of the corporation [or authorize the officers to do

so].

representative of the corporation:

(1) Acting in accordance with any emergency bylaws

[shall not be liable except for willful misconduct.] in

effect at the time or otherwise in accordance with this

section is not personally liable for monetary damages except

for:

(i) self-dealing, willful misconduct or

recklessness;

(ii) violation of a criminal statute; or

(iii) payment of taxes pursuant to Federal, State or

local law.

(2) [Shall not be] I s not liable for any action taken

[by him] by the representative in good faith in an emergency

in furtherance of the ordinary business affairs of the

corporation even though not authorized by the emergency or

other bylaws then in effect.

(d) Effect on regular bylaws.--To the extent not

inconsistent with any emergency bylaws [so adopted], the bylaws

of the corporation shall remain in effect during any emergency

and, upon its termination, the emergency bylaws shall cease to

be effective.

20210HB2057PN3299 - 89 -

(e) Procedure in absence of emergency bylaws.--Unless

otherwise provided in emergency bylaws, notice of any meeting of

the board of directors during an emergency shall be given only

to those directors it is feasible to reach at the time and by

such means as are feasible at the time, including publication,

radio or television. To the extent required to constitute a

quorum at any meeting of the board of directors during any

emergency, the officers of the corporation who are present at

the meeting shall, unless otherwise provided in emergency

bylaws, be deemed, in order of rank and within the same rank in

order of seniority, directors for the meeting. An officer

serving as a director under this subsection shall be subject to,

and entitled to the benefits of, the provisions of this subpart

relating to directors.

(f) Corporate actions.--A corporate action to further the

ordinary business affairs of the corporation that is taken in

accordance with any emergency bylaws in effect at the time or

otherwise in accordance with this section is valid and binding

on the corporation.

(g) Shareholder meetings.--The required time for holding the

annual meeting of the shareholders of a corporation provided in

section 1755(a) (relating to time of holding meetings of

shareholders) or the articles or bylaws is tolled during an

emergency. The board of directors, acting by a majority of those

directors that can be assembled, may take any action during an

emergency that the board determines to be practical and

necessary to address the circumstances of the emergency with

respect to a meeting of shareholders notwithstanding anything to

the contrary in this subpart or in the articles or bylaws. The

actions the board may take include:

20210HB2057PN3299 - 90 -

(1) postponing the meeting to a later time or da te, with

the record date for determining the shareholders entitled to

notice of, and to vote at, the meeting applying to the

postponed meeting without regard to section 1763 (relating to

determination of shareholders of record); and

(2) with respect to a registered corporation, notifying

the shareholders of any postponement or a change of the place

of the meeting, or a change to hold the meeting solely by

means of remote communication, solely by a documen t publicly

filed by the corporation with the Securities and Exchange

Commission pursuant to section 13, 14 or 15(d) of the

Exchange Act and the rules and regulations thereunder.

(h) Declared distributions.--The board of directors, acting

by a majority of the directors that can be assembled, may change

during an emergency the record date or payment date of a

distribution that has been declared if the record date has not

yet occurred. If the board acts under this subsection:

(1) the new payment date must be not more than 60 days

after the record date that applies to the new payment date;

and

(2) the corporation must give notice of the changes to

shareholders as promptly as practicable thereafte r, and in

any event before the record date theretofore in effect, which

notice, in the case of a registered corporation, may be given

solely by a document publicly filed with the Securities and

Exchange Commission pursuant to section 13, 14 or 15(d) of

the Exchange Act and the rules and regulations thereunder.

(i) Definition.--As used in this section, and for no other

purpose, "emergency" means a period during which a quorum of the

board, or of persons on whom the powers and duties of the board

20210HB2057PN3299 - 91 -

have been conferred or imposed under section 1721, cannot be

assembled as a result of:

(1) an attack on the United States;

(2) a nuclear disaster;

(3) an epidemic or pandemic;

(4) a state of emergency under federal or state law

covering a geographic area in which the corporation has its

principal office or a significant regional office or

operation; or

(5) any other catastrophe or disaster.

Section 36. Section 1512(b) and (c) of Title 15 are amended

and the section is amended by adding subsections to read:

§ 1512. Informational rights of a director.

* * *

(b) Proceedings for enforcement of inspection by a

director.--If the corporation, or an officer or agent thereof,

refuses to permit an inspection or obtain or provide information

sought by a director or attorney or other agent acting for the

director pursuant to subsection (a) or does not reply to the

request within two business days after the request has been

made, the director may [apply to] file an action in the court

for an order to compel the inspection or the obtaining or

providing of the information. The court shall summarily order

the corporation to permit the requested inspection or to obtain

the information unless the corporation establishes that [the]

information other than the bylaws to be obtained by the exercise

of the right is not reasonably related to the performance of the

duties of the director or that the director or the attorney or

agent of the director is likely to use [the] that information in

a manner that would violate the duty of the director to the

20210HB2057PN3299 - 92 -

corporation. The order of the court may contain provisions

protecting the corporation from undue burden or expense and

prohibiting the director from using the information in a manner

that would violate the duty of the director to the corporation.

receive, on demand and without charge, a copy in record form of

the currently effective text of the bylaws. This subsection may

not be relaxed by any provision of the articles.

(d) Reasonable restrictions permitted.--The corporation may

impose reasonable restrictions and conditions on access to and

use of information to be furnished under this section, including

designating information confidential and imposing nondisclosure

and safeguarding obligations on the recipient. In a dispute

concerning the reasonableness of a restriction, condition or

obligation under this subsection, the corporation has the burden

of proving reasonableness.

[(c)] (e) Cross references.--See sections 107 (relating to

form of records) and 1508 (relating to corporate records;

inspection by shareholders) and 42 Pa.C.S. § 2503(7) (relating

to right of participants to receive counsel fees).

Section 37. Title 15 is amended by adding a section to read:

§ 1513. Forum selection provisions.

(a) General rule.--The bylaws may provide that:

(1) an internal corporate claim must be brought

exclusively in a specified court or courts of this

Commonwealth and, if so specified, also in:

(i) other identified courts sitting in this

Commonwealth; or

(ii) identified courts sitting in other

jurisdictions with which the business corporation has a

20210HB2057PN3299 - 93 -

reasonable relationship; or

(2) a claim arising under the Securities Act of 1933 (48

Stat. 74, 15 U.S.C. § 77a et seq.) must be brought

exclusively in Federal court.

(b) Jurisdiction.--A provision of the bylaws adopted under

subsection (a) shall not have the effect of conferring

jurisdiction on any court or over any person or claim, and shall

not apply if none of the courts specified in the provision has

the requisite personal and subject matter jurisdiction. If none

of the courts of this Commonwealth specified in a provision

adopted under subsection (a)(1) has the requisite personal and

subject matter jurisdiction and another court of this

Commonwealth does have such jurisdiction, then the internal

corporate claim may be brought in the court with jurisdiction,

notwithstanding that it is not specified in the provision.

corporate claim" means:

(1) an action that is based upon an alleged violation of

a duty owed to the business corporation under the laws of

this Commonwealth by a current or former director, officer or

shareholder in that capacity;

(2) a derivative action or proceeding brought on behalf

of the corporation;

(3) an action asserting a claim arising pursuant to any

provision of:

(i) this title;

(ii) the articles of incorporation or bylaws; or

(iii) an agreement regarding the governance of the

corporation or the transfer of shares in the corporation

if:

20210HB2057PN3299 - 94 -

(A) the corporation and at least one shareholder

are parties to the agreement or stated or intended

beneficiaries thereof; and

(B) the agreement is entered into after the

adoption of a forum selection provision under this

section and the agreement does not contain an

inconsistent forum selection provision; or

(4) any action asserting a claim regarding the internal

affairs of the corporation that is not included in paragraphs

(1), (2) and (3).

Section 38. Section 1521(a), (b)(3) and (d) of Title 15 are

amended to read:

§ 1521. Authorized shares.

(a) General rule.--Every business corporation shall have

power to create and issue the number of shares stated in its

articles. The shares may consist of one class or be divided into

two or more classes and one or more series within any class

thereof, which classes or series may have full, limited,

multiple or fractional or no voting rights and such

designations, preferences, limitations and special rights as may

be desired. [Shares that are not entitled to a preference, even

if identified by a class or other designation, shall not be

designated as preference or preferred shares.]

(b) Provisions specifically authorized.--

* * *

(3) The articles may confer upon a shareholder a

specifically enforceable right to the declaration and payment

of dividends, the redemption of shares or the making of any

other form of distribution if the distribution is at the time

of enforcement then not prohibited by section [1551(b)(2)]

20210HB2057PN3299 - 95 -

1551(b) (relating to limitation). Such a right shall not

arise by implication, but only by either an express reference

to this section or another express reference to specific

enforceability of a distribution.

* * *

(d) Status and rights.--Shares of a business corporation

shall be deemed personal property. Except as otherwise provided

by the articles or, when so permitted by subsection (c), by one

or more bylaws adopted by the shareholders, each share shall be

in all respects equal to every other share. Nothing in this

subsection shall require a distribution by way of purchase,

redemption or other acquisition of the corporation's shares to

be made or offered with respect to all shares or all shares of

the same class or series. See section 1906(d)(4) (relating to

special treatment of holders of shares of same class or series).

Section 39. Section 1525(b) and (d) of the act are amended

and the section is amended by adding a subsection to read:

§ 1525. Stock rights and options.

* * *

(b) Specifically authorized provisions.--The securities,

contracts, warrants or other instruments evidencing any shares,

option rights, securities having conversion or option rights, or

obligations of a corporation may contain such terms as are fixed

by the board of directors, including, without limiting the

generality of such authority:

(1) Restrictions upon the authorization or issuance of

additional shares, option rights, securities having

conversion or option rights, or obligations.

(2) Provisions for the adjustment of the conversion or

option rights price.

20210HB2057PN3299 - 96 -

(3) Provisions concerning rights or adjustments in the

event of reorganization, merger, [consolidation,] sale of

assets, interest exchange [of shares] or other fundamental

changes.

(4) Provisions for the reservation of authorized but

unissued shares or other securities.

(5) Restrictions upon the declaration or payment of

dividends or distributions or related party transactions.

(6) Conditions relating to the exercise, conversion,

transfer or receipt of such shares, option rights, securities

having conversion or option rights, or obligations.

[There shall be no authority under this subsection to include a

provision authorized by section 2513 (relating to disparate

treatment of certain persons).]

(b.1) Disparate treatment.--Subsection (b) does not

authorize the inclusion of a condition described in section 2513

(relating to disparate treatment of certain persons) in the case

of a corporation that is not a registered corporation described

in section 2502(1)(i) (relating to registered corporation

status).

* * *

(d) Pricing and payment.--The provisions of this subchapter

applicable to the [pricing of and payment for] issuance and

pricing of, and payment for, shares shall be applicable to [the

pricing of and payment for] rights and options except that the

rights and options may be issued to representatives of the

corporation or any of its affiliates as an incentive to service

or continued service with the corporation and its affiliates or

for such other purpose and upon such other terms as its

directors, who may benefit by their action, [deem advantageous

20210HB2057PN3299 - 97 -

to the corporation] approve.

* * *

Section 40. Sections 1529(b), (c) and (d), 1552(a), 1553(a),

1571(b)(1) introductory paragraph and (f), 1702(a) and (d),

1704(a) and (d), 1708 and 1709(b) and (c) of Title 15 are

amended to read:

§ 1529. Transfer of securities; restrictions.

* * *

(b) Transfer restrictions generally.--A restriction on the

transfer or registration of transfer of securities of a business

corporation may be imposed by the bylaws or by an agreement

among any number of securityholders or among them and the

corporation. A restriction so imposed shall not be binding with

respect to securities issued prior to the adoption of the

restriction unless the holders of the securities are parties to

the agreement or voted in favor of the restriction[.], except

that a provision of the bylaws of a registered corporation

described in section 2502(1) (relating to registered corporation

status) adopted by the shareholders that is described in

subsection (d)(1)(ii), (2) or (3) shall be binding with respect

to all of the securities of each class or series to which it

applies. A restriction may be amended [by the vote or consent

and otherwise] in the manner provided in the bylaws or agreement

for amending the restriction or, in the absence of such a

provision, as provided for amending the bylaws or agreement

generally.

the transfer of securities of a business corporation is

permitted by this section if it:

(1) obligates the holder of the restricted securities to

20210HB2057PN3299 - 98 -

offer to the corporation or to any other holders of

securities of the corporation or to any other person or to

any combination of the foregoing a prior opportunity, to be

exercised within a reasonable time, to acquire the restricted

securities;

(2) obligates the corporation or any holder of

securities of the corporation or any other person or any

combination of the foregoing, to purchase the securities that

are the subject of an agreement respecting the purchase and

sale of the restricted securities;

(3) requires the corporation or the holders of any class

or series of securities of the corporation to consent to any

proposed transfer of the restricted securities or to approve

the proposed transferee of the restricted securities [;] or

to approve the amount of securities of the corporation that

may be owned by any person or group of persons;

(3.1) obligates the holder of the restricted securities

to sell or transfer an amount of restricted securities to the

corporation or to any other holders of securities of the

corporation or to any other person or to any combination of

the foregoing, or causes or results in the automatic sale or

transfer of an amount of restricted securities to the

corporation or to any other holders of securities of the

corporation or to any other person or to any combination of

the foregoing; or

(4) prohibits the transfer of the restricted securities

to designated persons or classes of persons and the

designation is not manifestly unreasonable.

(d) [Subchapter S] Tax and regulatory restrictions.--Any

restriction on the transfer of [the shares] securities of a

20210HB2057PN3299 - 99 -

business corporation [for the purpose of maintaining its status

as an electing small business corporation under Subchapter S of

the Internal Revenue Code of 1986 or a comparable provision

under state law] or on the amount of securities of a corporation

that may be owned by a person or group of persons for any of the

following purposes shall be conclusively presumed to be for a

reasonable purpose[.]:

(1) relating to the Federal, State, local or foreign

taxation of the corporation or its shareholders, including

without limitation:

(i) maintaining the status of the corporation as an

electing small business corporation under Subchapter S of

the Internal Revenue Code of 1986;

(ii) maintaining or preserving any tax attribu te,

including without limitation net operating losses; or

(iii) qualifying or maintaining the qualification of

the corporation as a real estate investment trust

pursuant to the Internal Revenue Code of 1986;

(2) complying with any statutory or regulatory

requirement; or

(3) maintaining any statutory or regulatory status.

* * *

§ 1552. Power of corporation to acquire its own shares.

(a) General rule.--A business corporation shall have the

power to acquire its own shares. If the articles provide that

shares acquired by the corporation shall not be reissued, the

authorized shares of the class or series that was acquired shall

be reduced by the number of shares acquired. In any other case

the shares acquired shall be deemed to be issued but not

outstanding, except that, unless otherwise provided in the

20210HB2057PN3299 - 100 -

bylaws, the board may, by resolution, restore any or all of the

previously issued shares of the corporation owned by it to the

status of:

(1) authorized but unissued shares[.]; or

(2) authorized but unissued shares of the class or

series.

* * *

§ 1553. Liability for unlawful dividends and other

distributions.

(a) Directors.--Except as otherwise provided pursuant to

section 1713 (relating to personal liability of directors), a

director who votes for or assents to any dividend or other

distribution contrary to the provisions of this subpart or

contrary to any restrictions contained in the bylaws shall, if

he has not complied with the standard provided in or pursuant to

section 1712 (relating to standard of care [and], justifiable

reliance and business judgment rule), be liable to the

corporation, jointly and severally with all other directors so

voting or assenting, for the amount of the dividend that is paid

or the value of the other distribution in excess of the amount

of the dividend or other distribution that could have been made

without a violation of the provisions of this subpart or the

restrictions in the bylaws.

* * *

§ 1571. Application and effect of subchapter.

* * *

(b) Exceptions.--

(1) Except as otherwise provided in paragraph (2), the

holders of the shares of any class or series of shares shall

not have the right to dissent and obtain payment of the fair

20210HB2057PN3299 - 101 -

value of the shares under this subchapter if, on the record

date fixed to determine the shareholders entitled to notice

of and to vote at the meeting at which a plan specified in

any of section 333, 343, 353, 363 or 1932(c) is to be voted

on or on the date of the first public announcement that such

a plan has been approved by the shareholders by consent

without a meeting, the shares of the class or series are

either:

* * *

(f) Certain provisions of articles ineffective.--This

subchapter may not be relaxed by any provision of the

articles[.], except that the articles may limit or eliminate

dissenters rights for a class or series of shares entitled to a

preference. If a limitation or elimination is added by

amendment, the limitation or elimination shall not apply to

shares that are outstanding on the effective date of the

amendment or that are issuable pursuant to a conversion,

exchange or other right exercisable on the effective date of the

amendment.

* * *

§ 1702. Manner of giving notice.

(a) General rule.--

(1) Any notice required to be given to any person under

the provisions of this subpart or by the articles or bylaws

of any business corporation shall be given to the person

either personally or by [sending] delivering a copy thereof:

(i) By first class or express mail, postage prepaid,

or courier service, charges prepaid, to [his] the postal

address of the person appearing on the books of the

corporation or, in the case of directors, supplied by

20210HB2057PN3299 - 102 -

[him] the director to the corporation for the purpose of

notice. Notice pursuant to this subparagraph shall be

deemed to have been given to the person entitled thereto

when deposited in the United States mail or with a

courier service for delivery to that person.

(ii) By facsimile transmission, e-mail or other

electronic communication to [his] the facsimile number or

address for e-mail or other electronic communications

supplied by [him] the person to the corporation for the

purpose of notice. Notice pursuant to this subparagraph

shall be deemed to have been given to the person entitled

thereto when sent.

(2) A notice of meeting shall specify the day and hour

and geographic location, if any, of the meeting and any other

information required by any other provision of this subpart.

A notice of meeting may include other information if the

information required by this subpart appears conspicuously at

or near the beginning of the notice.

* * *

(d) Cross [reference] references.--See [section] sections

2522 (relating to adjournment or postponement of meeting of

shareholders), 2528 (relating to notice of shareholder meetings)

and 3133 (relating to notice of meetings of members of mutual

insurance companies).

§ 1704. Place and notice of meetings of shareholders.

(a) Place.--Meetings of shareholders may be held at such

geographic location within or without this Commonwealth as may

be provided in or fixed pursuant to the bylaws. Authority to

provide for the location of a meeting of the shareholders

includes the authority to determine to hold a meeting solely by

20210HB2057PN3299 - 103 -

means of electronic technology in accordance with section 1708

(relating to use of conference telephone or other electronic

technology), notwithstanding that the authority may refer to one

or more geographic locations. Unless otherwise provided in or

fixed pursuant to the bylaws, all meetings of the shareholders

that are not held solely by means of electronic technology shall

be held at the executive office of the corporation wherever

situated. [If a meeting of the shareholders is held by means of

the Internet or other electronic communications technology in a

fashion pursuant to which the shareholders have the opportunity

to read or hear the proceedings substantially concurrently with

their occurrence, vote on matters submitted to the shareholders,

pose questions to the directors, make appropriate motions and

comment on the business of the meeting, the meeting need not be

held at a particular geographic location.]

* * *

(d) Alternative authority.--If the secretary or other

authorized person [neglects or refuses to] does not give notice

of a meeting within a reasonable time, a person calling the

meeting may do so.

* * *

§ 1708. Use of conference telephone or other electronic

technology.

(a) Incorporators and directors.--Except as otherwise

provided in the bylaws, one or more persons may participate in a

meeting of the incorporators or the board of directors of a

business corporation by means of conference telephone or other

electronic technology by means of which all persons

participating in the meeting can hear each other. Participation

in a meeting pursuant to this [section] subsection shall

20210HB2057PN3299 - 104 -

constitute presence in person at the meeting.

(b) Shareholders.--Except as otherwise provided in the

bylaws, the presence or participation, including voting and

taking other action, by a shareholder at a meeting of

shareholders [or the expression of consent or dissent to

corporate action by a shareholder] by conference telephone or

other electronic [means, including, without limitation, the

Internet, shall constitute the presence of, or vote or action

by, or consent or dissent of] technology constitutes the

presence or participation, including voting and taking other

action, by the shareholder for the purposes of this subpart.

bylaws provide expressly that a meeting of shareholders may not

be held solely by means of electronic technology, a meeting of

the shareholders does not need to be held at a geographic

location if the meeting is held by means of electronic

technology in a fashion pursuant to which the shareholders have

a reasonable opportunity to participate in the meeting, read or

hear the proceedings substantially concurrently with their

occurrence, vote on matters submitted to the shareholders and,

subject to such guidelines and procedures as the board of

directors may adopt, make appropriate motions and comment on the

business of the meeting. Any guidelines or procedures adopted by

the board must comply with sections 1709(c) (relating to conduct

of shareholders meeting) and 1758(e) (relating to voting rights

of shareholders).

§ 1709. Conduct of shareholders meeting.

* * *

(b) Authority of the presiding officer.--Except as otherwise

provided in the bylaws, the presiding officer shall determine

20210HB2057PN3299 - 105 -

the order of business and shall have the authority to establish

rules for the conduct of the meeting if the board of directors

has not determined the order of business or established the

rules.

officer in adopting rules for and in conducting a meeting shall]

ru les adopted for, and the conduct of, a meeting must be fair to

the shareholders.

* * *

Section 41. Section 1711 of Title 15 is amended by adding a

subsection to read:

§ 1711. Alternative provisions.

* * *

(d) Reversal of opt-out.--A provision of the articles or

bylaws providing that section 1715 or corresponding provisions

of prior law shall not be applicable to the corporation may be

rescinded pursuant to the procedures required by this subpart

and the articles and bylaws at the time of the rescission to

amend the articles or bylaws.

Section 42. Section 1712 of Title 15 is amended to read:

§ 1712. Standard of care [and], justifiable reliance and

business judgment rule.

(a) [Directors] General rule.--A director of a business

corporation shall stand in a fiduciary relation to the

corporation and shall perform [his duties as] the duties of a

director, including [his] duties as a member of any committee of

the board upon which [he] the director may serve, in good faith,

in a manner [he] the director reasonably believes to be in the

best interests of the corporation and with such care, including

[reasonable inquiry,] the skill and diligence[, as] that a

20210HB2057PN3299 - 106 -

person of ordinary prudence would use under similar

circumstances[.] and reasonable inquiry into those issues

required by the statutes of this Commonwealth to be considered

in the circumstances and those interests and factors listed or

described in section 1715(a) (relating to exercise of powers

generally) or 1716(a) (relating to alternative standard) that

the director considers appropriate. This subsection is subject

to subsection (d) where applicable.

(a.1) Justifiable reliance.--In performing [his duties] the

duties of a director, and in satisfying the requirements of

subsection (d), a director [shall be] is entitled to rely in

good faith on information, opinions, reports or statements,

including financial statements and other financial data, in each

case prepared or presented by any of the following:

(1) One or more officers or employees of the corporation

or an affiliate of the corporation whom the director

reasonably believes to be reliable and competent in the

matters presented.

(2) Counsel, public accountants or other persons as to

matters which the director reasonably believes to be within

the professional or expert competence of such person.

(3) A committee of the board upon which [he] the

director does not serve, duly designated in accordance with

law, as to matters within its designated authority, which

committee the director reasonably believes to merit

confidence.

(b) Effect of actual knowledge.--A director [shall not be]

is not considered to be acting in good faith [if he has] under

subsection (a.1) if the director has actual knowledge concerning

the matter [in question that would cause his] that causes the

20210HB2057PN3299 - 107 -

director to believe reliance [to be] is unwarranted.

[(c) Officers.--Except as otherwise provided in the bylaws,

an officer shall perform his duties as an officer in good faith,

in a manner he reasonably believes to be in the best interests

of the corporation and with such care, including reasonable

inquiry, skill and diligence, as a person of ordinary prudence

would use under similar circumstances. A person who so performs

his duties shall not be liable by reason of having been an

officer of the corporation.]

(d) Business judgment rule.--A director who makes a business

judgment in good faith fulfills the duties under this section

if:

(1) the subject of the business judgment does not

involve self-dealing by the director or an associate or

affiliate of the director;

(2) the director is informed with respect to the subject

of the business judgment to the extent the director

reasonably believes to be appropriate under the

circumstances; and

(3) the director rationally believes that the business

judgment is in the best interests of the corporation.

(e) Burden of proof.--A person challenging the conduct of a

director as violating the duty of care under this section has

the burden of proving:

(1) a breach of the duty of care, including that a

requirement for fulfillment of that duty under subsection (d)

has not been met; and

(2) in a damage action, that the breach was the legal

cause of damage suffered by the corporation.

Section 43. Section 1713(a)(1) and (c) of Title 15 are

20210HB2057PN3299 - 108 -

amended and the section is amended by adding a subsection to

read:

§ 1713. Personal liability of directors.

(a) General rule.--If a bylaw adopted by the shareholders of

a business corporation so provides, a director shall not be

personally liable, as such, for monetary damages for any action

taken unless:

(1) the director has breached or failed to perform the

duties of [his office] a director under this subchapter; and

* * *

adopted under subsection (a) does not affect its application

with respect to an act by a director occurring before the

amendment or repeal unless the provision in effect at the time

of the act explicitly authorizes its amendment or repeal after

an act has occurred.

[(c)] (d) Cross reference.--See 42 Pa.C.S. § 8332.5

(relating to corporate representatives).

Section 44. Sections 1714, 1715(b), (d) and (e)(1)(i), 1716,

1717 and 1718 of Title 15 are amended to read:

§ 1714. [Notation of dissent] Presumption of assent.

A director of a business corporation who is present at a

meeting of its board of directors, or of a committee of the

board, at which action on any corporate matter is taken on which

the director is generally competent to act, shall be presumed to

have assented to the action taken unless [his dissent] the

director's dissent, abstention or vote against the matter is

entered in the minutes of the meeting or unless [he files his

written dissent] the director delivers to the secretary of the

meeting before the adjournment thereof a dissent in record form

20210HB2057PN3299 - 109 -

to the action [with the secretary of the meeting before the

adjournment thereof] or transmits the dissent [in writing] in

record form to the secretary of the corporation immediately

after the adjournment of the meeting. The right to dissent shall

not apply to a director who voted in favor of the action.

Nothing in this subchapter shall bar a director from asserting

that minutes of the meeting incorrectly omitted [his dissent]

the director's dissent, abstention or vote against if, promptly

upon receipt of a copy of such minutes, [he] the director

notifies the secretary [in writing] of the corporation in record

form of the asserted omission or inaccuracy.

§ 1715. Exercise of powers generally.

* * *

(b) Consideration of interests and factors.--The board of

directors, committees of the board and individual directors

shall not be required, in considering the best interests of the

corporation or the effects of any action, to regard any

corporate interest or the interests of any particular group

affected by such action as a dominant or controlling interest or

factor. The consideration of interests and factors in the manner

described in this subsection and in subsection (a) shall not

constitute a violation of section 1712 (relating to standard of

care [and], justifiable reliance and business judgment rule).

* * *

(d) Presumption.--[Absent breach of fiduciary duty, lack of

good faith or self-dealing, any act as the board of directors, a

committee of the board or an individual director shall be

presumed to be in the best interests of the corporation.] In

assessing whether the standard set forth in section 1712 or 1728

(relating to interested directors or officers; quorum) has been

20210HB2057PN3299 - 110 -

satisfied, there shall not be any greater obligation to justify,

or higher burden of proof with respect to, any act as the board

of directors, any committee of the board or any individual

director relating to or affecting an acquisition or potential or

proposed acquisition of control of the corporation than is

applied to any other act as a board of directors, any committee

of the board or any individual director. Notwithstanding section

1712(d) and the preceding [provisions] provision of this

subsection, any act as the board of directors, a committee of

the board or an individual director relating to or affecting an

acquisition or potential or proposed acquisition of control to

which a majority of the disinterested directors shall have

assented shall be presumed to satisfy the standard set forth in

section 1712 or 1728, unless it is proven by clear and

convincing evidence that the disinterested directors did not

assent to such act in good faith after reasonable investigation.

(e) Definition.--The term "disinterested director" as used

in subsection (d) and for no other purpose means:

(1) A director of the corporation other than:

(i) A director who has a direct or indirect

financial or other interest in the person acquiring or

seeking to acquire control of the corporation or who is

an affiliate or associate[, as defined in section 2552

(relating to definitions),] of, or was nominated or

designated as a director by, a person acquiring or

seeking to acquire control of the corporation.

* * *

§ 1716. Alternative standard.

(a) General rule.--In discharging the duties of their

respective positions, the board of directors, committees of the

20210HB2057PN3299 - 111 -

board and individual directors of a business corporation may, in

considering the best interests of the corporation, consider the

effects of any action upon employees, upon suppliers and

customers of the corporation and upon communities in which

offices or other establishments of the corporation are located,

and all other pertinent factors. The consideration of those

factors shall not constitute a violation of section 1712

(relating to standard of care [and], justifiable reliance and

business judgment rule).

[(b) Presumption.--Absent breach of fiduciary duty, lack of

good faith or self-dealing, actions taken as a director shall be

presumed to be in the best interests of the corporation.]

alternative provisions).

§ 1717. Limitation on standing.

The duty of the board of directors, committees of the board

and individual directors under section 1712 (relating to

standard of care [and], justifiable reliance and business

judgment rule) is solely to the business corporation and not to

any shareholder or creditor or any other person or group, and

may be enforced directly by the corporation or may be enforced

by [a shareholder, as such, by] an action in the right of the

corporation, and may not be enforced directly by a shareholder

or creditor or by any other person or group. Notwithstanding the

preceding sentence, sections 1715(a) and (b) (relating to

exercise of powers generally) and 1716(a) (relating to

alternative standard) do not impose upon the board of directors,

committees of the board and individual directors any legal or

equitable duties, obligations or liabilities or create any right

or cause of action against, or basis for standing to sue, the

20210HB2057PN3299 - 112 -

board of directors, committees of the board and individual

directors.

§ 1718. Inconsistent articles ineffective.

Except as otherwise expressly provided in this subchapter,

the articles may not contain any provision that relaxes,

restricts, is inconsistent with or supersedes any provision of

this subchapter. [The last sentence of section 1306(b)] Section

1306(b)(2) (relating to other provisions authorized) shall not

apply to this subchapter.

Section 45. Title 15 is amended by adding a section to read:

§ 1719. Renunciation of business opportunities.

The articles of incorporation, or an action of the board of

directors, may renounce any interest or expectancy of a business

corporation in, or in being offered an opportunity to

participate in, a specified business opportunity or specified

classes or categories of business opportunities that are

presented to the corporation or to one or more of its directors,

officers or shareholders.

Section 46. Sections 1721(a) and 1722(b) of Title 15 are

amended to read:

§ 1721. Board of directors.

(a) General rule.--Unless otherwise provided by statute or

in a bylaw adopted by the shareholders, all powers enumerated in

section 1502 (relating to general powers) and elsewhere in this

[subpart] title or otherwise vested by law in a business

corporation shall be exercised by or under the authority of the

board of directors, and the business and affairs of every

business corporation shall be managed by or under the direction

of, a board of directors. If any such provision is made in the

bylaws, the powers and duties conferred or imposed upon the

20210HB2057PN3299 - 113 -

board of directors by this [subpart] title shall be exercised or

performed to such extent and by such person or persons as shall

be provided in the bylaws. Persons upon whom the [liabilities]

powers and duties of directors are imposed by this section shall

to that extent be subject to the liabilities imposed, and

entitled to the rights and immunities conferred, by or pursuant

to this part and other provisions of law upon directors of a

corporation.

* * *

§ 1722. Qualifications of directors.

* * *

(b) Cross [reference] references.--See [section] sections

2530 (relating to qualifications of directors) and 3131

(relating to directors).

Section 47. Section 1724(a) of Title 15 is amended and the

section is amended by adding a subsection to read:

§ 1724. Term of office of directors.

(a) General rule.--Each director of a business corporation

shall hold office until the expiration of the term for which

[he] the director was selected and until [his] a successor has

been selected and qualified or until [his] the director's

earlier death, resignation or removal. [Any director may resign

at any time upon written notice to the corporation. The

resignation shall be effective upon receipt thereof by the

corporation or at such subsequent time as shall be specified in

the notice of resignation.] Each director shall be selected for

the term of office provided in the bylaws, which shall be one

year [and until his successor has been selected and qualified or

until his earlier death, resignation or removal,] unless the

board is classified as provided by subsection (b). A decrease in

20210HB2057PN3299 - 114 -

the number of directors shall not have the effect of shortening

the term of any incumbent director.

* * *

notice in record form to the corporation. A resignation that is

not conditioned upon acceptance by the board of directors shall

be effective upon receipt by the corporation of the notice of

resignation, unless the notice specifies a later effective time

or an effective time determined upon the happening of an event

or events. If a resignation is conditioned upon its acceptance

by the board, a decision by the board to accept or reject the

resignation shall be made by the board in accordance with

Subchapter B (relating to fiduciary duty).

Section 48. Section 1725(b) of Title 15 is amended by adding

a paragraph to read:

§ 1725. Selection of directors.

* * *

(b) Vacancies.--

* * *

(3) At any time when the offices of all of the directors

of a corporation are vacant, any officer or shareholder, or a

fiduciary for a shareholder, may call a special meeting of

shareholders for the purpose of electing directors. This

paragraph shall not apply if the articles or bylaws, or an

agreement among the shareholders of a closely held

corporation, provide that all of the powers and duties of

directors are exercised by persons other than directors.

* * *

Section 49. Sections 1727(b) and 1728(a) of Title 15 are

amended and the sections are amended by adding subsections to

20210HB2057PN3299 - 115 -

read:

§ 1727. Quorum of and action by directors.

* * *

(b) Action by consent.--Unless otherwise restricted in the

bylaws, any action required or permitted to be approved at a

meeting of the directors may be approved without a meeting [if]

by a consent or consents to the action in record form [are].

Except as provided in subsection (c), the consents must be

signed, before, on or after the effective [date] time of the

action by all of the directors in office [on the date the first

consent is signed] at the effective time. The consent or

consents must be filed with the minutes of the proceedings of

the board of directors.

person signing a consent, whether or not then a director, may

instruct in record form, that the consent will be effective at a

future time, including a time determined upon the happening of

an event. In the case of a consent signed by a person not a

director at the time of signing, the consent is effective at the

stated effective time if the person who signed the consent is a

director at the effective time and did not revoke the consent in

record form prior to the effective time. A consent is effective

at the stated effective time even if one or more signers are no

longer directors at the effective time unless the consent has

been revoked by a signer who is a director at the effective

time. A signer of a consent may revoke the signer's consent in

record form until the consent becomes effective.

§ 1728. Interested directors or officers; quorum.

(a) General rule.--A contract or transaction between a

business corporation and one or more of its directors or

20210HB2057PN3299 - 116 -

officers or between a business corporation and another domestic

or foreign corporation for profit or not-for-profit,

partnership, joint venture, trust or other enterprise in which

one or more of [its] the corporation's directors or officers are

[directors] governors or officers of the other association or

have a financial or other interest, [shall not be] is not void

or voidable solely for that reason, or solely because the

director or officer of the corporation is present at or

participates in the meeting of the board of directors that

authorizes the contract or transaction, or solely because [his

or their votes are] the vote of the director or officer is

counted for that purpose, if:

(1) the material facts as to the relationship or

interest and as to the contract or transaction are disclosed

or are known to the board of directors and the board

authorizes the contract or transaction by the affirmative

votes of a majority of the disinterested directors even

though the disinterested directors are less than a quorum;

(2) the material facts as to [his] the relationship or

interest and as to the contract or transaction are disclosed

or are known to the shareholders entitled to vote thereon and

the contract or transaction is specifically approved in good

faith by vote of those shareholders; [or]

(3) the contract or transaction is fair as to the

corporation as of the time it is authorized, approved or

ratified by the board of directors or the shareholders[.]; or

(4) the contract or transaction satisfies subsection (d)

or (e).

* * *

(d) Common governors or officers with not wholly owned

20210HB2057PN3299 - 117 -

associations.--A contract or transaction between a business

corporation and an association that is not wholly owned by the

corporation, is not void or voidable solely on the grounds that

a person who is a director or officer of the corporation is also

a governor or officer of the other association if:

(1) one of the conditions set forth in subsection (a)

(1), (2) or (3) is satisfied; or

(2) (i) the director or officer does not participate

personally and substantially in negotiating the

transaction for either the corporation or the other

association; and

(ii) if the transaction is approved by the governors

of either association, the person that is a governor or

officer of each association does not cast a vote that

would be necessary at a meeting to approve the

transaction on behalf of either association.

(e) Common governors or officers with wholly owned

associations.--A contract or transaction between a business

corporation and an association that is wholly owned by the

corporation is not void or voidable solely on the grounds that a

director or officer of the corporation is also a governor or

officer of the wholly owned association.

(f) Cross references.--See sections 1715(d) (relating to

exercise of powers generally) and 1730 (relating to compensation

of directors).

Section 50. Sections 1730, 1731(a) and 1732 of Title 15 are

amended to read:

§ 1730. Compensation of directors.

(a) General rule.--Except as otherwise restricted in the

bylaws, the board of directors of a business corporation [shall

20210HB2057PN3299 - 118 -

have] has the authority to fix the compensation of directors for

their services as directors [and a], regardless of the personal

interest of the directors. A director may be a salaried officer

of the corporation.

(b) Presumption.--If the board of directors establishes the

compensation of directors in accordance with subsection (a),

that action is presumed to be fair to the corporation.

§ 1731. Executive and other committees of the board.

(a) Establishment and powers.--Unless otherwise restricted

in the bylaws:

(1) The bylaws or the board of directors of a business

corporation may establish one or more committees to consist

of one or more directors of the corporation.

(2) Any committee, to the extent provided in the

[resolution] action of the board of directors or in the

bylaws, shall have and may exercise all of the powers and

authority of the board of directors except that a committee

shall not have any power or authority as to the following:

(i) The submission to shareholders of any action or

matter , other than the election or removal of directors,

requiring approval of shareholders under this subpart or

Chapter 3 (relating to entity transactions).

(ii) The creation or filling of vacancies in the

board of directors.

(iii) The adoption, amendment or repeal of the

bylaws.

(iv) The amendment or repeal of any resolution of

the board that by its terms is amendable or repealable

only by the board.

(v) Action on matters committed by the bylaws or

20210HB2057PN3299 - 119 -

[resolution] action of the board of directors exclusively

to another committee of the board.

(3) The board may designate one or more directors as

alternate members of any committee who may replace any absent

or disqualified member at any meeting of the committee or for

the purposes of [any written] action in record form by the

committee. In the absence or disqualification of a member and

alternate member or members of a committee, the member or

members thereof present at any meeting and not disqualified

from voting, whether or not [he or they] those present

constitute a quorum, may unanimously appoint another director

to act at the meeting in the place of the absent or

disqualified member.

* * *

§ 1732. Officers.

(a) General rule.--Every business corporation shall have a

president, a secretary and a treasurer, or persons who shall act

as such, regardless of the name or title by which they may be

designated, elected or appointed and may have such other

officers [and assistant officers] as it may authorize from time

to time. The bylaws may prescribe special qualifications for the

officers. The president and secretary shall be natural persons

of full age. The treasurer may be a corporation, but if a

natural person shall be of full age. Unless otherwise restricted

in the bylaws, it shall not be necessary for the officers to be

directors. Any number of offices may be held by the same person.

(b) Election, appointment and term of office.--The officers

[and assistant officers] shall be elected or appointed at such

time, in such manner and for such terms as may be fixed by or

pursuant to the bylaws. Unless otherwise provided by or pursuant

20210HB2057PN3299 - 120 -

to the bylaws, each officer shall hold office for a term of one

year and until [his] the officer's successor has been selected

and qualified or until [his] the officer's earlier death,

resignation or removal.

written notice to the corporation. The resignation shall be

effective upon receipt thereof by the corporation or at such

subsequent time as may be specified in the notice of

resignation.

(d) Bonding.--The corporation may secure the fidelity of any

or all of the officers by bond or otherwise.

(e) Vacancies.--Unless otherwise provided in the bylaws, the

board of directors has the power to fill any vacancies in any

office occurring from whatever reason.

[(b)] (f) Authority.--Unless otherwise provided in the

bylaws, all officers of the corporation, as between themselves

and the corporation, shall have such authority and perform such

duties in the management of the corporation as may be provided

by or pursuant to the bylaws or, in the absence of controlling

provisions in the bylaws, as may be determined by or pursuant to

[resolutions or orders] actions of the board of directors.

[(c) Cross references.--See sections 1110 (relating to

annual report information), 1712(c) (relating to officers) and

3132 (relating to officers).]

(g) Right to bylaws.--Every officer shall have the right to

receive, promptly after demand and without charge, a copy in

record form of the currently effective text of the bylaws, but

only to the extent reasonably related to the officer's duties.

Section 51. Title 15 is amended by adding sections to read:

§ 1734. Officer's standard of care and justifiable reliance.

20210HB2057PN3299 - 121 -

(a) General rule.--Except as otherwise provided in the

bylaws, an officer shall perform the officer's duties in good

faith, in a manner the officer reasonably believes to be in the

best interests of the business corporation and with such care,

including reasonable inquiry, skill and diligence, as a person

of ordinary prudence would use under similar circumstances. A

person who performs the duties of an officer in accordance with

this subsection, and any provision of the bylaws that modify

this subsection, shall not be liable to the corporation by

reason of having been an officer of the corporation.

(b) Justifiable reliance.--In performing the duties of an

officer, an officer is entitled to rely in good faith on

information, opinions, reports or statements, including

financial statements and other financial data, in each case

prepared or presented by any of the following:

(1) One or more other officers or employees of the

corporation or an affiliate of the corporation whom the

officer reasonably believes to be reliable and competent in

the matters presented.

(2) Counsel, public accountants or other persons as to

matters that the officer reasonably believes to be within the

professional or expert competence of such person.

considered to be acting in good faith under subsection (a) if

the officer has actual knowledge concerning the matter that

causes the officer to believe reliance is unwarranted.

(d) Business judgment rule.--Except as otherwise restricted

in the bylaws, an officer who makes a business judgment in good

faith fulfills the duties of an officer if:

(1) the subject of the business judgment does not

20210HB2057PN3299 - 122 -

involve self-dealing by the officer or an associate or

affiliate of the officer;

(2) the officer is informed with respect to the subject

of the business judgment to the extent the officer reasonably

believes to be appropriate under the circumstances; and

(3) the officer rationally believes that the business

judgment is in the best interests of the corporation.

(e) Burden of proof.--A person challenging the conduct of an

officer under this section has the burden of proving a breach of

the duty of care, including the provisions of subsections (c)

and (d), and, in a damage action, the burden of proving that the

breach was the legal cause of damage suffered by the

corporation.

§ 1735. Personal liability of officers.

(a) General rule.--If a bylaw adopted by the shareholders of

a business corporation so provides, an officer shall not be

personally liable, as such, for monetary damages for any action

taken unless:

(1) the officer has breached or failed to perform the

duties of an officer under this subchapter; and

(2) the breach or failure to perform constitutes self-

dealing, willful misconduct or recklessness.

(b) Exceptions.--Subsection (a) shall not apply to:

(1) the responsibility or liability of an officer

pursuant to any criminal statute; or

(2) the liability of an officer for the payment of taxes

pursuant to Federal, State or local law.

described in subsection (a) does not affect its application with

respect to an act by an officer occurring before the amendment

20210HB2057PN3299 - 123 -

or repeal unless the provision in effect at the time of the act

explicitly authorizes its amendment or repeal after an act has

occurred.

(d) Certain provisions of articles ineffective.--This

section may not be relaxed by any provision of the articles.

(e) Cross reference.--See 42 Pa.C.S. § 8332.5 (relating to

corporate representatives).

Section 52. Sections 1743 and 1750 of Title 15 is amended to

read:

§ 1743. Mandatory indemnification.

(a) General rule.--To the extent that a [representative]

present or former director or officer of a business corporation

has been successful on the merits or otherwise in defense of any

action or proceeding referred to in section 1741 (relating to

third-party actions) or 1742 (relating to derivative and

corporate actions) or in defense of any claim, issue or matter

therein, [he] the direc tor or officer shall be indemnified

against expenses (including attorney fees) actually and

reasonably incurred by [him] the director or officer in

connection therewith.

(b) Prospective application.--The limi tation of the s cope of

subsection (a) to a present or former director or officer

applies only to acts occurring after (insert the effective date

of the amendment of subsection (a)).

§ 1750. Duration and extent of coverage.

The indemnification and advancement of expenses provided by,

or granted pursuant to, this subchapter shall, unless otherwise

provided when authorized or ratified, continue as to a person

who has ceased to be a representative of the corporation and

shall inure to the benefit of the heirs and personal

20210HB2057PN3299 - 124 -

representative of that person. A right to indemnification or to

advancement of expenses arising under a provision of the

articles or bylaws may not be eliminated or impaired by an

amendment to or repeal of the provision after the occurrence of

an act that is the subject of the threatened, pending or

completed action or proceeding, whether civil, criminal,

administrative or investigative, for which indemnification or

advancement of expenses is sought, unless the provision in

effect at the time of the act explicitly authorizes the

elimination or impairment after an act has occurred.

Section 53. Section 1755(b), (c) and (d) of Title 15 are

amended and the section is amended by adding a subsection to

read:

§ 1755. Time of holding meetings of shareholders.

* * *

(b) Special meetings.--Special meetings of the shareholders

may be called at any time:

(1) by the board of directors;

(2) unless otherwise provided in the articles, by

shareholders entitled to cast at least 20% of the votes that

all shareholders are entitled to cast at the particular

meeting; [or]

(3) by such officers or other persons as may be provided

in the bylaws[.]; or

(4) as provided in section 1725(b)(3) (relating to

selection of directors).

(b.1) Duties of secretary.--At any time, upon written

request of any person who has called a special meeting, it shall

be the duty of the secretary to fix the time of the meeting

which, if the meeting is called pursuant to a statutory right,

20210HB2057PN3299 - 125 -

shall be held within any period specified by this subpart, or if

no period is specified, not more than 60 days after the receipt

of the request. If the secretary neglects or refuses to fix the

time of the meeting, the person or persons calling the meeting

may do so. See [section] sections 2521 (relating to call of

special meetings of shareholders) and 2565(a) (relating to

procedure for establishing voting rights of control shares).

meeting may be taken but any meeting at which directors are to

be elected shall be adjourned [only] for no longer than from day

to day, or for such longer periods not exceeding 15 days each as

the shareholders present and entitled to vote shall direct,

until the directors have been elected. See section 2522

(relating to adjournment [of meetings] or postponement of

meeting of shareholders).

(d) Postponement or cancellation.--The board of directors

may postpone, or delegate to an officer the authority to

postpone, the annual or other regular meeting of shareholders,

subject to the provision of subsection (a) providing for a

meeting each calendar year. Unless otherwise restricted in the

bylaws or otherwise provided by statute, the holding of a

special meeting of shareholders may be postponed for not more

than 15 days or may be canceled by the person or group that

called the special meeting. In the case of a postponed or

canceled meeting, prompt notice in record form of the

postponement or cancellation must be given to the shareholders

entitled to vote at the meeting.

[(d)] (e) Cross reference.--See section 1106(b)(4) (relating

to uniform application of subpart).

Section 54. Sections 1756(a)(1), (3) and (4), 1758(a) and

20210HB2057PN3299 - 126 -

(b), 1763, 1764 and 1766 of Title 15 are amended to read:

§ 1756. Quorum.

(a) General rule.--A meeting of shareholders of a business

corporation duly called shall not be organized for the

transaction of business unless a quorum is present. Unless

otherwise provided in a bylaw adopted by the shareholders:

(1) [The] A quorum for the purposes of consideration and

action on a particular matter at a meeting shall consist of:

(i) the presence of shareholders entitled to cast at

least a majority of the votes that all shareholders are

entitled to cast on [a particular matter to be acted upon

at the meeting shall constitute a quorum for the purposes

of consideration and action on] the matter[.]; and

(ii) if any shareholders are entitled to vote as a

class on the matter, the presence of shareholders

entitled to cast at least a majority of the votes

entitled to be cast in the class vote.

* * *

(3) If a meeting cannot be organized because a quorum

has not attended, those present may, except as otherwise

provided in this subpart, adjourn the meeting to [such] a

time and place [as] they may determine.

(4) If a proxy casts a vote or takes other action on

behalf of a shareholder on any issue other than a procedural

motion considered at a meeting of shareholders, the

[shareholder] shares for which the proxy has so acted shall

be deemed to be present during the entire meeting for

purposes of determining whether a quorum is present for

consideration of any other issue.

* * *

20210HB2057PN3299 - 127 -

§ 1758. Voting rights of shareholders.

(a) General rule.--Unless otherwise provided in the

articles, every shareholder of a business corporation shall be

entitled to one vote for every share standing in [his] the

shareholder's name on the [books of the corporation] share

single holder or beneficial owner, or such a group of holders or

owners as the bylaws may define, of shares of any class or

series may directly or indirectly cast in the aggregate for the

election of directors or on any other matter coming before the

shareholders on the basis of any facts or circumstances that are

not manifestly unreasonable, including without limitation:

(1) the number of shares of any class or series held by

such single holder or beneficial owner or group of holders or

owners; or

(2) the length of time shares of any class or series

have been held by such single holder or beneficial owner or

group of holders or owners.

(b) Procedures for election of directors.--The following

apply to the election of directors:

(1) Unless otherwise restricted in the bylaws, in

elections for directors at a meeting of shareholders held at

a geographic location, voting need not be by ballot unless

required by vote of the shareholders before the voting for

election of directors begins. The shareholders do not have

the right to vote by ballot at a meeting that is not held at

a geographic location pursuant to section 1708(c) (relating

to use of conference telephone or other electronic

technology).

(2) Unless otherwise provided in a bylaw adopted by the

20210HB2057PN3299 - 128 -

shareholders, the candidates for election as directors

receiving the highest number of votes from each class or

group of classes, if any, entitled to elect directors

separately up to the number of directors to be elected by the

class or group of classes shall be elected. This paragraph

applies retroactively, and a bylaw described in this

paragraph shall be valid if it was adopted after January 1,

2000.

(3) If at any meeting of shareholders, directors of more

than one class are to be elected, each class of directors

shall be elected in a separate election.

* * *

§ 1763. Determination of shareholders of record.

(a) Fixing record date.--Unless otherwise restricted in the

bylaws, the board of directors of a business corporation may fix

a time prior to the date of any meeting of shareholders as a

record date for the determination of the shareholders entitled

to notice of[, or to vote at,] the meeting, which time, except

in the case of an adjourned or postponed meeting, shall be not

more than 90 days prior to the date of the meeting of

shareholders. If the board fixes a record date for notice of a

meeting, that date shall also be the record date for determining

the shareholders entitled to vote at the meeting unless the

board determines, at the time it fixes the record date for

notice, that a later date on or before the date of the meeting

shall be the date for determining the shareholders entitled to

vote. Only shareholders of record on the date fixed shall be so

entitled notwithstanding any transfer of shares on the books of

the corporation after any record date fixed as provided in this

subsection. Unless otherwise provided in the bylaws, the board

20210HB2057PN3299 - 129 -

of directors may similarly fix a record date for the

determination of shareholders of record for any other purpose. A

record date may not precede the date on which the board acts to

fix that record date. The shareholders of record shall be

determined as of the close of business on the record date unless

the board fixes a different time of day for that determination.

When a determination of shareholders of record has been made as

provided in this section for purposes of a meeting, the

determination shall apply to any adjournment or postponement

thereof unless otherwise restricted in the bylaws or unless the

board fixes a new record date for the adjourned meeting.

(b) Determination when a record date is not fixed.--Unless

otherwise provided in the bylaws, if a record date is not fixed:

(1) The [record date for determining shareholders

entitled to notice of or to vote at a meeting of shareholders

shall be at the] close of business on the day next preceding

the day on which notice is given or, if notice is waived, at

the close of business on the day immediately preceding the

day on which the meeting is held[.] shall be the record date

for determining shareholders entitled to notice of or to vote

at a meeting of shareholders.

(2) The close of business on the day on which the first

con sent, request or petition is filed in record form with the

secretary of the corporation shall be the record date for

determining shareholders entitled to:

(i) express consent or dissent to corporate action

[in writing] without a meeting, when prior action by the

board of directors is not necessary;

(ii) call a special meeting of the shareholders; or

(iii) propose an amendment of the articles.[;

20210HB2057PN3299 - 130 -

shall be at the close of business on the day on which the

first written consent or dissent, request for a special

meeting or petition proposing an amendment of the articles is

filed with the secretary of the corporation.]

(3) The record date for determining shareholders for any

other purpose shall be at the close of business on the day on

which the board of directors adopts the resolution relating

thereto.

board of directors may adopt a procedure whereby a shareholder

of the corporation may certify in writing to the corporation

that all or a portion of the shares registered in the name of

the shareholder are held for the account of a specified person

or persons. [The resolution of the board may set forth:] The

persons specified in a certification shall be deemed, for the

purposes set forth in the certification, to be the holders of

record of the number of shares specified in place of the

shareholder making the certification. A certification procedure

may include provisions on:

(1) The classification of shareholder who may certify.

(2) The purpose or purposes for which the certification

may be made.

(3) The form of certification and information to be

contained therein.

(4) If the certification is with respect to a record

date, the time after the record date within which the

certification must be received by the corporation.

(5) Such other provisions with respect to the procedure

as are deemed necessary or desirable.

[Upon receipt by the corporation of a certification complying

20210HB2057PN3299 - 131 -

with the procedure, the persons specified in the certification

shall be deemed, for the purposes set forth in the

certification, to be the holders of record of the number of

shares specified in place of the shareholder making the

certification.]

§ 1764. Voting lists.

(a) General rule.--The officer or agent having charge of the

[transfer books for shares] share register of a business

corporation shall make a complete list of the shareholders

entitled to vote at any meeting of shareholders, arranged in

alphabetical order, with the address of and the number of shares

held by each. This section does not require the corporation to

include electronic mail addresses or other electronic contact

information on the list. The list shall be produced and kept

open at the time and place of each meeting of shareholders [of a

nonregistered corporation held at a geographic location] and

shall be subject to the inspection of any shareholder during the

whole time of the meeting for the purposes thereof. [See section

2529 (relating to voting lists).] A shareholder and any agent or

attorney who inspects the list may use the information on the

list only for purposes related to the meeting and must keep the

information on the list confidential.

(b) Effect of list.--Failure to comply with the requirements

of this section shall not affect the validity of any action

taken at a meeting prior to a demand at the meeting by any

shareholder entitled to vote thereat to examine the list. The

original share register [or transfer book], or a duplicate

thereof kept in this Commonwealth, shall be prima facie evidence

as to who are the shareholders entitled to examine the list or

share register [or transfer book] or to vote at any meeting of

20210HB2057PN3299 - 132 -

shareholders.

nonregistered corporation] is not held at a geographic location,

the corporation shall make the list of shareholders required by

subsection (a) available in a reasonably accessible manner.

(d) Cross reference.--See section 2529 (relating to voting

lists).

§ 1766. Consent of shareholders in lieu of meeting.

(a) Unanimous consent.--Unless otherwise restricted in the

bylaws, any action required or permitted to be taken at a

meeting of the shareholders or of a class of shareholders of a

business corporation may be taken without a meeting if a consent

or consents to the action in record form are signed, before, on

or after the effective [date] time of the action by all of the

shareholders who would be entitled to vote at a meeting for such

purpose. The consent or consents must be filed with the minutes

of the proceedings of the shareholders.

(b) Partial consent.--If the bylaws so provide, any action

required or permitted to be taken at a meeting of the

shareholders or of a class of shareholders may be taken without

a meeting upon the signed consent or consents of shareholders

who would have been entitled to cast the minimum number of votes

that would be necessary to authorize the action at a meeting at

which all shareholders entitled to vote thereon were present and

voting. The [consents shall] consent or consents must be filed

in record form with the minutes of the proceedings of the

shareholders.

taken pursuant to subsection (b) to approve a transaction under

Chapter 3 (relating to entity transactions) shall not become

20210HB2057PN3299 - 133 -

effective until after at least ten days' notice of the action

has been given to each shareholder entitled to vote thereon who

has not consented thereto. Any other action may become effective

immediately, but prompt notice that the action has been taken

shall be given to each shareholder entitled to vote thereon that

has not consented. Notice under this subsection must include the

information that a notice of a meeting of shareholders seeking

approval of the action would have been required to contain. This

subsection may not be relaxed by any provision of the articles.

(d) Escrowing of consents.--A consent may provide, or a

person signing a consen t, whether or not then a shareholder, may

instruct in record form, that the consent will be effective at a

future time, including a time determined upon the happening of

an event. In the case of a consent signed by a person not a

shareholder at the time of signing, the consent is effective at

the stated effective time if the person who signed the consent

is a shareholder at the effective time and did not revoke the

consent in record form prior to the effective time. A consent is

effective at the stated effective time, even if one or more

signers are no longer shareholders at the effective time if

consents by shareholders entitled to cast the required number of

votes have not been revoked before the effective time.

(e) Revocation of consent.--Unless otherwise provided in a

consent, a signer of the consent may revoke the signer's consent

in record form until it becomes effective.

[(d)] (f) Cross references.--See sections 1702 (relating to

manner of giving notice) and 2524 (relating to consent of

shareholders in lieu of meeting).

Section 55. Section 1781(a)(1) and (c) and 1782(a) and (d)

of Title 15 are amended and the sections are amended by adding

20210HB2057PN3299 - 134 -

subsections to read:

§ 1781. Derivative action.

(a) General rule.--Subject to section 1782 (relating to

eligible shareholder plaintiffs and security for costs) and

[subsection (b)] subsections (b) and (g), a plaintiff may

maintain a derivative action to enforce a right of a business

corporation only if:

(1) the plaintiff first makes a demand on the

corporation or the board of directors requesting that [it

cause the corporation to] the corporation bring an action to

enforce the right, and:

(i) if a special litigation committee is not

appointed under section 1783 (relating to special

litigation committee), [the corporation does not bring

the action within a reasonable time; or] the board

determines that:

(A) an action based on some or all of the claims

asserted in the demand not be brought by the

corporation but that the corporation not object to an

action being brought by the party that made the

demand; or

(B) an action already commenced continue under

the control of the plaintiff; or

(ii) if a special litigation committee is appointed

under section 1783, a determination is made:

(A) under section 1783(e)(1) that the

corporation not object to the action; or

(B) under section 1783(e)(5)(i) that the

plaintiff continue the action;

* * *

20210HB2057PN3299 - 135 -

in record form and give notice with reasonable specificity of:

(1) the [essential] material facts relied upon to

support each of the claims made in the demand[.] against each

proposed defendant; and

(2) in the case of a derivative action commenced by a

shareholder, the basis on which the person making the demand

has standing under section 1782.

* * *

(g) Exception.--This subchapter does not apply to an action

brought by a holder of an equity security of a business

corporation under Subchapter H of Chapter 25 (relating to

disgorgement by certain controlling shareholders following

attempts to acquire control).

§ 1782. Eligible shareholder plaintiffs and security for costs.

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

any action or proceeding brought [to enforce a secondary right

on the part of] by one or more shareholders of a business

corporation [against any present or former officer or director

of the corporation because the corporation refuses to enforce

rights that may properly be asserted by it, each plaintiff must

aver and it must be made to appear that each plaintiff] to

enforce rights that the plaintiff claims could be, but have not

been, asserted by the corporation, each plaintiff has standing

to commence and maintain the derivative action only if the

plaintiff:

(1) was a shareholder of the corporation or owner of a

beneficial interest in the shares at the time of the

transaction or conduct of which [he] the plaintiff complains,

or that [his] the plaintiff's shares or beneficial interest

20210HB2057PN3299 - 136 -

in the shares devolved upon [him] the plaintiff by operation

of law from a person who was a shareholder or owner of a

beneficial interest in the shares at that time[.]; and

(2) continues to hold the shares until the time of

judgment, unless the failure to do so is the result of

corporate action that:

(i) was done merely to eliminate derivative claims;

(ii) has the effect of a reorganization that does

not affect the plaintiff's ownership of the business

enterprise.

* * *

(d) Failure to maintain ownership.--If a plaintiff loses the

right to maintain a derivative action under subsection (a)(2),

the court may entertain a motion by the corporation to

substitute the corporation as the named plaintiff.

[(d)] (e) Cross reference.--See section 4146 (relating to

provisions applicable to all foreign corporations).

Section 56. Sections 1783 and 1905 of Title 15 are amended

to read:

§ 1783. Special litigation committee.

(a) General rule.--If a business corporation or the board of

directors receives a demand to bring an action to enforce a

right of the corporation, or if a derivative action is commenced

before demand has been made on the corporation or the board, the

board may appoint a special litigation committee to investigate

the claims asserted in the demand or action and to determine on

behalf of the corporation or recommend to the board whether

pursuing any of the claims asserted is in the best interests of

the corporation. The corporation [shall send] must deliver a

20210HB2057PN3299 - 137 -

notice in record form to the person making the demand, or to the

plaintiff if a derivative action has been commenced, promptly

after the appointment of a committee under this section

notifying the person making the demand or the plaintiff that a

committee has been appointed and identifying by name the members

of the committee. A committee may not be appointed under this

section if every shareholder of the corporation is also a

director of the corporation.

(b) Discovery stay.--If the board of directors appoints a

special litigation committee and an action is commenced before a

determination has been made under subsection (e):

(1) On motion by the business corporation, or the

committee made in the name of the [business] corporation, the

court shall stay discovery for the time reasonably necessary

to permit the committee to complete its investigation, except

for good cause shown.

(2) The time for the defendants to plead shall be tolled

until the process provided for under subsection (f) has been

completed.

committee shall be composed of two or more individuals who:

(1) are not interested in the claims asserted in the

demand or action;

(2) are capable as a group of objective judgment in the

circumstances; and

(3) may, but need not, be shareholders or directors.

(c.1) Committee members who are not directors.--A member of

a special litigation committee who is not a director is subject,

when acting as a member of the committee, to the liabilities

imposed, and entitled to the rights and immunities conferred,

20210HB2057PN3299 - 138 -

under Subchapters B (relating to fiduciary duty) and D (relating

to indemnification) and other provisions of law upon directors

of a corporation.

(d) Appointment of committee.--A special litigation

committee may be appointed:

(1) by a majority of the directors not named as actual

or potential parties in the demand or action; or

(2) if all the directors are named as actual or

potential parties in the demand or action, by a majority of

the directors so named.

(e) Determination.--After appropriate investigation by a

special litigation committee, the committee [or the] may

determine, or the committee may recommend to the board of

directors [may] that the board determine, that it is in the best

interests of the business corporation that:

(1) an action based on some or all of the claims

asserted in the demand not be brought by the corporation but

that the corporation not object to an action being brought by

the party that made the demand;

(2) an action based on some or all of the claims

asserted in the demand be brought by the corporation;

(3) some or all of the claims asserted in the demand be

settled on terms [approved] determined or recommended by the

committee;

(4) an action not be brought based on any of the claims

asserted in the demand;

(5) an action already commenced continue under the

control of:

(i) the plaintiff;

(ii) the corporation; or

20210HB2057PN3299 - 139 -

(iii) the committee;

(6) some or all the claims asserted in an action already

commenced be settled on terms [approved] determined or

recommended by the committee; or

(7) an action already commenced be dismissed.

(f) Court review and action.--If a special litigation

committee is appointed and a derivative action is commenced

either before or after the committee makes a determination [is

made] under subsection (e) or the board of directors determines

under subsection (e) to accept the recommendation of the

committee:

(1) The business corporation or the committee shall file

with the court after a determination is made under subsection

(e) a statement of the determination and a report of the

committee supporting the determination. The corporation or

the committee shall serve each party with a copy of the

determination and report. If the corporation or the committee

moves to file the report under seal, the report shall be

served on the parties subject to an appropriate stipulation

agreed to by the parties or a protective order issued by the

court.

(2) The corporation or the committee shall file with the

court a motion, pleading or notice consistent with the

determination under subsection (e).

(3) If the determination is one described in subsection

(e)(2), (3), (4), (5)(ii), (6) or (7), the court shall

determine whether the members of the committee met the

qualifications required under subsection (c)(1) and (2) and

whether the committee conducted its investigation and made

its determination or recommendation in good faith,

20210HB2057PN3299 - 140 -

independently and with reasonable care. The plaintiff has the

burden of proving that the committee did not meet those

qualifications or act in the required manner. If the court

finds that the members of the committee met the

qualifications required under subsection (c)(1) and (2) and

that the committee acted in good faith, independently and

with reasonable care, the court shall enforce the

determination of the committee or the board. Otherwise, the

court shall:

(i) dissolve any stay of discovery entered under

subsection (b);

(ii) allow the action to continue under the control

of the plaintiff; and

(iii) permit the defendants to file preliminary

objections, other appropriate pleadings and motions.

(g) Certain provisions of articles ineffective.--The

provisions of this section may not be varied by the articles.

(h) Interest of a defendant.--The fact that a person is

named as a defendant does not make the person interested in the

claims asserted in a demand or action for purposes of subsection

(c)(1) if the claims against the person:

(1) are based only on an allegation that the person

approved of or acquiesced in the transaction or conduct that

is the subject of the claims; and

(2) do not otherwise allege with particularity facts

that, if true, raise a significant prospect that the person

would be adjudged liable.

§ 1905. Proposal of fundamental transactions.

Where any provision of this chapter requires that an

amendment of the articles, a plan of asset transfer or the

20210HB2057PN3299 - 141 -

dissolution of a business corporation be proposed or approved by

action of the board of directors, that requirement shall be

construed to authorize and be satisfied by the [written]

agreement or consent in record form of all of the shareholders

of the corporation entitled to vote thereon.

Section 57. Sections 1911(a)(1), (b)(2) and (c), 1912(a) and

(b)(1) and 1914(a) and (c)(2) of Title 15 are amended and the

sections are amended by adding subsections to read:

§ 1911. Amendment of articles authorized.

(a) General rule.--A business corporation, in the manner

provided in this subchapter, may from time to time amend its

articles for one or more of the following purposes:

(1) To adopt a new name, subject to the restrictions

provided in this [subpart] title.

* * *

(b) Exceptions.--An amendment adopted under this section

shall not amend articles in such a way that as so amended they

would not be authorized by this subpart as original articles of

incorporation except that:

* * *

(2) The corporation shall not be required to revise any

other provision of its articles if the provision is valid and

operative immediately prior to the [filing of the amendment

in] delivery of the amendment to the Department of State for

filing.

the articles authorized pursuant to Chapter 2 (relating to

entities generally) or 3 (relating to e ntity transactions) or

set forth in statements or certificates permitted or required to

be delivered to the department for filing by section 108

20210HB2057PN3299 - 142 -

(relating to change in location or status of registered office

provided by agent) or 138 (relating to statement of correction)

or by this subpart need not be proposed or adopted in the manner

provided in this subchapter, except to the extent that the

provisions of this subchapter have been incorporated into

Chapter 2 or 3 or into the provisions authorizing such

statements or certificates.

[(c)] (d) Cross [reference.--See section 1521(b)(1)(i)

(relating to provisions specifically authorized).] references.--

See sections 224(f) (relating to action on ratification), 321

(relating to approval by business corporation), 1103 (relating

to definitions), 1507 (relating to registered office) and

1522(c) (relating t o issuance of shares in classes or series;

board action).

§ 1912. Proposal of amendments.

(a) General rule.--Every amendment of the articles of a

business corporation shall be proposed:

(1) by the adoption by the board of directors of a

resolution setting forth the proposed amendment; [or]

(2) unless otherwise provided in the articles, by

petition of shareholders entitled to cast at least 10% of the

votes that all shareholders are entitled to cast thereon,

setting forth the proposed amendment, which petition shall be

directed to the board of directors and filed with the

secretary of the corporation[.

Except where the approval of the shareholders is unnecessary

under this subchapter, the board of directors shall direct that

the proposed amendment be submitted to a vote of the

shareholders entitled to vote thereon. An amendment proposed

pursuant to paragraph (2) shall be submitted to a vote either at

20210HB2057PN3299 - 143 -

the next annual meeting held not earlier than 120 days after the

amendment is proposed or at a special meeting of the

shareholders called for that purpose by the shareholders. See

sections 1106(b)(4) (relating to uniform application of subpart)

and 2535 (relating to proposal of amendment to articles).]; or

(3) by action of the board of directors directing the

submission of the proposed amendment to the shareholders

without the board having adopted the amendment.

(b) Form of amendment.--The resolution or petition shall

contain the language of the proposed amendment of the articles:

(1) by setting forth the existing text of the articles

or the provision thereof that is proposed to be amended, with

brackets around language that is to be deleted and

underscoring under language that is to be added or otherwise

clearly showing the changes to be made; or

* * *

(d) Submission to the shareholders.--Except where the

approval of the shareholders is unnecessary under this

subchapter, the board of directors shall direct that the

proposed amendment be submitted to a vote of the shareholders

entitled to vote thereon. An amendment proposed under subsection

(a)(2) shall be submitted to a vote either at the next annual

meeting held not earlier than 120 days after the amendment is

proposed or at a special meeting of the shareholders called for

that purpose by the shareholders.

(e) Cross references.--See sections 1106(b)(4) (relating to

uniform application of subpart) and 2535 (relating to proposal

of amendment to articles).

§ 1914. Adoption of amendments.

(a) General rule.--A vote of the shareholders entitled to

20210HB2057PN3299 - 144 -

vote on a proposed amendment shall be taken at the next annual

or special meeting of which notice for that purpose has been

duly given. Unless the articles or a specific provision of this

subpart requires a greater vote, a proposed amendment of the

articles of a business corporation shall be adopted upon

receiving the affirmative vote of a majority of the votes cast

by all shareholders entitled to vote thereon and, if any class

or series of shares is entitled to vote thereon as a class, the

affirmative vote of a majority of the votes cast in each such

class vote. Any number of amendments may be submitted to the

shareholders and voted upon by them at one meeting. [Except as

provided in section 1912(a)(2) (relating to proposal of

amendments), a proposed] An amendment of the articles proposed

under section 1912(a)(3) (relating to proposal of amendments)

shall not be deemed to have been adopted by the corporation

unless it has also been approved by the board of directors,

regardless of the fact that the board has directed or suffered

the submission of the amendment to the shareholders for action.

* * *

restricted in the articles, an amendment of articles shall not

require the approval of the shareholders of the corporation if:

* * *

(2) the amendment is restricted to one or more of the

following:

(i) changing the corporate name;

(ii) providing for perpetual existence;

(iii) reflecting a reduction in authorized shares

effected by operation of section 1552(a) (relating to

power of corporation to acquire its own shares) and, if

20210HB2057PN3299 - 145 -

appropriate, deleting all references to a class or series

of shares that is no longer outstanding;

(iv) adding or deleting a provision authorized by

section 1528(f) (relating to shares represented by

certificates and uncertificated shares); [or]

(v) adding, changing or eliminating the par value of

any class or series of shares if the par value of that

class or series does not have any substantive effect

under the terms of that or any other class or series of

shares; or

(vi) implementing an amendment authorized by section

229(h) (relating to limitation on voiding certain

defective entity actions);

* * *

(c.1) Board amendment under other sections.--Whenever a

provision of this subpart authorizes the board of directors to

take any action without the approval of the shareholders and

provides that a statement, certificate, plan or other document

relating to such action shall be filed in the Department of

State and shall operate as an amendment of the articles, the

board upon taking such action may, in lieu of filing the

statement, certificate, plan or other document, amend the

articles under this subsection without the approval of the

shareholders to reflect the taking of such action.

(c.2) Effect of board amendment.--An amendment of articles

under [this subsection] subsection (c) shall be deemed adopted

by the corporation when it has been adopted by the board of

directors pursuant to section 1912 (relating to proposal of

amendments).

* * *

20210HB2057PN3299 - 146 -

Section 58. Section 1932(g) of Title 15 is amended to read:

§ 1932. Voluntary transfer of corporate assets.

* * *

(g) Presumption.--The following apply to a determination

whether a corporation has sold, leased, exchanged or otherwise

disposed of all or substantially all, of its property and

assets, with or without good will:

(1) A corporation will conclusively be deemed not to

have [sold, leased, exchanged or otherwise disposed of all,

or substantially all, of its property and assets, with or

without goodwill,] done so if the corporation or any direct

or indirect subsidiary controlled by the corporation retains

a business activity that represented at the end of its most

recently completed fiscal year before the transaction, on a

consolidated basis, at least:

[(1)] (i) 25% of total assets; and

[(2)] (ii) 25% of either:

[(i)] (A) income from continuing operations

before taxes; or

[(ii)] (B) revenues from continuing operations.

(2) A determination under paragraph (1)(i) may be based

on a balance sheet that reflects:

(i) the book values of the assets of the

corporation, as reflected on its books and records;

(ii) a valuation that takes into consideration

unrealized appreciation and depreciation or other changes

in value of the assets of the corporation;

(iii) the current value of the assets of the

corporation, either valued separately or valued in

segments or as an entirety as a going concern; or

20210HB2057PN3299 - 147 -

(iv) any other method that is reasonable in the

circumstances.

(3) A deter mination under paragraph (1)(ii) may be based

on financial statements prepared on the basis of generally

accepted accounting principles, or such other accounting

practices and principles as are used generally by the

corporation in the maintenance of its books and records and

as are reasonable in the circumstances.

Section 59. Section 1979(b) of Title 15 is amended and the

section is amended by adding a subsection to read:

§ 1979. Survival of remedies and rights after dissolution.

* * *

(b) Rights and assets.--The dissolution of a business

corporation shall not affect the limited liability of a

shareholder of the corporation theretofore existing with respect

to transactions occurring or acts or omissions done or omitted

in the name of or by the corporation except that, subject to

subsection (d) and sections 1992(d) (relating to [claims barred]

notice to claimants) and 1993(b) (relating to [claims barred]

acceptance or rejection of matured claims), if applicable, each

shareholder shall be liable for his pro rata portion of the

unpaid liabilities of the corporation up to the amount of the

net assets of the corporation distributed to the shareholder in

connection with the dissolution. Should any property right of a

corporation be discovered, or the corporation be named as a

defendant in an action or proceeding, at any time after the

dissolution of the corporation, the surviving member or members

of the board of directors that wound up the affairs of the

corporation, or a receiver appointed by the court, shall have

authority to enforce the property right and to collect and

20210HB2057PN3299 - 148 -

divide the assets so discovered among the persons entitled

thereto and to prosecute actions or proceedings in the corporate

name of the corporation. Any assets so collected shall be

distributed and disposed of in accordance with the applicable

order of court, if any, and otherwise in accordance with this

subchapter.

* * *

(f) Late-filed action or proceeding.--The following apply to

an action or proceeding commenced against a dissolved

corporation after the expiration of the period specified in

subsection (a)(2):

(1) Any judgment against a dissolved corporation in an

action or proceeding shall be void.

(2) The dissolved corporation may, but need not, appear

and raise as a defense the expiration of the period specified

in subsection (a)(2) and any other reasonably related matters

in response to the action or proceeding.

(3) Any person who was a director, officer or

shareholder of the dissolved corporation when the dissolution

became effective or any governing person of any successor

entity acting pursuant to Subchapter H (relating to

postdissolution provision for liabilities), and any

successor-in-interest to any of those persons, may, but need

not, act on behalf of the dissolved corporation in taking the

actions described in paragraph (2), and shall not thereby be

deemed to be deprived of the operation of subsections (c) and

(d) or section 1978(b) (relating to winding up of corporation

after dissolution) or otherwise be responsible for any

obligations of the dissolved corporation.

Section 60. Sections 2104, 2105(a), 2322(b)(5) and (c),

20210HB2057PN3299 - 149 -

2336, 2521, 2522, 2524(a) and 2528 of Title 15 are amended to

read:

§ 2104. Election of an existing business corporation to become

a nonstock corporation.

(a) General rule.--Any business corporation may become a

nonstock corporation under this chapter by:

(1) Adopting a plan of [conversion] election providing

for the redemption by the corporation of all of its shares

whether or not redeemable by the terms of its articles and

adjusting its affairs so as to comply with the requirements

of this chapter applicable to nonstock corporations.

(2) Filing articles of amendment which shall contain, in

addition to the requirements of section 1915 (relating to

articles of amendment):

(i) A heading stating the name of the corporation

and that it is a nonstock corporation.

(ii) A statement that it elects to become a nonstock

corporation.

(iii) A statement that the corporation is organized

on a nonstock basis.

(iv) Such other changes, if any, that may be desired

in the articles.

(b) Procedure.--The plan of [conversion] election of the

corporation into a nonstock corporation (which plan shall

include the amendment of the articles required by subsection

(a)) shall be adopted in accordance with the requirements of

Subchapter B of Chapter 19 (relating to amendment of articles)

except that:

(1) The holders of shares of every class shall be

entitled to vote on the plan regardless of any limitations

20210HB2057PN3299 - 150 -

stated in the articles or bylaws on the voting rights of any

class.

(2) The plan must be approved by two-thirds of the votes

cast by all shares of each class.

(3) If any shareholder of a business corporation that

adopts a plan of [conversion] election into a nonstock

corporation objects to the plan of [conversion] election and

complies with the provisions of Subchapter D of Chapter 15

(relating to dissenters rights), the shareholder shall be

entitled to the rights and remedies of dissenting

shareholders therein provided. There shall be included in, or

enclosed with, the notice of the meeting of shareholders

called to act upon the plan of [conversion] election a copy

or a summary of the plan and a copy of Subchapter D of

Chapter 15 and of this subsection.

(4) The plan shall not impose any additional liability

upon any existing patron of the business of the corporation,

whether or not that person becomes a member of the

corporation pursuant to the plan, unless the patron expressly

assumes such liability.

§ 2105. Termination of nonstock corporation status.

(a) General rule.--A nonstock corporation may terminate its

status as such and cease to be subject to this chapter by:

(1) Adopting a plan of [conversion] termination

providing for the issue of appropriate shares to its members

and adjusting its affairs so as to comply with the

requirements of this subpart applicable to business

corporations that are not nonstock corporations.

(2) Amending its articles to delete therefrom the

additional provisions required or permitted by sections

20210HB2057PN3299 - 151 -

2102(a)(1) (relating to formation of nonstock corporations)

and 2103 (relating to contents of articles and other

documents of nonstock corporations) to be stated in the

articles of a nonstock corporation. The plan of [conversion]

termination (which plan shall include the amendment of the

articles required by this section) shall be adopted in

accordance with Subchapter B of Chapter 19 (relating to

amendment of articles) except that:

(i) The members of every class shall be entitled to

vote on the plan regardless of any limitations stated in

the articles or bylaws, or in a document evidencing

membership, on the voting rights of any class.

(ii) The plan must be approved by a majority of the

votes cast by the members of each class.

* * *

§ 2322. Share transfer restrictions.

* * *

(b) Exception.--Subsection (a) shall not apply to a

transfer:

* * *

(5) By merger[, consolidation or share] or interest

exchange that becomes effective pursuant to section 2336

(relating to fundamental changes) or a [share exchange]

reclassification of existing shares [for other shares of a

different class or series in the corporation].

* * *

transfer shares in a transaction not exempt under subsection (b)

(1) through (7) shall obtain an offer from a third party who

meets the requirements of subsection (d) to purchase the shares

20210HB2057PN3299 - 152 -

for cash and shall deliver written notice of the third-party

offer to the corporation at its registered office stating the

number and [kind] type of shares, the offering price, the other

terms of the offer and the name and address of the third-party

offeror.

* * *

§ 2336. Fundamental changes.

Except as permitted or required by this chapter, a statutory

close corporation shall not effect any corporate action that

under Chapter 3 (relating to entity transactions) or 19

(relating to fundamental changes) requires the approval of

shareholders unless the action is adopted by at least the

minimum vote.

§ 2521. Call of special meetings of shareholders.

(a) General rule.--[The] Except as provided in subsections

(b) and (c), the shareholders of a registered corporation [shall

not be entitled by statute to] described in subsection 2502(1)

(relating to registered corporation status) do not have the

right to call a special meeting of the shareholders.

(b) Exception.--[Subsection (a) shall not apply to the call

of a special meeting by an] An interested shareholder (as

defined in section 2553 (relating to interested shareholder))

may call a special meeting of shareholders for the purpose of

approving a business combination under section 2555(3) or (4)

(relating to requirements relating to certain business

combinations).

articles of a registered corporation described in section

2502(1) [(relating to registered corporation status)] that gives

shareholders the right to call a special meeting of the

20210HB2057PN3299 - 153 -

shareholders and:

(1) is adopted after July 1, 2015, may [not] provide

that a special meeting may be called [by less than 25%] only

by shareholders entitled to cast 25% or more of the votes

that all shareholders would be entitled to cast at the

meeting[.]; or

(2) was adopted on or before July 1, 2015, is

enforceable in accordance with its terms.

§ 2522. Adjournment [of meetings] or postponement of meeting of

shareholders.

(a) Authority to adjourn.--Except as otherwise provided in

the bylaws, any regular or special meeting of the shareholders

of a registered corporation, including one at which directors

are to be elected, may be adjourned for such period as the

presiding officer or the shareholders present and entitled to

vote shall direct.

(b) Notice of adjourned virtual meeting.--If notice of an

adjourned meeting of shareholders of a registered corporation

held exclusively by means of electronic technology as provided

in section 1708(c) (relating to use of conference telephone or

other electronic technology) cannot be given by announcement at

the meeting at which the adjournment is taken when permitted by

section 1702(b) (relating to manner of giving notice), notice

may be given by means solely of a publicly available filing with

the Securities and Exchange Commission.

officer for a meeting of shareholders of a registered

corporation that is to be held exclusively by means of

electronic technology as provided in section 1708(c) decides in

his or her reasonable judgment on the day of the meeting that

20210HB2057PN3299 - 154 -

the meeting cannot be convened because of a reason outside the

control of the corporation, the presiding officer may postpone

the meeting to a specified time later that day or the following

day. Notice of the postponed meeting may be given by means

solely of a publicly available filing with the Securities and

Exchange Commission.

§ 2524. Consent of shareholders in lieu of meeting.

(a) General rule.--An action may be authorized by the

shareholders of a registered corporation without a meeting by

less than unanimous consent of all shareholders entitled to vote

thereon only if permitted by its articles.

* * *

§ 2528. Notice of shareholder meetings.

(a) Householding.--If a registered corporation solicits

proxies generally with respect to a meeting of its shareholders,

the corporation is not required to give notice of the meeting to

any shareholder to whom the corporation is not required to send

a proxy statement pursuant to the rules of the Securities and

Exchange Commission.

(b) Notice and access.--If a registered corporation has

given a shareholder notice of the Internet availability of proxy

materials in a manner conforming with the rules of the

Securities and Exchange Commission, the corporation may give

notice of the meeting to the shareholder by posting the notice

on the Internet website to which the proxy materials are posted.

Section 61. Title 15 is amended by adding a section to read:

§ 2530. Qualifications of directors.

(a) General rule.--The bylaws of a registered corporation

may not impose a qualification of directors that is based on a

past, present or future action by a nominee or director in the

20210HB2057PN3299 - 155 -

discharge of the director's powers or duties as a governor of an

association.

(b) Certain permitted qualifications.--This section does not

prohibit qualifications relating to:

(1) not having entered a guilty plea, or not being or

having been subject to a criminal conviction, civil judgment

or regulatory sanction or penalty; or

(2) not having been removed as a governor of an

association by judicial action or for cause.

applies to a qualification included in a nomination procedure

adopted under section 1758(e) (relating to voting rights of

shareholders), but does not prohibit the corporation from

excluding a nomination that does not comply with such a

procedure.

Section 62. Section 2541 of Title 15 is amended by adding a

subsection to read:

§ 2541. Application and effect of subchapter.

* * *

(e) Exemption.--Voting shares acquired by a person or group

in a transaction that complies with section 321(f) (relating to

approval by business corporation) shall be disregarded for

purposes of determining if the person or group constitutes a

controlling person or group.

Section 63. The definitions of "affiliate" and "associate"

in section 2552 of Title 15 are amended to read:

§ 2552. 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:

20210HB2057PN3299 - 156 -

["Affiliate." A person that directly, or indirectly through

one or more intermediaries, controls, or is controlled by, or is

under common control with, a specified person.]

* * *

["Associate." When used to indicate a relationship with any

person:

(1) any corporation or organization of which such person

is an officer, director or partner or is, directly or

indirectly, the beneficial owner of shares entitling that

person to cast at least 10% of the votes that all

shareholders would be entitled to cast in an election of

directors of the corporation or organization;

(2) any trust or other estate in which such person has a

substantial beneficial interest or as to which such person

serves as trustee or in a similar fiduciary capacity; and

(3) any relative or spouse of such person, or any

relative of the spouse, who has the same home as such

person.]

* * *

Section 64. Section 2554(1) and (5) of Title 15 are amended

to read:

§ 2554. Business combination.

The term "business combination," when used in reference to

any registered corporation and any interested shareholder of the

corporation, means any of the following:

(1) A merger, [consolidation, share] interest exchange

or division of the corporation or any subsidiary of the

corporation:

(i) with the interested shareholder; or

(ii) with, involving or resulting in any other

20210HB2057PN3299 - 157 -

corporation (whether or not itself an interested

shareholder of the registered corporation) which is, or

after the merger, [consolidation, share] interest

exchange or division would be, an affiliate or associate

of the interested shareholder.

* * *

(5) A reclassification of securities (including, without

limitation, any split of shares, dividend of shares, or other

distribution of shares in respect of shares, or any reverse

split of shares), or recapitalization of the corporation, or

any merger [or consolidation] of the corporation with any

subsidiary of the corporation, or any other transaction

(whether or not with or into or otherwise involving the

interested shareholder), proposed by, or pursuant to any

agreement, arrangement or understanding (whether or not in

writing) with, the interested shareholder or any affiliate or

associate of the interested shareholder, which has the

effect, directly or indirectly, of increasing the

proportionate share of the outstanding shares of any class or

series of voting shares or securities convertible into voting

shares of the corporation or any subsidiary of the

corporation which is, directly or indirectly, owned by the

interested shareholder or any affiliate or associate of the

interested shareholder, except as a result of immaterial

changes due to fractional share adjustments.

* * *

Section 65. Section 2561(b)(5) and (e) of Title 15 are

amended, subsection (d) is amended by adding a paragraph and the

section is amended by adding a subsection to read:

§ 2561. Application and effect of subchapter.

20210HB2057PN3299 - 158 -

* * *

(b) Exceptions.--This subchapter shall not apply to any

control-share acquisition:

* * *

(5) Consummated:

(i) Pursuant to:

(A) a gift, devise, bequest or otherwise through

the laws of inheritance or descent[.]; or

(B) a transfer, sale or other disposition by a

beneficial or record holder of shares of the

corporation, or by a fiduciary of a beneficial or

record holder, either to, or in trust for, a spouse,

parent, sibling, child or descendant of:

(I) the holder; or

(II) a spouse, parent, sibling, child or

descendant of the holder.

(ii) By a settlor to a trustee under the terms of a

family, testamentary or charitable trust.

(iii) By a trustee to a trust beneficiary or a

trustee to a successor trustee under the terms of, or the

addition, withdrawal or demise of a beneficiary or

beneficiaries of, a family, testamentary or charitable

trust.

(iv) Pursuant to the appointment of a guardian or

custodian.

(v) Pursuant to a transfer from one spouse to

another by reason of separation or divorce or pursuant to

community property laws or other similar laws of any

jurisdiction.

(vi) Pursuant to the satisfaction of a pledge or

20210HB2057PN3299 - 159 -

other security interest created in good faith and not for

the purpose of circumventing this subchapter.

(vii) Pursuant to a plan of merger[, consolidation]

or plan of [share] interest exchange effected in

compliance with the provisions of this chapter if the

corporation is a party to the [agreement of merger,

consolidation or plan of share] merger or is the acquired

entity in the interest exchange.

(viii) Pursuant to a transfer from a person who

beneficially owns voting shares of the corporation that

would entitle the holder thereof to cast at least 20% of

the votes that all shareholders would be entitled to cast

in an election of directors of the corporation and who

acquired beneficial ownership of such shares prior to

October 17, 1989.

(ix) By the corporation or any of its subsidiaries.

(x) By any savings, stock ownership, stock option or

other benefit plan of the corporation or any of its

subsidiaries, or by any fiduciary with respect to any

such plan when acting in such capacity.

(xi) By a person engaged in business as an

underwriter of securities who acquires the shares

directly from the corporation or an affiliate or

associate of the corporation through his participation in

good faith in a firm commitment underwriting registered

under the Securities Act of 1933.

(xi.1) Pursuant to an acquisition of shares directly

from the corporation in a transaction exempt from the

registration requirements of the Securities Act of 1933.

(xii) Or commenced by a person who first became an

20210HB2057PN3299 - 160 -

acquiring person:

(A) after April 27, 1990; and

(B) (I) at a time when this subchapter was or

is not applicable to the corporation; or

(II) on or before ten business days after

the first public announcement by the corporation

that this subchapter is applicable to the

corporation, if this subchapter was not

applicable to the corporation on July 27, 1990.

* * *

(d) Status of certain shares and effect of formation of

group on status.--

* * *

(5) The acquisition of record title to a voting share by

a member of a group that is an acquiring person as a result

of a transfer of the share from another member of the group

does not constitute a control-share acquisition.

(e) Application of duties.--The duty of the board of

directors, committees of the board and individual directors

under section 2565 (relating to procedure for establishing

voting rights of control shares) is solely to the corporation

and not to any shareholder or creditor or any other person or

group, and may be enforced directly by the corporation or may be

enforced by [a shareholder, as such, by] an action in the right

of the corporation, and may not be enforced directly by a

shareholder or creditor or by any other person or group.

(f) Reversal of opt-out.--A provision of the articles or

bylaws providing that this subchapter shall not be applicable to

the corporation may be rescinded pursuant to the procedures

required by this subpart and the articles and bylaws at the time

20210HB2057PN3299 - 161 -

to amend the articles or bylaws generally.

Section 66. The definitions of "affiliate," "associate" and

"beneficial owner" and "existing shares" in section 2562 of

Title 15 are amended and the section is amended by adding a

definition to read:

§ 2562. 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:

* * *

["Affiliate," "associate" and "beneficial owner." The terms

shall have the meanings specified in section 2552 (relating to

definitions). The corporation may adopt reasonable provisions to

evidence beneficial ownership, specifically including

requirements that holders of voting shares of the corporation

provide verified statements evidencing beneficial ownership and

attesting to the date of acquisition thereof.]

* * *

"Beneficial owner." The term has the meaning specified in

section 2552 (relating to definitions). The corporation may

adopt reasonable provisions to evidence beneficial ownership,

specifically including requirements that holders of voting

shares of the corporation provide verified statements evidencing

beneficial ownership and attesting to the date of acquisition

thereof.

* * *

"Existing shares."

(1) Voting shares which have been beneficially owned

continuously by the same natural person since January 1,

1988.

20210HB2057PN3299 - 162 -

(2) Voting shares which are beneficially owned by any

natural person or trust, estate, foundation or other similar

entity to the extent the voting shares were acquired solely

by gift, inheritance, bequest, devise or other testamentary

distribution or series of these transactions, directly or

indirectly, from a natural person who had beneficially owned

the voting shares prior to January 1, 1988.

(3) Voting shares which were acquired pursuant to a

stock split, stock dividend, or other similar distribution

described in section 2561(c) (relating to [effect of

distributions] application and effect of subchapter) with

respect to existing shares that have been beneficially owned

continuously since their issuance by the corporation by the

natural person or entity that acquired them from the

corporation or that were acquired, directly or indirectly,

from such natural person or entity, solely pursuant to a

transaction or series of transactions described in paragraph

(2), and that are held at such time by a natural person or

entity described in paragraph (2).

(4) Voting shares which were acquired in a transaction

described in section 2561(b)(5).

* * *

Section 67. Section 2564 of Title 15 is amended by adding a

subsection to read:

§ 2564. Voting rights of shares acquired in a control-share

acquisition.

* * *

(d) Exemption.--The acquisition of voting shares by a person

or group in a transaction that complies with section 321(f)

(relating to approval by business corporation) shall be

20210HB2057PN3299 - 163 -

disregarded for purposes of determining if the transaction

constitutes a control-share acquisition.

Section 68. Sections 2565(a) and (c) and 2571(b)(5) and (6)

(i) and (iii) of Title 15 are amended and the sections are

amended by adding subsections to read:

§ 2565. Procedure for establishing voting rights of control

shares.

(a) Special meeting.--A special meeting of the shareholders

of a registered corporation shall be called by the board of

directors of the corporation for the purpose of considering the

voting rights to be accorded to the control shares if an

acquiring person:

(1) files an information statement fully conforming to

section 2566 (relating to information statement of acquiring

person);

(2) makes a request in writing for a special meeting of

the shareholders at the time of delivery of the information

statement;

(3) makes a control-share acquisition or a bona fide

written offer to make a control-share acquisition; and

(4) gives a written undertaking at the time of delivery

of the information statement to pay or reimburse the

corporation for the expenses of a special meeting of the

shareholders.

(a.1) Time of special meeting.--The special meeting

requested by the acquiring person shall be held on the date set

by the board of directors of the corporation, but in no event

later than 50 days after the receipt of the information

statement by the corporation, unless the corporation and the

acquiring person mutually agree to a later date. If the

20210HB2057PN3299 - 164 -

acquiring person so requests in writing at the time of delivery

of the information statement to the corporation, the special

meeting shall not be held sooner than 30 days after receipt by

the corporation of the complete information statement. Section

1755(d) (relating to time of holding meetings of shareholders)

does not apply to a special meeting called pursuant to this

subsection, unless the acquiring person has consented in record

form to the application of that subsection.

* * *

special meeting at which the issue of the voting rights to be

accorded the control shares shall be submitted to shareholders

shall be given at least ten days prior to the date named for the

meeting and shall be accompanied by:

(1) A copy of the information statement of the acquiring

person.

(2) A copy of any amendment of such information

statement previously delivered to the corporation at least

seven days prior to the date on which such notice is given.

(3) A statement disclosing whether the board of

directors of the corporation recommends approval of,

expresses no opinion and remains neutral toward, recommends

rejection of, or is unable to take a position with respect to

according voting rights to control shares. In determining the

position that it shall take with respect to according voting

rights to control shares, including to express no opinion and

remain neutral or to be unable to take a position with

respect to such issue, the board of directors shall

specifically consider, in addition to any other factors it

deems appropriate, the effect of according voting rights to

20210HB2057PN3299 - 165 -

control shares upon the interests of employees and of

communities in which offices or other establishments of the

corporation are located.

(4) Any other matter required by this subchapter to be

incorporated into or to accompany the notice of meeting of

shareholders or that the corporation elects to include with

such notice.

(c.1) Record date.--Only shareholders of record on the date

determined by the board of directors in accordance with the

provisions of section 1763 (relating to determination of

shareholders of record) shall be entitled to notice of and to

vote at the meeting to consider the voting rights to be accorded

to control shares.

* * *

§ 2571. Application and effect of subchapter.

* * *

(b) Exceptions.--This subchapter shall not apply to any

transfer of an equity security:

* * *

(5) Constituting:

(i) In the case of a person or group that, as of

October 17, 1989, beneficially owned shares entitling the

person or group to cast at least 20% of the votes that

all shareholders would be entitled to cast in an election

of directors of the corporation:

(A) The disposition of equity securities of the

corporation by the person or group.

(B) Subsequent dispositions of any or all equity

securities of the corporation disposed of by the

person or group where such subsequent dispositions

20210HB2057PN3299 - 166 -

are effected by:

(I) the direct purchaser of the securities

from the person or group if, as a result of the

acquisition by the purchaser of the securities

disposed of by the person or group, the

purchaser, immediately following the acquisition,

is entitled to cast at least 20% of the votes

that all shareholders would be entitled to cast

in an election of directors of the

corporation[.];

(II) a person that acquired the securities

from the person or group in a transaction or

series of transactions each of which is described

in this paragraph (5) if at the time of the

subsequent disposition the person disposing of

the securities is entitled to cast at least 20%

of the votes that all shareholders would be

entitled to cast in an election of directors of

the corporation; or

(III) an affiliate or associate of the

person or group.

(ii) The transfer of the beneficial ownership of the

equity security by:

(A) Gift, devise, bequest or otherwise through

the laws of inheritance or descent.

(A.1) Transfer, sale or other disposition by a

beneficial or record holder of the equity security of

the corporation, or by a fiduciary of a beneficial or

record holder, either to, or in trust for, a spouse,

parent, sibling, child or descendant of:

20210HB2057PN3299 - 167 -

(I) the holder; or

(II) a spouse, parent, sibling, child or

descendant of the holder.

(B) A settlor to a trustee under the terms of a

family, testamentary or charitable trust.

trustee to a successor trustee under the terms of a

family, testamentary or charitable trust.

(iii) The addition, withdrawal or demise of a

beneficiary or beneficiaries of a family, testamentary or

charitable trust.

(iv) The appointment of a guardian or custodian with

respect to the equity security.

(v) The transfer of the beneficial ownership of the

equity security from one spouse to another by reason of

separation or divorce or pursuant to community property

laws or other similar laws of any jurisdiction.

(vi) The transfer of record or the transfer of a

beneficial interest or interests in the equity security

where the circumstances surrounding the transfer clearly

demonstrate that no material change in beneficial

ownership has occurred.

(6) Consummated by:

(i) The corporation or any of its subsidiaries as a

disposition of shares by it.

* * *

(iii) A person engaged in business as an underwriter

of securities who acquires the equity securities directly

from the corporation or an affiliate or associate[, as

defined in section 2552 (relating to definitions),] of

20210HB2057PN3299 - 168 -

the corporation through [his] the person's participation

in good faith in a firm commitment underwriting

registered under the Securities Act of 1933.

* * *

(e) Reversal of opt-out.--A provision of the articles or

bylaws providing that this subchapter shall not be applicable to

the corporation may be rescinded pursuant to the procedures

required by this subpart and the articles and bylaws at the time

to amend the articles or bylaws generally.

Section 69. The definitions of "equity security" and

"transfer" in section 2573 of Title 15 are amended to read:

§ 2573. 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:

* * *

"Equity security." Any security, including all shares, stock

or similar security, and any security convertible into (with or

without additional consideration) or exercisable for any such

shares, stock or similar security, or carrying any warrant,

right or option to subscribe to or purchase such shares, stock

or similar security or any such warrant, right, option or

similar instrument. The term also includes any other security,

instrument, right of payment or other arrangement based on the

value of any of the foregoing.

* * *

"Transfer." [Acquisition or disposition.] Includes an

acquisition or disposition of equity securities in a transaction

under chapter 3 (relating to entity transactions).

* * *

20210HB2057PN3299 - 169 -

Section 70. Section 3321(a)(3), (b) and (c) of Title 15 are

amended and the section is amended by adding a subsection to

read:

§ 3321. Standard of conduct for directors.

(a) Consideration of interests.--Without regard to whether

the benefit corporation is subject to section 1715 (relating to

exercise of powers generally) or 1716 (relating to alternative

standard), in discharging the duties of their respective

positions, the board of directors, committees of the board and

individual directors of a benefit corporation, in considering

the best interest of the benefit corporation:

* * *

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

interests of any person or group] any matter referred to in

paragraph (1) or (2) over [the interests of any other person

or group] any other such matter or to regard any such matter

as dominant or controlling unless the benefit corporation has

stated in its articles 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 its articles.

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

consideration of [interests and factors] matters in the manner

required under subsection (a)[:

(1) shall not constitute a violation of section 1712

(relating to standard of care and justifiable reliance); and

(2) is in addition to the ability of directors to

consider interests and factors as provided in section 1715 or

1716.] shall not constitute a violation of section 1712

(relating to standards of care, justifiable reliance and

20210HB2057PN3299 - 170 -

business judgment rule). A benefit corporation:

(1) shall not be subject to section 1715(a) and (b) or

section 1716(a); but

(2) shall be subject to section 1715 (c), (d) and (e)

unless its articles or bylaws provide that it is subject to

section 1716, and references in section 1715(c), (d) and (e)

to the fiduciary duty of directors or the standard set forth

in section 1712 include the provisions of subsection (a).

whether the bylaws of a benefit corporation include a provision

eliminating or limiting the personal liability of directors

authorized under section 1713 (relating to personal liability of

directors):

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

for monetary damages for any action taken as a director 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] recklessness.

(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.

* * *

(e) Ownership of shares.--A director's ownership of, or

other interest in, the shares of a benefit corporation does not

alone, create a conflict of interest on the part of the director

with respect to the director's performance of the duties of a

director under subsection (a), except to the extent the

ownership or interest would create a conflict of interest if the

corporation were not a benefit corporation.

20210HB2057PN3299 - 171 -

Section 71. Section 3322(b) and (f) of Title 15 are amended

to read:

§ 3322. Benefit director.

* * *

(b) Election, removal and qualifications.--The benefit

director shall be elected and may be removed in the manner

provided under Subchapter C of Chapter 17 (relating to directors

and officers). Except as set forth in subsection [(e)(2)(i) or]

(g), the benefit director shall be an individual who is

independent. The benefit director may serve as the benefit

officer at the same time as serving as the benefit director. The

articles or bylaws of a benefit corporation may prescribe

additional qualifications of the benefit director not

inconsistent with this subsection.

* * *

(f) Exoneration from personal liability.--Regardless of

whether the bylaws of a benefit corporation include a provision

eliminating or limiting the personal liability of directors

authorized under section 1713 (relating to personal liability of

directors), a benefit director shall not be personally liable

for any act or omission in the capacity of a benefit director

unless the act or omission constitutes self-dealing, willful

misconduct or [a knowing violation of law] recklessness.

* * *

Section 72. Section 3323(b) of Title 15 is amended and the

section is amended by adding a subsection to read:

§ 3323. Standard of conduct for officers.

* * *

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

consideration of interests and factors in the manner described

20210HB2057PN3299 - 172 -

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

[1712(c) (relating to standard of care and justifiable

reliance)] 1734 (relating to officer's standard of care and

justifiable reliance).

* * *

(e) Ownership of shares.--An officer's ownership of, or

other interest in, the shares of a benefit corporation does not

alone, create a conflict of interest on the part of the officer

with respect to the officer's performance of the duties of an

officer under subsection (a), except to the extent the ownership

or interest would create a conflict of interest if the

corporation were not a benefit corporation.

Section 73. The definition of "plan" in section 5103(a) and

(b) of Title 15 are amended and subsection (a) is amended by

adding a definition to read:

§ 5103. Definitions.

(a) General definitions.--Subject to additional definitions

contained in subsequent provisions of this subpart that are

applicable to specific provisions of this subpart, the following

words and phrases when used in Part I (relating to preliminary

provisions) or in this subpart shall have the meanings given to

them in this section unless the context clearly indicates

otherwise:

* * *

"Membership register." Records administered by or on behalf

of a corporation in which the names of all of its members, the

address of each member and the class and other details of the

membership of each member are recorded.

* * *

["Plan." A plan of reclassification, merger, consolidation,

20210HB2057PN3299 - 173 -

asset transfer, division or conversion.]

* * *

(b) Index of other definitions.--The following is a

nonexclusive list of words and phrases which when used in this

subpart shall have the meanings given to them in section 102

(relating to definitions):

"Act" or "action."

"Conversion."

"Corporation for profit."

"Corporation not-for-profit."

"Court."

"Department."

"Division."

"Domestic corporation for profit."

"Domestic corporation not-for-profit."

"Domestication."

"Execute."

"Foreign corporation for profit."

"Foreign corporation not-for-profit."

"Interest exchange."

"Internal Revenue Code of 1986."

"Merger."

"Obligation."

"Officially publish."

"Record form."

"Representative."

"Sign."

Section 74. Section 5110 of Title 15 is repealed:

[§ 5110. Annual report.

(a) General rule.--On or before April 30 of each year, a

20210HB2057PN3299 - 174 -

corporation described in subsection (b) that has effected any

change in its officers during the preceding calendar year shall

file in the Department of State a statement executed by the

corporation and setting forth:

(1) The name of the corporation.

(2) The post office address, including street and

number, if any, of its principal office.

(3) The names and titles of the persons who are its

principal officers.

(b) Application.--This section shall apply to every:

(1) domestic nonprofit corporation that has been

incorporated after December 31, 1972;

(2) domestic nonprofit corporation that has made any

filing under the Nonprofit Corporation Law of 1933 in the

Department of State as amended by the act of June 19, 1969

(P.L.86, No.31);

(3) domestic nonprofit corporation that has filed a

statement of summary of record with the Department of State

after December 31, 1972; and

(4) qualified foreign nonprofit corporation.

under this section shall not constitute compliance with section

5507(b) (relating to registered office).

(d) Fee.--No fee shall be charged for effecting a filing

under this section.

(e) Cross reference.--See section 134 (relating to docketing

statement).]

Section 75. Sections 5306(a)(8) and 5504(c) of Title 15 are

amended and the sections are amended by adding subsections to

read:

20210HB2057PN3299 - 175 -

§ 5306. Articles of incorporation.

(a) General rule.--Articles of incorporation shall be signed

by each of the incorporators and shall set forth in the English

language:

* * *

(8) The name [and address, including street and number,

if any,] of each of the incorporators.

* * *

(d) Reference to external facts.--Except for the provisions

required by subsection (a)(1), (2), (4), (5), (6)(i) and (8),

any provision of the articles of incorporation may be made

dependent upon facts ascertainable outside of the articles if

the manner in which the facts will operate upon the provision is

set forth in the articles. The facts may include actions or

events within the control of or determinations made by the

corporation or a representative of the corporation.

§ 5504. Adoption, amendment and contents of bylaws.

* * *

(b.1) Restated bylaws.--Subsection (b) does not prohibit the

board of directors from including in restated bylaws, without

substantive change, a bylaw adopted by the members, and such a

restated provision continues to have the status of a bylaw

adopted by the members.

and bylaws.--Where any provision of this subpart or any other

provision of law refers to a rule as set forth in the bylaws of

a corporation or in a bylaw adopted by the members, the

reference shall be construed to include and be satisfied by any

rule on the same subject as set forth in the articles of the

corporation. Where any provision of this subpart or any other

20210HB2057PN3299 - 176 -

provision of law refers to a rule as set forth in the articles

of a corporation or prohibits the articles from setting forth a

rule, the contemplated rule may not be included in a bylaw or a

bylaw adopted by the members.

* * *

Section 76. Section 5505 of Title 15 is amended to read:

§ 5505. Persons bound by bylaws.

Except as otherwise provided by section 5713 (relating to

personal liability of directors) or any similar provision of

law, the bylaws of a nonprofit corporation [shall operate only

as regulations among] are binding on the members, directors,

members of an other body and officers of the corporation[, and]

with respect to its internal affairs whether or not a member,

director, member of an other body or officer has actual

knowledge of the provisions of the bylaws, but a bylaw shall not

affect contracts or other dealings with other persons, unless

those persons have actual knowledge of the [bylaws] bylaw.

Section 77. Section 5507(b) and (d) of Title 15 are amended

and the section is amended by adding a subsection to read:

§ 5507. Registered office.

* * *

(b) Statement of change of registered office.--After

incorporation, a change of the location of the registered office

may be authorized at any time by the board of directors or other

body. Before the change of location becomes effective, the

corporation [either] shall include the change in an annual

report under section 146 (relating to annual report), amend its

articles under the provisions of this subpart to reflect the

change [in location or shall file in] or deliv er to the

Department of State for filing a statement of change of

20210HB2057PN3299 - 177 -

registered office executed by the corporation, setting forth:

(1) The name of the corporation.

(2) The address, including street number, if any, of its

then registered office.

(3) The address, including street number, if any, to

which the registered office is to be changed.

(4) A statement that the change was authorized by the

board of directors or other body.

* * *

(d) Effect of statement.--A statement regarding the

registered office of a corporation set forth in a document filed

in the department pursuant to this section shall operate as an

amendment of the articles.

[(d)] (e) Cross reference.--See section 134 (relating to

docketing statement).

Section 78. Sections 5508, 5509 and 5512 of Title 15 are

amended to read:

§ 5508. Corporate records; inspection by members.

(a) Required records.--Every nonprofit corporation shall

keep minutes of the proceedings of the incorporators, members,

the directors and any other body, and a membership register[,

giving the names and addresses of all members and the class and

other details of the membership of each]. The corporation shall

also keep appropriate, complete and accurate books or records of

account. [The records provided for in this subsection shall be

kept at any of the following locations:

(1) the registered office of the corporation in this

Commonwealth;

(2) the principal place of business wherever situated;

20210HB2057PN3299 - 178 -

(3) any actual business office of the corporation.]

(b) Right of inspection by a member.--[Every member shall,

upon written verified demand stating the purpose thereof, have

a] On demand, in compliance with the requirements in subsection

(b.1), a member has the right to examine, in person or by agent

or attorney, during the usual hours for business for any proper

purpose, the membership register, books and records of account,

and [records of the proceedings of] minutes of, and consents in

lieu of meetings by, the incorporators, members, directors and

any other body, and to make copies or extracts therefrom.

(b.1) Contents and delivery of demand.--All of the following

apply to a demand under subsection (b):

(1) A proper purpose shall mean a purpose reasonably

related to the interest of the person as a member.

(2) In every instance where an attorney or other agent

is the person who seeks the right of inspection, the demand

shall be accompanied by a verified power of attorney or other

[writing] record that authorizes the attorney or other agent

to so act on behalf of the member.

(3) The demand must be:

(i) made in good faith;

(ii) in record form; and

(iii) verified.

(4) The demand must describe with reasonable

particularity:

(i) the purpose of the member; and

(ii) the records the member desires to inspect and

how the records relate to the purpose of the member.

(5) The demand [shall be directed] must be delivered to

the corporation:

20210HB2057PN3299 - 179 -

[(1)] (i) at its registered office in this

Commonwealth;

[(2)] (ii) at its principal place of business

wherever situated; [or

(3)] (iii) in care of the person in charge of an

actual business office of the corporation[.]; or

(iv) in care of the secretary of the corporation at

the most recent address of the secretary shown in the

records of the department.

member.--If the corporation, or an officer or agent thereof,

refuses to permit an inspection sought by a member or attorney

or other agent acting for the member pursuant to subsection (b)

or does not reply to the demand within five business days after

the demand has been [made] received, the member may [apply to]

file an action in the court for an order to compel the

inspection. The court [shall] is hereby vested with exclusive

jurisdiction to determine whether or not the person seeking

inspection is entitled to the inspection sought. The court may

summarily order the corporation to permit the member to inspect

the membership register and the other books and records of the

corporation and to make copies or extracts therefrom; or the

court may order the corporation to furnish to the member a list

of its members as of a specific date on condition that the

member first pay to the corporation the reasonable cost of

obtaining and furnishing the list and on such other conditions

as the court deems appropriate. Where the member seeks to

inspect the books and records of the corporation, other than its

membership register or list of members, [he] the member shall

first establish:

20210HB2057PN3299 - 180 -

(1) that [he] the member has complied with the

provisions of this section respecting the form and manner of

making demand for inspection of such document; and

(2) that the inspection [he] the member seeks is for a

proper purpose.

(d) Burden of proof.--Where the member seeks to inspect the

membership register or list of members of the corporation and

[he] the member has complied with the provisions of this section

respecting the form and manner of making demand for inspection

of the documents, the burden of proof shall be upon the

corporation to establish that the inspection he seeks is for an

improper purpose.

(e) Available relief.--The court may, in its discretion,

prescribe any limitations or conditions with reference to the

inspection, or award such other or further relief as the court

deems just and proper. The court may order books, documents and

records, pertinent extracts therefrom, or duly authenticated

copies thereof, to be brought into this Commonwealth and kept in

this Commonwealth upon such terms and conditions as the order

may prescribe.

(f) Right to bylaws.--Every member shall have the right to

receive, promptly after demand and without charge, a copy in

record form of the currently effective text of the bylaws. If

the corporation does not provide a member with a copy of the

bylaws as required by this subsection, the member may apply to

the court for an order to compel the production. The court shall

summarily order the corporation to provide a copy of the bylaws

unless the corporation establishes that the person seeking the

bylaws is not a member.

(g) Reasonable restrictions permitted.--The corporation may

20210HB2057PN3299 - 181 -

impose reasonable restrictions and conditions on access to and

use of information to be furnished under this section, including

designating information confidential and imposing nondisclosure

and safeguarding obligations on the recipient. In a dispute

concerning the reasonableness of a restriction, condition or

obligation under this subsection, the corporation has the burden

of proving reasonableness.

[(d)] (h) Cross references.--See sections 107 (relating to

form of records) and 5512 (relating to informational rights of a

director)[.] and 42 Pa.C.S. § 2503(7) and (9) (relating to right

of participants to receive counsel fees).

§ 5509. Bylaws and other powers in emergency.

(a) General rule.--Except as otherwise restricted in the

bylaws, the board of directors or other body of any nonprofit

corporation may adopt emergency bylaws, subject to repeal or

change by action of the members, which shall, notwithstanding

any different provisions of law or of the articles or bylaws, be

effective during [any emergency resulting from an attack on the

United States, a nuclear disaster or another catastrophe as a

result of which a quorum of the board cannot readily be

assembled] an emergency. The emergency bylaws may make any

provision that may be appropriate for the circumstances of the

emergency, including:

(1) Procedures for calling meetings of delegates, the

board or [other] an other body.

(2) Quorum requirements for meetings of delegates, the

board or an other body.

(3) Procedures for designating additional or substitute

directors or members of an other body.

(b) Lines of succession; head office.--The board of

20210HB2057PN3299 - 182 -

directors or other body, or the officers, if [given

authorization] authorized by the board of directors or other

body, either before or during any emergency, may:

(1) provide, and from time to time modify, lines of

succession in the event that during the emergency any or all

officers or agents of the corporation shall for any reason be

rendered incapable of discharging their duties; and

(2) effective in the emergency, change the head offices

or designate several alternative head offices or regional

offices of the corporation.

representative of the corporation:

(1) Acting in accordance with any emergency bylaws

[shall not be] in effect at the time or otherwise in

accordance with this section is not liable for monetary

damages except for:

(i) self-dealing, willful misconduct or

recklessness[.];

(ii) violation of a criminal statute; or

(iii) payment of taxes pursuant to Federal, State or

local law.

(2) [Shall not be] Is not liable for any action taken

[by him] by the representative in good faith in an emergency

in furtherance of the ordinary business affairs of the

corporation even though not authorized by the emergency or

other bylaws then in effect.

(d) Effect on regular bylaws.--To the extent [that they are]

not inconsistent with any emergency bylaws [adopted], the bylaws

of the corporation shall remain in effect during any emergency,

and, upon its termination, the emergency bylaws shall cease to

20210HB2057PN3299 - 183 -

be effective.

(e) Procedure in absence of emergency bylaws.--Unless

otherwise provided in emergency bylaws, notice of any meeting of

delegates, the board of directors or an other body during an

emergency shall be given only to those delegates, directors or

members of an other body it is feasible to reach at the time and

by such means as are feasible at the time, including

publication, radio or television. To the extent required to

constitute a quorum at any meeting of the board of directors or

an other body during any emergency, the officers of the

corporation who are present at the meeting shall, unless

otherwise provided in emergency bylaws, be deemed, in order of

rank and within the same rank in order of seniority, directors

or members of the other body, as the case may be, for the

meeting. An officer serving as a director or member of an other

body under this subsection shall be subject to, and entitled to

the benefits of, the provisions of this subpart relating to

directors or members of an other body.

(f) Corporate actions.--A corporate action to further the

ordinary business affairs of the corporation that is taken in

good faith in accordance with any emergency bylaws in effect at

the time or otherwise in accordance with this section is valid

and binding on the corporation.

(g) Member meetings.--The required time for holding the

annual meeting of delegates or members of a corporation provided

in section 5755(a) (relating to time of holding meetings of

members) or the articles or bylaws is tolled during an

emergency. The board or other body, acting by a majority of the

directors or members of the other body that can be assembled,

may take any action during an emergency that the board or other

20210HB2057PN3299 - 184 -

body determines to be practical and necessary to address the

circumstances of the emergency with respect to a meeting of

members notwithstanding anything to the contrary in this subpart

or in the articles or bylaws. The actions the board or other

body may take include postponing the meeting to a later time or

date, with the record date for determining the members entitled

to notice of, and to vote at, the meeting applying to the

postponed meeting without regard to section 5763 (relating to

determination of members of record).

(h) Definition.--As used in this section, and for no other

purpose, "emergency" means a period during which a quorum of the

board or an other body cannot readily be assembled as a result

of:

(1) an attack on the United States;

(2) a nuclear disaster;

(3) an epidemic or pandemic;

(4) a state of emergency under Federal or State law

covering a geographic area in which the corporation has its

principal office or a significant regional office or

operation; or

(5) any other catastrophe or disaster.

§ 5512. Informational rights of a director.

(a) General rule.--To the extent reasonably related to the

performance of the duties of the director, including those

arising from service as a member of a committee of the board of

directors, a director of a nonprofit corporation is entitled:

(1) in person or by any attorney or other agent, at any

reasonable time, to inspect and copy corporate books, records

and documents and, in addition, to inspect, and receive

information regarding, the assets, liabilities and operations

20210HB2057PN3299 - 185 -

of the corporation and any subsidiaries of the corporation

incorporated or otherwise organized or created under the laws

of this Commonwealth that are controlled directly or

indirectly by the corporation; and

(2) to demand that the corporation exercise whatever

rights it may have to obtain information regarding any other

subsidiaries of the corporation.

(b) Proceedings for the enforcement of inspection by a

director.--If the corporation, or an officer or agent thereof,

refuses to permit an inspection or obtain or provide information

sought by a director or attorney or other agent acting for the

director pursuant to subsection (a) or does not reply to the

request within two business days after the request has been

made, the director may [apply to] file an action in the court

for an order to compel the inspection or the obtaining or

providing of the information. The court shall summarily order

the corporation to permit the requested inspection or to obtain

the information unless the corporation establishes that [the]

information other than the bylaws to be obtained by the exercise

of the right is not reasonably related to the performance of the

duties of the director or that the director or the attorney or

agent of the director is likely to use [the] that information in

a manner that would violate the duty of the director to the

corporation. The order of the court may contain provisions

protecting the corporation from undue burden or expense and

prohibiting the director from using the information in a manner

that would violate the duty of the director to the corporation.

receive, on demand and without charge, a copy in record form of

the currently effective text of the bylaws.

20210HB2057PN3299 - 186 -

(d) Reasonable restrictions permitted.--The corporation may

impose reasonable restrictions and conditions on access to and

use of information to be furnished under this section, including

designating information confidential and imposing nondisclosure

and safeguarding obligations on the recipient. In a dispute

concerning the reasonableness of a restriction, condition or

obligation under this subsection, the corporation has the burden

of proving reasonableness.

[(c)] (e) Cross references.--See sections 107 (relating to

form of records), 5508 (relating to corporate records;

inspection by members) and 5734 (relating to other body) and 42

Pa.C.S. § 2503(7) (relating to right of participants to receive

counsel fees).

Section 79. Title 15 is amended by adding a section to read:

§ 5513. Forum selection provisions.

(a) General rule.--The bylaws may require that an internal

corporate claim must be brought exclusively in a specified court

or courts of this Commonwealth and, if so specified, also in

other courts sitting in this Commonwealth or in any other

jurisdiction with which the nonprofit corporation has a

reasonable relationship.

(b) Jurisdiction.--A provision of the bylaws adopted under

subsection (a) shall not have the effect of conferring

jurisdiction on any court or over any person or claim, and shall

not apply if none of the courts specified in the provision has

the requisite personal and subject matter jurisdiction. If none

of the courts of this Commonwealth specified in a provision

adopted under subsection (a) has the requisite personal and

subject matter jurisdiction and another court of this

Commonwealth does have such jurisdiction, then the internal

20210HB2057PN3299 - 187 -

corporate claim may be brought in the court with jurisdiction,

notwithstanding that it is not specified in the provision.

(1) Except as provided in paragraph (2), "internal

corporate claim" means:

(i) an action that is based upon an alleged

violation of a duty owed to the nonprofit corporation

under the laws of this Commonwealth by a current or

former director, member of an other body, officer or

member in that capacity;

(ii) a derivative action or proceeding brought on

behalf of the corporation;

(iii) an action asserting a claim arising pursuant

to any provision of:

(A) this title;

(B) the articles of incorporation or bylaws; or

corporation or the transfer of memberships in the

corporation if:

(I) the corporation and at least one member

are parties to the agreement or stated or

intended beneficiaries thereof; and

(II) the agreement is entered into after the

adoption of the forum selection provision under

this section and the agreement does not contain

an inconsistent forum selection provision; or

(iv) any action asserting a claim regarding the

internal affairs of t he corporation that is not included

in subparagraphs (i), (ii) and (iii).

(2) An internal corpora te claim does not include a

20210HB2057PN3299 - 188 -

claim, action or proceeding described in paragraph (1) that

is subject to section 5107 (relating to subordination of

subpart to canon law).

Section 80. Sections 5547(b), 5702(a)(1), 5704, 5708,

5709(b) and (c), 5711 and 5712 of Title 15 are amended to read:

§ 5547. Authority to take and hold trust property.

* * *

(b) Nondiversion of certain property.--Property committed to

charitable purposes shall not, by any proceeding under Chapter 3

(relating to entity transactions) or 59 (relating to

[fundamental changes] amendments, sale of assets and

dissolution) or otherwise, be diverted from the objects to which

it was donated, granted or devised, unless and until the board

of directors or other body obtains from the court an order under

20 Pa.C.S. Ch. 77 (relating to trusts) specifying the

disposition of the property.

§ 5702. Manner of giving notice.

(a) General rule.--

(1) Any notice required to be given to any person under

the provisions of this subpart or by the articles or bylaws

of any nonprofit corporation shall be given to the person

either personally or by [sending] delivering a copy thereof:

(i) By first class or express mail, postage prepaid,

or courier service, charges prepaid, to the person's

postal address appearing on the books of the corporation

or, in the case of directors or members of an other body,

supplied by the person to the corporation for the purpose

of notice. Notice under this subparagraph shall be deemed

to have been given to the person entitled thereto when

deposited in the United States mail or with a courier

20210HB2057PN3299 - 189 -

service for delivery to that person.

(ii) By facsimile transmission, e-mail or other

electronic communication to the [person's] facsimile

number or address for e-mail or other electronic

communications supplied by the person to the corporation

for the purpose of notice. Notice under this subparagraph

shall be deemed to have been given to the person entitled

thereto when sent.

* * *

§ 5704. Place and notice of meetings of members.

(a) Place.--Meetings of members may be held at [the] a

geographic location within or without this Commonwealth as may

be provided in or fixed pursuant to the bylaws. Authority to

provide for the location of a meeting of the members includes

the authority to determine to hold a meeting solely by means of

electronic technology in accordance with section 5708 (relating

to use of conference telephone or other electronic technology),

notwithstanding that the authority may refer to one or more

geographic locations. Unless otherwise provided in or fixed

pursuant to the bylaws, all meetings of the members that are not

held solely by means of electronic technology shall be held at

the executive office of the corporation wherever situated. [If a

meeting of members is held by means of the Internet or other

electronic communications technology in a fashion pursuant to

which the members have the opportunity to read or hear the

proceedings substantially concurrently with their occurrence,

vote on matters submitted to the members, pose questions to the

directors and members of any other body, make appropriate

motions and comment on the business of the meeting, the meeting

need not be held at a particular geographic location.]

20210HB2057PN3299 - 190 -

(b) Notice.--Notice in record form of every meeting of the

members shall be given by, or at the direction of, the secretary

or other authorized person to each member of record entitled to

vote at the meeting at least:

(1) ten days prior to the day named for a meeting that

will consider a transaction under Chapter 3 (relating to

entity transactions) or a fundamental change under Chapter 59

(relating to amendments, sale of assets and dissolution); or

(2) five days prior to the day named for the meeting in

any other case.

[If the secretary or other authorized person neglects or refuses

to give notice of a meeting, the person or persons calling the

meeting may do so.]

members, the notice shall specify the general nature of the

business to be transacted, and in all cases the notice shall

comply with the express requirements of this subpart. The

corporation shall not have a duty to augment the notice.

(d) Alternative authority.--If the secretary or other

authorized person does not give notice of a meeting within a

reasonable time, a person calling the meeting may do so.

§ 5708. Use of conference telephone or other electronic

technology.

(a) Incorporators, directors and members of an other body.--

Except as otherwise provided in the bylaws, one or more persons

may participate in a meeting of the incorporators, the board of

directors or an other body of a nonprofit corporation by means

of conference telephone or other electronic technology by means

of which all persons participating in the meeting can hear each

other. Participation in a meeting pursuant to this [section]

20210HB2057PN3299 - 191 -

subsection shall constitute presence in person at the meeting.

(b) Members.--Except as otherwise provided in the bylaws,

the presence or participation by a member, including voting and

taking other action, at a meeting of members[, or the expression

of consent or dissent to corporate action, by a member] by

conference telephone or other electronic [means, including,

without limitation, the Internet, shall constitute] technology

constitutes the presence of, or vote or action by, [or consent

or dissent of] the member for the purposes of this subpart.

bylaws provide expressly that a meeting of members may not be

held solely by means of electronic technology, a meeting of the

members does not need to be held at a geographic location if the

meeting is held by means of electronic technology in a fashion

pursuant to which the members have a reasonable opportunity to

participate in the meeting, read or hear the proceedings

substantially concurrently with their occurrence, vote on

matters subm itted to the members and, subject to such guidelines

and procedures as the board of directors may adopt, make

appropriate motions and comment on the business of the meeting.

Any guidelines or procedures adopted by the board or an other

body must comply with section 5709(c) (relating to conduct of

members meeting).

§ 5709. Conduct of members meeting.

* * *

(b) Authority of the presiding officer.--Except as otherwise

provided in the bylaws, the presiding officer shall determine

the order of business and shall have the authority to establish

rules for the conduct of the meeting if the board of directors

has not determined the order of business or established such

20210HB2057PN3299 - 192 -

rules.

officer in adopting rules for, and in conducting] rules adopted

for, and the conduct of, a meeting shall be fair to the members.

* * *

§ 5711. Alternative provisions.

(a) General rule.--Section 5716 (relating to alternative

standard) shall not be applicable to any nonprofit corporation

to which section 5715 (relating to exercise of powers generally)

is applicable. Section 5715 shall be applicable to any

corporation except a corporation:

(1) the bylaws of which by amendment adopted by the

board of directors on or before July 26, 1990, and not

subsequently rescinded by an articles amendment, explicitly

provide that section 5715 or corresponding provisions of

prior law shall not be applicable to the corporation; or

(2) the articles of which explicitly provide that

section 5715 or corresponding provisions of prior law shall

not be applicable to the corporation.

(b) Reversal of opt-out.--A provision of the articles or

bylaws providing that section 5715 or corresponding provisions

of prior law shall not be applicable to the corporation may be

rescinded pursuant to the procedures required by this subpart

and the articles and bylaws at the time of the rescission to

amend the articles or bylaws.

§ 5712. Standard of care [and], justifiable reliance and

business judgment rule.

(a) [Directors] General rule.--A director of a nonprofit

corporation shall stand in a fiduciary relation to the

corporation and shall perform [his duties as] the duties of a

20210HB2057PN3299 - 193 -

director, including [his] duties as a member of any committee of

the board upon which [he] the director may serve, in good faith,

in a manner [he] the director reasonably believes to be in the

best interests of the corporation and with such care, including

[reasonable inquiry,] the skill and diligence[, as] that a

person of ordinary prudence would use under similar

circumstances[.] and reasonable inquiry into those issues

required by the statutes of this Commonwealth to be considered

in the circumstances and those interests and factors listed in

section 5715(a) (relating to exercise of powers generally) or

5716(a) (relating to alternative standard) that the director

considers appropriate. This subsection is subject to subsection

(d) where applicable.

(a.1) Justifiable reliance.--In performing [his duties] the

duties of a director and in satisfying the requirements of

subsection (d), a director [shall be] is entitled to rely in

good faith on information, opinions, reports or statements,

including financial statements and other financial data, in each

case prepared or presented by any of the following:

(1) One or more officers or employees of the corporation

or an affiliate of the corporation whom the director

reasonably believes to be reliable and competent in the

matters presented.

(2) Counsel, public accountants or other persons as to

matters which the director reasonably believes to be within

the professional or expert competence of such person.

(3) A committee of the board upon which [he] the

director does not serve, duly designated in accordance with

law, as to matters within its designated authority, which

committee the director reasonably believes to merit

20210HB2057PN3299 - 194 -

confidence.

(b) Effect of actual knowledge.--A director [shall not be]

is not considered to be acting in good faith [if he has] under

subsection (a.1) if the director has actual knowledge concerning

the matter [in question that would cause his reliance to be]

that causes the director to believe reliance is unwarranted.

[(c) Officers.--Except as otherwise provided in the bylaws,

an officer shall perform his duties as an officer in good faith,

in a manner he reasonably believes to be in the best interests

of the corporation and with such care, including reasonable

inquiry, skill and diligence, as a person of ordinary prudence

would use under similar circumstances. A person who so performs

his duties shall not be liable by reason of having been an

officer of the corporation.]

(d) Business judgment rule.--A director who makes a business

judgment in good faith fulfills the duties under this section

if:

(1) the subject of the business judgment does not

involve self-dealing by the director or an associate or

affiliate of the director;

(2) the director is informed with respect to the subject

of the business judgment to the extent the director

reasonably believes to be appropriate under the

circumstances; and

(3) the director rationally believes that the business

judgment is in the best interests of the corporation.

(e) Burden of proof.--A person challenging the conduct of a

director as violating the duty of care under this section has

the burden of proving:

(1) a breach of the duty of care, including the

20210HB2057PN3299 - 195 -

inapplicability of the provisions as to the fulfillment of

that duty under subsection (d); and

(2) in a damage action, that the breach was the legal

cause of damage suffered by the corporation.

Section 81. Section 5713(c) of Title 15 is amended and the

section is amended by adding a subsection to read:

§ 5713. Personal liability of directors.

* * *

adopted under subsection (a) does not affect its application

with respect to an act by a director occurring before the

amendment or repeal unless the provision in effect at the time

of the act explicitly authorizes its amendment or repeal after

an act has occurred.

[(c)] (d) Cross reference.--See 42 Pa.C.S. § 8332.5

(relating to corporate representatives).

Section 82. Sections 5714, 5715(b), (d) and (e)(1)(i), 5716

and 5717 of Title 15 are amended to read:

§ 5714. [Notation of dissent] Presumption of assent.

A director of a nonprofit corporation who is present at a

meeting of its board of directors, or of a committee of the

board, at which action on any corporate matter is taken on which

the director is generally competent to act, shall be presumed to

have assented to the action taken unless [his] the director's

dissent, abstention or vote against the matter is entered in the

minutes of the meeting or unless [he files his written dissent]

the director delivers to the secretary of the meeting before the

adjournment thereof a dissent in record form to the action [with

the secretary of the meeting before the adjournment thereof] or

transmits the dissent in [writing] record form to the secretary

20210HB2057PN3299 - 196 -

of the corporation immediately after the adjournment of the

meeting. The right to dissent shall not apply to a director who

voted in favor of the action. Nothing in this subchapter shall

bar a director from asserting that minutes of the meeting

incorrectly omitted [his] the director's dissent, abstention or

vote against if, promptly upon receipt of a copy of such

minutes, [he] the director notifies the secretary [in writing]

of the corporation in record form of the asserted omission or

inaccuracy.

§ 5715. Exercise of powers generally.

* * *

(b) Consideration of interests and factors.--The board of

directors, committees of the board and individual directors

shall not be required, in considering the best interests of the

corporation or the effects of any action, to regard any

corporate interest or the interests of any particular group

affected by such action as a dominant or controlling interest or

factor. The consideration of interests and factors in the manner

described in this subsection and in subsection (a) shall not

constitute a violation of section 5712 (relating to standard of

care [and], justifiable reliance and business judgment rule).

* * *

(d) Presumption.--[Absent breach of fiduciary duty, lack of

good faith or self-dealing, any act as the board of directors, a

committee of the board or an individual director shall be

presumed to be in the best interests of the corporation.] In

assessing whether the standard set forth in section 5712 or 5728

(relating to interested directors or officers; quorum) has been

satisfied, there shall not be any greater obligation to justify,

or higher burden of proof with respect to, any act as the board

20210HB2057PN3299 - 197 -

of directors, any committee of the board or any individual

director relating to or affecting an acquisition or potential or

proposed acquisition of control of the corporation than is

applied to any other act as a board of directors, any committee

of the board or any individual director. Notwithstanding section

5712(d) and the preceding [provisions] provision of this

subsection, any act as the board of directors, a committee of

the board or an individual director relating to or affecting an

acquisition or potential or proposed acquisition of control to

which a majority of the disinterested directors shall have

assented shall be presumed to satisfy the standard set forth in

section 5712 or 5728, unless it is proven by clear and

convincing evidence that the disinterested directors did not

assent to such act in good faith after reasonable investigation.

(e) Definition.--The term "disinterested director" as used

in subsection (d) and for no other purpose means:

(1) A director of the corporation other than:

(i) A director who has a direct or indirect

financial or other interest in the person acquiring or

seeking to acquire control of the corporation or who is

an affiliate or associate[, as defined in section 2552

(relating to definitions),] of, or was nominated or

designated as a director by, a person acquiring or

seeking to acquire control of the corporation.

* * *

§ 5716. Alternative standard.

(a) General rule.--In discharging the duties of their

respective positions, the board of directors, committees of the

board and individual directors of a nonprofit corporation may,

in considering the best interests of the corporation, consider

20210HB2057PN3299 - 198 -

the effects of any action upon employees, upon suppliers and

customers of the corporation and upon communities in which

offices or other establishments of the corporation are located,

and all other pertinent factors. The consideration of those

factors shall not constitute a violation of section 5712

(relating to standard of care [and], justifiable reliance and

business judgment rule).

[(b) Presumption.--Absent breach of fiduciary duty, lack of

good faith or self-dealing, actions taken as a director shall be

presumed to be in the best interests of the corporation.]

alternative provisions).

§ 5717. Limitation on standing.

The duty of the board of directors, committees of the board

and individual directors under section 5712 (relating to

standard of care [and], justifiable reliance and business

judgment rule) is solely to the nonprofit corporation and not to

any member or creditor or any other person or group, and may be

enforced directly by the corporation or may be enforced by [a

member, as such, by] an action in the right of the corporation,

and may not be enforced directly by a member or creditor or by

any other person or group. Notwithstanding the preceding

sentence, sections 5715(a) and (b) (relating to exercise of

powers generally) and 5716(a) (relating to alternative standard)

do not impose upon the board of directors, committees of the

board and individual directors, any legal or equitable duties,

obligations or liabilities or create any right or cause of

action against, or basis for standing to sue, the board of

directors, committees of the board and individual directors.

Section 83. Title 15 is amended by adding sections to read:

20210HB2057PN3299 - 199 -

§ 5718. (Reserved).

§ 5719. Renunciation of corporate opportunities.

The articles of incorporation or bylaws, or an action of the

board of directors, may renounce any interest or expectancy of a

nonprofit corporation in, or in being offered an opportunity to

participate in, a specified corporate opportunity or specified

classes or categories of corporate opportunities that are

presented to the corporation or to one or more of its directors,

officers or members.

Section 84. Sections 5721 and 5724(b) of Title 15 are

amended to read:

§ 5721. Board of directors.

Unless otherwise provided by statute or in a bylaw adopted by

the members, all powers enumerated in section 5502 (relating to

general powers) and elsewhere in this [subpart] title or

otherwise vested by law in a nonprofit corporation shall be

exercised by or under the authority of the board of directors,

and the business and affairs of every nonprofit corporation

shall be managed by or under the direction of, a board of

directors. If any such provision is made in the bylaws, the

powers and duties conferred or imposed upon the board of

directors by this [subpart] title shall be exercised or

performed to such extent and by such other body as shall be

provided in the bylaws.

§ 5724. Term of office of directors.

* * *

(b) Resignations.--[Any director may resign at any time upon

notice in record form to the corporation. The resignation shall

be effective upon its receipt by the corporation or at a

subsequent time specified in the notice of resignation.] A

20210HB2057PN3299 - 200 -

director may resign at any time upon notice in record form to

the corporation. A resignation that is not conditioned upon

acceptance by the board of directors shall be effective upon

receipt by the corporation of the notice of resignation, unless

the notice specifies a later effective time or an effective time

determined upon the happening of an event or events. If a

resignation is conditioned upon its acceptance by the board, a

decision by the board to accept or reject the resignation shall

be made by the board in the manner required by Subchapter B

(relating to fiduciary duty).

* * *

Section 85. Section 5725 of Title 15 is amended by adding a

subsection to read:

§ 5725. Selection of directors.

* * *

(c.1) No directors in office.--At any time when the offices

of all of the directors of a membership corporation are vacant,

any officer, member of an other body or member may call a

special meeting of members for the purpose of electing

directors.

* * *

Section 86. Sections 5727, 5728, 5730, 5731(a) and 5732 of

Title 15 are amended to read:

§ 5727. Quorum of and action by directors.

(a) General rule.--Unless otherwise provided in the bylaws,

a majority of the directors in office of a nonprofit corporation

shall be necessary to constitute a quorum for the transaction of

business, and the acts of a majority of the directors present

and voting at a meeting at which a quorum is present shall be

the acts of the board of directors.

20210HB2057PN3299 - 201 -

(b) Action by consent.--Unless otherwise restricted in the

bylaws, any action required or permitted to be approved at a

meeting of the directors may be approved without a meeting [if a

consent or] if one or more consents to the action in record form

[are]. Except as provided in subsection (c), the consents must

be signed, before, on or after the effective [date] time of the

action by all of the directors in office [on the date the last

consent is signed] at the effective time. The consent or

consents must be filed with the secretary of the corporation.

person signing a con sent, whether or not then a director, may

instruct in record form, that the consent will be effective at a

future time, including a time determined upon the happening of

an event. In the case of a consent signed by a person not a

director at the time of signing, the consent is effective at the

stated effective time if the person who signed the consent is a

director at the effective time and did not revoke the consent in

record form prior to the effective time. A consent is effective

at the stated effective time even if one or more signers are no

longer directors at the effective time unless the consent has

been revoked by a signer who is a director at the effective

time. A signer of a consent may revoke the signer's consent in

record form until the consent becomes effective.

§ 5728. Interested directors or officers; quorum.

(a) General rule.--A contract or transaction between a

nonprofit corporation and one or more of its directors or

officers or between a nonprofit corporation and another domestic

or foreign corporation for profit or not-for-profit,

partnership, joint venture, trust or other association in which

one or more of [its] the corporation's directors or officers are

20210HB2057PN3299 - 202 -

[directors] governors or officers of the other association or

have a financial or other interest, [shall not be] is not void

or voidable solely for that reason, or solely because the

director or officer of the corporation is present at or

participates in the meeting of the board of directors that

authorizes the contract or transaction, or solely because the

vote of the director or officer is counted for that purpose, if:

(1) the material facts as to the relationship or

interest and as to the contract or transaction are disclosed

or are known to the board of directors and the board

authorizes the contract or transaction by the affirmative

votes of a majority of the disinterested directors even

though the disinterested directors are less than a quorum;

(2) the material facts as to the [director's or

officer's] relationship or interest and as to the contract or

transaction are disclosed or are known to the members

entitled to vote thereon, if any, and the contract or

transaction is specifically approved in good faith by vote of

those members; [or]

(3) the contract or transaction is fair as to the

corporation as of the time it is authorized, approved or

ratified by the board of directors or the members[.]; or

(4) the contract or transaction satisfies subsection (d)

or (e).

(b) Quorum.--Common or interested directors may be counted

in determining the presence of a quorum at a meeting of the

board that authorizes a contract or transaction specified in

subsection (a).

applicable except as otherwise restricted in the bylaws.

20210HB2057PN3299 - 203 -

(d) Common governors or officers with nonwholly owned

associations.--A contract or transaction between a nonprofit

corporation and an association that is not wholly owned or

controlled by the corporation, is not void or voidable solely on

the grounds that a person who is a director or officer of the

corporation is also a governor or officer of the other

association if:

(1) one of the conditions set forth in subsection (a)

(1), (2) or (3) is satisfied; or

(2) (i) the director or officer does not participate

personally and substantially in negotiating the

transaction for either the corporation or the other

association; and

(ii) if the transaction is approved by the governors

of either association, the person that is a governor or

officer of each association does not cast a vote that

would be necessary at a meeting to approve the

transaction on behalf of either association.

(e) Common governors or officers with wholly owned

associations.--A contract or transaction between a nonprofit

corporation and an association wholly owned or controlled by the

corporation is not void or voidable solely on the grounds that a

director or officer of the corporation is also a governor or

officer of the wholly owned or controlled association.

(f) Cross references.--See sections 5715(d) (relating to

exercise of powers generally) and 5730 (relating to compensation

of directors).

§ 5730. Compensation of directors.

(a) General rule.--Except as otherwise restricted in the

bylaws, the board of directors of a nonprofit corporation [shall

20210HB2057PN3299 - 204 -

have] has the authority to fix the compensation of directors for

their services as directors[, and a] regardless of the personal

interest of the directors. A director may be a salaried officer

of the corporation.

(b) Presumption.--If the board of directors of a nonprofit

corporation that is not incorporated for a charitable purpose

establishes the compensation of directors in accordance with

subsection (a), that action is presumed to be fair to the

corporation.

§ 5731. Executive and other committees of the board.

(a) Establishment and powers.--Unless otherwise restricted

in the bylaws:

(1) The bylaws or the board of directors [may, by

resolution adopted by a majority of the directors in office,]

of a nonprofit corporation may establish one or more

committees to consist of one or more directors of the

corporation.

(2) Any committee, to the extent provided in the

[resolution] action of the board of directors or in the

bylaws, shall have and may exercise all of the powers and

authority of the board of directors, except that a committee

shall not have any power or authority as to the following:

(i) The submission to members of any action or

matte r, other than the election or removal of directors,

requiring approval of members under this subpart or

Chapter 3 (relating to entity transactions) .

(ii) The creation or filling of vacancies in the

board of directors.

(iii) The adoption, amendment or repeal of the

bylaws.

20210HB2057PN3299 - 205 -

(iv) The amendment or repeal of any resolution of

the board that by its terms is amendable or repealable

only by the board.

(v) Action on matters committed by the bylaws or [a

resolution] an action of the board of directors

exclusively to another committee of the board.

(3) The board may designate one or more directors as

alternate members of any committee, who may replace any

absent or disqualified member at any meeting of the committee

or for purposes of action in record form by the committee. In

the absence or disqualification of a member and alternate

member or members of a committee, the member or members

thereof present at any meeting and not disqualified from

voting, whether or not [he or they] those present constitute

a quorum, may unanimously appoint another director to act at

the meeting in the place of any absent or disqualified

member.

* * *

§ 5732. Officers.

(a) General rule.--Every nonprofit corporation shall have a

president, a secretary, and a treasurer, or persons who shall

act as such, regardless of the name or title by which they may

be designated, elected or appointed and may have such other

officers [and assistant officers] as it may authorize from time

to time. The bylaws may prescribe special qualifications for the

officers. The president and secretary shall be natural persons

of full age. The treasurer may be a corporation, but if a

natural person shall be of full age. Unless otherwise restricted

in the bylaws, it shall not be necessary for the officers to be

directors. Any number of offices may be held by the same person.

20210HB2057PN3299 - 206 -

(b) Term of office.--The officers [and assistant officers]

shall be elected or appointed at such time, in such manner and

for such terms as may be fixed by or pursuant to the bylaws.

Unless otherwise provided by or pursuant to the bylaws, each

officer shall hold office for a term of one year and until [his]

the officer's successor has been selected and qualified or until

[his] the officer's earlier death, resignation or removal.

written notice to the corporation. The resignation shall be

effective upon receipt thereof by the corporation or at such

subsequent time as may be specified in the notice of

resignation.

(d) Bonding.--The corporation may secure the fidelity of any

or all of the officers by bond or otherwise.

(e) Vacancies.--Unless otherwise provided in the bylaws, the

board of directors shall have power to fill any vacancies in any

office occurring from whatever reason.

[(b)] (f) Authority.--Unless otherwise provided in the

bylaws, all officers of the corporation, as between themselves

and the corporation, shall have such authority and perform such

duties in the management of the corporation as may be provided

by or pursuant to the bylaws or, in the absence of controlling

provisions in the bylaws, as may be determined by or pursuant to

[resolutions or orders] actions of the board of directors or

other body.

[(c) Nomination of officers.--Unless the bylaws provide

otherwise, officers shall be nominated by a nominating committee

or from the floor.

(d) Cross reference.--See section 5110 (relating to annual

report).]

20210HB2057PN3299 - 207 -

(g) Right to bylaws.--Every officer shall have the right to

receive, promptly after demand and without charge, a copy in

record form of the currently effective text of the bylaws, but

only to the extent reasonably related to the officer's duties.

Section 87. Title 15 is amended by adding sections to read:

§ 5733.1. Officer's standard of care and justifiable reliance.

(a) General rule.--Except as otherwise provided in the

bylaws, an officer shall perform the duties of an officer in

good faith, in a manner the officer reasonably believes to be in

the best interests of the nonprofit corporation and with such

care, including reasonable inquiry, skill and diligence, as a

person of ordinary prudence would use under similar

circumstances. A person who performs the duties of an officer in

accordance with this subsection, and any provision of the bylaws

that modify this subsection, shall not be liable to the

corporation by reason of having been an officer of the

corporation.

(b) Justifiable reliance.--In performing the duties of an

officer, an officer is entitled to rely in good faith on

information, opinions, reports or statements, including

financial statements and other financial data, in each case

prepared or presented by any of the following:

(1) One or more other officers or employees of the

corporation or an affiliate of the corporation whom the

officer reasonably believes to be reliable and competent in

the matters presented.

(2) Counsel, public accountants or other persons as to

matters that the officer reasonably believes to be within the

professional or expert competence of such person.

20210HB2057PN3299 - 208 -

considered to be acting in good faith under subsection (a) if

the director has actual knowledge concerning the matter that

causes the officer to believe reliance is unwarranted.

(d) Business judgment rule.--Except as otherwise restricted

in the bylaws, an officer who makes a business judgment in good

faith fulfills the duties of an officer if:

(1) the subject of the business judgment does not

involve self-dealing by the officer or an associate or

affiliate of the officer;

(2) the officer is informed with respect to the subject

of the business judgment to the extent the officer reasonably

believes to be appropriate under the circumstances; and

(3) the officer rationally believes that the business

judgment is in the best interests of the corporation.

(e) Burden of proof.--A person challenging the conduct of an

officer under this section has the burden of proving a breach of

the duty of care, including the provisions of subsections (c)

and (d) , and, in a damage action, the burden of proving that the

breach was the legal cause of damage suffered by the

corporation.

§ 5733.2. Personal liability of officers.

(a) General rule.--If a bylaw adopted by the members of a

nonprofit corporation so provides, an officer shall not be

personally liable, as such, for monetary damages for any action

taken unless:

(1) the officer has breached or failed to perform the

duties of an officer under this subchapter; and

(2) the breach or failure to perform constitutes self-

dealing, willful misconduct or recklessness.

(b) Exceptions.--Subsection (a) shall not apply to:

20210HB2057PN3299 - 209 -

(1) the responsibility or liability of an officer

pursuant to any criminal statute; or

(2) the liability of an officer for the payment of taxes

pursuant to Federal, State or local law.

described in subsection (a) does not affect its application with

respect to an act by an officer occurring before the amendment

or repeal unless the provision in effect at the time of the act

explicitly authorizes its amendment or repeal after an act has

occurred.

(d) Cross reference.--See 42 Pa.C.S. § 8332.5 (relating to

corporate representatives).

Section 88. Sections 5743, 5750, 5755, 5756(a)(1) and (b)

(1), 5758 and 5763 of Title 15 are amended to read:

§ 5743. Mandatory indemnification.

(a) General rule.--To the extent that a [representative]

present or former director or officer of a nonprofit corporation

has been successful on the merits or otherwise in defense of any

action or proceeding referred to in section 5741 (relating to

third-party actions) or 5742 (relating to derivative and

corporate actions) or in defense of any claim, issue or matter

therein, [he] the director or officer shall be indemnified

against expenses (including attorney fees) actually and

reasonably incurred by [him] the director or officer in

connection therewith.

(b) Prospective application.--The limitation of the scope of

subsection (a) to a present or former director or officer

applies only to acts occurring after (insert the effective date

of this act) .

[(b)] (c) Cross reference.--See section 6145 (relating to

20210HB2057PN3299 - 210 -

applicability of certain safeguards to foreign corporations).

§ 5750. Duration and extent of coverage.

The indemnification and advancement of expenses provided by

or granted pursuant to this subchapter shall, unless otherwise

provided when authorized or ratified, continue as to a person

who has ceased to be a representative of the corporation and

shall inure to the benefit of the heirs and personal

representative of that person. A right to indemnification or to

advancement of expenses arising under a provision of the

articles or bylaws may not be eliminated or impaired by an

amendment to or repeal of the provision after the occurrence of

an act that is the subject of the threatened, pending or

completed action or proceeding, whether civil, criminal,

administrative or investigative, for which indemnification or

advancement of expenses is sought, unless the provision in

effect at the time of the act explicitly authorizes the

elimination or impairment after an act has occurred.

§ 5755. Time of holding meetings of members.

(a) Regular meetings.--The bylaws of a nonprofit corporation

may provide for the number and the time of meetings of members[,

but unless]. Except as otherwise provided in a bylaw adopted by

the members, at least one meeting of the members [of a

corporation that has members, as such,] that are entitled to

vote[,] for the election of directors shall be held in each

calendar year for the election of directors at the time provided

in or fixed pursuant to authority granted by the bylaws. Failure

to hold the annual or other regular meeting at the designated

time shall not work a dissolution of the corporation or affect

otherwise valid corporate acts. If the annual or other regular

meeting is not called and held within six months after the

20210HB2057PN3299 - 211 -

designated time, any member may call the meeting at any time

thereafter.

(b) Special meetings.--Special meetings of the members may

be called at any time by:

(1) the board of directors;

(2) members entitled to cast at least 10% of the votes

that all members are entitled to cast at the particular

meeting; [or]

(3) [other] such officers or other persons as may be

provided in the bylaws[.]; or

(4) as provided in section 5725(c.1) (relating to

selection of directors).

(b.1) Duties of secretary.--At any time, upon written

request of any person who has called a special meeting, it shall

be the duty of the secretary to fix the time of the meeting

which, if the meeting is called pursuant to a statutory right,

shall be held within any period specified by this subpart, or if

no period is specified, not more than 60 days after the receipt

of the request. If the secretary neglects or refuses to fix the

time of the meeting, the person or persons calling the meeting

may do so.

meeting may be taken but any meeting at which directors are to

be elected shall be adjourned [only] for no longer than from day

to day, or for longer periods not exceeding 15 days each, as the

members present and entitled to vote shall direct, until the

directors have been elected.

(d) Postponement or cancellation.--The board of directors

may postpone , or delegate to an officer the authority to

postpone, the annual or other regular meeting of members,

20210HB2057PN3299 - 212 -

subject to the provision of subsection (a) providing for a

meeting each calendar year. Unless otherwise restricted in the

bylaws or otherwise provided by statute, the holding of a

special meeting of members may be postponed for not more than 15

days or may be canceled by the person or group that called the

special meeting. In the case of a postponed or canceled meeting,

prompt notice in record form of the postponement or cancellation

must be given to the members entitled to vote at the meeting.

[(d)] (e) Cross reference.--See section 6145 (relating to

applicability of certain safeguards to foreign domiciliary

corporations).

§ 5756. Quorum.

(a) General rule.--A meeting of members of a nonprofit

corporation duly called shall not be organized for the

transaction of business unless a quorum is present. Unless

otherwise provided in a bylaw adopted by the members:

(1) [The] A quorum for the purposes of consideration and

action on a particular matter at a meeting shall consist of:

(i) the presence of members entitled to cast at

least a majority of the votes that all members are

entitled to cast on [a particular] the matter [to be

acted upon at the meeting shall constitute a quorum for

the purposes of consideration and action on the matter.];

and

(ii) if any members are entitled to vote as a class

on the matter, the presence of members entitled to cast

at least a majority of the votes entitled to be cast in

the class vote.

* * *

(b) Exceptions.--Notwithstanding any contrary provision in

20210HB2057PN3299 - 213 -

the articles or bylaws, those members entitled to vote who

attend a meeting of members:

(1) At which directors are to be elected that has been

previously adjourned for lack of a quorum, although less than

a quorum as fixed in this section or in the bylaws, shall

nevertheless constitute a quorum for the purpose of [election

of] electing directors.

* * *

§ 5758. Voting rights of members.

(a) General rule.--Unless otherwise provided in a bylaw

adopted by the members, every member of a nonprofit corporation

shall be entitled to one vote.

(b) Procedures.--The following apply to voting by the

members:

(1) The manner of voting on any matter, including

changes in the articles or bylaws, may be by ballot, mail or

any reasonable means provided in a bylaw adopted by the

members.

(2) If a bylaw adopted by the members provides a fair

and reasonable procedure for the nomination of candidates for

any office, only candidates who have been duly nominated in

accordance therewith shall be eligible for election.

(3) Unless otherwise provided in [such] a bylaw adopted

by the members, in elections for directors at a meeting of

members held at a geographic location, voting shall be by

ballot[, and the]. The members do not have the right to vote

by ballot at a meeting that is not held at a geographic

location pursuant to section 5708(c) (relating to use of

conference telephone or other electronic technology).

(4) The candidates for election as directors receiving

20210HB2057PN3299 - 214 -

the highest number of votes from each class or group of

classes, if any, of members entitled to elect directors

separately up to the number of directors to be elected by

such class or group of classes shall be elected. If at any

meeting of members directors of more than one class are to be

elected, each class of directors shall be elected in a

separate election.

provides, in each election of directors of a nonprofit

corporation every member entitled to vote shall have the right

to multiply the number of votes to which he may be entitled by

the total number of directors to be elected in the same election

by the members or the class of members to which he belongs, and

he may cast the whole number of his votes for one candidate or

he may distribute them among any two or more candidates.

(d) Sale of votes.--No member shall sell his vote or issue a

proxy for money or anything of value.

(e) Voting lists.--Upon request of a member, the [books or

records of] membership register shall be produced at any regular

or special meeting of the corporation. If at any meeting the

right of a person to vote is challenged, the presiding officer

shall require the [books or records] membership register to be

produced as evidence of the right of the person challenged to

vote, and all persons who appear by the [books or records]

membership register to be members entitled to vote may vote. See

section 6145 (relating to applicability of certain safeguards to

foreign corporations).

§ 5763. Determination of members of record.

(a) Fixing record date.--Unless otherwise restricted in the

bylaws, the board of directors of a nonprofit corporation may

20210HB2057PN3299 - 215 -

fix a time prior to the date of any meeting of members as a

record date for the determination of the members entitled to

notice of, or to vote at, the meeting, which time, except in the

case of an adjourned meeting, shall not be more than 90 days

prior to the date of the meeting of members. Only members of

record on the date fixed shall be so entitled notwithstanding

any increase or other change in membership on the books of the

corporation after any record date fixed as provided in this

subsection. Unless otherwise provided in the bylaws, the board

of directors may similarly fix a record date for the

determination of members of record for any other purpose. A

record date may not precede the date on which the board acts to

fix that record date. The members of record shall be determined

as of the close of business on the record date unless the board

fixes a different time of day for that determination. When a

determination of members of record has been made as provided in

this section for purposes of a meeting, the determination shall

apply to any adjournment thereof unless otherwise restricted in

the bylaws or unless the board fixes a new record date for the

adjourned meeting.

(b) Determination when no record date fixed.--Unless

otherwise provided in the bylaws, if a record date is not fixed:

(1) The [record date for determining members entitled to

notice of or to vote at a meeting of members shall be at the]

close of business on the day next preceding the day on which

notice is given or, if notice is waived, at the close of

business on the day immediately preceding the day on which

the meeting is held[.] shall be the record date for

determining members entitled to notice of or to vote at a

meeting of members.

20210HB2057PN3299 - 216 -

(2) The close of business on the day on which the first

consent or dissent, request or petition is filed in record

form with the secretary of the corporation shall be the

record date for determining members entitled to:

(i) express consent or dissent to corporate action

[in writing] without a meeting, when prior action by the

board of directors or other body is not necessary;

(ii) call a special meeting of the members; or

(iii) propose an amendment of the articles.[;

shall be the close of business on the day on which the first

written consent or dissent, request for a special meeting or

petition proposing an amendment of the articles is filed with

the secretary of the corporation.]

(3) The record date for determining members for any

other purpose shall be at the close of business on the day on

which the board of directors or other body adopts the

resolution relating thereto.

Section 89. Section 5766(a) of Title 15 is amended and the

section is amended by adding subsections to read:

§ 5766. Consent of members in lieu of meeting.

(a) Unanimous consent.--Unless otherwise restricted in the

bylaws, any action required or permitted to be taken at a

meeting of the members or of a class of members of a nonprofit

corporation may be taken without a meeting if a consent or

consents to the action in record form are signed, before, on or

after the effective [date] time of the action by all of the

members who would be entitled to vote at a meeting for that

purpose. The consent or consents must be filed with the minutes

of the proceedings of the members.

* * *

20210HB2057PN3299 - 217 -

(d) Escrowing of consents.--A consent may provide, or a

person signing a consent, whether or not then a member, may

instruct in record form, that the consent will be effective at a

future time, including a time determined upon the happening of

an event. In the ca se of a consent signed by a person not a

member at the time of signing, the consent is effective at the

stated effective time if the person who signed the consent is a

member at the effective time and did not revoke the consent in

record form prior to the effective time. A consent is effective

at the stated effective time, even if one or more signers are no

longer members at the effective time if consents by members

entitled to cast the required number of votes have not been

revoked before the effective time.

(e) Revocation of consent.--Unless otherwise provided in a

consent, a signer of the consent may revoke the signer's consent

in record form until it becomes effective.

Section 90. Section 5781(a)(1)(i), (b) and (c) of Title 15

are amended to read:

§ 5781. Derivative action.

(a) General rule.--Subject to section 5782 (relating to

eligible member plaintiffs and security for costs) and

subsection (b), a plaintiff may maintain a derivative action to

enforce a right of a nonprofit corporation only if:

(1) the plaintiff first makes a demand on the

corporation or the board of directors, requesting that [it

cause the corporation to] the corporation bring an action to

enforce the right, and:

(i) if a special litigation committee is not

appointed under section 5783 (relating to special

litigation committee), [the corporation does not bring

20210HB2057PN3299 - 218 -

the action within a reasonable time; or] the board

determines that:

(A) an action based on some or all of the claims

asserted in the demand not be brought by the

corporation but that the corporation not object to an

action being brought by the party that made the

demand; or

(B) an action already commenced continue under

the control of the plaintiff; or

* * *

(b) Prior demand excused.--

(1) A demand under subsection (a)(1) is excused only if

the [member] plaintiff makes a specific showing that

immediate and irreparable harm to the nonprofit corporation

would otherwise result.

(2) If demand is excused under paragraph (1), demand

shall be made promptly after commencement of the action.

in record form and give notice with reasonable specificity of:

(1) the [essential] material facts relied upon to

support each of the claims made in the demand[.] against each

proposed defendant; and

(2) in the case of a derivative action commenced by a

member, the basis on which the person making the demand has

standing under section 5782.

* * *

Section 91. Section 5782(a) and (d) of Title 15 are amended

and the section is amended by adding a subsection to read:

§ 5782. Eligible member plaintiffs and security for costs.

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

20210HB2057PN3299 - 219 -

any action or proceeding brought [to enforce a secondary right

on the part of] by one or more members of a nonprofit

corporation [against any present or former officer, director or

member of an other body of the corporation because the

corporation refuses to enforce rights that may properly be

asserted by it] to enforce rights that the plaintiff claims

could be, but have not been, asserted by the corporation, each

plaintiff [must aver and it must be made to appear that each

plaintiff] has standing to commence and maintain the derivative

action if the plaintiff:

(1) was a member of the corporation at the time of the

transaction or conduct of which [he] the plaintiff

complains[.]; and

(2) continues to be a member until the time of judgment,

unless the failure to do so is the result of corporate action

that:

(i) was done merely to eliminate derivative claims;

(ii) has the effect of a reorganization that does

not affect the plaintiff's ownership of the enterprise.

* * *

(d) Failure to maintain ownership.--If a plaintiff loses the

right to maintain a derivative action under subsection (a)(2),

the court may entertain a motion to substitute the corporation

as the named plaintiff.

[(d)] (e) Cross reference.--See section 6146 (relating to

provisions applicable to all foreign corporations).

Section 92. Section 5783(a), (b)(1), (e) introductory

paragraph, (3) and (6) and (f) of Title 15 are amended and the

section is amended by adding subsections to read:

20210HB2057PN3299 - 220 -

§ 5783. Special litigation committee.

(a) General rule.--If a nonprofit corporation or the board

of directors receives a demand to bring an action to enforce a

right of the corporation, or if a derivative action is commenced

before demand has been made on the corporation or the board, the

board may appoint a special litigation committee to investigate

the claims asserted in the demand or action and to determine on

behalf of the corporation or recommend to the board whether

pursuing any of the claims asserted is in the best interests of

the corporation. The corporation [shall send] must deliver a

notice in record form to the [plaintiff] person making the

demand, or to the plaintiff if a derivative action has been

commenced, promptly after the appointment of a committee under

this section notifying the person making the demand or the

plaintiff that a committee has been appointed and identifying by

name the members of the committee.

(b) Discovery stay.--If the board of directors appoints a

special litigation committee and an action is commenced before a

determination has been made under subsection (e):

(1) On motion by the nonprofit corporation, or the

committee made in the name of the [nonprofit] corporation,

the court shall stay discovery for the time reasonably

necessary to permit the committee to complete its

investigation, except for good cause shown.

* * *

(c.1) Committee members who are not directors or members of

an other body.--A member of a special litigation committee who

is not a director or member of an other body, when acting as a

member of the committee, is subject to the liabilities imposed,

and entitled to the rights and immunities conferred, by

20210HB2057PN3299 - 221 -

Subchapters B (relating to fiduciary duty) and D (relating to

indemnification) and other provisions of law upon directors of a

corporation.

* * *

(e) Determination.--After appropriate investigation by a

special litigation committee, the committee [or the] may

determine, or the committee may recommend to the board of

directors [may] that the board determine that it is in the best

interests of the nonprofit corporation that:

* * *

(3) some or all of the claims asserted in the demand be

settled on terms [approved] determined or recommended by the

committee;

* * *

(6) some or all the claims asserted in an action already

commenced be settled on terms [approved] determined or

recommended by the committee; or

* * *

(f) Court review and action.--If a special litigation

committee is appointed and a derivative action is commenced

before or after the committee makes a determination [is made]

under subsection (e) or the board of directors determines under

subsection (e) to accept the recommendation of the committee:

(1) The nonprofit corporation or the committee shall

file with the court after a determination is made under

subsection (e) a statement of the determination and a report

of the committee supporting the determination. The

corporation or the committee shall serve each party with a

copy of the determination and report. If the corporation or

the committee moves to file the report under seal, the report

20210HB2057PN3299 - 222 -

shall be served on the parties subject to an appropriate

stipulation agreed to by the parties or a protective order

issued by the court.

(2) The corporation or the committee shall file with the

court a motion, pleading or notice consistent with the

determination under subsection (e).

(3) If the determination is one described in subsection

(e)(2), (3), (4), (5)(ii), (6) or (7), the court shall

determine whether the members of the committee met the

qualifications required under subsection (c)(1) and (2) and

whether the committee conducted its investigation and made

its determination or recommendation in good faith,

independently and with reasonable care. The plaintiff has the

burden of proving that the committee did not meet those

qualifications or act in the required manner. If the court

finds that the members of the committee met the

qualifications required under subsection (c)(1) and (2) and

that the committee acted in good faith, independently and

with reasonable care, the court shall enforce the

determination of the committee or the board. Otherwise, the

court shall:

(i) dissolve any stay of discovery entered under

subsection (b);

(ii) allow the action to continue under the control

of the plaintiff; and

(iii) permit the defendants to file preliminary

objections, other appropriate pleadings and motions.

* * *

(h) Interest of a defendant.--The fact that a person is

named as a defendant does not make the person interested in the

20210HB2057PN3299 - 223 -

claims asserted in a demand or action for purposes of subsection

(c)(1) if the claims against the person:

(1) are based only on an allegation that the person

approved of or acquiesced in the transaction or conduct that

is the subject of the claims; and

(2) do not otherwise allege with particularity facts

that, if true, raise a significant prospect that the person

would be adjudged liable.

Section 93. Section 5911(b) of Title 15 is amended and the

section is amended by adding a subsection to read:

§ 5911. Amendment of articles authorized.

* * *

(b) Exceptions.--An amendment adopted under this section

shall not amend articles in such a way that as so amended they

would not be authorized by this subpart as original articles of

incorporation except that:

(1) Restated articles shall, subject to section 109

(relating to name of commercial registered office provider in

lieu of registered address), state the address of the current

instead of the initial registered office of the corporation

in this Commonwealth and need not state the names and

addresses of the incorporators.

(2) The corporation shall not be required to revise any

other provision of its articles if the provision is valid and

operative immediately prior to the [filing of the amendment

in] delivery of the amendment to the department for filing.

the articles authorized pursuant to Chapter 2 (relating to

entities generally) or Chapter 3 (relating to entity

transactions) or set forth in statements or certificates

20210HB2057PN3299 - 224 -

permitted or required to be delivered to the department for

filing by sections 108 (relating to change in location or status

of registered office provided by agent) and 138 (relating to

statement of correction) or by this subpart need not be proposed

or adopted in the manner provided in this subchapter, except to

the extent that the provisions of this subchapter have been

incorporated into Chapter 2 or Chapter 3 or into the provisions

authorizing such statements or certificates.

Section 94. Section 5912(b) and (c)(1) of Title 15 are

amended to read:

§ 5912. Proposal of amendments.

* * *

(b) Submission to members.--Except where the approval of the

members is unnecessary under this subchapter, the board of

directors or other body shall direct that the proposed amendment

be submitted to a vote of the members entitled to vote thereon

[at a regular or special meeting of the members]. An amendment

proposed pursuant to subsection (a)(2) shall be submitted to a

vote either at the next annual meeting held not earlier than 120

days after the amendment is proposed or at a special meeting of

the members called for that purpose by the members.

contain the language of the proposed amendment of the articles:

(1) by setting forth the existing text of the articles

or the provision thereof that is proposed to be amended, with

brackets around language that is to be deleted and

underscoring under language that is to be added or otherwise

clearly showing the changes to be made; or

* * *

Section 95. Section 5979(b) of Title 15 is amended and the

20210HB2057PN3299 - 225 -

section is amended by adding a subsection to read:

§ 5979. Survival of remedies and rights after dissolution.

* * *

(b) Rights and assets.--The dissolution of a nonprofit

corporation shall not affect the limited liability of a member

of the corporation theretofore existing with respect to

transactions occurring or acts or omissions done or omitted in

the name of or by the corporation except that, subject to

subsection (d) and sections 5992(d) (relating to [claims barred]

notice to claimants) and 5993(b) (relating to [claims barred]

acceptance or rejection of matured claims), if applicable, each

member shall be liable for his pro rata portion of the unpaid

liabilities of the corporation up to the amount of the net

assets of the corporation distributed to the member in

connection with the dissolution. Should any property right of a

corporation be discovered, or the corporation be named as a

defendant in an action or proceeding, at any time after the

dissolution of the corporation, the surviving member or members

of the board of directors or other body that wound up the

affairs of the corporation, or a receiver appointed by the

court, shall have authority to enforce the property right and to

collect and divide the assets so discovered among the persons

entitled thereto and to prosecute or defend actions or

proceedings in the corporate name of the corporation. Any assets

so collected shall be distributed and disposed of in accordance

with the applicable order of court, if any, and otherwise in

accordance with this subchapter.

* * *

(f) Late-filed action or proceeding.--The following apply to

an action or proceeding commenced against a dissolved

20210HB2057PN3299 - 226 -

corporation after the expiration of the period specified in

subsection (a)(2):

(1) Any judgment against a dissolved corporation in the

action or proceeding shall be void.

(2) The dissolved corporation may, but need not, appear

and raise as a defense the expiration of the period specified

in subsection (a)(2) and any other reasonably related matters

in response to the action or proceeding.

(3) Any person who was a director, member of an other

body, officer or member of the dissolved corporation when the

dissolution became effective or any governing person of any

successor entity acting pursuant to Subchapter H (relating to

postdissolution provision for liabilities), and any

successor-in-interest to any of those persons, may, but need

not, act on behalf of the dissolved corporation in taking the

actions described in paragraph (2), and shall not thereby be

deemed to be deprived of the operation of subsections (c) and

(d) or of section 5978(b) (relating to winding up of

corporation after dissolution) or otherwise be responsible

for any obligations of the dissolved corporation.

Section 96. Section 7331 heading and (a) of Title 15 are

amended to read:

§ 7331. Merger, [consolidation,] division or sale of assets.

(a) Merger[, consolidation] or division.--Any two or more

electric cooperative corporations may merge[, consolidate] or

divide but only if the surviving or resulting corporation is a

corporation existing under this chapter. Every merger[,

consolidation] or division shall be proposed by the adoption by

the board of directors of a resolution approving the plan of

merger[, consolidation] or division and directing that the plan

20210HB2057PN3299 - 227 -

be submitted to a vote of the members entitled to vote thereon

at a regular or special meeting of the members.

* * *

Section 97. Section 8411(e) of Title 15 is amended and the

section is amended by adding a subsection to read:

§ 8411. Short title and application of chapter.

* * *

(e) References to withdrawal.--A reference in a partnership

agreement to the withdrawal of a partner shall be deemed to be a

reference to the dissociation of the partner.

[(e)] (f) Cross reference.--See section 8415(c)(5) (relating

to contents of partnership agreement).

Section 98. Section 8441(a) of Title 15 is amended to read:

§ 8441. Partner's rights and duties.

(a) Distributions [and losses].--Each partner is entitled to

share in distributions as provided in section 8445 (relating to

sharing of and right to distribution before dissolution).

* * *

Section 99. Sections 8446(k) and 8611(f) of Title 15 are

amended and the sections are amended by adding subsections to

read:

§ 8446. Rights to information.

* * *

(k) Enforcement of right to information.--If the

partnership, or a partner or agent thereof, refuses to permit an

inspection sought by a partner or person dissociated as a

partner or attorney or other agent acting for the partner or

person dissociated as a partner pursuant to subsection (b) or

(e), or does not reply to the demand made under either of those

subsections within ten days after the demand has been received,

20210HB2057PN3299 - 228 -

the partner or person dissociated as a partner may file an

action in the court for an order to compel the inspection. The

court is vested with exclusive jurisdiction to determine whether

or not the person seeking inspection is entitled to the

inspection sought. The court may summarily order the partnership

to permit the partner or person dissociated as a partner to

inspect the information and to make copies or extracts

therefrom.

[(k)] (l) Cross reference.--See section 8415 (relating to

contents of partnership agreement).

§ 8611. Short title and application of chapter.

* * *

(f) References to withdrawal.--A reference in the organic

rules of a limited partnership to the withdrawal of a general

partner or limited partner shall be deemed to be a reference to

the dissociation of the partner.

[(f)] (g) Cross reference.--See section 8615 (relating to

contents of partnership agreement).

Section 100. Section 8623(a)(3) of Title 15 is amended to

read:

§ 8623. Signing of filed documents.

(a) Required signatures.--Except as provided in this title,

a document delivered to the department for filing under this

title relating to a limited partnership must be signed as

follows:

* * *

(3) An amendment to the certificate of limited

partnership designating as general partner a person admitted

under section 8681(a)(3)(ii) (relating to events causing

dissolution) following the dissociation of a limited

20210HB2057PN3299 - 229 -

partnership's last general partner must be signed by [that

person] the person admitted as a general partner.

* * *

Section 101. Section 8625(b) and (d), 8634(i) and 8647(k) of

Title 15 are amended and the sections are amended by adding

subsections to read:

§ 8625. Registered office.

* * *

(b) Change of registered office.--After formation, a change

in the location of the registered office may be effected at any

time by the limited partnership. Before the change becomes

effective, the limited partnership shall amend its certificate

of limited partnership under the provisions of this chapter to

reflect the change [in location], include the change in an

annual report under section 146 (relating to annual report) or

[shall] deliver to the department for filing a certificate of

change of registered office setting forth:

(1) The name of the limited partnership.

(2) The address, including street and number, if any, of

its then registered office.

(3) The address, including street and number, if any, to

which the registered office is to be changed.

* * *

(d) Effect of statement.--A statement regarding the

registered office of a limited partnership set forth in a

document filed in the department pursuant to this section shall

operate as an amendment of the certificate of limited

partnership.

[(d)] (e) Cross references.--See:

Section 108 (relating to change in location or status of

20210HB2057PN3299 - 230 -

registered office provided by agent).

Section 134 (relating to docketing statement).

Section 135 (relating to requirements to be met by filed

documents).

Section 136(c) (relating to processing of documents by

Department of State).

Section 8615(c)(6) (relating to contents of partnership

agreement).

Section 8623 (relating to signing of filed documents).

§ 8634. Limited partner rights to information.

* * *

(i) Enforcement of right to information.--If the limited

partnership, or a general partner or agent thereof, refuses to

permit an inspection sought by a limited partner or person

dissociated as a limited partner or attorney or other agent

acting for the limited partner or person dissociated as a

limited partner pursuant to subsection (a), (b) or (c), or does

not reply to the demand made under any of those subsections

within ten days after the demand has been received, the limited

partner may file an action in the court for an order to compel

the inspection. The court is vested with exclusive jurisdiction

to determine whether or not the person seeking inspection is

entitled to the inspection sought. The court may summarily order

the limited partnership to permit the limited partner to inspect

the information and to make copies or extracts therefrom.

[(i)] (j) Cross reference.--See section 8615 (relating to

contents of partnership agreement).

§ 8647. General partner rights to information.

* * *

(k) Enforcement of right to information.--If the limited

20210HB2057PN3299 - 231 -

partnership, or a general partner or agent thereof, refuses to

permit an inspection sought by a general partner or person

dissociated as a general partner or attorney or other agent

acting for the general partner or person dissociated as a

general partner pursuant to subsection (a), (b) or (e), or does

not reply to the demand made under any of those subsections

within ten days after the demand has been received, the general

partner may file an action in the court for an order to compel

the inspection. The court is vested with exclusive jurisdiction

to determine whether or not the person seeking inspection is

entitled to the inspection sought. The court may summarily order

the limited partnership to permit the general partner to inspect

the information and to make copies or extracts therefrom.

[(k)] (l) Cross reference.--See section 8615 (relating to

contents of partnership agreement).

Section 102. Sections 8692(a)(1)(i), (b)(1) and (c) and 8693

of Title 15 are amended to read:

§ 8692. Derivative action.

(a) General rule.--Subject to section 8693 (relating to

eligible partner plaintiffs and security for costs) and

subsection (b), a [partner] plaintiff may maintain a derivative

action to enforce a right of a limited partnership only if:

(1) the [partner] plaintiff first makes a demand on the

limited partnership or the general partners requesting that

[they cause] the partnership [to] bring an action to enforce

the right, and:

(i) if a special litigation committee is not

appointed under section 8694 (relating to special

litigation committee), the [partnership does not bring

the action within a reasonable time; or] general partners

20210HB2057PN3299 - 232 -

determine that:

(A) an action based on some or all of the claims

asserted in the demand not be brought by the limited

partnership but that the partnership not object to an

action being brought by the party that made the

demand; or

(B) an action already commenced continue under

the control of the plaintiff; or

* * *

(b) Prior demand excused.--

(1) A demand under subsection (a)(1) is excused only if

the [partner] plaintiff makes a specific showing that

immediate and irreparable harm to the limited partnership

would otherwise result.

* * *

in record form and give notice with reasonable specificity of:

(1) the [essential] material facts relied upon to

support each of the claims made in the demand[.] against each

proposed defendant; and

(2) in the case of a derivative action commenced by a

partner, the basis on which the person making the demand has

standing under section 8693.

* * *

§ 8693. [Security] Eligible partner plaintiffs and security for

costs.

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

any action or proceeding brought by one or more partners of a

limited partnership to enforce rights that the plaintiff claims

could be, but have not been, asserted by the partnership, each

20210HB2057PN3299 - 233 -

plaintiff has standing to commence and maintain a derivative

action only if the plaintiff:

(1) was a partner at the time of the transaction or

conduct of which the plaintiff complains, or that the

plaintiff's interest as a partner devolved upon the plaintiff

by operation of law from a person who was a partner at that

time; and

(2) continues to be a partner until the time of

judgment, unless the failure to do so is the result of

partnership action that:

(i) was done merely to eliminate derivative claims;

(ii) has the effect of a reorganization that does

not affect the plaintiff's ownership of the business

enterprise.

(b) Exception.--Any partner that, except for the provisions

of subsection (a), would be entitled to maintain the action or

proceeding and that does not meet such requirements may,

nevertheless in the discretion of the court, be allowed to

maintain the action or proceeding on preliminary showing to the

court, by application and upon such verified statements and

depositions as may be required by the court, that there is a

strong prima facie case in favor of the claim asserted on behalf

of the limited partnership and that without the action serious

injustice will result.

instituted or maintained by partners holding transferable

interests entitled to receive less than 5% of any distribution

by a limited partnership, unless the transferable interests held

by the partners have an aggregate fair market value in excess of

20210HB2057PN3299 - 234 -

$200,000, the partnership in whose right the action or

proceeding is brought shall be entitled at any stage of the

proceedings to require the plaintiffs to give security for the

reasonable expenses, including attorneys' fees, that may be

incurred by the partnership in connection therewith or for which

it may become liable pursuant to section 8648(b) (relating to

reimbursement, indemnification, advancement and insurance) to

which security the partnership shall have recourse in such

amount as the court determines upon the termination of the

action or proceeding. The amount of security may, from time to

time, be increased or decreased in the discretion of the court

upon showing that the security provided has or is likely to

become inadequate or excessive. The security may be denied or

limited by the court if the court finds after an evidentiary

hearing that undue hardship on plaintiffs and serious injustice

would result.

(d) Failure to maintain ownership.--If a plaintiff loses the

right to maintain a derivative action under subsection (a)(2),

the court may entertain a motion by the limited partnership to

substitute the partnership as the named plaintiff.

Section 103. Section 8694(a), (b)(1), (e)(3) and (6), (f)

and (h) of Title 15 are amended and the section is amended by

adding subsections to read:

§ 8694. Special litigation committee.

(a) General rule.--If a limited partnership or the general

partners receive a demand to bring an action to enforce a right

of the partnership, or if a derivative action is commenced

before demand has been made on the partnership or the general

partners, the general partners may appoint a special litigation

committee to investigate the claims asserted in the demand or

20210HB2057PN3299 - 235 -

action and to determine on behalf of the limited partnership or

recommend to the general partners whether pursuing any of the

claims asserted is in the best interests of the partnership. The

partnership [shall send] must deliver a notice in record form to

the person making the demand, or to the plaintiff if a

derivative action has been commenced, promptly after the

appointment of the committee under this section notifying the

person making the demand or the plaintiff that a committee has

been appointed and identifying by name the members of the

committee.

(b) Discovery stay.--If the general partners appoint a

special litigation committee and an action is commenced before a

determination has been made under subsection (e):

(1) On motion by the limited partnership, or the

committee made in the name of the partnership, the court

shall stay discovery for the time reasonably necessary to

permit the committee to make its investigation, except for

good cause shown.

* * *

(c.1) Committee members who are not general partners.--A

member of a special litigation committee who is not a general

partner, when acting as a member of the committee, is subject to

the liabilities imposed, and entitled to the rights and

immunities conferred, by sections 8648 (relating to

reimbursement, indemnification, advancement and insurance) and

8649 (relating to standards of conduct for general partners).

* * *

(e) Determination.--After appropriate investigation by a

special litigation committee, the committee [or the general

partners] may determine, or the committee may recommend to the

20210HB2057PN3299 - 236 -

general partners that the general partners determine, that it is

in the best interests of the limited partnership that:

* * *

(3) some or all of the claims asserted in the demand be

settled on terms [approved] determined or recommended by the

committee;

* * *

(6) some or all of the claims asserted in an action

already commenced be settled on terms [approved] determined

or recommended by the committee; or

* * *

(f) Court review and action.--If a special litigation

committee is appointed and [an] a derivative action is commenced

before or after either the committee makes a determination [is

made] under subsection (e) or the general partners determine

under that subsection to accept the recommendation of the

committee:

(1) The limited partnership or the committee shall file

with the court after a determination is made under subsection

(e) a statement of the determination and a report of the

committee supporting the determination. The partnership or

the committee shall serve each party with a copy of the

determination and report. If the partnership or the committee

moves to file the report under seal, the report shall be

served on the parties subject to an appropriate stipulation

agreed to by the parties or a protective order issued by the

court.

(2) The partnership or the committee shall file with the

court a motion, pleading or notice consistent with the

determination under subsection (e).

20210HB2057PN3299 - 237 -

(3) If the determination is one described in subsection

(e)(2), (3), (4), (5)(ii), (6) or (7), the court shall

determine whether the members of the committee met the

qualifications required under subsection (c)(1) and (2) and

whether the committee conducted its investigation and made

its determination or recommendation in good faith,

independently and with reasonable care. The plaintiff has the

burden of proving that the committee did not meet those

qualifications or act in the required manner. If the court

finds that the members of the committee met the

qualifications required under subsection (c)(1) and (2) and

that the committee acted in good faith, independently and

with reasonable care, the court shall enforce the

determination of the committee or the general partners.

Otherwise, the court shall:

(i) dissolve any stay of discovery entered under

subsection (b);

(ii) allow the action to continue under the control

of the plaintiff; and

(iii) permit the defendants to file preliminary

objections and other appropriate motions and pleadings.

* * *

(h) Interest of a defendant.--The fact that a person is

named as a defendant does not make the person interested in the

claims asserted in a demand or action for purposes of subsection

(c)(1) if the claims against the person:

(1) are based only on an allegation that the person

approved of or acquiesced in the transaction or conduct that

is the subject of the claims; and

(2) do not otherwise allege with particularity facts

20210HB2057PN3299 - 238 -

that, if true, raise a significant prospect that the person

would be adjudged liable.

[(h)] (i) Cross reference.--See section 8615(c)(18)

(relating to contents of partnership agreement).

Section 104. Section 8821(a) and (g) of Title 15 are amended

to read:

§ 8821. Formation of limited liability company and certificate

of organization.

(a) Formation.--One or more [persons] associations or

individuals 18 years of age or older may act as organizers to

form a limited liability company by delivering to the department

for filing a certificate of organization.

* * *

(g) Cross references.--See:

Section 134 (relating to docketing statement).

Section 135 (relating to requirements to be met by filed

documents).

Section 136(c) (relating to processing of documents by

Department of State).

Section 8818(d)(1) (relating to characteristics of

limited liability company).

Section 8823 (relating to signing of filed documents).

Section 8893(a) (relating to benefit company status).

Section 105. Sections 8825(b) and (d) and 8850(i) of Title

15 are amended and the sections are amended by adding

subsections to read:

§ 8825. Registered office.

* * *

(b) Change of registered office.--After organization, a

change in the location of the registered office may be effected

20210HB2057PN3299 - 239 -

at any time by the company. Before the change becomes effective,

the company shall amend its certificate of organization under

the provisions of this chapter to reflect the change [in

location], include the change in an annual report under section

146 (relating to annual report) or [shall] file with the

department a certificate of change of registered office setting

forth:

(1) The name of the company.

(2) The address, including street and number, if any, of

its then-registered office.

(3) The address, including street and number, if any, to

which the registered office is to be changed.

* * *

(d) Effect of statement.--A statement regarding the

registered office of a limited liability company set forth in a

document filed in the department pursuant to this section shall

operate as an amendment of the certificate of organization.

[(d)] (e) Cross references.--See:

Section 108 (relating to change in location or status of

registered office provided by agent).

Section 134 (relating to docketing statement).

Section 135 (relating to requirements to be met by filed

documents).

Section 136(c) (relating to processing of documents by

Department of State).

Section 8815(c)(7) (relating to contents of operating

agreement).

Section 8823 (relating to signing of filed documents).

§ 8850. Rights to information.

* * *

20210HB2057PN3299 - 240 -

(i) Enforcement of right to information.--If a limited

liability company, or a manager, member or agent thereof,

refuses to permit an inspection sought by a person or attorney

or other agent acting for the person pursuant to this section,

or does not reply to the demand made under this section within

ten days after the demand has been rec eived, the person seeking

inspection may file an action in the court for an order to

compel the inspection. The court is vested with exclusive

jurisdiction to determine whether or not the person seeking

inspection is entitled to the inspection sought. The court may

summarily order the company to permit the person to inspect the

information and to make copies or extracts therefrom.

[(i)] (j) Cross reference.--See section 8815 (relating to

contents of operating agreement).

Section 106. Sections 8882(a)(1)(i), (b)(1) and (c) and 8883

of Title 15 are amended to read:

§ 8882. Derivative action.

(a) General rule.--Subject to section 8883 (relating to

eli gible plaintiffs and security for costs) and subsection (b),

a [member or manager] plaintiff may maintain a derivative action

to enforce a right of a limited liability company only if:

(1) the plaintiff first makes a demand on the company or

the other members in a member-managed limited liability

company, or the managers of a manager-managed limited

liability company, requesting that [they cause] the company

[to] bring an action to enforce the right and:

(i) if a special litigation committee is not

appointed under section 8884 (relating to special

litigation committee), [the company does not bring the

action within a reasonable time; or] the members in a

20210HB2057PN3299 - 241 -

member-managed company or managers of a manager-managed

company determine that:

(A) an action based on some or all of the claims

asserted in the demand not be brought by the company

but that the company not object to an action being

brought by the party that made the demand; or

(B) an action already commenced continue under

the control of the plaintiff; or

* * *

(b) Prior demand excused.--

(1) A demand under subsection (a)(1) is excused only if

the plaintiff makes a specific showing that immediate and

irreparable harm to the limited liability company would

otherwise result.

* * *

in record form and give notice with reasonable specificity of:

(1) the [essential] material facts relied upon to

support each of the claims made in the demand[.] against each

proposed defendant; and

(2) in the case of a derivative action commenced by a

member or manager, the basis on which the person making the

demand has standing under section 8883.

* * *

§ 8883. [Security] Eligible plaintiffs and security for costs.

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

any action or proceeding brought by one or more members or

managers of a limited liability company to enforce rights that

the plaintiff claims could be, but have not been, asserted by

the company, each plaintiff has standing to commence and

20210HB2057PN3299 - 242 -

maintain the derivative action if the plaintiff:

(1) was a member or manager of the company at the time

of the transaction or conduct of which the plaintiff

complains, or that the plaintiff's status as a member or

manager devolved upon the plaintiff by operation of law from

a person who was a member or manager at that time; and

(2) continues to be a member or manager until the time

of judgment, unless the failure to do so is the result of

company action that:

(i) was done merely to eliminate derivative claims;

(ii) has the effect of a reorganization that does

not affect the plaintiff's ownership of the business

enterprise.

(b) Exception.--Any member or manager that, except for the

provisions of subsection (a), would be entitled to maintain the

action or proceeding and who does not meet such requirements

may, nevertheless in the discretion of the court, be allowed to

maintain the action or proceeding on preliminary showing to the

court, by application and upon such verified statements and

depositions as may be required by the court, that there is a

strong prima facie case in favor of the claim asserted on behalf

of the company and that without the action serious injustice

will result.

instituted or maintained by members holding transferable

interests entitled to receive less than 5% of any distribution

by a limited liability company, unless the transferable

interests held by the members have an aggregate fair market

value in excess of $200,000, the company in whose right the

20210HB2057PN3299 - 243 -

action or proceeding is brought shall be entitled at any stage

of the proceedings to require the plaintiffs to give security

for the reasonable expenses, including attorney fees, that may

be incurred by the company in connection therewith or for which

it may become liable pursuant to section 8848(b) (relating to

reimbursement, indemnification, advancement and insurance) to

which security the company shall have recourse in such amount as

the court determines upon the termination of the action or

proceeding. The amount of security may, from time to time, be

increased or decreased in the discretion of the court upon

showing that the security provided has or may become inadequate

or excessive. The security may be denied or limited by the court

if the court finds after an evidentiary hearing that undue

hardship on plaintiffs and serious injustice would result.

(d) Failure to maintain ownership.--If a plaintiff loses the

right to maintain a derivative action under subsection (a)(2),

the court may entertain a motion by the limited liability

company to substitute the limited liability company as the named

plaintiff.

Section 107. Sections 8884(a), (b)(1), (e)(3) and (6), (f)

and (h), 8895(a)(3), (b) and (c) and 8896(d) of Title 15 are

amended and the sections are amended by adding subsections to

read:

§ 8884. Special litigation committee.

(a) General rule.--If a limited liability company or its

members or managers receive a demand to bring an action to

enforce a right of the company, or if a derivative action is

commenced before demand has been made on the company or its

members or managers, the members in a member-managed limited

liability company, or the managers in a manager-managed limited

20210HB2057PN3299 - 244 -

liability company, may appoint a special litigation committee to

investigate the claims asserted in the demand or action and to

determine on behalf of the company or recommend to the managers

or members whether pursuing any of the claims asserted is in the

best interests of the company. The company [shall send] must

deliver a notice in record form to the person making the demand,

or to the plaintiff if a derivative action has been commenced,

promptly after the appointment of a committee under this section

notifying the person making the demand or the plaintiff that a

committee has been appointed and identifying by name the members

of the committee. A committee may not be appointed under this

section if:

(1) every member of the company is also a manager of the

company; or

(2) the company is member-managed and every member is

actively involved in the management of the company.

(b) Discovery stay.--If the members or managers appoint a

special litigation committee and an action is commenced before a

determination has been made under subsection (e):

(1) On motion by the limited liability company, or the

committee made in the name of the [limited liability]

company, the court shall stay discovery for the time

reasonably necessary to permit the committee to make its

investigation, except for good cause shown.

* * *

(c.1) Committee members who are not managers.--A member of a

special litigation committee who is not a manager, when acting

as a member of the committee, is subject to the liabilities

imposed, and entitled to the rights and immunities conferred, by

sections 8848 (relating to reimbursement, indemnification,

20210HB2057PN3299 - 245 -

advancement and insurance) and 8849.2 (relating to standards of

conduct for managers).

* * *

(e) Determination.--After appropriate investigation by a

special litigation committee, the committee [or the] may

determine, or the committee may recommend to the managers or

members [may] that they determine, that it is in the best

interests of the limited liability company that:

* * *

(3) some or all of the claims asserted in the demand be

settled on terms [approved] determined or recommended by the

committee;

* * *

(6) some or all of the claims asserted in an action

already commenced be settled on terms [approved] determined

or recommended by the committee; or

* * *

(f) Court review and action.--If a special litigation

committee is appointed and a derivative action is commenced

either before or after either the committee makes a

determination [is made] under subsection (e) or the members or

managers determine under that subsection to accept the

recommendation of the committee:

(1) The limited liability company or the committee shall

file with the court after a determination is made under

subsection (e) a statement of the determination and a report

of the committee supporting the determination. The company or

the committee shall serve each party with a copy of the

determination and report. If the company or the committee

moves to file the report under seal, the report shall be

20210HB2057PN3299 - 246 -

served on the parties subject to an appropriate stipulation

agreed to by the parties or a protective order issued by the

court.

(2) The company or the committee shall file with the

court a motion, pleading or notice consistent with the

determination under subsection (e).

(3) If the determination is one described in subsection

(e)(2), (3), (4), (5)(ii), (6) or (7), the court shall

determine whether the members of the committee met the

qualifications required under subsection (c)(1) and (2) and

whether the committee conducted its investigation and made

its determination or recommendation in good faith,

independently and with reasonable care. The plaintiff has the

burden of proving that the committee did not meet those

qualifications or act in the required manner. If the court

finds that the members of the committee met the

qualifications required under subsection (c)(1) and (2) and

that the committee acted in good faith, independently and

with reasonable care, the court shall enforce the

determination of the committee or the members or managers.

Otherwise, the court shall:

(i) dissolve any stay of discovery entered under

subsection (b);

(ii) allow the action to continue under the control

of the plaintiff; and

(iii) permit the defendants to file preliminary

objections and other appropriate motions and pleadings.

* * *

(h) Interest of a defendant.--The fact that a person is

named as a defendant does not make the person interested in the

20210HB2057PN3299 - 247 -

claims asserted in a demand or action for purposes of subsection

(c)(1) if the claims against the person:

(1) are based only on an allegation that the person

approved of or acquiesced in the transaction or conduct that

is the subject of the claims; and

(2) does not otherwise allege with particularity facts

that, if true, raise a significant prospect that the person

would be adjudged liable.

[(h)] (i) Cross reference.--See section 8815(c)(18)

(relating to contents of operating agreement).

§ 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:

* * *

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

interests of any person or group] any matter referred to in

paragraph (1) or (2) over [the interests of any other person

or group] any other such matter or to regard any such matter

as dominant or controlling 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] matters in the manner

required under subsection (a) shall not constitute a violation

of section 8849.1 (relating to standards of conduct for

20210HB2057PN3299 - 248 -

members).

whether the operating agreement of a member-managed benefit

company includes a provision eliminating or limiting the

personal liability of a member:

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

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

limited liability] the benefit 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] recklessness.

(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.

* * *

(e) Ownership of interest.--A member's ownership, directly

or indirectly, of an interest in a benefit company does not

alone create a conflict of interest on the part of the member

with respect to the member's performance of the duties of a

member under subsection (a), except to the extent the ownership

would create a conflict of interest if the limited liability

company were not a benefit company.

§ 8896. Standard of conduct for managers and officers.

* * *

(d) Exoneration from personal liability.--Regardless of

whether the operating agreement of a manager-managed benefit

company includes a provision eliminating or limiting the

personal liability of a manager or officer:

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

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

20210HB2057PN3299 - 249 -

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] recklessness.

(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.

* * *

(f) Ownership of interest.--The ownership by a manager or

officer, directly or indirectly, of an interest in a benefit

company does not alone create a conflict of interest on the part

of the manager or officer with respect to the performance by the

manager or officer of the duties of a manager or officer under

subsection (a) or (b), except to the extent the ownership would

create a conflict of interest if the limited liability company

were not a benefit company.

Section 108. Section 8995 of Title 15 is amended by adding

subsections to read:

§ 8995. Application and effect of subchapter.

* * *

(f) Indication of status.--The certificate of organization

of a domestic restricted professional company or the foreign

registration statement of a foreign restricted professional

company shall contain a statement that the entity is a

restricted professional company and include a brief description

of the restricted professional service or services to be

rendered by the company.

(g) Definition.--For purposes of this subchapter, the

following term has the meaning indicated:

20210HB2057PN3299 - 250 -

"Restricted professional company." A domestic or foreign

limited liability company that renders one or more restricted

professional services in this Commonwealth.

Section 109. Section 9504(b) of Title 15 is amended and the

section is amended by adding a subsection to read:

§ 9504. Registered office.

* * *

(b) Change.--The registered office [location] of a business

trust may be changed by an amendment of the instrument[.] or by

including the change in an annual report under section 146

(relating to annual report).

* * *

(d) Effect of statement.--A statement regarding the

registered office of a business trust set forth in a document

filed in the department pursuant to this section shall operate

as an amendment of the instrument.

Section 110. Sections 101, 103(a), 302, 311(b) and (e)(1),

331 and 332 of Title 54 are amended to read:

§ 101. Definitions.

Subject to additional definitions contained in subsequent

provisions of this title which are applicable to specific

provisions of this title, the [following words and phrases when

used in] definitions in 15 Pa.C.S. § 102 (relating to

definitions) apply to this title [shall have], unless the

context clearly indicates otherwise.[, the meanings given to

them in this section:

"Department." The Department of State of the Commonwealth.

"Domestic corporation." A corporation incorporated under the

laws of this Commonwealth.

"Domestic corporation not-for-profit." A domestic

20210HB2057PN3299 - 251 -

corporation not incorporated for a purpose or purposes involving

pecuniary profit, incidental or otherwise.

"Officially publish." The meaning specified in 15 Pa.C.S. §

1103 (relating to definitions) except that the county of

publication shall be as specified in this title.

"Qualified foreign corporation." A corporation incorporated

under any laws other than those of this Commonwealth that is

authorized to do business in this Commonwealth under either 15

Pa.C.S. Ch. 41 (relating to foreign business corporations) or

Ch. 61 (relating to foreign nonprofit corporations).

"Verified statement." A document filed under this title

containing statements of fact and a statement by the signatory

that it is made subject to the penalties of 18 Pa.C.S. § 4904

(relating to unsworn falsification to authorities).]

§ 103. Execution of documents.

(a) General rule.--Any document [filed in] delivered to the

Department of State for filing under this title by [a

corporation] an association may be executed on behalf of the

[corporation] association by any one duly authorized [officer]

representative thereof. The corporate seal may be affixed and

attested, but the affixation and attestation of the corporate

seal shall not be necessary for the due execution of any filing

by a corporation under this title.

* * *

§ 302. Definitions.

[(a) Definitions.--]The following words and phrases when

used in this chapter shall have, unless the context clearly

indicates otherwise, the meanings given to them in this section:

"Business." Any commercial or professional activity.

"Entity." Any individual or any corporation, association,

20210HB2057PN3299 - 252 -

partnership, joint-stock company, business trust, syndicate,

joint adventureship or other combination or group of persons,

regardless of whether it is organized or formed under the laws

of this Commonwealth or any other jurisdiction.

"Fictitious name." Any assumed or fictitious name, style or

designation other than the proper name of the entity using such

name. The term includes a name assumed by a general partnership,

syndicate, joint adventureship or similar combination or group

of persons.

"Proper name." When used with respect to an association of a

type listed in the following paragraphs, the term means the name

set forth in:

(1) the public organic record, for a domestic filing

association;

(2) the statement of registration, for a limited

liability partnership;

(4) the statement of election, for an electing

partnership;

(9) the statement of registration of a [foreign]

registered foreign association under 15 Pa.C.S. § 412(a)(1)

(i) (relating to foreign registration statement) or, if that

name does not comply with 15 Pa.C.S. § 202 (relating to

requirements for names generally), the name set forth in the

statement under 15 Pa.C.S. § 412 (a)(1)(ii).

[(b) Other defined terms.--The definitions in 15 Pa.C.S. §

102 (relating to definitions) apply to this title except to the

extent they are inconsistent with the provisions of this title.]

§ 311. Registration.

* * *

(b) Use of [corporate] designators.--A fictitious name

20210HB2057PN3299 - 253 -

registered under this chapter:

(1) May not contain a corporate designator such as

"corporation," "incorporated" or "limited" or any derivation

or abbreviation thereof unless the entity or at least one

entity named in the application for registration of

fictitious name is a corporation. The use of the word

"company" or any derivation or abbreviation thereof by a sole

proprietorship, a partnership or a corporation is

permissible.

(2) Need not contain [a corporate] an association

designator, notwithstanding the fact that some or all of the

persons interested therein are [corporations] associations.

This paragraph shall not be construed to limit or affect any

personal liability otherwise existing of [shareholders of a

corporation] interest holders of an association to persons

who deal with the [corporation] association without knowledge

of its status as such.

* * *

(e) Duplicate use of names.--The fictitious name shall be

distinguishable upon the records of the department from:

(1) The name of any domestic filing entity, domestic

limited liability limited partnership, domestic electing

partnership[,] or registered foreign association [or the name

of any corporation or other association registered at any

time under Chapter 5 (relating to corporate and other

association names)], unless such name is available or is made

available for use under the provisions or procedures of 15

Pa.C.S. § 202(b)(1) (relating to requirements for names

generally).

* * *

20210HB2057PN3299 - 254 -

§ 331. Contracts [entered into] and acts by entity using

unregistered fictitious name.

(a) General rule.--No entity which has failed to register a

fictitious name as required by this chapter shall be permitted

to maintain any action in any tribunal of this Commonwealth

until such entity shall have complied with the provisions of

this chapter. Nor shall any action be maintained in any tribunal

of this Commonwealth by any successor or assignee of such entity

on any right, claim or demand arising out of a transaction with

respect to which such entity used such fictitious name until

such entity, or an entity which has acquired all or

substantially all of its assets, shall have complied with the

provisions of this chapter. The failure [of any] by itself of an

entity to register a fictitious name as required by this chapter

shall not impair the validity of any contract or act of [such

entity] the entity using the fictitious name and shall not

prevent [such] the entity from defending any action in any

tribunal of this Commonwealth.

[(b) Civil penalty.--Before any entity may institute any

action in any tribunal of this Commonwealth on any cause of

action arising out of any transaction in respect to which such

entity used a fictitious name prior to the date of the

registration of such fictitious name, or after the date its

registration under this chapter was cancelled or otherwise

terminated as to such entity, the entity shall pay to the

department for the use of the Commonwealth a civil penalty of

$500.]

(a) and (b)] penalty under subsection (a) shall not be

applicable if there has been substantial compliance in good

20210HB2057PN3299 - 255 -

faith with the requirements of this chapter or the corresponding

provisions of prior law.

§ 332. Effect of registration.

(a) General rule.--Registration of a fictitious name under

this chapter imparts no legal right to the registering entity

other than that:

(1) the conducting of business by it under a fictitious

name shall not result in the penalties provided by section

331 (relating to contracts [entered into] and acts by entity

using unregistered fictitious name)[.]; and

(2) the doing of business by the entity using the

registered name has the same force and effect as doing

business under the proper name of the entity.

(b) [Corporate qualification] Foreign registration

unaffected.--The registration required under this chapter is in

addition to all other acts required of [a corporation] an entity

prerequisite to its doing business in this Commonwealth and no

provision of this chapter shall be construed as relieving [a

corporation] an entity of any duty under any other statute.

Section 111. Sections 501, 502, 503, 504, 505 and 506 of

Title 54 are repealed:

[§ 501. Register established.

(a) General rule.--A register is established by this chapter

which shall consist of such of the following names as are not

deleted therefrom by operation of section 504 (relating to

effect of failure to make filings) or 506 (relating to voluntary

termination of registration by corporations and other

associations):

(1) A name registered prior to February 13, 1973, under

the act of May 16, 1923 (P.L.246, No.160), relating to

20210HB2057PN3299 - 256 -

registration of certain names.

(2) A name registered under section 502 (relating to

certain additions to register).

(3) In the case of a domestic or registered foreign

corporation, a name rendered unavailable for corporate use by

other corporations by reason of any filing in the department

by such domestic or registered foreign corporation.

(4) A name registered under 15 Pa.C.S. § 209 (relating

to registration of name of nonregistered foreign association)

or any similar provision of law.

(5) In the case of a business trust which exists subject

to 15 Pa.C.S. Ch. 95 (relating to business trusts), the name

of the trust as set forth in the instrument filed in the

department under 15 Pa.C.S. § 9503 (relating to documentation

of trust).

(6) In the case of a limited partnership or limited

liability company subject to 15 Pa.C.S. Ch. 86 (relating to

limited partnerships) or 88 (relating to limited liability

companies), the name of the partnership or company as set

forth in the certificate of limited partnership, certificate

of organization or statement of registration as a foreign

association.

(8) In the case of a limited liability partnership

subject to 15 Pa.C.S. Ch. 82 (relating to limited liability

partnerships and limited liability limited partnerships) that

is not also a limited partnership, the name of the

partnership as set forth in the statement of registration as

a foreign association.

(b) Subsequent availability of certain names.--Whenever, by

reason of change in name, withdrawal or dissolution of a

20210HB2057PN3299 - 257 -

domestic or registered foreign association, failure to renew a

registration of its name by a nonregistered foreign association,

or for any other cause, its name is no longer rendered

unavailable by the express provisions of Title 15 (relating to

corporations and unincorporated associations), such name shall

no longer be deemed to be registered under subsection (a)(3) or

(4) on the register established by this chapter.

§ 502. Certain additions to register.

(a) Corporation names.--

(1) A domestic corporation not-for-profit incorporated

prior to May 16, 1923 may register its name with the

department under this chapter by effecting the filing

specified in 15 Pa.C.S. § 5311 (relating to filing of

certificate of summary of record by certain corporations).

(2) Any person who is not eligible to make a filing

under 15 Pa.C.S. § 209 (relating to registration of name of

nonregistered foreign association) may register a corporation

name with the department by filing an application for

registration of name, executed by the person, which shall set

forth:

(i) The name of the corporation.

(ii) The address, including street and number, if

any, of the person who executed the application.

(b) Associations generally.--An association other than a

corporation may register with the department the name under

which it is doing business or operating by filing an application

for registration, which shall be executed by the association,

and shall set forth:

(1) The name to be registered.

(2) The address, including street and number, if any, of

20210HB2057PN3299 - 258 -

the association.

(3) The length of time, if any, during which the name

has been used by the applicant.

(4) Such other information necessary to the

administration of this chapter as the department may specify

by regulation.

Notwithstanding subsections (a) and (b), no new name shall be

registered or deemed to be registered under this section which

is not distinguishable upon the records of the department from

any other name then registered or deemed to be registered under

this chapter, without the consent of the senior registrant.

(d) Annual renewal.--A person who has in effect a

registration of a name may renew the registration from year to

year by annually filing an application for renewal setting forth

the facts required to be set forth in an original application

for registration. A renewal application may be filed between

October 1 and December 31 in each year and shall extend the

registration for the following calendar year.

(e) Cross reference.--See 15 Pa.C.S. § 134 (relating to

docketing statement).

§ 503. Decennial filings required.

(a) General rule.--Except as otherwise provided in this

section, every corporation or other association whose name is

registered under this chapter shall, during the year 2001 and

every tenth year thereafter, file in the department a report,

which shall be executed by the corporation or other association,

and shall set forth:

(1) The name of the corporation or other association.

(2) The address, including street and number, if any, of

20210HB2057PN3299 - 259 -

its registered or other office.

(3) A statement that the corporation or other

association continues to exist.

(4) Such other information necessary to the

administration of this chapter as the department may specify

by regulation.

(b) Exceptions.--Subsection (a) shall not apply to any of

the following:

(1) A corporation or other association that during the

ten years ending on December 31 of the year in which a filing

would otherwise be required under subsection (a) has made any

filing in the department pursuant to a provision of this

title or 15 Pa.C.S. (relating to corporations and

unincorporated associations) other than:

(i) a report required by subsection (a); or

(ii) a filing under 15 Pa.C.S. § 208 (relating to

reservation of name) or 209 (relating to registration of

name of nonregistered foreign association).

(2) A corporation whose name is registered pursuant to

section 501(a)(4) (relating to register established).

(3) A corporation that has had officer information

forwarded to the department by the Department of Revenue

during the preceding ten years under 15 Pa.C.S. § 1110

(relating to annual report information).

(d) Cross references.--See 15 Pa.C.S. §§ 134 (relating to

docketing statement) and 135 (relating to requirements to be met

by filed documents).

§ 504. Effect of failure to make filings.

On January 1 of the year following the year during which a

report is required to be filed under section 503 (relating to

20210HB2057PN3299 - 260 -

decennial filings required), the name of every corporation and

association which has failed to comply with such section shall

no longer be deemed to be registered under this chapter.

§ 505. Late filings.

A corporation or association which has failed to file the

report required by section 503 (relating to decennial filings

required) may do so at any later time, which filing shall

reinstate the name of the corporation or association on the

appropriated during the period of the delinquency by any other

person in the manner provided in this chapter or as otherwise

provided by law.

§ 506. Voluntary termination of registration by corporations

and other associations.

(a) General rule.--Any corporation or other association

which has its name registered under this chapter may terminate

such registration by filing in the department a statement of

termination of registration of name, which shall be executed by

the corporation or other association, and shall set forth:

(1) The name of the corporation or other association.

(2) The address, including street and number, if any, of

the corporation or other association.

(3) The date on which and the statute under which the

name of the corporation or other association was registered.

(4) A statement that the registration of the name of the

corporation or other association under this chapter is

terminated.

(5) Such other information necessary to the

administration of this chapter as the department may specify

by regulation.

20210HB2057PN3299 - 261 -

(b) Cross reference.--See 15 Pa.C.S. § 134 (relating to

docketing statement).]

Section 112. This act shall take effect in 60 days.

20210HB2057PN3299 - 262 -