PRIOR PRINTER'S NOS. 2039, 2169
PRINTER'S NO. 2230
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1716
Session of
2023
INTRODUCED BY WARREN, MADDEN, SANCHEZ, M. JONES AND DELLOSO,
SEPTEMBER 26, 2023
AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES,
OCTOBER 31, 2023
AN ACT
Amending Title 15 (Corporations and Unincorporated Associations)
of the Pennsylvania Consolidated Statutes, in entities
generally, further providing for requirements for names
generally and providing for registration of name of domestic
nonfiling association; in entity transactions, further
providing for nature of transactions and for approval by
limited liability company; in foreign associations, further
providing for foreign registration statement; in general
provisions, further providing for definitions; in corporate
powers, duties and safeguards, further providing for certain
specifically authorized debt terms; in officers, directors
and shareholders, further providing for derivative action; in
foreign business corporations, further providing for
application of article; in general provisions, further
providing for definitions; in corporate powers, duties and
safeguards, further providing for certain specifically
authorized debt terms; in officers, directors and members,
further providing for derivative action; in general
partnerships, further providing for contents of partnership
agreement; in limited partnerships, further providing for
contents of partnership agreement and for derivative action;
and, in limited liability companies, further providing for
contents of operating agreement and for derivative action.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 202(b)(2) of Title 15 of the Pennsylvania
Consolidated Statutes is amended to read:
§ 202. Requirements for names generally.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
* * *
(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:
* * *
(2) A name that has been reserved or registered pursuant
to section 208 (relating to reservation of name) [or], 209
(relating to registration of name of nonregistered foreign
association) or 210 (relating to registration of name of
domestic nonfiling association) . A name shall be rendered
unavailable for use under this subchapter by reason of the
filing by the department of an assumed or fictitious name
registration under 54 Pa.C.S. Ch. 3 (relating to fictitious
names) only to the extent expressly provided in 54 Pa.C.S.
Ch. 3.
* * *
Section 2. Title 15 is amended by adding a section to read:
§ 210. Registration of name of domestic nonfiling association .
(a) General rule.--A domestic nonfiling association THAT IS
NOT A LIMITED LIABILITY PARTNERSHIP may register a name that is
available for use by a domestic filing entity under section 202
(relating to requirements for names generally) by delivering to
the department for filing an application for registration of
name, signed by the association, stating:
(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.--A domestic nonfiling association that
20230HB1716PN2230 - 2 -
<--
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
has in effect a registration of its name may renew the
registration from year to year by annually filing an application
for renewal stating the facts required to be stated 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.
(c) Use of registered name.--A domestic nonfiling
association whose name registration is effective may convert
under Subchapter E of Chapter 3 (relating to conversion) to a
domestic filing entity under the registered name or consent in a
signed record to the use of that name by another entity.
(d) Definition.--The term " domestic nonfiling association "
means a domestic nonprofit association subject to:
(1) 68 Pa.C.S. Pt. II Subpt. B (relating to
condominiums);
(2) 68 Pa.C.S. Pt. II Subpt. C (relating to
cooperatives); or
(3) 68 Pa.C.S. Pt. II Subpt. D (relating to planned
communities).
(e) (D) Cross references.--See sections 134 (relating to
docketing statement) and 135 (relating to requirements to be met
by filed documents).
Section 3. Sections 315(a) and 325(d)(2)(iv) of Title 15 are
amended to read:
§ 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
this chapter or other law produces a result that could be
accomplished in any other manner permitted by a different set of
provisions of this chapter or other law shall not be a basis for
20230HB1716PN2230 - 3 -
<--
<--
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
recharacterizing the sale, conversion or transaction as a
different form of sale, conversion or transaction under this
chapter or other law.
* * *
§ 325. Approval by limited liability company.
* * *
(d) Merger by action of managers only.--Unless otherwise
required by a provision of the organic rules in record form, a
plan of merger shall not require the approval of the members of
a manager-managed, domestic limited liability company and shall
be deemed adopted by the company when a resolution approving the
plan has been adopted by the managers pursuant to subsection (a)
if:
* * *
(2) The plan of merger provides for the merger of the
company (referred to in this paragraph as the "constituent
company") with or into a single indirect wholly owned
subsidiary (referred to in this paragraph as the "subsidiary
company") of the constituent company if all of the following
provisions are satisfied:
* * *
(iv) Immediately following the effectiveness of the
merger, the certificate of organization and operating
agreement of the holding company are identical to the
certificate of organization and operating agreement of
the constituent company immediately before the
effectiveness of the merger, except for changes that
could be made without member approval pursuant to Chapter
[89] 88 (relating to limited liability companies).
* * *
20230HB1716PN2230 - 4 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Section 4. Section 412(b) of Title 15 is amended by adding a
paragraph to read:
§ 412. Foreign registration statement.
* * *
(b) Qualification or registration under former statutes.--
The effect of a foreign association qualifying or registering to
do business under prior provisions of law shall be as follows:
* * *
(6) A reference in the law of this Commonwealth to
qualification as a foreign association includes registration
under subsection (a) and deemed registration under this
subsection.
* * *
Section 5. The definition of "foreign business corporation"
in section 1103(a) of Title 15 is amended 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
otherwise:
* * *
"Foreign business corporation." A foreign corporation for
profit subject to Chapter 4 (relating to foreign associations),
whether or not required to [qualify] register thereunder.
* * *
Section 6. Sections 1510(c), 1718(a)(1) 1781(A)(1), 4101,
5103(b), 5510(c), 5781(a)(1), 8415(c)(2), 8615(c)(2), 8692(a)
20230HB1716PN2230 - 5 -
<--
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(1), 8815(c)(2) and 8882(a)(1) of Title 15 are amended to read:
§ 1510. Certain specifically authorized debt terms.
* * *
(c) Definitions.--As used in this section, the following
words shall have the meanings given to them in this subsection:
"Affiliate." An affiliate or associate as defined in
section [2552] 102 (relating to definitions).
"Obligation." Includes an installment sale contract.
* * *
§ 1781. Derivative action.
(a) General rule.--Subject to section 1782 (relating to
eligible shareholder plaintiffs and security for costs) and
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 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 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]
(i.1) if a special litigation committee is not
appointed under section 1783 (relating to special
litigation committee):
20230HB1716PN2230 - 6 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(A) the board determines that:
(I) 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
(II) an action already commenced continue
under the control of the plaintiff; or
(B) the board does not notify the party that
made the demand within 60 days after the demand was
made that the board has appointed a special
litigation committee or has made a determination
described under either clause (A)(I) or (II); 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;
* * *
§ 4101. Application of article.
(a) General rule.--Except as otherwise provided in this
section or in subsequent provisions of this article, this
article shall apply to and the words "corporation" or "foreign
business corporation" in this article shall include every
foreign corporation for profit, including a corporation that, if
a domestic corporation for profit, would be a banking
institution[,] or credit union [or savings association].
(b) Domestic Federal financial institution exclusion.--
Except as permitted by act of Congress, this article shall not
20230HB1716PN2230 - 7 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
apply to:
(1) Any of the following institutions or similar
federally chartered institutions engaged in this Commonwealth
in activities similar to those conducted by banking
institutions[, saving associations] or credit unions:
(i) National banking associations organized under
The National Bank Act (13 Stat. 99, 12 U.S.C. § 1 et
seq.).
(ii) Federal savings and loan associations and
Federal mutual savings banks organized under the Home
Owners' Loan Act of 1933 (48 Stat. 128, 12 U.S.C. § 1461
et seq.).
(iii) Federal credit unions organized under the
Federal Credit Union Act (48 Stat. 1216, 12 U.S.C. § 1751
et seq.).
(2) Any other Federal corporation intended by the
Congress to be treated for state law purposes as a domestic
corporation of this Commonwealth.
§ 5103. Definitions.
* * *
(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."
"Charitable purposes."
"Conversion."
"Corporation for profit."
"Corporation not-for-profit."
"Court."
20230HB1716PN2230 - 8 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
"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."
§ 5510. Certain specifically authorized debt terms.
* * *
(c) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection:
"Affiliate." An affiliate or associate as defined in section
[2552] 102 (relating to definitions).
"Obligation." Includes an installment sale contract.
* * *
§ 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:
20230HB1716PN2230 - 9 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(1) the plaintiff first makes a demand on the
corporation or the board of directors, requesting that 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 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]
(i.1) if a special litigation committee is not
appointed under section 5783 (relating to special
litigation committee):
(A) the board determines that:
(I) 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
(II) an action already commenced continue
under the control of the plaintiff; or
(B) the board does not notify the party that
made the demand within 60 days after the demand was
made that the board has appointed a special
litigation committee or has made a determination
described under either clause (A)(I) or (II); or
(ii) if a special litigation committee is appointed
20230HB1716PN2230 - 10 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
under section 5783, a determination is made:
(A) under section 5783(e)(1) that the
corporation not object to the action; or
(B) under section 5783(e)(5)(i) that the
plaintiff continue the action;
* * *
§ 8415. Contents of partnership agreement.
* * *
(c) Limitations.--A partnership agreement may not do any of
the following:
* * *
(2) Vary the right of a partner to approve a merger,
interest exchange, conversion[,] or division [or
domestication] under section 333(a)(2) (relating to approval
of merger), 343(a)(2) (relating to approval of interest
exchange), 353(a)(3) (relating to approval of conversion)[,]
or 363(a)(2) (relating to approval of division) [or 373(a)(2)
(relating to approval of domestication)].
* * *
§ 8615. Contents of partnership agreement.
* * *
(c) Limitations.--A partnership agreement may not do any of
the following:
* * *
(2) Vary the right of a partner to approve a merger,
interest exchange, conversion[,] or division [or
domestication] under section 333(a)(2) (relating to approval
of merger), 343(a)(2) (relating to approval of interest
exchange), 353(a)(3) (relating to approval of conversion)[,]
or 363(a)(2) (relating to approval of division) [or 373(a)(2)
20230HB1716PN2230 - 11 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(relating to approval of domestication)].
* * *
§ 8692. Derivative action.
(a) General rule.--Subject to section 8693 (relating to
eligible partner plaintiffs and security for costs) and
subsection (b), a plaintiff may maintain a derivative action to
enforce a right of a limited partnership only if:
(1) the plaintiff first makes a demand on the limited
partnership or the general partners requesting that the
partnership 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 general partners 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]
(i.1) if a special litigation committee is not
appointed under section 8694 (relating to special
litigation committee):
(A) the general partners determine that:
(I) 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
20230HB1716PN2230 - 12 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(II) an action already commenced continue
under the control of the plaintiff; or
(B) the general partners do not notify the party
that made the demand within 60 days after the demand
was made that the general partners have appointed a
special litigation committee or have made a
determination described under either clause (A)(I) or
(II); or
(ii) if a special litigation committee is appointed
under section 8694, a determination is made:
(A) under section 8694(e)(1) that the
partnership not object to the action; or
(B) under section 8694(e)(5)(i) that the
plaintiff continue the action;
* * *
§ 8815. Contents of operating agreement.
* * *
(c) Limitations.--An operating agreement may not do any of
the following:
* * *
(2) Vary the right of a member to approve a merger,
interest exchange, conversion[,] or division [or
domestication] under section 333(a)(2) (relating to approval
of merger), 343(a)(2) (relating to approval of interest
exchange), 353(a)(3) (relating to approval of conversion)[,]
or 363(a)(2) (relating to approval of division) [or 373(a)
(2) (relating to approval of domestication)].
* * *
§ 8882. Derivative action.
(a) General rule.--Subject to section 8883 (relating to
20230HB1716PN2230 - 13 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
eligible plaintiffs and security for costs) and subsection (b),
a 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 the company 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 members in a 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]
(i.1) if a special litigation committee is not
appointed under section 8884 (relating to special
litigation committee):
(A) the members in a member-managed company or
managers of a manager-managed company determine that:
(I) 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
(II) an action already commenced continue
20230HB1716PN2230 - 14 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
under the control of the plaintiff; or
(B) the members in a member-managed company or
managers of a manager-managed company do not notify
the party that made the demand within 60 days after
the demand was made that they have appointed a
special litigation committee or have made a
determination described under either clause (A)(I) or
(II); or
(ii) if a special litigation committee is appointed
under section 8884, a determination is made:
(A) under section 8884(e)(1) that the company
not object to the action; or
(B) under section 8884(e)(5)(i) that the
plaintiff continue the action;
* * *
Section 7. This act shall take effect in 60 days.
20230HB1716PN2230 - 15 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16