Bill Text: PA SB351 | 2009-2010 | Regular Session | Amended


Bill Title: In Title 15, making extensive revisions, additions and deletions to preliminary material on general provisions; to corporation material on general provisions, on incorporation, on corporate powers, duties and safeguards, on officers, directors and shareholders, on fundamental changes, on registered corporations, on insurance corporations, on foreign business corporations, on incorporation and on foreign nonprofit corporations; to partnership and limited liability company material on general provisions, on registered limited liability partnerships, on general partnerships, on limited partnerships and on limited liability companies; and to material on business trusts; in Title 54, further providing for general provisions and for corporate and other association names; and making related repeals.

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2010-06-07 - Laid on the table [SB351 Detail]

Download: Pennsylvania-2009-SB351-Amended.html

  

 

PRIOR PRINTER'S NO. 349

PRINTER'S NO.  755

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

SENATE BILL

 

No.

351

Session of

2009

  

  

INTRODUCED BY GREENLEAF, ALLOWAY, O'PAKE AND BROWNE, FEBRUARY 20, 2009

  

  

SENATOR GREENLEAF, JUDICIARY, AS AMENDED, MARCH 24, 2009   

  

  

  

AN ACT

  

1

Amending Titles 15 (Corporations and Unincorporated

2

Associations) and 54 (Names) of the Pennsylvania Consolidated

3

Statutes, in Title 15, making extensive revisions, additions

4

and deletions to preliminary material on general provisions;

5

to corporation material on general provisions, on

6

incorporation, on corporate powers, duties and safeguards, on

7

officers, directors and shareholders, on fundamental changes,

8

on registered corporations, on insurance corporations, on

9

foreign business corporations, on incorporation and on

10

foreign nonprofit corporations; to partnership and limited

11

liability company material on general provisions, on

12

registered limited liability partnerships, on general

13

partnerships, on limited partnerships and on limited

14

liability companies; and to material on business trusts; in

15

Title 54, further providing for general provisions and for

16

corporate and other association names; and making related

17

repeals.

18

The General Assembly of the Commonwealth of Pennsylvania

19

hereby enacts as follows:

20

Section 1. This act shall be known and may be cited as the

21

GAA Amendments Act of 2009.

22

Section 2. The definitions of "banking institution," "limited

23

liability company," "representative" and "savings association"

24

in section 102 of Title 15 of the Pennsylvania Consolidated

25

Statutes are amended and the section is amended by adding

 


1

definitions to read:

2

§ 102. Definitions.

3

Subject to additional or inconsistent definitions contained

4

in subsequent provisions of this title that are applicable to

5

specific provisions of this title, the following words and

6

phrases when used in this title shall have, unless the context

7

clearly indicates otherwise, the meanings given to them in this

8

section:

9

* * *

10

"Banking institution." A [banking institution as defined in

11

section 1103 (relating to definitions).] domestic corporation

12

for profit which is an institution as defined in the act of

13

November 30, 1965 (P.L.847, No.356), known as the Banking Code

14

of 1965.

15

"Bankrupt." A person who is the subject of any of the

16

following:

17

(1) An order for relief or a voluntary case under 11

18

U.S.C. (relating to bankruptcy).

19

(2) A comparable order or case under a State insolvency

20

statute.

21

* * *

22

"Debtor in bankruptcy." A bankrupt.

23

"Domestic banking institution." A domestic corporation for

24

profit which is an institution as defined in the act of November

25

30, 1965 (P.L.847, No.356), known as the Banking Code of 1965.

26

* * *

27

"Domestic insurance corporation." An insurance corporation as

28

defined in section 3102 (relating to definitions).

29

"Domestic savings association." A domestic corporation for

30

profit which is an association as defined in the act of December

- 2 -

 


1

14, 1967 (P.L.746, No.345), known as the Savings Association

2

Code of 1967.

3

* * *

4

"Execute." When used with respect to authenticating or

5

adopting a filing, document or other record, means "sign."

6

* * *

7

"Limited liability company." A domestic or foreign limited

8

liability company as defined in section 8903 (relating to

9

definitions [and index of definitions)].

10

"Obligation." Includes a note or other form of indebtedness,

11

whether secured or unsecured.

12

"Officially publish." Publish in two newspapers of general

13

circulation in the English language in the county in which the

14

registered office of the association is located or, in the case

15

of a proposed association, will be located, one of which must be

16

the legal newspaper, if any, designated by the rules of court

17

for the publication of legal notices. If there is only one

18

newspaper of general circulation in the county, advertisement in

19

that newspaper is sufficient. If no other frequency is

20

specified, the notice must be published one time. See section

21

109(a)(2) (relating to name of commercial registered office

22

provider in lieu of registered address).

23

* * *

24

"Record form." Inscribed on a tangible medium or stored in an

25

electronic or other medium and retrievable in perceivable form.

26

"Representative." [A representative as defined in section

27

1103 (relating to definitions).] When used with respect to an

28

association, joint venture, trust or other enterprise, a person

29

occupying the position or discharging the functions of a

30

director, officer, partner, manager, trustee, fiduciary,

- 3 -

 


1

employee or agent, regardless of the name or title by which the

2

person may be designated. The term does not imply that a

3

director, as such, is an agent of a corporation.

4

"Savings association." A [savings association as defined in

5

section 1103.] domestic corporation for profit which is an

6

association as defined in the act of December 14, 1967 (P.L.746,

7

No.345), known as the Savings Association Code of 1967.

8

"Sign." With present intent to authenticate or adopt

9

information in record form:

10

(1)  to sign manually or adopt a tangible symbol; or

11

(2)  to attach to, or logically associate with,

12

information in record form, an electronic sound, symbol or

13

process.

14

* * *

15

Section 3.  Section 107 of Title 15 is amended to read:

16

§ 107.  Form of records.

17

(a)  General rule.--Any records maintained by a corporation

18

or other association in the regular course of its business,

19

including shareholder or membership records, books of account

20

and minute books, may be kept [on, or be in the form of, punch

21

cards, magnetic storage media, photographs, microphotographs or

22

any other information storage device if the records so kept can

23

be converted into reasonably legible written form within a

24

reasonable time] in record form. Any corporation or other

25

association shall [so] convert any of its records [so kept] into

26

a tangible and reasonably legible form to the extent they are

27

not kept in that form upon the request of any person entitled to

28

inspect the records. [Where] If records are kept in [this

29

manner, a] record form, a tangible and reasonably legible

30

[written] form [produced from the information storage device] 

- 4 -

 


1

that accurately portrays the record shall be admissible in

2

evidence, and shall be accepted for all other purposes, to the

3

same extent as an original written record of the same

4

information would have been accepted.

5

(b)  Meaning of "written."--References in this title to a

6

document in writing or to a written provision of an agreement or

7

other document shall be deemed to include and be satisfied by a

8

document or provision of an agreement or document in record

9

form.

10

Section 3.1.  Title 15 is amended by adding a section to

11

read:

12

§ 111.  Relation of title to Electronic Signatures in Global and

13

National Commerce Act.

14

(a)  General rule.--Except as set forth in subsection (b),

15

this title modifies, limits and supersedes the Electronic

16

Signatures in Global and National Commerce Act (Public Law

17

106-229, 15 U.S.C. § 7001, et seq.).

18

(b)  Exception.--This title does not do any of the following:

19

(1)  Modify, limit or supersede section 101(c) of the

20

Electronic Signatures in Global and National Commerce Act (15

21

U.S.C. § 7001(c)).

22

(2)  Authorize electronic delivery of a notice described

23

in section 103(b) of the Electronic Signatures in Global and

24

National Commerce Act (15 U.S.C. § 7003(b)).

25

Section 3.2.  Sections 131, 133(a) and (d), 135(a)(7), 136(b)

26

(2) and (3), 152, 153(a) and 155(a) of Title 15 are amended to

27

read:

28

§ 131.  Application of subchapter.

29

As used in this subchapter, the term "this title" includes

30

Titles 17 (relating to credit unions) and 54 (relating to names)

- 5 -

 


1

and any other provision of law that makes reference to the

2

powers and procedures of this subchapter or, to the extent not

3

inconsistent with this subchapter, requires a filing in the

4

Corporation Bureau of the department and does not specify some

5

or all of the necessary procedures therefor provided in this

6

subchapter.

7

§ 133.  Powers of Department of State.

8

(a)  General rule.--The [Department of State shall have] 

9

department has the power and authority reasonably necessary to

10

enable it to administer this subchapter efficiently and to

11

perform the functions specified in section 132 (relating to

12

functions of Department of State), in 13 Pa.C.S. (relating to

13

commercial code) and in 17 Pa.C.S. (relating to credit unions).

14

The following shall not be agency regulations for the purposes

15

of section 612 of the act of April 9, 1929 (P.L.177, No.175),

16

known as The Administrative Code of 1929, the act of October 15,

17

1980 (P.L.950, No.164), known as the Commonwealth Attorneys Act,

18

the act of June 25, 1982 (P.L.633, No.181), known as the

19

Regulatory Review Act, or any similar provision of law, but

20

shall be subject to the opportunity of public comment

21

requirement under section 201 of the act of July 31, 1968 (P.L.

22

769, No.240), referred to as the Commonwealth Documents Law:

23

(1)  Sample filing forms promulgated by the department

24

under subsection (d).

25

(2)  Instructions accompanying sample filing forms and

26

other explanatory material published in the Pennsylvania Code

27

that is intended to substantially track applicable statutory

28

provisions relating to the particular filing or to any of the

29

functions of the department covered by this subsection, if a

30

regulation of the department expressly states that [such] 

- 6 -

 


1

those instructions or explanatory materials shall not have

2

the force of law.

3

(3)  Regulations, which the department is hereby

4

authorized to promulgate, that:

5

(i)  Authorize payment of fees and other remittances

6

through or by a credit or debit card issuer or other

7

financial intermediary.

8

(ii)  Authorize contracts with credit or debit card

9

issuers and other financial intermediaries relating to

10

the collection, transmission and payment of fees and

11

other remittances.

12

[(iii)  Adjust the level of fees and other

13

remittances as otherwise fixed by law so as to facilitate

14

their transmission through or by a credit card issuer or

15

other financial intermediary pursuant to such regulations

16

without net cost to the department.]

17

(iv)  Adjust, not more than once per year, the fees

18

set forth in section 153(a) (relating to fee schedule)

19

and 13 Pa.C.S. § 9525 (relating to fees) for filings

20

transmitted to the department electronically.

21

* * *

22

(d)  [Physical characteristics and copies of documents] 

23

Format of filings.--All articles and other documents authorized

24

or required to be filed in the department under this title shall

25

be in such format as [to size, shape and other physical

26

characteristics as shall be] prescribed by regulations

27

promulgated by the department. [The regulations may require the

28

submission of not to exceed three conformed copies of any

29

document in addition to the original and any copies thereof

30

otherwise required by law.] All formats promulgated by the

- 7 -

 


1

department for use under this title shall [include a statement

2

of the number of copies required to be filed and shall] be

3

published in the Pennsylvania Code.

4

* * *

5

§ 135.  Requirements to be met by filed documents.

6

(a)  General rule.--A document shall be accepted for filing

7

by the Department of State if it satisfies the following

8

requirements:

9

* * *

10

(7)  It is in record form and executed. The department

11

shall not examine a document to determine whether the

12

document has been executed by an authorized person or by

13

sufficient authorized persons or otherwise is duly executed.

14

[A document shall be deemed executed if it contains a

15

facsimile signature, so long as the operative portions of the

16

document meet any applicable requirements prescribed under

17

section 133(d) (relating to physical characteristics and

18

copies of documents).]

19

* * *

20

§ 136.  Processing of documents by Department of State.

21

* * *

22

(b)  Immediate certified copy.--

23

* * *

24

[(2)  If the duplicate copy is delivered by hand to the

25

office of the department at the seat of government at least

26

four hours before the close of business on any day not a

27

holiday and relates to a matter other than a label or other

28

mark requiring examination under Title 54 (relating to names)

29

or the reservation or registration of a name under this title

30

and, in the case of a document that creates a new

- 8 -

 


1

association, effects or reflects a change in name or

2

qualifies a foreign association to do business in this

3

Commonwealth, if the duplicate copy is accompanied by

4

evidence that the proposed name has been reserved or

5

registered by or on behalf of the applicant, the department

6

before the close of business on that day shall either:

7

(i)  Certify the duplicate copy as required by this

8

subsection and make such certified copy available at the

9

office of the department to or upon the order of the

10

person who delivered it to the department.

11

(ii)  Make available at the office of the department

12

to or upon the order of the person who delivered it to

13

the department a brief statement in writing of the

14

reasons of the department for refusing to certify such

15

duplicate copy.

16

See section 153(a)(10) (relating to certification fees).]

17

(3)  In lieu of comparing the duplicate copy with the

18

original signed document as provided in [paragraphs (1) and

19

(2)] paragraph (1), the department may make a copy of the

20

original signed document at the cost of the person who

21

delivered it to the department.

22

* * *

23

§ 152.  Definitions.

24

The following words and phrases when used in this subchapter

25

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

26

context clearly indicates otherwise:

27

"Ancillary transaction."  Includes:

28

(1)  preclearance of document[,];

29

(2)  amendment of articles, charter, certificate or other

30

organic document, restatement of articles, charter,

- 9 -

 


1

certificate or other organic document[, change in registered

2

or principal office, change in share structure,];

3

(3)  dissolution, cancellation or termination[,

4

reorganization,] of an association;

5

(4)  withdrawal by foreign association[,];

6

(5)  withdrawal by a partner[, or];

7

(6)  any [similar transaction,] transaction similar to

8

any item listed in paragraphs (1) through (5); or

9

(7)  the deposit in the Department of State for filing

10

in, by or with the Department of State or the Secretary of

11

the Commonwealth of any articles, statements, proceedings,

12

agreements or any [like] similar papers affecting

13

associations under the statutes of this Commonwealth[.] for

14

which a specific fee is not set forth in section 153

15

(relating to fee schedule) or other applicable statute.

16

"Bureau."  The Corporation Bureau of the Department of State

17

or any successor agency within the department.

18

§ 153.  Fee schedule. 

19

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

20

for the public acts and transactions of the Secretary of the

21

Commonwealth administered through the bureau, shall be as

22

follows:

23

(1)  Domestic corporations:

  

24

25

26

(i)  Articles of incorporation, letters

patent or similar instruments incorporating a

corporation or association.......................

  

  

$125

27

28

(ii)  Articles or agreement or similar

instrument of merger, consolidation or division..

  

70

29

30

(iii)  Additional fee for each association

which is a party to a merger or consolidation....

  

40

- 10 -

 


1

2

(iv)  Additional fee for each new association

resulting from a division........................

  

125

3

4

(v)  Articles of conversion or a similar

instrument.......................................

  

70

5

(vi)  Each ancillary transaction............

70

6

(2)  Foreign corporations:

  

7

8

(i)  Certificates of authority or similar

qualifications to do business....................

  

250

9

10

(ii)  Amended certificate of authority or

similar change in qualification to do business...

  

250

11

(iii)  Domestication.........................

125

12

13

14

15

(iv)  Statement of merger or consolidation or

similar instrument reporting occurrence of merger

or consolidation not effected by a filing in the

department.......................................

  

  

  

70

16

17

18

(v)  Additional fee for each qualified

foreign corporation which is named in a statement

of merger or consolidation or similar instrument.

  

  

40

19

(vi)  Each ancillary transaction.............

70

20

(3)  Partnerships and limited liability companies:

  

21

22

23

24

25

(i)  Certificate of limited partnership or

certificate of organization of a limited

liability company or similar instrument forming a

limited partnership or organizing a limited

liability company................................

  

  

  

  

125

26

27

(ii)  Certificate of merger, consolidation or

division.........................................

  

70

28

29

(iii)  Additional fee for each association

which is a party to a merger or consolidation....

  

40

30

(iv)  Additional fee for each new association

  

- 11 -

 


1

resulting from a division..................

125

2

3

4

(v)  Application for registration of foreign

limited partnership or limited liability

company..........................................

  

  

250

5

6

7

(vi)  Certificate of amendment of

registration of foreign limited partnership or

limited liability company........................

  

  

250

8

9

10

11

(vii)  Statement of registration of

registered limited liability partnership or

statement of election as an electing

partnership......................................

  

  

  

125

12

13

(viii)  Domestication of foreign limited

liability company................................

  

125

14

(ix)  Each ancillary transaction.............

70

15

(4)  Business trusts:

  

16

17

(i)  Deed of trust or other initial

instrument for a business trust..................

  

125

18

(ii)  Each ancillary transaction..............

70

19

(5)  Fictitious names:

  

20

(i)  Registration............................

70

21

(ii)  Each ancillary transaction.............

70

22

(6)  Service of process:

  

23

(i)  Each defendant named or served..........

70

24

(ii)  (Reserved)..............................

  

25

26

(7)  Trademarks, emblems, union labels,

description of bottles and similar matters:

  

  

27

(i)  Trademark registration..................

50

28

(ii)  Each ancillary trademark transaction...

50

29

30

(iii)  Any other registration under this

paragraph........................................

  

70

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1

2

(iv)  Any other ancillary transaction under

this paragraph...................................

  

70

3

4

(8)  Uniform Commercial Code: As provided in 13

Pa.C.S. § 9525 (relating to fees).

  

  

5

6

(9)  Copy fees, including copies furnished under

the Uniform Commercial Code:

  

  

7

(i)  Each page of photocopy furnished........

3

8

(ii)  (Reserved).............................

  

9

(10)  Certification fees:

  

10

11

12

(i)  For certifying copies of any document or

paper on file, the fee specified in paragraph

(9), if the department furnished the copy, plus..

  

  

40

13

(ii)  (Reserved).............................

  

14

15

16

17

(iii)  For issuing any other certificate of

the Secretary of the Commonwealth or the

department (other than an engrossed

certificate).....................................

  

  

  

40

18

19

(11)  Report of record search other than a search

under paragraph (8):

  

  

20

21

22

(i)  For preparing and providing a report of

a record search, the fee specified in paragraph

(9), if any, plus................................

  

  

15

23

(ii)  (Reserved).............................

  

24

(12)  Reservation and registration of names:

  

25

(i)  Reservation of association name.........

70

26

27

(ii)  Registration of foreign or other

corporation name.................................

  

70

28

(13)  Change of registered office or address:

  

29

30

(i)  Each statement of change of registered

office by agent..................................

  

5

- 13 -

 


1

2

(ii)  Each statement or certificate of change

of registered office.............................

  

5

3

(iii)  Each statement of change of address...

5

4

(14)  Contingent domestication:

  

5

(i)  Statement of contingent domestication...

125

6

7

8

(ii)  Each year, or portion of a year, during

which a contingent domestication or temporary

domiciliary status is in effect..................

  

  

1,500

9

(15)  Expedited service:

  

10

11

12

13

14

(i)  For the processing of any filing under

this title or 13 Pa.C.S. (relating to commercial

code) which is received by the bureau before 4

p.m. and is requested to be completed within one

hour, an additional fee of.......................

  

  

  

  

1,000

15

16

17

18

19

(ii)  For the processing of any filing under

this title or Title 13 which is received by the

bureau before 2 p.m. and is requested to be

completed within three hours, an additional fee

of...............................................

  

  

  

  

300

20

21

22

23

(iii)  For processing of any filing under

this title or Title 13 which is received by the

bureau before 10 a.m. and is requested to be

completed the same day, an additional fee of.....

  

  

  

100

24

(16)  Unincorporated nonprofit associations:

  

<--

25

26

(i)  Statement appointing an agent to receive

service of process.........................

  

70

27

(ii)  Resignation of appointed agent..........

40

28

29

(iii)  Amendment or cancellation of statement

appointing an agent...............................

  

70

30

* * *

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1

§ 155.  Disposition of funds.

2

(a)  [Establishment of restricted account.--] Corporation

3

Bureau Restricted Account.--The Corporation Bureau Restricted

4

Account, established under section 814 of the act of April 9,

5

1929 (P.L.177, No.175), known as The Administrative Code of

6

1929, is continued. This account shall receive 30% of the amount

7

received by the department under this subchapter except for the

8

fees collected under 13 Pa.C.S. § 9525(a)(1)(ii) (relating to

9

fees). This account shall receive 5% of the amount received by

10

the department under 13 Pa.C.S. § 9525(a)(1)(ii). The balance of

11

the amount received by the department under this subchapter

12

shall be deposited in the General Fund. Money in the account

13

shall be used solely for the operation of the bureau and for its

14

modernization as may be required for improved operations of the

15

bureau unless a surplus arises after two consecutive years, at

16

which time the Secretary of the Commonwealth shall transfer any

17

amount in excess of the bureau's budget into the General Fund.

18

* * *

19

Section 4.  The introductory paragraph and the definitions of

20

"act," "banking institution," "corporation for profit,"

21

"corporation not-for-profit," "court," "credit union,"

22

"department," "distribution," "domestic corporation for profit,"

23

"domestic corporation not-for-profit," "foreign corporation for

24

profit," "foreign corporation not-for-profit," "insurance

25

corporation," "Internal Revenue Code of 1986," "obligation,"

26

"officially publish," "representative," "savings association"

27

and "voting" in section 1103 of Title 15 are amended and the

28

section is amended by adding a subsection to read:

29

§ 1103.  Definitions.

30

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

- 15 -

 


1

contained in subsequent provisions of this subpart that are

2

applicable to specific provisions of this subpart, the following

3

words and phrases when used in this subpart shall have the

4

meanings given to them in this section unless the context

5

clearly indicates otherwise:

6

["Act" or "action."  Includes failure to act.]

7

* * *

8

["Banking institution" or "domestic banking institution."  A

9

domestic corporation for profit that is an institution as

10

defined in the act of November 30, 1965 (P.L.847, No.356), known

11

as the Banking Code of 1965.]

12

* * *

13

["Corporation for profit."  A corporation incorporated for a

14

purpose or purposes involving pecuniary profit, incidental or

15

otherwise, to its shareholders or members.

16

"Corporation not-for-profit."  A corporation not incorporated

17

for a purpose or purposes involving pecuniary profit, incidental

18

or otherwise.

19

"Court."  Subject to any inconsistent general rule prescribed

20

by the Supreme Court of Pennsylvania:

21

(1)  the court of common pleas of the judicial district

22

embracing the county where the registered office of the

23

corporation is or is to be located; or

24

(2)  where a corporation results from a merger,

25

consolidation, division or other transaction without

26

establishing a registered office in this Commonwealth or

27

withdraws as a foreign corporation, the court of common pleas

28

in which venue would have been laid immediately prior to the

29

transaction or withdrawal.

30

"Credit union."  A credit union as defined in 17 Pa.C.S. §

- 16 -

 


1

102 (relating to application of title).

2

"Department."  The Department of State of the Commonwealth.]

3

* * *

4

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

5

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

6

warrants to acquire its own shares) or incurrence of

7

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

8

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

9

by dividend or by purchase, redemption or other acquisition of

10

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

11

performance upon, a guaranty or similar arrangement by a

12

corporation for the benefit of any or all of its shareholders

13

nor a direct or indirect transfer or allocation of assets or

14

liabilities effected under Chapter 19 (relating to fundamental

15

changes) with the approval of the shareholders shall constitute

16

a distribution for the purposes of this subpart.

17

["Domestic corporation for profit."  A corporation for profit

18

incorporated under the laws of this Commonwealth.

19

"Domestic corporation not-for-profit."  A corporation not-

20

for-profit incorporated under the laws of this Commonwealth.]

21

* * *

22

["Foreign corporation for profit."  A corporation for profit

23

incorporated under any laws other than those of this

24

Commonwealth.

25

"Foreign corporation not-for-profit."  A corporation not-for-

26

profit incorporated under any laws other than those of this

27

Commonwealth.]

28

* * *

29

["Insurance corporation" or "domestic insurance corporation."

30

An insurance corporation as defined in section 3102 (relating to

- 17 -

 


1

definitions).

2

"Internal Revenue Code of 1986."  The Internal Revenue Code

3

of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).]

4

* * *

5

["Obligation."  Includes a note or other form of

6

indebtedness, whether secured or unsecured.]

7

* * *

8

["Officially publish."  Publish in two newspapers of general

9

circulation in the English language in the county in which the

10

registered office of the corporation is located, or in the case

11

of a proposed corporation is to be located, one of which shall

12

be the legal newspaper, if any, designated by the rules of court

13

for the publication of legal notices or, if there is no legal

14

newspaper, in two newspapers of general circulation in the

15

county. When there is but one newspaper of general circulation

16

in any county, advertisement in that newspaper shall be

17

sufficient. Where no other frequency is specified, the notice

18

shall be published one time in the appropriate newspaper or

19

newspapers. See section 109(a)(2) (relating to name of

20

commercial registered office provider in lieu of registered

21

address).]

22

* * *

23

["Representative."  When used with respect to an association,

24

joint venture, trust or other enterprise, means a person

25

occupying the position or discharging the functions of a

26

director, officer, employee or agent thereof, regardless of the

27

name or title by which the person may be designated. The term

28

does not imply that a director, as such, is an agent of a

29

corporation.

30

"Savings association" or "domestic savings association."  A

- 18 -

 


1

domestic corporation for profit that is an association as

2

defined in the act of December 14, 1967 (P.L.746, No.345), known

3

as the Savings Association Code of 1967.]

4

* * *

5

"Voting" or "casting a vote."  Includes the giving of

6

[written] consent in lieu of voting. The term does not include

7

either recording the fact of abstention or failing to vote for a

8

candidate or for approval or disapproval of a matter, whether or

9

not the person entitled to vote characterizes the conduct as

10

voting or casting a vote.

11

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

12

nonexclusive list of words and phrases which when used in this

13

subpart shall have the meanings given to them in section 102

14

(relating to definitions):

15

"Act" or "action."

16

"Banking institution" or "domestic banking institution."

17

"Corporation for profit."

18

"Corporation not-for-profit."

19

"Court."

20

"Credit union."

21

"Department."

22

"Domestic corporation for profit."

23

"Domestic corporation not-for-profit."

24

"Execute."

25

"Foreign corporation for profit."

26

"Foreign corporation not-for-profit."

27

"Insurance corporation" or "domestic insurance corporation."

28

"Internal Revenue Code of 1986."

29

"Obligation."

30

"Officially publish."

- 19 -

 


1

"Record form."

2

"Representative."

3

"Savings association" or "domestic savings association."

4

"Sign."

5

Section 5.  Section 1104 of Title 15 is repealed:

6

[§ 1104.  Other general provisions.

7

The following provisions of this title are applicable to

8

corporations subject to this subpart:

9

Section 101 (relating to short title and application of

10

title).

11

Section 102 (relating to definitions).

12

Section 103 (relating to subordination of title to regulatory

13

laws).

14

Section 104 (relating to equitable remedies).

15

Section 105 (relating to fees).

16

Section 106 (relating to effect of filing papers required to

17

be filed).

18

Section 107 (relating to form of records).

19

Section 108 (relating to change in location or status of

20

registered office provided by agent).

21

Section 109 (relating to name of commercial registered office

22

provider in lieu of registered address).

23

Section 110 (relating to supplementary general principles of

24

law applicable).

25

Section 132 (relating to functions of Department of State).

26

Section 133 (relating to powers of Department of State).

27

Section 134 (relating to docketing statement).

28

Section 135 (relating to requirements to be met by filed

29

documents).

30

Section 136 (relating to processing of documents by

- 20 -

 


1

Department of State).

2

Section 137 (relating to court to pass upon rejection of

3

documents by Department of State).

4

Section 138 (relating to statement of correction).

5

Section 139 (relating to tax clearance of certain fundamental

6

transactions).

7

Section 140 (relating to custody and management of orphan

8

corporate and business records).

9

Section 152 (relating to definitions).

10

Section 153 (relating to fee schedule).

11

Section 154 (relating to enforcement and collection).

12

Section 155 (relating to disposition of funds).

13

Section 162 (relating to contingent domestication of certain

14

foreign associations).

15

Section 501 (relating to reserved power of General Assembly).

16

Section 503 (relating to actions to revoke corporate

17

franchises).

18

Section 504 (relating to validation of certain defective

19

corporations).

20

Section 505 (relating to validation of certain defective

21

corporate acts).

22

Section 506 (relating to scope and duration of certain

23

franchises).

24

Section 507 (relating to validation of certain share

25

authorizations).]

26

Section 6.  Section 1306 of Title 15 is amended by adding a

27

subsection to read:

28

§ 1306.  Articles of incorporation.

29

* * *

30

(e)  Reference to external facts.--Except for the provisions

- 21 -

 


1

required by subsection (a)(1), (2), (3), (4)(i), (5) and (7),

2

any provision of the articles of incorporation may be made

3

dependent upon facts ascertainable outside of the articles if

4

the manner in which the facts will operate upon the provision is

5

set forth in the articles. The facts may include actions or

6

events within the control of or determinations made by the

7

corporation or a representative of the corporation.

8

Section 7.  Sections 1504(c), 1521(d) and 1523 of Title 15

9

are amended to read:

10

§ 1504.  Adoption, amendment and contents of bylaws.

11

* * *

12

(c)  Bylaw provisions in articles.--Where any provision of

13

this subpart or any other provision of law refers to a rule as

14

set forth in the bylaws of a corporation or in a bylaw adopted

15

by the shareholders, the reference shall be construed to include

16

and be satisfied by any rule on the same subject as set forth in

17

the articles of the corporation.

18

* * *

19

§ 1521.  Authorized shares.

20

* * *

21

(d)  Status and rights.--Shares of a business corporation

22

shall be deemed personal property. Except as otherwise provided

23

by the articles or, when so permitted by subsection (c), by one

24

or more bylaws adopted by the shareholders, the terms of each

25

share shall be in all respects equal to every other share. See

26

section 1906(d)(4) (relating to special treatment of holders of

27

shares of same class or series).

28

§ 1523.  Pricing and issuance of shares.

29

Except as otherwise restricted in the bylaws, shares of a

30

business corporation may be issued at a price determined by the

- 22 -

 


1

board of directors[,]; or the board may [set a minimum price or

2

establish a formula or method by which the price may be

3

determined] authorize one or more directors or one or more

4

officers, acting alone or with the participation of one or more

5

directors, to determine the purchasers, number of shares, price

6

or consideration and other terms on which shares will be issued,

7

within limits, pursuant to a formula or method or subject to

8

relevant criteria specifically prescribed by the board.

9

Section 7.1.  Section 1527(a)(3) of Title 15 is amended and

10

the section is amended by adding a subsection to read:

11

§ 1527.  Issuance of fractional shares or scrip.

12

(a)  General rule.--A business corporation may but shall not

13

be required to create and issue fractions of a share, either

14

represented by a certificate or uncertificated, which, unless

15

otherwise provided in the articles, shall represent proportional

16

interests in all the voting rights, preferences, limitations and

17

special rights, if any, of full shares. If the corporation

18

creates but does not provide for the issuance of fractions of a

19

share, it shall:

20

* * *

21

(3)  issue scrip or other evidence of ownership, in

22

registered form (either represented by a certificate or

23

uncertificated) or in bearer form (represented by a

24

certificate), entitling the holder to receive a full share

25

upon the surrender of the scrip or other evidence of

26

ownership aggregating a full share, or the transfer of

27

uncertificated scrip aggregating a full share, but which

28

shall not[, unless otherwise provided therein or with respect

29

thereto,] entitle the holder to exercise any voting right, to

30

receive dividends or to participate in any of the assets of

- 23 -

 


1

the corporation in the event of liquidation.

2

* * *

3

(c)  Limitation.--The articles may not provide that scrip or

4

other evidence of ownership entitles the holder to exercise any

5

voting right, to receive dividends or to participate in any of

6

the assets of the corporation in the event of liquidation.

7

Section 7.2.  Section 1528 of Title 15 is amended by adding a

8

subsection to read:

9

§ 1528.  Shares represented by certificates and uncertificated

10

shares.

11

* * *

12

(g)  Bearer shares prohibited.--A business corporation may

13

not issue share certificates in bearer form. This subsection may

14

not be varied by the articles.

15

Section 7.3.  Section 1529(b) of Title 15 is amended to read:

16

§ 1529.  Transfer of securities; restrictions.

17

* * *

18

(b)  Transfer restrictions generally.--A restriction on the

19

transfer or registration of transfer of securities of a business

20

corporation may be imposed by the bylaws or by an agreement

21

among any number of securityholders or among them and the

22

corporation. A restriction so imposed shall not be binding with

23

respect to securities issued prior to the adoption of the

24

restriction unless the holders of the securities are parties to

25

the agreement or voted in favor of the restriction. A

26

restriction may be amended by the vote or consent, and otherwise

27

in the manner, provided in the bylaws or agreement for amending

28

the restriction or, in the absence of such a provision, as

29

provided for amending the bylaws or agreement generally.

30

* * *

- 24 -

 


1

Section 8.  Section 1552(b) of Title 15 is amended and the

2

section is amended by adding subsections to read:

3

§ 1552.  Power of corporation to acquire its own shares.

4

* * *

5

(b)  Security for acquisition.--In connection with an

6

acquisition by a corporation of its shares, the corporation may

7

grant a security interest in the acquired shares to secure an

8

obligation to pay for the acquisition. The shares shall not be

9

canceled on the books of the corporation until the obligation of

10

the corporation is fully paid or discharged.

11

(c)  Application of distribution tests.--A corporation may

12

acquire or agree to acquire its shares, even though the

13

acquisition would violate section 1551 (relating to

14

distributions to shareholders), if payment of all or part of the

15

purchase price is deferred until the payment would not violate

16

that section.

17

[(b)] (d)  Cross reference.--See section 1914(c)(2) (relating

18

to adoption by board of directors).

19

Section 9.  Section 1575(a) introductory paragraph of Title

20

15 is amended to read:

21

§ 1575.  Notice to demand payment.

22

(a)  General rule.--If the proposed corporate action is

23

approved by the required vote at a meeting of shareholders of a

24

business corporation, the corporation shall mail a further

25

notice to all dissenters who gave due notice of intention to

26

demand payment of the fair value of their shares and who

27

refrained from voting in favor of the proposed action. If the

28

proposed corporate action is [to be] approved by the

29

shareholders by less than unanimous consent without a meeting or

30

is taken without [a vote of] the need for approval by the 

- 25 -

 


1

shareholders, the corporation shall send to all shareholders who

2

are entitled to dissent and demand payment of the fair value of

3

their shares a notice of the adoption of the plan or other

4

corporate action. In either case, the notice shall:

5

* * *

6

Section 10.  Section 1704(a) and (b) of Title 15 are amended

7

and the section is amended by adding subsections to read:

8

§ 1704.  Place and notice of meetings of shareholders.

9

(a)  Place.--Meetings of shareholders may be held at such

10

geographic location within or without this Commonwealth as may

11

be provided in or fixed pursuant to the bylaws. Unless otherwise

12

provided in or pursuant to the bylaws, all meetings of the

13

shareholders shall be held at the executive office of the

14

corporation wherever situated. If a meeting of the shareholders

15

is held by means of the Internet or other electronic

16

communications technology in a fashion pursuant to which the

17

shareholders have the opportunity to read or hear the

18

proceedings substantially concurrently with their occurrence,

19

vote on matters submitted to the shareholders [and], pose

20

questions to the directors, make appropriate motions and comment

21

on the business of the meeting, the meeting need not be held at

22

a particular geographic location.

23

(b)  Notice.--[Written notice] Notice in record form of every

24

meeting of the shareholders shall be given by, or at the

25

direction of, the secretary or other authorized person to each

26

shareholder of record entitled to vote at the meeting at least:

27

(1)  ten days prior to the day named for a meeting that

28

will consider a fundamental change under Chapter 19 (relating

29

to fundamental changes); or

30

(2)  five days prior to the day named for the meeting in

- 26 -

 


1

any other case.

2

[If the secretary or other authorized person neglects or refuses

3

to give notice of a meeting, the person or persons calling the

4

meeting may do so.]

5

* * *

6

(d)  Alternative authority.--If the secretary or other

7

authorized person neglects or refuses to give notice of a

8

meeting, a person calling the meeting may do so.

9

(e)  Cross reference.--See section 2528 (relating to notice

10

of shareholder meetings).

11

Section 11.  Sections 1705(a), 1727(b), 1756(a)(4) and

<--

12

1759(a), (c) and (e) of Title 15 are amended to read:

13

§ 1705.  Waiver of notice.

14

(a)  [Written waiver] General rule.--Whenever any [written] 

15

notice is required to be given under the provisions of this

16

subpart or the articles or bylaws of any business corporation, a

17

waiver thereof [in writing, signed] which is filed with the

18

secretary of the corporation in record form signed by the person

19

or persons entitled to the notice, whether before or after the

20

time stated therein, shall be deemed equivalent to the giving of

21

the notice. Neither the business to be transacted at, nor the

22

purpose of, a meeting need be specified in the waiver of notice

23

of the meeting.

24

* * *

25

§ 1727.  Quorum of and action by directors.

26

* * *

27

(b)  Action by consent.--Unless otherwise restricted in the

28

bylaws, any action required or permitted to be [taken]approved 

<--

29

at a meeting of the directors may be taken without a meeting

30

if[, prior or subsequent to the action,] a consent or consents

- 27 -

 


1

[thereto] to the action in record form are signed, before, on or

2

after the effective date of the action, by all of the directors

3

in office [is] on the date the last consent is signed. The

4

consent or consents must be filed with the secretary of the

5

corporation.

6

§ 1756.  Quorum.

<--

7

(a)  General rule.--A meeting of shareholders of a business

8

corporation duly called shall not be organized for the

9

transaction of business unless a quorum is present. Unless

10

otherwise provided in a bylaw adopted by the shareholders:

11

* * *

12

(4)  If a proxy casts a vote or takes other action on 

13

behalf of a shareholder on any issue other than a procedural

14

motion considered at a meeting of shareholders, the

15

shareholder shall be deemed to be present during the entire

16

meeting for purposes of determining whether a quorum is

17

present for consideration of any other issue.

18

* * *

19

§ 1759.  Voting and other action by proxy.

20

(a)  General rule.--

21

(1)  Every shareholder entitled to vote at a meeting of

22

shareholders or to express consent or dissent to corporate

23

action [in writing] without a meeting may authorize another

24

person to act for him by proxy.

25

(2)  The [presence of, or] vote or other action on behalf

<--

26

of a shareholder at a meeting of shareholders, or the

27

expression of consent or dissent to corporate action [in

28

writing], by a proxy of a shareholder shall constitute the

29

presence of, or vote or action by, or [written] consent or

30

dissent of the shareholder for the purposes of this subpart.

- 28 -

 


1

(3)  Where two or more proxies of a shareholder are

2

present, the corporation shall, unless otherwise expressly

3

provided in the proxy, accept as the vote or other action of

4

all shares represented thereby the vote cast or other action

5

taken by a majority of them and, if a majority of the proxies

6

cannot agree whether the shares represented shall be voted or

7

upon the manner of voting the shares or taking the other

8

action, the voting of the shares or right to take other

9

action shall be divided equally among those persons.

10

* * *

11

(c)  Revocation.--A proxy, unless coupled with an interest,

12

shall be revocable at will, notwithstanding any other agreement

13

or any provision in the proxy to the contrary, but the

14

revocation of a proxy shall not be effective until notice

15

thereof has been given to the secretary of the corporation or

16

its designated agent in writing or by electronic transmission.

17

An unrevoked proxy shall not be valid after three years from the

18

date of its execution, authentication or transmission unless a

19

longer time is expressly provided therein. A proxy shall not be

20

revoked by the death or incapacity of the maker unless, before

21

the vote is counted or the authority is exercised, [written] 

22

notice in record form of the death or incapacity is given to the

23

secretary of the corporation or its designated agent.

24

* * *

25

(e)  Cross [reference] references.--See [section] sections

26

1702 (relating to manner of giving notice) and 3135 (relating to

27

proxies of members of mutual insurance companies).

28

Section 12.  Section 1764(a) of Title 15 is amended and the

29

section is amended by adding a subsection to read:

30

§ 1764.  Voting lists.

- 29 -

 


1

(a)  General rule.--The officer or agent having charge of the

2

transfer books for shares of a business corporation shall make a

3

complete list of the shareholders entitled to vote at any

4

meeting of shareholders, arranged in alphabetical order, with

5

the address of and the number of shares held by each. This

6

section does not require the corporation to include electronic

7

mail addresses or other electronic contact information on the

8

list. The list shall be produced and kept open at the time and

9

place of [the] each meeting of shareholders of a nonregistered

10

corporation held at a geographic location and shall be subject

11

to the inspection of any shareholder during the whole time of

12

the meeting for the purposes thereof [except that, if a business

13

corporation has 5,000 or more shareholders, in lieu of the

14

making of the list the corporation may make the information

15

therein available at the meeting by any other means]. See

16

section 2529 (relating to voting lists).

17

* * *

18

(c)  Electronic meetings.--If a meeting of shareholders of a

19

nonregistered corporation is not held at a geographic location,

20

the corporation shall make the list of shareholders required by

21

subsection (a) available on a reasonably accessible electronic

22

network during the whole time of the meeting and shall provide

23

the information required to gain access to the list with the

24

notice of the meeting.

25

Section 13.  Section 1766(a), (b) and (d) of Title 15 are

26

amended to read:

27

§ 1766.  Consent of shareholders in lieu of meeting.

28

(a)  Unanimous consent.--Unless otherwise restricted in the

29

bylaws, any action required or permitted to be taken at a

30

meeting of the shareholders or of a class of shareholders of a

- 30 -

 


1

business corporation may be taken without a meeting if[, prior

2

or subsequent to the action,] a consent or consents [thereto] to

3

the action in record form are signed, before, on or after the

4

effective date of the action, by all of the shareholders who

5

would be entitled to vote at a meeting for such purpose [shall

6

be filed], the. The consent or consents must be filed with the

<--

7

secretary of the corporation.

8

(b)  Partial consent.--If the bylaws so provide, any action

9

required or permitted to be taken at a meeting of the

10

shareholders or of a class of shareholders may be taken without

11

a meeting upon the signed consent of shareholders who would have

12

been entitled to cast the minimum number of votes that would be

13

necessary to authorize the action at a meeting at which all

14

shareholders entitled to vote thereon were present and voting.

15

The consents shall be filed in record form with the secretary of

16

the corporation.

17

* * *

18

(d)  Cross [reference] references.--See [section] sections

19

1702 (relating to manner of giving notice) and 2524 (relating to

20

consent of shareholders in lieu of meeting).

21

Section 14.  Section 1906(d)(3) of Title 15 is amended and

22

the section is amended by adding a subsection to read:

23

§ 1906.  Special treatment of holders of shares of same class or

24

series.

25

* * *

26

(c.1)  Determination of groups.--For purposes of applying

27

subsections (a)(1) and (b), the determination of which

28

shareholders are part of each group receiving special treatment

29

shall be made as of the record date for shareholder action on

30

the plan.

- 31 -

 


1

(d)  Exceptions.--This section shall not apply to:

2

* * *

3

(3)  A plan that contains an express provision that this

4

section shall not apply or that fails to contain an express

5

provision that this section shall apply. [The shareholders of

6

a corporation that proposes a plan to which this section is

7

not applicable by reason of this paragraph shall have the

8

remedies contemplated by section 1105 (relating to

9

restriction on equitable relief).]

10

* * *

11

Section 15.  Title 15 is amended by adding sections to read:

12

§ 1907.  Purpose of fundamental transactions.

13

A transaction under this chapter does not require an

14

independent business purpose in order for the transaction to be

15

lawful.

16

§ 1908.  Submission of matters to shareholders.

17

A business corporation may agree, in record form, to submit

<--

18

an amendment, plan or other matter to its shareholders whether

19

or not the board of directors determines, at any time after

<--

20

approving the matter, that the matter is no longer advisable and

21

recommends that the shareholders reject or vote against it, 

<--

22

regardless of whether the board of directors changes its

23

recommendation. If a corporation so agrees to submit a matter to

24

its shareholders, the matter is deemed to have been validly

25

adopted by the corporation when it has been approved by the

26

shareholders.

27

Section 16.  Sections 1911(a)(4), 1913, 1922(a)(3), 1923,

28

1931(a), (b)(2), (d) and (g), 1957(b)(1)(iv), 1973 and, 1978(b) 

<--

29

and 2522 of Title 15 are amended to read:

<--

30

§ 1911.  Amendment of articles authorized.

- 32 -

 


1

(a)  General rule.--A business corporation, in the manner

2

provided in this subchapter, may from time to time amend its

3

articles for one or more of the following purposes:

4

* * *

5

(4)  To cancel or otherwise affect the right of holders

6

of the shares of any class or series to receive dividends

7

that have accrued but have not been declared or to otherwise

8

effect a reclassification of or otherwise affect the

9

substantial rights of the holders of any shares, including,

10

without limitation, by providing special treatment of shares

11

held by any shareholder or group of shareholders [as

12

authorized by, and subject to the provisions of,] consistent

13

with section 1906 (relating to special treatment of holders

14

of shares of same class or series).

15

* * *

16

§ 1913.  Notice of meeting of shareholders.

17

(a)  General rule.--[Written notice] Notice in record form of

18

the meeting of shareholders of a business corporation that will

19

act on the proposed amendment [shall] must be given to each

20

shareholder entitled to vote thereon. [There shall be included

21

in, or enclosed with, the notice] The notice must include a copy

22

of the proposed amendment or a summary of the changes to be

23

effected thereby and, if Subchapter D of Chapter 15 (relating to

24

dissenters rights) is applicable, a copy of that subchapter.

25

(b)  Cross [reference] references.--See Subchapter A of

26

Chapter 17 (relating to notice and meetings generally) and

27

section 2528 (relating to notice of shareholder meetings).

28

§ 1922.  Plan of merger or consolidation.

29

(a)  Preparation of plan.--A plan of merger or consolidation,

30

as the case may be, shall be prepared, setting forth:

- 33 -

 


1

* * *

2

(3)  The manner and basis of canceling or converting the

<--

3

shares of each corporation into shares or other securities or

4

obligations of the surviving or new corporation, or of

<--

5

canceling some or all of the shares of a corporation, as the

6

case may be, and, if any of the shares of any of the

7

corporations that are parties to the merger or consolidation

8

are not to be canceled or converted solely into shares or

9

other securities or obligations of the surviving or new

10

corporation, the shares or other securities or obligations of

11

any other person or cash, property or rights that the holders

12

of such shares are to receive in exchange for, or upon

13

conversion of, such shares, and the surrender of any

14

certificates evidencing them, which securities or

15

obligations, if any, of any other person or cash, property or

16

rights may be in addition to or in lieu of the shares or

17

other securities or obligations of the surviving or new

18

corporation.

19

* * *

20

§ 1923.  Notice of meeting of shareholders.

21

(a)  General rule.--[Written notice] Notice in record form of

22

the meeting of shareholders that will act on the proposed plan

23

[shall] must be given to each shareholder of record, whether or

24

not entitled to vote thereon, of each domestic business

25

corporation that is a party to the merger or consolidation.

26

[There shall be included in, or enclosed with, the notice] The

27

notice must include or be accompanied by a copy of the proposed

28

plan or a summary thereof [and, if]. If Subchapter D of Chapter

29

15 (relating to dissenters rights) is applicable to the holders

30

of shares of any class or series, a copy of that subchapter and

- 34 -

 


1

of section 1930 (relating to dissenters rights) [shall] must be

2

furnished to the holders of shares of that class or series. If

3

the surviving or new corporation will be a nonregistered

4

corporation, the notice [shall] must state that a copy of its

5

bylaws as they will be in effect immediately following the

6

merger or consolidation will be furnished to any shareholder on

7

request and without cost.

8

(b)  Cross references.--See Subchapter A of Chapter 17

9

(relating to notice and meetings generally) and [section] 

10

sections 2512 (relating to dissenters rights procedure) and 2528

11

(relating to notice of shareholder meetings).

12

§ 1931.  Share exchanges.

13

(a)  General rule.--All the outstanding shares of one or more

14

classes or series of a domestic business corporation, designated

15

in this section as the exchanging corporation, may, in the

16

manner provided in this section, be acquired by any person,

17

designated in this section as the acquiring person, through an

18

exchange of all the shares pursuant to a plan of exchange. The

19

plan of exchange may also provide for the [conversion of any

20

other] shares of any other class or series of the exchanging

21

corporation to be canceled or converted into shares, other

22

securities or obligations of any person or cash, property or

23

rights. The procedure authorized by this section shall not be

24

deemed to limit the power of any person to acquire all or part

25

of the shares or other securities of any class or series of a

26

corporation through a voluntary exchange or otherwise by

27

agreement with the holders of the shares or other securities.

28

(b)  Plan of exchange.--A plan of exchange shall be prepared,

29

setting forth:

30

* * *

- 35 -

 


1

(2)  The manner and basis of canceling the shares of the

2

exchanging corporation or exchanging or converting the shares

3

of the exchanging corporation into shares or other securities

4

or obligations of the acquiring person, and, if any of the

5

shares of the exchanging corporation are not to be exchanged

6

or converted solely into shares or other securities or

7

obligations of the acquiring person, the shares or other

8

securities or obligations of any other person or cash,

9

property or rights that the holders of the shares of the

10

exchanging corporation are to receive in exchange for, or

11

upon conversion of, the shares and the surrender of any

12

certificates evidencing them, which securities or

13

obligations, if any, of any other person or cash, property

14

and rights may be in addition to or in lieu of the shares or

15

other securities or obligations of the acquiring person.

16

* * *

17

(d)  Dissenters rights in share exchanges.--Any holder of

18

shares that are to be canceled, exchanged or converted pursuant

19

to a plan of exchange who objects to the plan and complies with

20

the provisions of Subchapter D of Chapter 15 shall be entitled

21

to the rights and remedies of dissenting shareholders therein

22

provided, if any. See section 1906(c) (relating to dissenters

23

rights upon special treatment).

24

* * *

25

(g)  Effect of plan.--Upon the plan of exchange becoming

26

effective, the shares of the exchanging corporation that are,

27

under the terms of the plan, to be canceled, converted or

28

exchanged shall cease to exist or shall be converted or 

29

exchanged. The former holders of the shares shall thereafter be

30

entitled only to the shares, other securities or obligations or

- 36 -

 


1

cash, property or rights into which they have been converted or

2

for which they have been exchanged in accordance with the plan,

3

and the acquiring person shall be the holder of the shares of

4

the exchanging corporation stated in the plan to be acquired by

5

such person. The articles of incorporation of the exchanging

6

corporation shall be deemed to be amended to the extent, if any,

7

that changes in its articles are stated in the plan of exchange.

8

* * *

9

§ 1957.  Effect of division.

10

* * *

11

(b)  Property rights; allocations of assets and

12

liabilities.--

13

(1)  * * *

14

(iv)  [To] Except as provided in section 1952(g)

15

(relating to proposal and adoption of plan of division),

16

to the extent allocations of liabilities are contemplated

17

by the plan of division, the liabilities of the dividing

18

corporation shall be deemed without further action to be

19

allocated to and become the liabilities of the resulting

20

corporations on such a manner and basis and with such

21

effect as is specified in the plan; and one or more, but

22

less than all, of the resulting corporations shall be

23

free of the liabilities of the dividing corporation to

24

the extent, if any, specified in the plan, if in either

25

case:

26

(A)  no fraud on minority shareholders or

27

shareholders without voting rights or violation of

28

law shall be effected thereby; and

29

(B)  the plan does not constitute a fraudulent

30

transfer under 12 Pa.C.S. Ch. 51 (relating to

- 37 -

 


1

fraudulent transfers).

2

* * *

3

§ 1973.  Notice of meeting of shareholders.

4

(a)  General rule.--[Written notice] Notice in record form of

5

the meeting of shareholders that will consider the resolution

6

recommending dissolution of the business corporation [shall] 

7

must be given to each shareholder of record entitled to vote

8

thereon [and the purpose shall be included]. The purpose of the

9

meeting must be stated in the notice [of the meeting].

10

(b)  Cross [reference] references.--See Subchapter A of

11

Chapter 17 (relating to notice and meetings generally) and

12

section 2528 (relating to notice of shareholder meetings).

13

§ 1978.  Winding up of corporation after dissolution.

14

* * *

15

(b)  Standard of care of directors and officers.--The

16

dissolution of the corporation shall not subject its directors

17

or officers to standards of conduct different from those

18

prescribed by or pursuant to Chapter 17 (relating to officers,

19

directors and shareholders). Directors of a dissolved

20

corporation who have complied with section 1975 (relating to

21

predissolution provision for liabilities) or Subchapter H

22

(relating to postdissolution provision for liabilities) and

23

governing persons of a successor entity who have complied with

24

Subchapter H shall not be personally liable to the creditors or

25

claimants of the dissolved corporation.

26

§ 2522.  Adjournment of meetings of shareholders.

<--

27

[Any] Except as otherwise provided in the bylaws, any regular

28

or special meeting of the shareholders of a registered

29

corporation, including one at which directors are to be elected,

30

may be adjourned for such period as the shareholders present and

- 38 -

 


1

entitled to vote shall direct.

2

Section 17.  Title 15 is amended by adding sections to read:

3

§ 2528.  Notice of shareholder meetings.

4

If a registered corporation solicits proxies generally with

5

respect to a meeting of its shareholders, the corporation need

<--

6

notis not required to give notice of the meeting to any

<--

7

shareholder to whom the corporation is not required to send a

8

proxy statement pursuant to the rules of the Securities and

9

Exchange Commission.

10

§ 2529.  Voting lists.

11

A registered corporation is not required to produce or make

12

available to its shareholders a list of shareholders in

13

connection with any meeting of its shareholders for which a

14

judge or judges of election are appointed, but such a list must

15

be furnished to the judge or judges of election.

16

Section 18.  Section 2545(b) of Title 15 is amended and the

17

section is amended by adding a subsection to read:

18

§ 2545.  Notice to shareholders.

19

* * *

20

(b)  Obligations of the corporation.--If the controlling

21

person or group so requests, the corporation shall, at the

22

option of the corporation and at the expense of the person or

23

group, either furnish a list of all such shareholders and their

24

postal addresses to the person or group or [mail] provide the

25

notice to all such shareholders.

26

* * *

27

(e)  Cross reference.--See section 1702 (relating to manner

28

of giving notice).

29

Section 19.  Sections 3133(a) introductory paragraph, 3135

30

and 4127(a) introductory paragraph and (5), (b) and (d) are

- 39 -

 


1

amended to read:

2

§ 3133.  Notice of meetings of members of mutual insurance

3

companies.

4

(a)  General rule.--Unless otherwise restricted in the

5

bylaws, persons authorized or required to give notice of an

6

annual meeting of members of a mutual insurance company for the

7

election of directors or of a meeting of members of a mutual

8

insurance company called for the purpose of considering

9

amendment of the articles or bylaws, or both, of the corporation

10

may, in lieu of any [written] notice of meeting of members

11

required to be given by this subpart, give notice of such

12

meeting by causing notice of such meeting to be officially

13

published. Such notice shall be published each week for at

14

least:

15

* * *

16

§ 3135.  Proxies of members of mutual insurance companies.

17

In no event shall a proxy given by a member of a mutual

18

insurance company, unless coupled with an interest, be voted on

19

or utilized to express consent or dissent to corporate action

20

[in writing] after 11 months from the date of execution of the

21

proxy.

22

§ 4127.  Merger, consolidation or division of qualified foreign

23

corporations.

24

(a)  General rule.--Whenever a qualified foreign business

25

corporation is a nonsurviving party to a statutory merger,

26

consolidation or division permitted by the laws of the

27

jurisdiction under which it is incorporated, the corporation or

28

other association surviving the merger, or the new corporation

29

or other association resulting from the consolidation or

30

division, as the case may be, shall file in the Department of

- 40 -

 


1

State a statement of merger, consolidation or division, which

2

shall be executed by the surviving or new corporation or other

3

association and shall set forth:

4

* * *

5

(5)  In the case of a merger, consolidation or division

6

in which any of the new or resulting associations is a

7

corporation, or if the surviving corporation in a merger was

8

a nonqualified foreign business corporation prior to the

9

merger, the statements on the part of the surviving or each 

10

new or resulting corporation required by section 4124(a)

11

(relating to application for a certificate of authority).

12

(b)  Effect of filing.--The filing of the statement shall

13

operate, as of the effective date of the merger, consolidation

14

or division, to cancel the certificate of authority of each

15

nonsurviving constituent corporation that was a qualified

16

foreign business corporation and to qualify the surviving [or

17

new corporation], new or resulting corporations, under this

18

subchapter. If the surviving [or new corporation does], new or

19

resulting corporations do not desire to continue as [a] 

20

qualified foreign business [corporation, it] corporations, they 

21

may thereafter withdraw in the manner provided by section 4129

22

(relating to application for termination of authority).

23

* * *

24

(d)  Cross [reference] references.--See [section] sections 

25

134 (relating to docketing statement) and 135 (relating to

26

requirements to be met by filed documents).

27

Section 20.  The introductory paragraph and the definitions

28

of "act," "board of directors," "bylaws," "charitable purposes,"

29

"corporation for profit," "corporation not-for-profit," "court,"

30

"department," "directors," "domestic corporation for profit,"

- 41 -

 


1

"domestic corporation not-for-profit," "foreign corporation for

2

profit," "foreign corporation not-for-profit," "fraternal

3

benefit society," "member," "nonprofit corporation,"

4

"nonqualified foreign corporation," "other body,"

5

"representative," "trust instrument," "unless otherwise

6

provided" and "unless otherwise restricted," in section 5103 of

7

Title 15 are amended and the section is amended by adding

8

definitions and a subsection to read:

9

§ 5103.  Definitions.

10

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

11

contained in subsequent provisions of this subpart that are

12

applicable to specific provisions of this subpart, the following

13

words and phrases when used in this subpart shall have the

14

meanings given to them in this section unless the context

15

clearly indicates otherwise:

16

["Act" or "action."  Includes failure to act.]

17

"Amendment."  An amendment of the articles.

18

* * *

19

"Board of directors" or "board."  The group of persons

20

[vested with the management of] under the direction of whom the

21

business and affairs of the corporation are managed irrespective

22

of the name by which [such] the group is designated. The term

23

does not include an other body. [The term, when used in any

24

provision of this subpart relating to the organization or

25

procedures of or the manner of taking action by the board of

26

directors, shall be construed to include and refer to any

27

executive or other committee of the board. Any provision of this

28

subpart relating or referring to action to be taken by the board

29

of directors or the procedure required therefor shall be

30

satisfied by the taking of corresponding action by a committee

- 42 -

 


1

of the board of directors to the extent authority to take such

2

action has been delegated to such committee pursuant to section

3

5731 (relating to executive and other committees of the board).] 

4

See section 5731(c) (relating to executive and other committees

5

of the board).

6

* * *

7

"Business corporation."  A domestic corporation for profit

8

defined in section 1103 (relating to definitions).

9

"Bylaws."  The code or codes of rules adopted for the

10

regulation or management of the business and affairs of the

11

corporation irrespective of the name or names by which [such] 

12

the rules are designated. The term includes provisions of the

13

articles as provided by section 5504(c) (relating to adoption,

14

amendment and contents of bylaws).

15

"Charitable purposes."  The relief of poverty, the

16

advancement and provision of education, including postsecondary

17

education, the advancement of religion, [the promotion of

18

health,] the prevention and treatment of disease or injury,

19

including mental retardation and mental disorders, governmental

20

or municipal purposes, and any other [purposes] purpose the

21

accomplishment of which is recognized as important and 

22

beneficial to the [community] public.

23

* * *

24

["Corporation for profit."  A corporation incorporated for a

25

purpose or purposes involving pecuniary profit, incidental or

26

otherwise, to its shareholders or members.

27

"Corporation not-for-profit."  A corporation not incorporated

28

for a purpose or purposes involving pecuniary profit, incidental

29

or otherwise.

30

"Court."  Subject to any inconsistent general rule prescribed

- 43 -

 


1

by the Supreme Court of Pennsylvania:

2

(1)  the court of common pleas of the judicial district

3

embracing the county where the registered office of the

4

corporation is or is to be located; or

5

(2)  where a corporation results from a merger,

6

consolidation, division or other transaction without

7

establishing a registered office in this Commonwealth or

8

withdraws as a foreign corporation, the court of common pleas

9

in which venue would have been laid immediately prior to the

10

transaction or withdrawal.

11

"Department."  The Department of State of the Commonwealth.]

12

"Directors."  [Persons] Individuals designated, elected or

13

appointed, by that or any other name or title, to act as members

<--

14

of the board of directors, and their successors. The term does

15

not include a member of an other body, [as such] unless the

16

person is also a director. The term, when used in relation to

17

any power or duty requiring collective action, shall be

18

construed to mean "board of directors."

19

* * *

20

["Domestic corporation for profit."  A corporation for profit

21

incorporated under the laws of this Commonwealth.

22

"Domestic corporation not-for-profit."  A corporation not-

23

for-profit incorporated under the laws of this Commonwealth.]

24

"Employee."  The term does not include a member, director or

25

member of an other body, unless the person is also an employee.

26

See section 5730 (relating to compensation of directors) as to

27

acceptance by a director of duties that make the director also

28

an employee.

29

* * *

30

["Foreign corporation for profit."  A corporation for profit

- 44 -

 


1

incorporated under any laws other than those of this

2

Commonwealth.

3

"Foreign corporation not-for-profit."  A corporation not-for-

4

profit incorporated under any laws other than those of this

5

Commonwealth.]

6

"Foreign domiciliary corporation."  A foreign nonprofit

7

corporation described in section 6102 (relating to foreign

8

domiciliary corporations).

9

* * *

10

"Fraternal benefit society."  A domestic corporation not-for-

11

profit that is a society as defined in [the act of July 29, 1977

12

(P.L.105, No.38) known as the Fraternal Benefit Society Code] 

13

Article XXIV of the act of May 17, 1921 (P.L.682, No.284), known

14

as The Insurance Company Law of 1921.

15

* * *

16

"Member."  [One having membership rights in a corporation in

17

accordance with the provisions of its bylaws. The term, when

18

used in relation to the taking of corporate action includes:

19

(1)  the proxy of a member, if action by proxy is

20

permitted under the bylaws of the corporation; and

21

(2)  a delegate to any convention or assembly of

22

delegates of members established pursuant to any provision of

23

this subpart.

24

If and to the extent the bylaws confer rights of members upon

25

holders of securities evidencing indebtedness or governmental or

26

other entities pursuant to any provision of this subpart the

27

term shall be construed to include such security holders and

28

governmental or other entities. The term shall be construed to

29

include "shareholder" if the corporation issues shares of

30

stock.] Any of the following:

- 45 -

 


1

(1)  A person that has voting rights.

2

(2)  When used in relation to the taking of corporate

3

action by a membership corporation, a delegate to a

4

convention or assembly of delegates of members established

5

pursuant to any provision of this subpart who has the right

6

to vote at the convention or assembly in accordance with the

7

rules of the convention or assembly.

8

(3)  A person that has been given voting rights or other

9

membership rights in a membership corporation by a bylaw

10

adopted by the members pursuant to section 5770 (relating to

11

voting powers and other rights of certain securityholders and

12

other entities) or other provision of law, but only to the

13

extent of those rights.

14

(4)  A shareholder of a corporation, if the corporation

15

issues shares of stock.

16

"Membership corporation."  A nonprofit corporation having

17

articles of incorporation that do not provide that the

18

corporation is to have no members.

19

"Nonprofit corporation" or "domestic nonprofit corporation."

20

A domestic corporation not-for-profit [which] that is not

21

excluded from the scope of this subpart by section 5102

22

(relating to application of subpart).

23

"Nonqualified foreign corporation" or "nonqualified foreign

24

nonprofit corporation."  A foreign corporation not-for-profit

25

[which] that is not a qualified foreign corporation, as defined

26

in this section.

27

* * *

28

"Other body."  A term employed in this subpart to denote a

29

person or group, other than the board of directors or a

30

committee thereof, who pursuant to authority expressly conferred

- 46 -

 


1

by this subpart may be vested by the bylaws of the corporation

2

with powers [which] that, if not vested by the bylaws in [such] 

3

the person or group, would by this subpart be required to be

4

exercised by [either]:

5

(1)  the [membership of a corporation taken as a whole] 

6

members;

7

(2)  a convention or assembly of delegates of members

8

established pursuant to any provision of this subpart; or

9

(3)  the board of directors.

10

Except as otherwise provided in this subpart, a corporation may

11

establish distinct persons or groups to exercise different

12

powers [which] that this subpart authorizes a corporation to

13

vest in an other body.

14

"Plan."  A plan of reclassification, merger, consolidation,

15

asset transfer, division or conversion.

16

* * *

17

["Representative."  When used with respect to a corporation,

18

partnership, joint venture, trust or other enterprise, means a

19

director, officer, employee or agent thereof.]

20

"Trust instrument."  Any lawful deed of gift, grant, will or

21

other document by which the donor, grantor or testator [shall

22

give, grant or devise] gives, grants or devises any real or

23

personal property or the income [therefrom] from any real or

24

personal property in trust for any charitable purpose.

25

"Unless otherwise provided" or "except as otherwise

26

provided." When used to introduce or modify a rule, the term 

27

implies that the alternative provisions contemplated may either

28

relax or restrict the stated rule.

29

"Unless otherwise restricted" or "except as otherwise

30

restricted." When used to introduce or modify a rule, the term 

- 47 -

 


1

implies that the alternative provisions contemplated may further

2

restrict, but may not relax, the stated rule.

3

"Voting" or "casting a vote."  Includes the giving of consent

4

in lieu of voting. Whether or not the person entitled to vote

5

characterizes the conduct as voting or casting a vote, the term

6

does not include:

7

(1)  recording the fact of abstention; or

8

(2)  failing to vote for a candidate or for approval or

9

disapproval of a matter.

10

"Voting rights."  The right of a person in a membership

11

corporation, other than in the capacity of a director or member

12

of an other body, to vote on the election or removal of

13

directors or members of an other body or on approval of an

14

amendment, a plan or the dissolution of the corporation.

15

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

16

nonexclusive list of words and phrases which when used in this

17

subpart shall have the meanings given to them in section 102

18

(relating to definitions):

19

"Act" or "action."

20

"Corporation for profit."

21

"Corporation not-for-profit."

22

"Court."

23

"Department."

24

"Domestic corporation for profit."

25

"Domestic corporation not-for-profit."

26

"Execute."

27

"Foreign corporation for profit."

28

"Foreign corporation not-for-profit."

29

"Internal Revenue Code of 1986."

30

"Obligation."

- 48 -

 


1

"Officially publish."

2

"Record form."

3

"Representative."

4

"Sign."

5

Section 21.  Sections 5104, 5105, 5106, 5107, 5108, 5109,

6

5302, 5306(a)(6) introductory paragraph and (11)(ii), 5307,

7

5308, 5309, 5310, 5331 and 5501 of Title 15 are amended to read:

8

[§ 5104.  Other general provisions.

9

The following provisions of this title are applicable to

10

corporations subject to this subpart:

11

Section 101 (relating to short title and application of

12

title).

13

Section 102 (relating to definitions).

14

Section 103 (relating to subordination of title to regulatory

15

laws).

16

Section 104 (relating to equitable remedies).

17

Section 105 (relating to fees).

18

Section 106 (relating to effect of filing papers required to

19

be filed).

20

Section 107 (relating to form of records).

21

Section 108 (relating to change in location or status of

22

registered office provided by agent).

23

Section 109 (relating to name of commercial registered office

24

provider in lieu of registered address).

25

Section 110 (relating to supplementary general principles of

26

law applicable).

27

Section 132 (relating to functions of Department of State).

28

Section 133 (relating to powers of Department of State).

29

Section 134 (relating to docketing statement).

30

Section 135 (relating to requirements to be met by filed

- 49 -

 


1

documents).

2

Section 136 (relating to processing of documents by

3

Department of State).

4

Section 137 (relating to court to pass upon rejection of

5

documents by Department of State).

6

Section 138 (relating to statement of correction).

7

Section 139 (relating to tax clearance of certain fundamental

8

transactions).

9

Section 140 (relating to custody and management of orphan

10

corporate and business records).

11

Section 152 (relating to definitions).

12

Section 153 (relating to fee schedule).

13

Section 154 (relating to enforcement and collection).

14

Section 155 (relating to disposition of funds).

15

Section 162 (relating to contingent domestication of certain

16

foreign associations).

17

Section 501 (relating to reserved power of General Assembly).

18

Section 503 (relating to actions to revoke corporate

19

franchises).

20

Section 504 (relating to validation of certain defective

21

corporations).

22

Section 505 (relating to validation of certain defective

23

corporate acts).

24

Section 2552 (relating to definitions) (definitions of

25

"affiliate" and "associate").]

26

§ 5105.  [Saving clause and restriction] Restriction on

27

equitable relief.

28

[(a)  General rule.--Except as otherwise provided in

29

subsection (b) of this section, this subpart and its amendments

30

shall not impair or affect any act done, offense committed, or

- 50 -

 


1

substantial right accruing, accrued, or acquired, or liability,

2

duty, obligation, penalty, judgment or punishment incurred prior

3

to the time this subpart or any amendment thereto takes effect,

4

but the same may be enjoyed, asserted, enforced, prosecuted, or

5

inflicted as fully and to the same extent as if this subpart or

6

any amendment thereto had not been enacted.

7

(b)  Exception.--] A member of a nonprofit corporation shall

8

not have any right to claim the right to valuation [of] and

9

payment [for] of the fair value of his membership interest or

10

shares because of any proposed plan or amendment [of articles] 

11

authorized under any provision of this subpart, or to obtain, in

12

the absence of fraud or fundamental unfairness, an injunction

13

against [any such] the plan or amendment.

14

§ 5106.  [Limited uniform] Uniform application of subpart.

15

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

16

this subpart and its amendments are intended to provide uniform

17

rules for the government and regulation of the affairs of

18

nonprofit corporations and of their officers, directors and

19

members, regardless of the date or manner of incorporation or

20

qualification, or of the issuance of any evidences of membership

21

in or shares [thereof] of a nonprofit corporation.

22

(b)  Exceptions.--

23

(1)  Unless expressly provided otherwise in any amendment

24

to this subpart [any such], the amendment shall take effect

25

only prospectively.

26

(2)  Any existing corporation lawfully using a name[,] 

27

or, as a part of its name, a word[, which] that could not be

28

used as or included in the name of a corporation [hereafter] 

29

subsequently incorporated or qualified under this subpart[,] 

30

may continue to use [such] the name[,] or word as part of its

- 51 -

 


1

name[, provided] if the use or inclusion of [such] the word

2

or name was lawful when first adopted by the corporation in

3

this Commonwealth.

4

(3)  [Nothing in subsection] Subsection (a) shall not

5

adversely affect the rights specifically provided for or 

6

saved [by the general terms of section 5105 (relating to

7

saving clause and restriction on equitable relief)] in this

8

subpart, including, without limiting the generality of the

9

foregoing, the provisions of section 5952(d) (relating to

10

proposal and adoption of plan of division).

11

(4)  Nothing in this subpart shall be deemed to repeal or

12

supersede any provision in section 7 of the act of April 26,

13

1855 (P.L.328, No.347), entitled "An act relating to

14

Corporations and to Estates held for Corporate, Religious and

15

Charitable uses."

16

§ 5107.  Subordination of subpart to canon law.

17

If and to the extent canon law or similar principles 

<--

18

applicable to a corporation incorporated for religious purposes

19

[shall set] sets forth provisions relating to the government and

20

regulation of the affairs of the corporation [which] that are

21

inconsistent with the provisions of this subpart on the same

22

subject, the [provisions of] canon law or similar principles 

<--

23

shall control except to the extent[, and only to the extent,

24

required] prohibited by the Constitution of the United States or

25

the Constitution of Pennsylvania[, or both].

26

§ 5108.  Limitation on incorporation.

27

[No corporation which might] A corporation that can be

28

incorporated under this subpart shall [hereafter] not be

29

incorporated except under the provisions of this subpart.

30

§ 5109.  Execution of documents.

- 52 -

 


1

(a)  General rule.--Any document filed in the Department of

2

State under this title by a domestic or foreign nonprofit

3

corporation [or a foreign corporation not-for-profit] subject to

4

this subpart may be executed on behalf of the corporation by any

5

one duly authorized officer [thereof] of the corporation. The

6

corporate seal may be affixed and attested, but the affixation

7

or attestation of the corporate seal shall not be necessary for

8

the due execution of any filing by a corporation under this

9

title.

10

(b)  Cross reference.--See section 135 (relating to

11

requirements to be met by filed documents).

12

[(c)  Transitional provision.--This section supersedes any

13

contrary provision of this subpart enacted prior to the

14

enactment of the act of December 21, 1988 (P.L.1444, No.177),

15

known as the General Association Act of 1988.]

16

§ 5302.  Number and qualifications of incorporators.

17

One or more corporations for profit or not-for-profit or

18

natural persons of full age may incorporate a nonprofit

19

corporation under the provisions of this [article] subpart.

20

§ 5306.  Articles of incorporation.

21

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

22

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

23

language:

24

* * *

25

(6)  [A] If the corporation is a membership corporation,

26

a statement whether the corporation is to be organized upon a

27

nonstock basis or a stock share basis, and, if it is to be

28

organized on a stock share basis:

29

* * *

30

(11)  Any other provisions that the incorporators may

- 53 -

 


1

choose to insert if:

2

* * *

3

(ii)  such provisions are not inconsistent with this

4

subpart and relate to the purpose or purposes of the

5

corporation, the management of its business or affairs or

6

the rights, powers or duties of its members, security

7

holders, directors, members of an other body or officers.

8

* * *

9

§ 5307.  Advertisement.

10

The incorporators or the corporation shall officially publish

11

a notice of intention to file or of the filing of articles of

12

incorporation. The notice may appear prior to or after the day

13

the articles of incorporation are filed in the [Department of

14

State,] department and shall set forth briefly:

15

(1)  The name of the proposed corporation.

16

(2)  A statement that the corporation is to be or has

17

been incorporated under the provisions of this [article] 

18

subpart.

19

[(3)  A brief summary of the purpose or purposes of the

20

corporation.

21

(4)  A date on or before which the articles will be filed

22

in the Department of State or the date the articles were

23

filed.]

24

§ 5308.  Filing of articles.

25

(a)  General rule.--The articles of incorporation shall be

26

filed in the [Department of State] department.

27

(b)  Cross [reference] references.--See [section] sections 

28

134 (relating to docketing statement) and 135 (relating to

29

requirements to be met by filed documents).

30

§ 5309.  Effect of filing of articles of incorporation.

- 54 -

 


1

(a)  Corporate existence.--Upon the filing of the articles of

2

incorporation in the [Department of State] department or upon

3

the effective date specified in the articles of incorporation,

4

whichever is later, the corporate existence shall begin.

5

(b)  Evidence of incorporation.--Subject to the provisions of

6

section 503 (relating to actions to revoke corporate

7

franchises), the articles of incorporation filed in the

8

[Department of State, or approved by the court and] department,

9

or recorded in the office of the recorder of deeds under the

10

former provisions of law, shall be conclusive evidence of the

11

fact that the corporation has been incorporated.

12

§ 5310.  Organization meeting.

13

(a)  General rule.--After the [filing of the articles of

14

incorporation] corporate existence begins, an organization

15

meeting of the initial directors[,] or, if directors are not

16

named in the articles, of the incorporator [or incorporators],

17

shall be held, within or without this Commonwealth, for the

18

purpose of adopting bylaws, [which they shall have authority to

19

do at such meeting, of] electing directors [to hold office as

20

provided in the bylaws,] if directors are not named in the

21

articles[,] and the transaction of such other business as may

22

come before the meeting. A bylaw adopted at [such] the

23

organization meeting of directors or incorporators shall be

24

deemed to be a bylaw adopted by the members for the purposes of

25

this [article and of] subpart and any other provision of law.

26

(b)  Call of and action at meeting.--The meeting may be held

27

at the call of any director or, if directors are not named in

28

the articles, of any incorporator, who shall give at least five

29

days' [written notice thereof] notice of the meeting to each

30

other director or incorporator[, which]. The notice shall set

- 55 -

 


1

forth the time and place of the meeting. For the purposes of

2

this section [an], any director or incorporator may act in

3

person, by consent or by proxy signed by him or his [attorney in

4

fact] attorney-in-fact.

5

(c)  Death or incapacity of directors or incorporators.--If a

6

designated director or an incorporator dies or is for any reason

7

unable to act at the meeting, the other or others may act. If

8

there is no other designated director or incorporator able to

9

act, any person for whom [an] a director or incorporator was

10

acting as agent may act or appoint another to act in his stead.

11

§ 5331.  [Unincorporated] Incorporation of unincorporated

12

associations.

13

In the case of the incorporation as a nonprofit corporation

14

under this [article] subpart of an unincorporated association

15

the articles of incorporation shall contain, in addition to the

16

provisions [heretofore required in this chapter] required in

17

Subchapter A (relating to incorporation generally), a statement

18

that the incorporators constitute a majority of the members of

19

the committee authorized to incorporate [such] the association

20

by the requisite vote required by the organic law of the

21

association for the amendment of [such] the organic law.

22

§ 5501.  Corporate capacity.

23

Except as provided in section 103 [of this title] (relating

24

to subordination of title to regulatory laws), a nonprofit

25

corporation shall have the legal capacity of natural persons to

26

act.

27

Section 22.  Section 5504(b), (c) and (d) of Title 15 are

28

amended and the section is amended by adding a subsection to

29

read:

30

§ 5504.  Adoption, amendment and contents of bylaws.

- 56 -

 


1

* * *

2

(b)  Exception.--Except as provided in section 5310(a)

3

(relating to organization meeting), the board of directors or

4

other body shall not have the authority to adopt or change a

5

bylaw on any subject that is committed expressly to the members

6

by any of the provisions of this subpart. See:

7

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

8

Section 5713 (relating to personal liability of directors).

9

Section 5721 (relating to board of directors).

10

Section 5725(b) (relating to selection of directors).

11

Section 5726(a) (relating to removal of directors by the

12

members).

13

Section 5726(b) (relating to removal of directors by the

14

board).

15

Section 5729 (relating to voting rights of directors).

16

Section 5751(a) (relating to classes and qualifications of

17

membership).

18

Section 5752(c) (relating to rights of shareholders).

19

Section 5754(a) (relating to members grouped in local units).

20

Section 5755(a) (relating to regular meetings).

21

Section 5756 (relating to quorum).

22

Section 5757 (relating to action by members).

23

Section 5758 (relating to voting rights of members).

24

Section 5759(a) (relating to voting and other action by

25

proxy).

26

Section [5760(a)] 5762(a) (relating to voting [in nonprofit

27

corporation matters] by corporations).

28

Section [5762] 5765 (relating to judges of election).

29

Section [5766(a)] 5769(a) (relating to termination and

30

transfer of membership).

- 57 -

 


1

Section [5767] 5770 (relating to voting powers and other

2

rights of certain [security holders] securityholders and other

3

entities).

4

Section 5975(c) (relating to winding up and distribution).

5

(c)  Bylaw provisions in articles.--Where any provision of

6

this subpart or any other provision of law refers to a rule as

7

set forth in the bylaws of a corporation or in a bylaw adopted

8

by the members, the reference shall be construed to include and

9

be satisfied by any rule on the same subject as set forth in the

10

articles of the corporation.

11

(d)  Amendment of voting provisions.--

12

(1)  Unless otherwise restricted in a bylaw adopted by

13

the members, whenever the bylaws require for the taking of

14

any action by the members or a class of members a specific

15

number or percentage of votes, the provision of the bylaws

16

setting forth that requirement shall not be amended or

17

repealed by any lesser number or percentage of votes of the

18

members or of the class of members.

19

(2)  Paragraph (1) shall not apply to a bylaw setting

20

forth the right of members to act by unanimous written

21

consent as provided in section 5766(a) (relating to consent

22

of members in lieu of meeting).

23

(e)  Cross reference.--See section 6145 (relating to

24

applicability of certain safeguards to foreign domiciliary

25

corporations).

26

Section 23.  Section 5509 of Title 15 is amended to read:

27

§ 5509.  Bylaws and other powers in emergency.

28

(a)  General rule.--[The] Except as otherwise restricted in

29

the bylaws, the board of directors or other body of any

30

nonprofit corporation may adopt emergency bylaws, subject to

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1

repeal or change by action of the members, which shall,

2

notwithstanding any different provisions of law or of the

3

articles or bylaws, be [operative] effective during any

4

emergency resulting from [warlike damage or] an attack on the

5

United States [or any], a nuclear [or atomic] disaster or

6

another catastrophe a result of which a quorum of the board

7

cannot readily be assembled. The emergency bylaws may make any

8

provision that may be [practical and necessary] appropriate for

9

the circumstances of the emergency, including [provisions that]:

10

(1)  [A meeting of the board of directors or other body

11

may be called by any officer or director or member of such

12

other body in such manner and under such conditions as shall

13

be prescribed in the emergency bylaws.] Procedures for

14

calling meetings of the board or other body.

15

(2)  [The director or directors or the member or members

16

of such other body in attendance at the meeting, or any other

17

number fixed in the emergency bylaws, shall constitute a

18

quorum.] Quorum requirements for meetings.

19

(3)  [The officers or other persons designated on a list

20

approved by the board of directors or other body before the

21

emergency, all in such order of priority and subject to such

22

conditions and for such period of time, not longer than

23

reasonably necessary after the termination of the emergency

24

as may be provided in the emergency bylaws or in the

25

resolution approving the list, shall, to the extent required

26

to provide a quorum at any meeting of the board of directors

27

or such other body, be deemed directors or members of such

28

other body for such meeting.] Procedures for designating

29

additional or substitute directors or members of an other

30

body.

- 59 -

 


1

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

2

directors or [such] other body, or the officers, if given

3

authorization by the board of directors or other body, either

4

before or during any [such] emergency, may [provide,]:

5

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

6

succession in the event that during [such an] the emergency

7

any or all officers or agents of the corporation shall for

8

any reason be rendered incapable of discharging their

9

duties[, and may,]; and

10

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

11

or designate several alternative head offices or regional

12

offices of the corporation[, or authorize the officers so to

13

do].

14

(c)  Personnel not liable.--[No officer, director, member of

15

such other body, or employee acting in accordance with any

16

emergency bylaws shall be liable except for wilful misconduct.] 

17

A representative of the corporation:

18

(1)  Acting in accordance with any emergency bylaws shall

19

not be liable except for willful misconduct.

20

(2)  Shall not be liable for any action taken by him in

21

good faith in an emergency in furtherance of the ordinary

22

business affairs of the corporation even though not

23

authorized by the emergency or other bylaws then in effect.

24

(d)  Effect on regular bylaws.--To the extent that they are 

25

not inconsistent with any emergency bylaws [so] adopted, the

26

bylaws of the corporation shall remain in effect during any

27

emergency[,] and, upon its termination, the emergency bylaws

28

shall cease to be [operative] effective.

29

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

30

otherwise provided in emergency bylaws, notice of any meeting of

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1

the board of directors or [such] an other body during [such] an

2

emergency shall be given only to [such of the] those directors

3

or members of [such] an other body [as it may be] it is feasible

4

to reach at the time and by such means as [may be] are feasible

5

at the time, including publication [or], radio or television. To

6

the extent required to constitute a quorum at any meeting of the

7

board of directors or [such] an other body during [such an] any 

8

emergency, the officers of the corporation who are present

9

shall, unless otherwise provided in emergency bylaws, be deemed,

10

in order of rank and within the same rank in order of seniority,

11

directors or members of [such] the other body, as the case may

12

be, for [such] the meeting.

13

Section 24.  Section 5511 of Title 15 is reenacted to read:

14

§ 5511.  Establishment of subordinate units.

15

A nonprofit corporation may establish and terminate local

16

branches, chapters, councils, clubs, churches, lodges, parishes

17

or other subordinate units regardless of their designation, form

18

of government, incorporated or unincorporated status or

19

relationship to the corporation or other supervising and

20

controlling organization of which the corporation is a member or

21

with which it is in allegiance and to which it is subordinate.

22

Section 25.  Sections 5541, 5542, 5543, 5544, 5546, 5547(b),

<--

23

5548(b) and 5550 of Title 15 are amended to read:

24

§ 5541.  Capital contributions of members.

25

(a)  General rule.--A nonprofit corporation organized on a

26

nonstock basis may provide in its bylaws that members, upon or

27

subsequent to admission, shall make capital contributions. The

28

amount shall be specified in, or fixed by the board of directors

29

or other body pursuant to authority granted by, the bylaws. The

30

requirement of a capital contribution may apply to all members,

- 61 -

 


1

[or] to the members of a single class, or to members of

2

different classes in different amounts or proportions.

3

(b)  Consideration receivable.--[The capital contribution of

4

a member shall consist of money or other property, tangible or

5

intangible, or labor or services actually received by or

6

performed for the corporation or for its benefit or in its

7

formation or reorganization, or a combination thereof. In the

8

absence of fraud in the transaction, the judgment of the board

9

of directors or other body as to the value of the consideration

10

received by the corporation shall be conclusive.] The capital

11

contribution of a member, unless otherwise provided in the

12

bylaws:

13

(1)  May consist of money, obligations (including an

14

obligation of a member), services performed whether or not

15

contracted for, contracts for services to be performed,

16

memberships in or securities or obligations of the

17

corporation, or any other tangible or intangible property or

18

benefit to the corporation. If a capital contribution is made

19

in a form other than money, the value of the contribution

20

shall be determined by or in the manner provided by the board

21

of directors or other body.

22

(2)  Shall be provided or paid to or as ordered by the

23

corporation.

24

(c)  Evidence of contribution.--The capital contribution of a

25

member shall be recorded on the books of the corporation and may

26

be evidenced by a written instrument delivered to the member,

27

but [such] the instrument shall not be denominated a "share

28

certificate" or by any other word or term implying that the

29

instrument is a share certificate subject to section 5752

30

(relating to organization on a stock share basis).

- 62 -

 


1

(d)  Transferability of interest.--Unless otherwise provided

2

in the bylaws, the capital contribution of a member shall not be

3

transferable.

4

(e)  Repayment of contribution.--The capital contribution of

5

a member shall not be repaid by the corporation except upon

6

dissolution of the corporation or as provided in this [article] 

7

subpart. A corporation may provide in its bylaws that its

8

capital contributions, or some of them, shall be repayable, in

9

whole or in part, at the option of the corporation only, [at

10

such] in the amount or amounts (not to exceed the amount of the

11

capital contribution), within [such] the period or periods[,] 

12

and on [such] the terms and conditions, not inconsistent with

13

this [article] subpart, as are stated in, or fixed by the board

14

of directors or other body pursuant to authority granted by, the

15

bylaws.

16

§ 5542.  Subventions.

17

(a)  General rule.--The bylaws of a nonprofit corporation may

18

provide that the corporation shall be authorized by resolution

19

of the board of directors or other body to accept subventions

20

from members or nonmembers on terms and conditions not

21

inconsistent with this [article, and to issue certificates

22

therefor] subpart. The resolution of the board or other body may

23

provide that [holders of] the maker of a subvention

24

[certificates] shall be entitled to a fixed or contingent

25

periodic payment out of the corporate assets equal to a

26

percentage of the original amount or value of the subvention.

27

The rights of [holders of subvention certificates] makers of

28

subventions shall at all times be subordinate to the rights of

29

creditors of the corporation.

30

(b)  Consideration receivable.--[A subvention shall consist

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1

of money or other property, tangible or intangible, actually

2

received by the corporation or expended for its benefit or in

3

its formation or reorganization, or a combination thereof. In

4

the absence of fraud in the transaction, the judgment of the

5

board of directors or other body as to the value of the

6

consideration received by the corporation shall be conclusive.

7

(c)  Form of certificate.--Each subvention certificate shall

8

be signed by two duly authorized officers of the corporation,

9

and may be sealed with the seal of the corporation or a

10

facsimile thereof. The signatures of the officers upon a

11

certificate may be facsimiles if the certificate is

12

countersigned by a transfer agent or registered by a registrar

13

other than the corporation itself or its employees. In case any

14

officer who has signed or whose facsimile signature has been

15

placed upon a certificate shall have ceased to be such officer

16

before such certificate is issued, it may be issued by the

17

corporation with the same effect as if he were such officer at

18

the date of issue. The fact that the corporation is a nonprofit

19

corporation shall be noted conspicuously on the face or back of

20

each certificate.] Consideration for subventions, unless

21

otherwise provided in the bylaws:

22

(1)  May consist of money, obligations (including an

23

obligation of a subventor), services performed whether or not

24

contracted for, contracts for services to be performed,

25

memberships in or securities or obligations of the

26

corporation, or any other tangible or intangible property or

27

benefit to the corporation. If subventions are issued for

28

other than money, the value of the consideration shall be

29

determined by or in the manner provided by the board of

30

directors or other body.

- 64 -

 


1

(2)  Shall be provided or paid to or as ordered by the

2

corporation.

3

(c.1)  Form of subventions.--Subventions shall be represented

4

by certificates or shall be uncertificated subventions. Each

5

subvention certificate shall be executed by or on behalf of the

6

corporation issuing the subvention in the manner it may

7

determine. The fact that the corporation is a nonprofit

8

corporation shall be noted conspicuously on the face or back of

9

each certificate.

10

(d)  Transferability of subvention.--[Subvention

11

certificates] Subventions shall be nontransferable unless the

12

resolution of the board of directors or other body [shall

13

provide] provides that they shall be transferable either at will

14

or subject to specified restrictions.

15

(e)  Redemption at option of corporation.--The resolution of

16

the board of directors or other body may provide that a

17

subvention shall be redeemable, in whole or in part, at the

18

option of the corporation at [such] the price or prices (not to

19

exceed the original amount or value of the subvention plus any

20

periodic payments due or accrued thereon), within [such] the 

21

period or periods, and on [such] the terms and conditions, not

22

inconsistent with this [article] subpart, as are stated in the

23

resolution.

24

(f)  Redemption at option of holders.--The resolution of the

25

board of directors or other body may provide that makers or 

26

holders of all or some [subvention certificates] subventions 

27

shall have the right to require the corporation after a

28

specified period of time to redeem [such certificates] the

29

subventions, in whole or in part, at a price or prices that do

30

not exceed the original amount or value of the subvention plus

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1

any periodic payments due or accrued [thereon] on the

2

subvention, upon an affirmative showing that the financial

3

condition of the corporation will permit the required payment to

4

be made without impairment of its operations or injury to its

5

creditors. The right to require redemption may in addition be

6

conditioned upon the occurrence of a specified event. For the

7

purpose of enforcing their rights under this subsection, makers

8

or holders of [subvention certificates] subventions shall be

9

entitled to inspect the books and records of the corporation.

10

(g)  Rights of makers or holders on dissolution.--[Holders] 

11

Makers or holders of [subvention certificates] subventions, upon

12

dissolution of the corporation, shall be entitled, after the

13

claims of creditors have been satisfied, to repayment of the

14

original amount or value of the subvention plus any periodic

15

payments due or accrued [thereon] on the subvention, unless a

16

lesser sum is specified in the resolution of the board of

17

directors or other body concerning [such] the subvention.

18

§ 5543.  Debt and security interests.

19

(a)  General rule.--[No corporation shall issue bonds or

20

other evidences of indebtedness except for money or other

21

property, tangible or intangible, or labor or services actually

22

received by or performed for the corporation or for its benefit

23

or in its formation or reorganization, or a combination thereof.

24

In the absence of fraud in the transaction, the judgment of the

25

board of directors or other body as to the value of the

26

consideration received by the corporation shall be conclusive.] 

27

Unless otherwise provided in the bylaws, a nonprofit corporation

28

may issue its bonds or other obligations for an amount and form

29

of consideration as may be determined by or in the manner

30

provided by the board of directors or other body.

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1

(b)  Creation of lien on real or personal property.--The

2

board of directors or other body may authorize any mortgage or

3

pledge of, or the creation of a security interest in, all or any

4

part of the real or personal property of the corporation, or any

5

interest [therein. Unless] in the real or personal property. No

6

application to or confirmation by a court shall be required and,

7

unless otherwise restricted in the bylaws, no vote or consent of

8

the members shall be required to make effective [such] the 

9

action by the board or other body.

10

§ 5544.  [Fees, dues] Dues and assessments.

11

(a)  General rule.--A nonprofit corporation may levy dues or

12

assessments, or both, on its members, if authority to do so is

13

conferred by the bylaws, subject to any limitations [therein] 

14

contained in the bylaws. [Such] The dues or assessments, or

15

both, may be imposed upon all members of the same class either

16

alike or in different amounts or proportions, and upon a

17

different basis upon different classes of members. Members of

18

one or more classes may be made exempt from either dues or

19

assessments, or both, in the manner or to the extent provided in

20

the bylaws.

21

(b)  Amount and method of collection.--The amount of the levy

22

and method of collection of [such] the dues or assessments, or

23

both, may be fixed in the bylaws, or the bylaws may authorize

24

the board of directors or other body to fix the amount [thereof] 

25

of the dues or assessments from time to time, and make them

26

payable at [such] the time and by [such] the methods of

27

collection as the board of directors or other body may

28

prescribe.

29

(c)  Enforcement of payment.--A nonprofit corporation may

30

make bylaws necessary to enforce the collection of [such] dues

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1

or assessments, including provisions for the termination of

2

membership, upon reasonable notice, for nonpayment of [such] 

3

dues or assessments, and for reinstatement of membership.

4

§ 5546.  Purchase, sale, mortgage and lease of real property.

5

[Except for an industrial development corporation whose

6

articles or bylaws otherwise provide, no purchase of real

7

property shall be made by a nonprofit corporation and no

8

corporation shall sell, mortgage, lease away or otherwise

9

dispose of its real property, unless authorized by the vote of

10

two-thirds of the members in office of the board of directors or

11

other body, except that if there are 21 or more directors or

12

members of such other body, the vote of a majority of the

13

members in office shall be sufficient. No application to or

14

confirmation of any court shall be required and, unless

15

otherwise restricted in the bylaws, no vote or consent of the

16

members shall be required to make effective such action by the

17

board or other body. If the real property is subject to a trust

18

the conveyance away shall be free of trust and the trust shall

19

be impinged upon the proceeds of such conveyance.] Except as

20

otherwise provided in this subpart and unless otherwise provided

21

in the bylaws, no application to or confirmation of any court

22

shall be required for the purchase by or the sale, lease or

23

other disposition of the real or personal property, or any part  

24

of the real or personal property of a nonprofit corporation,

25

and, unless otherwise restricted in section 5930 (relating to

26

voluntary transfer of corporate assets) or in the bylaws, no

27

vote or consent of the members shall be required to make

28

effective such action by the board or other body. If the

29

property is subject to a trust, the conveyance away shall be

30

free of trust, and the trust shall be impinged upon the proceeds

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1

of the conveyance.

2

§ 5547.  Authority to take and hold trust property.

<--

3

* * *

4

(b)  Nondiversion of certain property.--Property committed to

5

charitable purposes shall not, by any proceeding under Chapter

6

59 (relating to fundamental changes) or otherwise, be diverted

7

from the objects to which it was donated, granted or devised,

8

unless and until the board of directors or other body obtains

9

from the court an order under 20 Pa.C.S. Ch. [61] 77 (relating

10

to [estates] trusts) specifying the disposition of the property.

11

§ 5548.  Investment of trust funds.

12

* * *

13

(b)  Use and management.--Except as otherwise permitted under

14

20 Pa.C.S. Ch. [61] 77 (relating to [estates] trusts), the board

15

of directors or other body shall apply all assets thus received

16

to the purposes specified in the trust instrument. The directors

17

or other body shall keep accurate accounts of all trust funds,

18

separate and apart from the accounts of other assets of the

19

corporation.

20

* * *

21

§ 5550.  Devises, bequests and gifts after certain fundamental

22

changes.

23

A devise, bequest or gift to be effective in the future, in

24

trust or otherwise, to or for a nonprofit corporation which has:

25

(1)  changed its purposes;

26

(2)  sold, leased away or exchanged all or substantially

27

all its property and assets;

28

(3)  been converted into a business corporation;

29

(4)  become a party to a consolidation or a division;

30

(5)  become a party to a merger which it did not survive;

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1

or

2

(6)  been dissolved;

3

after the execution of the document containing [such] the 

4

devise, bequest or gift and before the nonprofit corporation

5

acquires a vested interest in the devise, bequest or gift shall

6

be effective only as a court having jurisdiction over the assets

7

may order under [the Estates Act of 1947] 20 Pa.C.S. Ch. 6177 

<--

8

(relating to estatestrusts) or other applicable provisions of

<--

9

law.

10

Section 26.  Section 5551 of Title 15 is reenacted to read:

11

§ 5551.  Dividends prohibited; compensation and certain payments

12

authorized.

13

(a)  General rule.--A nonprofit corporation shall not pay

14

dividends or distribute any part of its income or profits to its

15

members, directors, or officers. Nothing herein contained shall

16

prohibit a fraternal benefit society operating under the

17

insurance laws of Pennsylvania from paying dividends or refunds

18

by whatever name known pursuant to the terms of its insurance

19

contracts.

20

(b)  Reasonable compensation for services.--A nonprofit

21

corporation may pay compensation in a reasonable amount to

22

members, directors, or officers for services rendered.

23

(c)  Certain payments authorized.--A nonprofit corporation

24

may confer benefits upon members or nonmembers in conformity

25

with its purposes, may repay capital contributions, and may

26

redeem its subvention certificates or evidences of indebtedness,

27

as authorized by this article, except when the corporation is

28

currently insolvent or would thereby be made insolvent or

29

rendered unable to carry on its corporate purposes, or when the

30

fair value of the assets of the corporation remaining after such

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1

conferring of benefits, payment or redemption would be

2

insufficient to meet its liabilities. A nonprofit corporation

3

may make distributions of cash or property to members upon

4

dissolution or final liquidation as permitted by this article.

5

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

6

§ 5552.  (Reserved).

7

Section 28.  Section 5552 of Title 15 is renumbered to read: 

8

§ [5552] 5553.  Liabilities of members.

9

* * *

10

Section 29.  Section 5553 of Title 15 is renumbered and

11

amended to read:

12

§ [5553] 5554.  Annual report of directors or other body.

13

(a)  Contents.--The board of directors or other body of a

14

nonprofit corporation shall present annually to the members a

15

report, verified by the president and treasurer or by a majority

16

of the directors or members of [such] the other body, showing in

17

appropriate detail the following:

18

(1)  The assets and liabilities, including [the] trust

19

funds, of the corporation as of the end of the fiscal year

20

immediately preceding the date of the report.

21

(2)  The principal changes in assets and liabilities, 

22

including trust funds, during the fiscal year immediately

23

preceding the date of the report.

24

(3)  The revenue or receipts of the corporation, both

25

unrestricted and restricted to particular purposes, for the

26

fiscal year immediately preceding the date of the report,

27

including separate data with respect to each trust fund held

28

by or for the corporation.

29

(4)  The expenses or disbursements of the corporation,

30

for both general and restricted purposes, during the fiscal 

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1

year immediately preceding the date of the report, including

2

separate data with respect to each trust fund held by or for

3

the corporation.

4

(5)  The number of members of the corporation as of the

5

date of the report, together with a statement of increase or

6

decrease in [such] their number during the year immediately

7

preceding the date of the report, and a statement of the

8

place where the names and addresses of the current members

9

may be found.

10

(b)  Place of filing.--The annual report of the board of

11

directors or other body shall be filed with the minutes of the

12

meetings of members.

13

(c)  Report in absence of meeting of members.--The board of

14

directors or other body of a corporation having no members shall

15

direct the president and treasurer to present at the annual

16

meeting of the board or [of such] other body a report in

17

accordance with subsection (a) [of this section], but omitting

18

the requirement of paragraph (5) [thereof]. [Such] The report

19

shall be filed with the minutes of the annual meeting of the

20

board or [of such] other body.

21

(d)  Cross reference.--See section 6145 (relating to

22

applicability of certain safeguards to foreign domiciliary

23

corporations).

24

Section 30.  Sections 5585, 5586, 5587, 5588, 5589, 5702(a),

25

5704(a) and (b), 5705(a), 5708, 5722(a), 5723, 5724, 5725, 5726,

26

5727, 5728(a) and (b), 5729(b) and 5730 of Title 15 are amended

27

to read:

28

§ 5585.  Establishment or use of common trust funds authorized.

29

(a)  General rule.--Every nonprofit corporation may establish

30

and maintain one or more common trust funds, the assets of which

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1

shall be held, invested and reinvested by the corporation itself

2

or by a corporate trustee to which the assets have been

3

transferred pursuant to section 5549 (relating to transfer of

4

trust or other assets to institutional trustee). Upon the

5

payment by the corporate trustee to the nonprofit corporation of

6

the net income from [such] the assets, which income may be

7

determined under section 5548(c) (relating to investment of

8

trust funds) if [such] the election is properly made by the

9

board of directors or other body of the corporation, for use and

10

application to the several participating interests in [such] the 

11

common trust fund, the proportionate participation of each

12

interest in [such] the net income shall be designated by the

13

corporate trustee. The nonprofit corporation may, at any time,

14

withdraw the whole or part of any participating interest in

15

[such] the common trust fund for distribution by it as provided

16

in this subchapter.

17

(b)  Limitations in trust instrument.--Nothing contained in

18

this section shall be construed to authorize the corporation to

19

invest assets of a trust or fund in any [such] common trust fund

20

contrary to any specific limitation or restriction contained in

21

the trust instrument[,] nor to limit or restrict the authority

22

conferred upon the corporation with respect to investments by

23

[any such] the trust instrument.

24

(c)  Effect of good faith mistakes.--[No mistakes] Mistakes 

25

made in good faith[,] and in the exercise of due care and

26

prudence[,] in connection with the administration of any [such] 

27

common trust fund[,] shall not be held to exceed any power

28

granted to or violate any duty imposed upon the corporation[,] 

29

if, promptly after the discovery of the mistake, the corporation

30

takes [such] whatever action [as] may be practicable under the

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1

circumstances to remedy the mistake.

2

§ 5586.  Restrictions on investments.

3

(a)  Legal investments.--If the trust instrument [shall limit

4

or restrict] limits or restricts the investment of [such] the 

5

assets to investments of the class authorized by law as legal

6

investments, [the] a nonprofit corporation may invest and

7

reinvest the assets of the trust or fund in any [such] common

8

trust fund maintained by the corporation[, provided] if the

9

investments composing [such] the fund consist solely of

10

investments of the class authorized by [the Fiduciaries

11

Investment Act of 1949] 20 Pa.C.S. Ch. 72 (relating to prudent

12

investor rule) to be held by fiduciaries.

13

(b)  Other than legal investments.--If the trust instrument

14

[shall] does not limit or restrict the investment of [such] the 

15

assets to investments of the class authorized by law as legal

16

investments, the corporation may invest and reinvest the assets

17

of the trust or fund in any [such] common trust fund maintained

18

by the corporation[,] composed of [such] the investments as in

19

the honest exercise of the judgment of the directors or other

20

body of the corporation they may, after investigation, determine

21

to be safe and proper investments.

22

§ 5587.  Determination of interests.

23

A nonprofit corporation shall invest the assets of a trust or

24

fund in a common trust fund authorized by this subchapter by

25

adding [such] those assets thereto, and by apportioning a

26

participation therein to [such] the trust or fund in the

27

proportion that the assets of the trust or fund added thereto

28

bears to the aggregate value of all the assets of [such] the 

29

common trust fund at the time of [such] the investment,

30

including in [such] those assets the assets of the trust or fund

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1

so added. The withdrawal of a participation from [such] the 

2

common trust fund shall be on a basis of its proportionate

3

interest in the aggregate value of all the assets of [such] the 

4

common trust fund at the time of [such] the withdrawal. The

5

participating interest of any trust or fund in [such] the common

6

trust fund may from time to time be withdrawn, in whole or in

7

part, by the corporation. Upon [such withdrawals] a withdrawal, 

8

the corporation may make distribution in cash, or ratably in

9

kind, or partly in cash and partly in kind. Participations in

10

[such] the common trust funds shall not be sold by the

11

corporation to any other corporation or person, but this

12

sentence shall not prevent a corporate trustee designated under

13

section 5585 (relating to establishment or use of common trust

14

funds authorized) from investing the assets of [such a] the 

15

common trust fund in any collective investment fund established

16

and maintained by it in accordance with law and to which the

17

assets comprising [such a] the common trust fund are eligible

18

contributions.

19

§ 5588.  Amortization of premiums on securities held.

20

If a bond or other obligation for the payment of money is

21

acquired as an investment for any common trust fund at a cost in

22

excess of the par or maturity value thereof, the nonprofit

23

corporation may, during [(but not beyond)] but not beyond the

24

period that [such] the obligation is held as an investment in

25

[such] the fund, amortize [such] the excess cost out of the

26

income on [such] the obligation, by deducting from each payment

27

of income and adding to principal an amount equal to the sum

28

obtained by dividing [such] the excess cost by the number of

29

periodic payments of income to accrue on [such] the obligation

30

from the date of [such] the acquisition until its maturity date.

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1

§ 5589.  Records; ownership of assets.

2

The nonprofit corporation shall designate clearly upon its

3

records the names of the trusts or funds on behalf of which

4

[such] the corporation, as fiduciary or otherwise, owns a

5

participation in any common trust fund and the extent of the

6

interest of the trust or fund therein. [No such] The trust or

7

fund shall not be deemed to have individual ownership of any

8

asset in [such] the common trust fund, but shall be deemed to

9

have a proportionate undivided interest in the common trust

10

fund. The ownership of the individual assets comprising any

11

common trust fund shall be solely in the nonprofit corporation

12

as fiduciary or otherwise.

13

§ 5702.  Manner of giving notice.

14

(a)  General rule.--[Whenever written]

15

(1)  Any notice [is] required to be given to any person

16

under the provisions of this subpart or by the articles or

17

bylaws of any nonprofit corporation[, it may] shall be given

18

to the person either personally or by sending a copy thereof

19

[by]:

20

(i)  By first class or express mail, postage prepaid,

21

[or by telegram (with messenger service specified), telex

22

or TWX (with answer back received)] or courier service,

23

charges prepaid, [or by facsimile transmission,] to [his] 

24

the person's postal address [(or to his telex, TWX or

25

facsimile number)] appearing on the books of the

26

corporation or, in the case of directors or members of an

27

other body, supplied by [him] the person to the

28

corporation for the purpose of notice. [If the notice is

29

sent by mail, telegraph or courier service, it shall be

30

deemed to have been given to the person entitled thereto

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1

when deposited in the United States mail or with a

2

telegraph office or courier service for delivery to that

3

person or, in the case of telex or TWX, when dispatched.] 

4

Notice under this subparagraph shall be deemed to have

5

been given to the person entitled thereto when deposited

6

in the United States mail or with a courier service for

7

delivery to that person.

8

(ii)  By facsimile transmission, e-mail or other

9

electronic communication to the person's facsimile number

10

or address for e-mail or other electronic communications

11

supplied by the person to the corporation for the purpose

12

of notice. Notice under this subparagraph shall be deemed

13

to have been given to the person entitled thereto when

14

sent.

15

(2)  A notice of meeting shall specify the [place,] day

16

[and], hour and geographic location, if any, of the meeting

17

and any other information required by any other provision of

18

this subpart.

19

* * *

20

§ 5704.  Place and notice of meetings of members.

21

(a)  Place.--Meetings of members may be held at [such place] 

22

the geographic location within or without this Commonwealth as

23

may be provided in or fixed pursuant to the bylaws. Unless

24

otherwise provided in or pursuant to the bylaws, all meetings of

25

the members shall be held [in this Commonwealth at the

26

registered office of the corporation.] at the executive office

27

of the corporation wherever situated. If a meeting of members is

28

held by means of the Internet or other electronic communications

29

technology in a fashion pursuant to which the members have the

30

opportunity to read or hear the proceedings substantially

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1

concurrently with their occurrence, vote on matters submitted to

2

the members, pose questions to the directors and members of any

3

other body, make appropriate motions and comment on the business

4

of the meeting, the meeting need not be held at a particular

5

geographic location.

6

(b)  Notice.--[Written notice] Notice in record form of every

7

meeting of the members shall be given by, or at the direction

8

of, the secretary or other authorized person to each member of

9

record entitled to vote at the meeting at least:

10

(1)  ten days prior to the day named for a meeting that

11

will consider a fundamental change under Chapter 59 (relating

12

to fundamental changes); or

13

(2)  five days prior to the day named for the meeting in

14

any other case.

15

If the secretary or other authorized person neglects or refuses

16

to give notice of a meeting, the person or persons calling the

17

meeting may do so.

18

* * *

19

§ 5705.  Waiver of notice.

20

(a)  [Written waiver] General rule.--Whenever any [written] 

21

notice is required to be given under the provisions of this

22

subpart or the articles or bylaws of any nonprofit corporation,

23

a waiver thereof [in writing, signed] that is filed with the

24

secretary of the corporation in record form signed by the person

25

or persons entitled to the notice, whether before or after the

26

time stated therein, shall be deemed equivalent to the giving of

27

the notice. [Except as otherwise required by this subsection,

28

neither] Neither the business to be transacted at, nor the

29

purpose of, a meeting need be specified in the waiver of notice

30

of the meeting.

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1

* * *

2

§ 5708.  Use of conference telephone [and similar equipment.] or

3

other electronic technology.

4

(a)  Incorporators, directors and members of an other body.--

5

Except as otherwise provided in the bylaws, one or more persons

6

may participate in a meeting of the incorporators, the board of

7

directors or an other body[, or the members] of a nonprofit

8

corporation by means of conference telephone or [similar

9

communications equipment] other electronic technology by means

10

of which all persons participating in the meeting can hear each

11

other. Participation in a meeting pursuant to this section shall

12

constitute presence in person at the meeting.

13

(b)  Members.--Except as otherwise provided in the bylaws,

14

the presence or participation, including voting and taking other

15

action, at a meeting of members, or the expression of consent or

16

dissent to corporate action, by a member by conference telephone

17

or other electronic means, including, without limitation, the

18

Internet, shall constitute the presence of, or vote or action

19

by, or consent or dissent of the member for the purposes of this

20

subpart.

21

§ 5722.  Qualifications of directors.

22

(a)  General rule.--Each director of a nonprofit corporation 

23

shall be a natural person of full age, except as provided in

24

subsection (b), who, unless otherwise restricted in the bylaws,

25

need not be a resident of this Commonwealth or a member of the

26

corporation. Except as otherwise provided in this section, the

27

qualifications of directors may be prescribed in the bylaws.

28

* * *

29

§ 5723.  Number of directors.

30

The board of directors of a nonprofit corporation shall

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1

consist of one or more members. [Except as otherwise provided in

2

this section, the] The number of directors shall be fixed by[,] 

3

or in the manner provided in[,] the bylaws[; or if]. If not so

4

fixed, the number of directors shall be the same as that stated

5

in the articles or three if no number is so stated.

6

§ 5724.  Term of office of directors.

7

(a)  General rule.--Each director of a nonprofit corporation 

8

shall hold office until the expiration of the term for which

9

[he] the director was selected and until [his] a successor has

10

been selected and qualified or until [his] the director's 

11

earlier death, resignation or removal. Directors, other than

12

those selected by virtue of their office or former office in the

13

corporation or in any other entity or organization, shall be

14

selected for the term of office provided in the bylaws. In the

15

absence of a provision fixing the term, it shall be one year.

16

(b)  Resignations.--Any director may resign at any time upon

17

notice in record form to the corporation. The resignation shall

18

be effective upon its receipt by the corporation or at a

19

subsequent time specified in the notice of resignation.

20

(c)  Decrease in number.--A decrease in the number of

21

directors shall not have the effect of shortening the term of

22

any incumbent director.

23

(d)  Classified board of directors.--Except as otherwise

24

provided in the bylaws, if the directors are classified in

25

respect of the time for which they shall severally hold office:

26

(1)  Each class shall be as nearly equal in number as

27

possible.

28

(2)  The term of office of at least one class shall

29

expire in each year.

30

(3)  The members of a class shall not be elected for a

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1

longer period than four years.

2

§ 5725.  Selection of directors.

3

(a)  General rule.--Except as otherwise provided in this

4

section, directors of a nonprofit corporation, other than those

5

[named in the articles, if any,] constituting the first board of

6

directors, shall be elected by the members.

7

(b)  Other methods.--If a bylaw adopted by the members so

8

provides, directors may be elected, appointed, designated or

9

otherwise selected by [such] the person or persons or by [such] 

10

the method or methods as shall be fixed by, or in the manner

11

provided in, [such] the bylaw, and the directors may be

12

classified as to the members who exercise the power to select

13

directors.

14

(c)  Vacancies.--Except as otherwise provided in the

15

bylaws[,]:

16

(1)  [vacancies] Vacancies in the board of directors,

17

including vacancies resulting from an increase in the number

18

of directors, [shall] may be filled by a majority of the

19

remaining members of the board though less than a quorum, or

20

by a sole remaining director, and each person so [elected] 

21

selected shall be a director to serve for the balance of the

22

unexpired term unless otherwise restricted in the bylaws.

23

(2)  When one or more directors resign from the board

24

effective at a future date, the directors then in office,

25

including those who have so resigned, shall have power by the

26

applicable vote to fill the vacancies, the vote thereon to

27

take effect when the resignations become effective.

28

(3)  In the case of a corporation having a board of

29

directors classified in respect of the time for which

30

directors shall severally hold office, any director chosen to

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1

fill a vacancy, including a vacancy resulting from an

2

increase in the number of directors, shall hold office until

3

the next election of the class for which the director has

4

been chosen and until a successor has been selected and

5

qualified or until the director's earlier death, resignation

6

or removal.

7

(d)  Alternate directors.--If the bylaws so provide, a person

8

or group of persons entitled to elect, appoint, designate or

9

otherwise select one or more directors may select [one or more

10

alternates] an alternate for each [such] director. In the

11

absence of a director from a meeting of the board [one of his

12

alternates], the director's alternate may, in the manner and

13

upon [such] the notice, if any, as may be provided in the

14

bylaws, attend [such] the meeting or execute a consent in record

15

form and exercise at the meeting [such of] or in the consent, 

16

the powers of the absent director as may be specified by, or in

17

the manner provided in, the bylaws. When so exercising the

18

powers of the absent director, [such] the alternate shall be

19

subject in all respects to the provisions of this [article] 

20

subpart relating to directors.

21

(e)  Nomination of directors.--Unless otherwise provided in 

22

the bylaws [provide otherwise], directors shall be nominated by

23

a nominating committee or from the floor.

24

(f)  Cross references.--See the definition of "member" in

25

section 5103 (relating to definitions) and section 5758(c)

26

(relating to voting rights of members).

27

§ 5726.  Removal of directors.

28

(a)  [By] Removal by the members.--

29

(1)  Unless otherwise provided in a bylaw adopted by the

30

members, the entire board of directors, or a class of the

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1

board[,] where the board is classified with respect to the

2

power to select directors, or any individual director[,] of a

3

nonprofit corporation may be removed from office without

4

assigning any cause by the vote of members, or a class of

5

members, entitled to [cast at least a majority of the votes

6

which all members present would be entitled to cast at any

7

annual or other regular election of the directors or of such

8

class of directors] elect directors, or the class of

9

directors. In case the board or [such] a class of the board

10

or any one or more directors are so removed, new directors

11

may be elected at the same meeting. [If members are entitled

12

to vote cumulatively for the board or a class of the board,

13

no individual director shall be removed unless the entire

14

board or class of the board is removed in case sufficient

15

votes are cast against the resolution for his removal, which,

16

if cumulatively voted at an annual or other regular election

17

of directors, would be sufficient to elect one or more

18

directors to the board or to the class.]

19

(2)  An individual director shall not be removed, unless

20

the entire board or class of the board is removed, from the

21

board of a corporation in which members are entitled to vote

22

cumulatively for the board or a class of the board if

23

sufficient votes are cast against the resolution for removal

24

of the director which, if cumulatively voted at an annual or

25

other regular election of directors, would be sufficient to

26

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

27

(b)  [By] Removal by the board.--Unless otherwise provided in

28

a bylaw adopted by the members, the board of directors may

29

declare vacant the office of a director [if he is declared] who

30

has been judicially declared of unsound mind [by an order of

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1

court or is convicted of felony] or who has been convicted of an

2

offense punishable by imprisonment for a term of more than one

3

year, or for any other proper cause which the bylaws may

4

specify, or if, within 60 days, or [such] other time as the

5

bylaws may specify, after notice of [his] selection, [he] a

6

director does not accept [such] the office either in writing or

7

by attending a meeting of the board of directors[,] and fulfill

8

[such] the other requirements of qualification as the bylaws may

9

specify.

10

(c)  [By] Removal by the court.--[The court may, upon

11

petition of any member or director, remove from office any

12

director in case of fraudulent or dishonest acts, or gross abuse

13

of authority or discretion with reference to the corporation, or

14

for any other proper cause, and may bar from office any director

15

so removed for a period prescribed by the court. The corporation

16

shall be made a party to such action.] Upon application of any

17

member or director, the court may remove from office any

18

director in case of fraudulent or dishonest acts, or gross abuse

19

of authority or discretion with reference to the corporation, or

20

for any other proper cause, and may bar from office any director

21

so removed for a period prescribed by the court. The corporation

22

shall be made a party to the action and as a prerequisite to the

23

maintenance of an action under this subsection a member shall

24

comply with Subchapter G (relating to judicial supervision of

25

corporate action).

26

(d)  Effect of reinstatement.--An act of the board done

27

during the period when a director has been suspended or removed

28

for cause shall not be impugned or invalidated if the suspension

29

or removal is thereafter rescinded by the members or by the

30

board or by the final judgment of a court.

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1

§ 5727.  Quorum of and action by directors.

2

(a)  General rule.--Unless otherwise provided in the bylaws,

3

a majority of the directors in office of a nonprofit corporation 

4

shall be necessary to constitute a quorum for the transaction of

5

business, and the acts of a majority of the directors present

6

and voting at a meeting at which a quorum is present shall be

7

the acts of the board of directors.

8

(b)  Action by [written] consent.--Unless otherwise

9

restricted in the bylaws, any action [which may] required or

10

permitted to be [taken]approved at a meeting of the directors

<--

11

may be [taken]approved without a meeting[,] if a consent or

<--

12

consents [in writing setting forth the action so taken shall be

13

signed] to the action in record form are signed, before, on or

14

after the effective date of the action, by all of the directors

15

in office [and shall be] on the date the last consent is signed.

16

The consent or consents must be filed with the secretary of the

17

corporation.

18

§ 5728.  Interested [members,] directors or officers; quorum.

19

(a)  General rule.--[No] A contract or transaction between a

20

nonprofit corporation and one or more of its [members,] 

21

directors or officers or between a nonprofit corporation and

22

[any other corporation, partnership, association, or other

23

organization] another domestic or foreign corporation for profit

24

or not-for-profit, partnership, joint venture, trust or other

25

association in which one or more of its directors or officers

26

are directors or officers[,] or have a financial or other 

27

interest, shall not be void or voidable solely for [such] that 

28

reason, or solely because the [member,] director or officer is

29

present at or participates in the meeting of the board of

30

directors [which] that authorizes the contract or transaction,

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1

or solely because [his or their votes are] the vote of the

2

director or officer is counted for [such] that purpose, if:

3

(1)  the material facts as to the relationship or

4

interest and as to the contract or transaction are disclosed

5

or are known to the board of directors and the board [in good

6

faith] authorizes the contract or transaction by the

7

affirmative votes of a majority of the disinterested

8

directors even though the disinterested directors are less

9

than a quorum;

10

(2)  the material facts as to [his] the director's or

11

officer's relationship or interest and as to the contract or

12

transaction are disclosed or are known to the members

13

entitled to vote thereon, if any, and the contract or

14

transaction is specifically approved in good faith by vote of

15

[such] those members; or

16

(3)  the contract or transaction is fair as to the

17

corporation as of the time it is authorized, approved or

18

ratified by the board of directors or the members.

19

(b)  Quorum.--Common or interested directors may be counted

20

in determining the presence of a quorum at a meeting of the

21

board [which] that authorizes a contract or transaction

22

specified in subsection (a) [of this section].

23

* * *

24

§ 5729.  Voting rights of directors.

25

* * *

26

(b)  Multiple and fractional voting.--The requirement of this

27

[article] subpart for the presence of or vote or other action by

28

a specified percentage of directors shall be satisfied by the

29

presence of or vote or other action by directors entitled to

30

cast [such] the specified percentage of the votes which all

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1

directors are entitled to cast.

2

§ 5730.  Compensation of directors.

3

Except as otherwise restricted in the bylaws, the board of

4

directors of a nonprofit corporation shall have the authority to

5

fix the compensation of directors for their services as [such] 

6

directors, and a director may be a salaried officer of the

7

corporation.

8

Section 31.  Section 5731 of Title 15 is amended by adding a

9

subsection to read:

10

§ 5731.  Executive and other committees of the board.

11

* * *

12

(c)  Status of committee action.--The term "board of

13

directors" or "board," when used in any provision of this

14

subpart relating to the organization or procedures of or the

15

manner of taking action by the board of directors, shall be

16

construed to include and refer to any executive or other

17

committee of the board. Any provision of this subpart relating

18

or referring to action to be taken by the board of directors or

19

the procedure required therefor shall be satisfied by the taking

20

of corresponding action by a committee of the board of directors

21

to the extent authority to take the action has been delegated to

22

the committee under this section.

23

Section 32.  Sections 5733, 5746(a), 5751, 5752, 5753, 5754,

24

5755, 5756(a)(1) and (3) and (b), 5757 and 5759 of Title 15 are

25

amended to read:

26

§ 5733.  Removal of officers and agents.

27

Unless otherwise provided in the bylaws, any officer or agent

28

of a nonprofit corporation may be removed by the board of

29

directors or other body [whenever in its judgment the best

30

interests of the corporation will be served thereby, but such] 

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1

with or without cause. The removal shall be without prejudice to

2

the contract rights, if any, of any person so removed. Election

3

or appointment of an officer or agent shall not of itself create

4

contract rights.

5

§ 5746.  Supplementary coverage.

6

(a)  General rule.--The indemnification and advancement of

7

expenses provided by or granted pursuant to the other sections

8

of this subchapter shall not be deemed exclusive of any other

9

rights to which a person seeking indemnification or advancement

10

of expenses may be entitled under any bylaw, agreement, vote of

11

members or disinterested directors or otherwise, both as to

12

action in [his] an official capacity and as to action in another

13

capacity while holding that office. Section 5728 (relating to

14

interested [members,] directors or officers; quorum) shall be

15

applicable to any bylaw, contract or transaction authorized by

16

the directors under this section. A corporation may create a

17

fund of any nature, which may, but need not, be under the

18

control of a trustee, or otherwise secure or insure in any

19

manner its indemnification obligations, whether arising under or

20

pursuant to this section or otherwise.

21

* * *

22

§ 5751.  Classes and qualifications of membership.

23

(a)  General rule.--Membership in a nonprofit corporation

24

shall be of [such] the classes, and shall be governed by [such] 

25

the rules of admission, retention, suspension and expulsion,

26

[as] prescribed in bylaws adopted by the members [shall

27

prescribe], except that [all such] the rules shall be

28

reasonable, germane to the purpose or purposes of the

29

corporation[,] and equally enforced as to all members of the

30

same class. Unless otherwise provided by a bylaw adopted by the

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1

members[, there]:

2

(1)  There shall be one class of members whose voting and

3

other rights and interests shall be equal.

4

(2)  If there is only one class of members, the members

5

shall have all the rights of members generally in a nonprofit

6

corporation.

7

(b)  Corporations without voting members.--Where the articles

8

provide that the corporation shall have no members, as such, or

9

where a nonprofit corporation has under its bylaws or in fact no

10

members entitled to vote on a matter, any provision of this

11

[article] subpart or any other provision of law requiring notice

12

to, the presence of, or the vote, consent or other action by

13

members of the corporation in connection with [such] the matter

14

shall be satisfied by notice to, the presence of, or the vote,

15

consent or other action by the board of directors or other body

16

of the corporation.

17

(c)  Membership status.--Regardless of whether a nonprofit

18

corporation designates or refers to a person as a member of the

19

corporation, the person is not a member of the corporation for

20

purposes of this subpart unless the person satisfies the

21

definition of "member" in section 5103(a) (relating to

22

definitions).

23

§ 5752.  Organization on a stock share basis.

24

(a)  General rule.--A nonprofit corporation may be organized

25

upon either a nonstock basis or, if so provided in its articles, 

26

upon a stock share basis[, as set forth in its articles].

27

(b)  Form of certificates; uncertificated shares.--The shares

28

of nonprofit corporations organized upon a stock share basis

29

shall be of [such] the denominations [as] provided in the bylaws

30

[shall provide] and shall be represented by share

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1

certificates[.] unless the articles provide that any or all

2

classes and series of shares, or any part thereof, shall be

3

uncertificated shares. A provision of the articles providing for

4

uncertificated shares shall not apply to shares represented by a

5

certificate until the certificate is surrendered to the

6

corporation. Except as otherwise expressly provided by law, the

7

rights and obligations of the holders of shares represented by

8

certificates and the rights and obligations of the holders of

9

uncertificated shares of the same class and series shall be

10

identical. The fact that the corporation is a nonprofit

11

corporation shall be noted conspicuously on the face of each

12

certificate. Within a reasonable time after the issuance or

13

transfer of uncertificated shares, the corporation shall send to

14

the registered owner thereof a written notice stating:

15

(1)  That the corporation is a nonprofit corporation

16

incorporated under the laws of this Commonwealth.

17

(2)  The name of the registered owner.

18

(3)  The denomination and class of shares and the

19

designation of the series, if any, of the shares issued or

20

transferred.

21

(c)  Rights of shareholders.--Unless otherwise provided in a

22

bylaw adopted by the members, each share shall entitle the

23

holder thereof to one vote. No dividends shall be directly or

24

indirectly paid on [any such] the shares, nor shall the

25

shareholders be entitled to any portion of the earnings of

26

[such] the corporation derived through increment of value upon

27

its property, or otherwise incidentally made, until the

28

dissolution of [any such] the corporation.

29

(d)  Transferability of shares.--Unless otherwise provided in

30

the bylaws, [such] the shares shall not be transferable by

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1

operation of law or otherwise.

2

(e)  Power to cancel shares.--A nonprofit corporation shall

3

have power to exclude from further membership any shareholder

4

who fails to comply with the reasonable and lawful bylaws of the

5

corporation, and may cancel the shares of any [such] offending

6

member without liability for an accounting[,] except as may be

7

provided in the bylaws.

8

(f)  Applicability of the Uniform Commercial Code.--The

9

provisions of [Division 8 of Title 13] 13 Pa.C.S. Div. 8 

10

(relating to investment securities) shall not apply in any

11

manner to the shares of a nonprofit corporation.

12

(g)  Cross reference.--See the definition of "member" in

13

section 5103 (relating to definitions).

14

§ 5753.  Membership certificates.

15

A nonprofit corporation organized upon a nonstock basis shall

16

not issue shares of stock, but membership in [such] the 

17

corporation may be evidenced by certificates of membership. The

18

fact that the corporation is a nonprofit corporation shall be

19

noted conspicuously on the face of each certificate.

20

§ 5754.  Members grouped in local units.

21

(a)  General rule.--The bylaws of a nonprofit corporation may

22

provide that the members of the corporation shall be grouped in

23

incorporated or unincorporated local units formed upon the basis

24

of territorial areas, or [such] other basis as may be determined

25

in the bylaws, for the purpose of election of delegates or

26

representatives to represent the members of [such] the local

27

units at any regular or special meetings of [such] the 

28

corporation. Unless otherwise provided in a bylaw adopted by the

29

members, each local unit participating in a representative

30

capacity by means of one or more delegates or otherwise at a

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1

meeting of the corporation shall have a number of votes equal to

2

the total membership of the local unit.

3

(b)  Voting at meetings of delegates.--The requirements of

4

this [article] subpart for action by or the consent of a

5

specified number or percentage of the members shall be satisfied

6

by action by or the consent of [such] that number or percentage

7

of votes of delegates or representatives of members selected

8

pursuant to this section.

9

(c)  Calling and holding meetings of delegates.--The

10

provisions of this [article] subpart relating to the manner of

11

the calling and holding of and the taking of action at meetings

12

of members shall be applicable to meetings of delegates or

13

representatives of members.

14

(d)  Incorporation of local units.--A local unit of an

15

incorporated or unincorporated parent body [which] that is

16

incorporated or organized for a purpose or purposes not

17

involving pecuniary profit, incidental or otherwise, to its

18

members[,] may be incorporated under this [article] subpart by

19

an incorporated parent body or by the members of [such] the 

20

local unit.

21

§ 5755.  Time of holding meetings of members.

22

(a)  Regular meetings.--The bylaws of a nonprofit corporation

23

may provide for the number and the time of meetings of members,

24

but unless otherwise provided in a bylaw adopted by the members

25

at least one meeting of the members of a corporation [which] 

26

that has members, as such, entitled to vote, shall be held in

27

each calendar year for the election of directors[, at such] at

28

the time [as shall be] provided in or fixed pursuant to

29

authority granted by the bylaws. Failure to hold the annual or

30

other regular meeting at the designated time shall not work a

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1

dissolution of the corporation or affect otherwise valid

2

corporate acts. If the annual or other regular meeting [shall

3

not be] is not called and held within six months after the

4

designated time, any member may call [such] the meeting at any

5

time thereafter.

6

(b)  Special meetings.--Special meetings of the members may

7

be called at any time by:

8

(1)  [by] the board of directors[, or];

9

(2)  members entitled to cast at least 10% of the votes

10

[which] that all members are entitled to cast at the

11

particular meeting[, or by such]; or

12

(3)  other officers or persons as may be provided in the

13

bylaws.

14

At any time, upon written request of any person who has called a

15

special meeting, it shall be the duty of the secretary to fix

16

the time of the meeting[,] which, if the meeting is called

17

pursuant to a statutory right, shall be held not more than 60

18

days after the receipt of the request. If the secretary [shall

19

neglect or refuse] neglects or refuses to fix the time of the

20

meeting, the person or persons calling the meeting may do so.

21

(c)  Adjournments.--Adjournments of any regular or special

22

meeting may be taken[,] but any meeting at which directors are

23

to be elected shall be adjourned only from day to day, or for

24

[such] longer periods not exceeding 15 days each, as the members

25

present and entitled to [cast at least a majority of the votes

26

which all members present and voting are entitled to cast] vote 

27

shall direct, until [such] the directors have been elected.

28

(d)  Cross reference.--See section 6145 (relating to

29

applicability of certain safeguards to foreign domiciliary

30

corporations).

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1

§ 5756.  Quorum.

2

(a)  General rule.--A meeting of members of a nonprofit

3

corporation duly called shall not be organized for the

4

transaction of business unless a quorum is present. Unless

5

otherwise provided in a bylaw adopted by the members:

6

(1)  The presence of members entitled to cast at least a

7

majority of the votes [which] that all members are entitled

8

to cast on [the matters] a particular matter to be acted upon

9

at the meeting shall constitute a quorum for the purposes of

10

consideration and action on the matter.

11

* * *

12

(3)  If a meeting cannot be organized because a quorum

13

has not attended, those present may, except as otherwise

14

provided in this [article] subpart, adjourn the meeting to

15

[such] a time and place [as] they may determine.

16

(b)  Exceptions.--Notwithstanding any contrary provision in

17

the articles or bylaws, those members entitled to vote who

18

attend a meeting of members:

19

(1)  [In the case of any meeting called for the election

20

of directors those who attend the second of such adjourned

21

meetings] at which directors are to be elected that has been

22

previously adjourned for lack of a quorum, although less than

23

a quorum as fixed in this section[,] or in the [articles or] 

24

bylaws, shall nevertheless constitute a quorum for the

25

purpose of election of directors[.];

26

(2)  [In the case of any meeting called for any other

27

purpose those who attend the second of such adjourned

28

meetings] that has been previously adjourned for one or more

29

periods aggregating at least 15 days because of an absence of

30

a quorum, although less than a quorum as fixed in this

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1

section[,] or in the [articles or] bylaws, shall nevertheless

2

constitute a quorum for the purpose of acting upon any

3

[resolution or other] matter set forth in the notice of the

4

meeting[, if written notice of such second adjourned meeting,

5

stating] if the notice states that those members who attend

6

the adjourned meeting shall nevertheless constitute a quorum

7

for the purpose of acting upon [such resolution or other] the 

8

matter[, is given to each member of record entitled to vote

9

at such second adjourned meeting at least ten days prior to

10

the day named for the second adjourned meeting].

11

§ 5757.  Action by members.

12

(a)  General rule.--[Except as otherwise provided in this

13

article or in a bylaw adopted by the members, the acts at a duly

14

organized meeting of members present entitled to cast at least a

15

majority of the votes which all members present and voting are

16

entitled to cast shall be the acts of the members.

17

(b)  Increased minimum vote.--Whenever in this article a

18

specified number or percentage of votes of members or of a class

19

of members is required for the taking of any action, a nonprofit

20

corporation may prescribe in a bylaw adopted by the members that

21

a higher number or percentage of votes shall be required for

22

such action.] Except as otherwise provided in this subpart or in

23

a bylaw adopted by the members, whenever any corporate action is

24

to be taken by vote of the members of a nonprofit corporation,

25

it shall be authorized upon receiving the affirmative vote of a

26

majority of the votes cast by the members entitled to vote

27

thereon and, if any members are entitled to vote thereon as a

28

class, upon receiving the affirmative vote of a majority of the

29

votes cast by the members entitled to vote as a class.

30

(b)  Changes in required vote.--Whenever a provision of this

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1

subpart requires a specified number or percentage of votes of

2

members or of a class of members for the taking of any action, a

3

nonprofit corporation may prescribe in a bylaw adopted by the

4

members that a higher number or percentage of votes shall be

5

required for the action. The number or percentage of members

6

necessary to call a special meeting of members or to petition

7

for the proposal of an amendment of articles under this subpart

8

may not be increased under this subsection. See sections 5504(d)

9

(relating to adoption, amendment and contents of bylaws) and

10

5914(d) (relating to adoption of amendments).

11

(c)  Expenses.--Unless otherwise restricted in the articles,

12

the corporation shall pay the reasonable expenses of

13

solicitation of votes, proxies or consents of members by or on

14

behalf of the board of directors or its nominees for election to

15

the board, including solicitation by professional proxy

16

solicitors and otherwise, and may pay the reasonable expenses of

17

a solicitation by or on behalf of other persons.

18

§ 5759.  Voting and other action by proxy.

19

(a)  General rule.--Voting by members of a nonprofit

20

corporation shall be only in person unless a bylaw adopted by

21

the members provides for voting by proxy. [The presence of or

22

vote or other action at a meeting of members, or the expression

23

of consent or dissent to corporate action in writing, by a proxy

24

of a member pursuant to such a bylaw shall constitute the

25

presence of, or vote or action by, or written consent or dissent

26

of such member for the purposes of this article.] Unless

27

otherwise restricted by a bylaw adopted by the members:

28

(1)  The presence of, or vote or other action at a

29

meeting of members, or the expression of consent or dissent

30

to corporate action, by a proxy of a member pursuant to a

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1

bylaw shall constitute the presence of, or vote or action by,

2

or consent or dissent of the member for the purposes of this

3

subpart.

4

(2)  Where two or more proxies of a member are present,

5

the corporation shall, unless otherwise expressly provided in

6

the proxy, accept as the vote or other action of all the

7

members or shares represented thereby the vote cast or other

8

action taken by a majority of them, and, if a majority of the

9

proxies cannot agree whether the memberships or shares

10

represented shall be voted or upon the manner of voting the

11

memberships or shares or taking the other action, the voting

12

of the memberships or shares or right to take other action

13

shall be divided equally among those persons.

14

(b)  [Minimum requirements] Execution and filing.--Every

15

proxy shall be executed [in writing] or authenticated by the

16

member or by [his] the member's duly authorized [attorney in

17

fact] attorney-in-fact and filed with or transmitted to the

18

secretary of the corporation[.] or its designated agent. A

19

member or the member's duly authorized attorney-in-fact may

20

execute or authenticate a writing or transmit an electronic

21

message authorizing another person to act for the member by

22

proxy. A telegram, telex, cablegram, datagram, e-mail, Internet

23

communication or other means of electronic transmission from a

24

member or attorney-in-fact, or a photographic, facsimile or

25

similar reproduction of a writing executed by a member or

26

attorney-in-fact:

27

(1)  may be treated as properly executed or authenticated

28

for purposes of this subsection; and

29

(2)  shall be so treated if it sets forth or utilizes a

30

confidential and unique identification number or other mark

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1

furnished by the corporation to the member for the purposes

2

of a particular meeting or transaction.

3

(c)  Revocation.--A proxy shall be revocable at will,

4

notwithstanding any other agreement or any provision in the

5

proxy to the contrary, but the revocation of a proxy shall not

6

be effective until notice thereof has been given to the

7

secretary of the corporation[. No] or its designated agent in

8

writing or by electronic transmission. An unrevoked proxy shall

9

not be valid after 11 months from the date of its execution,

10

authentication or transmission unless a longer time is expressly

11

provided therein[, but in no event shall a proxy be voted on

12

after three years from the date of its execution]. A proxy shall

13

not be revoked by the death or incapacity of the maker unless, 

14

before the vote is counted or the authority is exercised,

15

[written] notice of [such] the death or incapacity is given to

16

the secretary of the corporation[.] or its designated agent. See

17

section 6145 (relating to applicability of certain safeguards to

18

foreign domiciliary corporations).

19

Section 33.  Title 15 is amended by adding sections to read:

20

§ 5760.  (Reserved).

21

§ 5761.  (Reserved).

22

Section 34.  Sections 5760 and 5761 of Title 15 are

23

renumbered and amended to read:

24

§ [5760] 5762.  Voting by corporations.

25

(a)  Voting in nonprofit corporation matters.--Unless

26

otherwise provided in a bylaw of a nonprofit corporation adopted

27

by the members, any other [corporation which is a member of such

28

a nonprofit corporation may vote therein by any of its

29

officers,] domestic or foreign corporation for profit or not-

30

for-profit that is a member of the nonprofit corporation may

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1

vote by any of its officers or agents, or by proxy appointed by

2

any officer or agent, unless some other person, by resolution of

3

the board of directors of [such] the other corporation[,] or a

4

provision of its articles or bylaws, a copy of which resolution

5

or provision certified to be correct by one of its officers

6

[shall have] has been filed with the secretary of the nonprofit

7

corporation, [shall be] is appointed its general or special

8

proxy[,] in which case [such] that person shall be entitled to

9

vote [therein] as the proxy.

10

(b)  Voting by nonprofit corporations.--Shares of or

11

memberships in a domestic or foreign corporation for profit or

12

not-for-profit other than a nonprofit corporation, standing in

13

the name of a shareholder or member [which] that is a nonprofit

14

corporation, may be voted by the persons and in the manner

15

provided for in the case of nonprofit corporations by subsection

16

(a) [of this section] unless the laws of the jurisdiction in

17

which the issuer of [any such] the shares or memberships is

18

incorporated [shall] require the shares or memberships to be

19

voted by some other person or persons or in some other manner[,] 

20

in which case, to the extent that [such] those laws are

21

inconsistent [herewith] with this subsection, this subsection

22

shall not apply.

23

§ [5761] 5763.  Determination of members of record.

24

(a)  Fixing record date.--Unless otherwise restricted in the

25

bylaws, the board of directors of a nonprofit corporation may

26

fix a time[, not more than 70 days] prior to the date of any

27

meeting of members [or any adjournment thereof,] as a record

28

date for the determination of the members entitled to notice of,

29

or to vote at, [such] the meeting[. In such case only], which

30

time, except in the case of an adjourned meeting, shall not be

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1

more than 90 days prior to the date of the meeting of members.

2

Only members of record on the date [so] fixed shall [so] be so 

3

entitled notwithstanding any increase or other change in

4

membership on the books of the corporation after any record date

5

fixed as [aforesaid] provided in this subsection. Unless

6

otherwise [restricted] provided in the bylaws, the board of

7

directors may similarly fix a record date for the determination

8

of members of record for any other purpose. When a determination

9

of members of record has been made as provided in this section

10

for purposes of a meeting, the determination shall apply to any

11

adjournment thereof unless otherwise restricted in the bylaws or

12

unless the board fixes a new record date for the adjourned

13

meeting.

14

(b)  Determination when no record date fixed.--Unless

15

otherwise [restricted] provided in the bylaws, if [no] a record

16

date is not fixed:

17

(1)  The record date for determining members entitled to

18

notice of or to vote at a meeting of members shall be at the

19

close of business on the day next preceding the day on which

20

notice is given, or, if notice is waived, at the close of

21

business on the day [next] immediately preceding the day on

22

which the meeting is held.

23

(2)  The record date for determining members entitled to:

24

(i)  express consent or dissent to corporate action

25

in writing without a meeting, when [no] prior action by

26

the board of directors or other body is not necessary[,];

27

(ii)  call a special meeting of the members; or

28

(iii)  propose an amendment of the articles;

29

shall be the close of business on the day on which the first

30

written consent or dissent, request for a special meeting or

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1

petition proposing an amendment of the articles is

2

[expressed] filed with the secretary of the corporation.

3

(3)  The record date for determining members for any

4

other purpose shall be at the close of business on the day on

5

which the board of directors or other body adopts the

6

resolution relating thereto.

7

Section 35.  Title 15 is amended by adding a section to read:

8

§ 5764.  (Reserved).

9

Section 36.  Sections 5762, 5763, 5764, 5765, 5766 and 5767

10

of Title 15 are renumbered and amended to read:

11

§ [5762] 5765.  Judges of election.

12

(a)  General rule.--Unless otherwise provided in a bylaw

13

adopted by the members:

14

(1)  In advance of any meeting of members of a nonprofit

15

corporation, the board of directors or other body may appoint

16

judges of election, who need not be members, to act at [such] 

17

the meeting or any adjournment thereof. If judges of election

18

are not so appointed, the presiding officer of [any such] the 

19

meeting may, and on the request of any member shall, [make

20

such appointment] appoint judges of election at the meeting.

21

The number of judges shall be one or three. [No] A person who

22

is a candidate for office to be filled at the meeting shall

23

not act as a judge.

24

(2)  In case any person appointed as judge fails to

25

appear or fails or refuses to act, the vacancy may be filled

26

by appointment made by the board of directors or other body

27

in advance of the convening of the meeting, or at the meeting

28

by the presiding officer thereof.

29

(3)  The judges of election shall determine the number of

30

members of record and the voting power of each, the members

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1

present at the meeting, the existence of a quorum, the

2

authenticity, validity[,] and effect of proxies, if voting by

3

proxy is permitted under the bylaws, receive votes or

4

ballots, hear and determine all challenges and questions in

5

any way arising in connection with the right to vote, count

6

and tabulate all votes, determine the result[,] and [do such] 

7

perform the acts as may be proper to conduct the election or

8

vote with fairness to all members. The judges of election

9

shall perform their duties impartially, in good faith, to the

10

best of their ability[,] and as expeditiously as is

11

practical. If there are three judges of election, the

12

decision, act or certificate of a majority shall be effective

13

in all respects as the decision, act or certificate of all.

14

(4)  On request of the presiding officer of the meeting,

15

or of any member, the judges shall make a report in writing

16

of any challenge or question or matter determined by them,

17

and execute a certificate of any fact found by them. Any

18

report or certificate made by them shall be prima facie

19

evidence of the facts stated therein.

20

(b)  Cross reference.--See section 6145 (relating to

21

applicability of certain safeguards to foreign domiciliary

22

corporations).

23

§ [5763] 5766.  Consent of members in lieu of meeting.

24

(a)  Unanimous consent.--Unless otherwise restricted in the

25

bylaws, any action [which may] required or permitted to be taken

26

at a meeting of the members or of a class of members of a

27

nonprofit corporation may be taken without a meeting[,] if a

28

consent or consents [in writing, setting forth the action so

29

taken, shall be signed] to the action in record form are signed,

30

before, on or after the effective date of the action, by all of

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1

the members who would be entitled to vote at a meeting for [such

2

purpose and shall be filed] that purpose. The consent or

3

consents must be filed with the secretary of the corporation.

4

(b)  Partial consent.--If the bylaws so provide, any action

5

required or permitted to be taken at a meeting of the members or

6

of a class of members may be taken without a meeting upon the

7

signed consent of members who would have been entitled to cast

8

the minimum number of votes that would be necessary to authorize

9

the action at a meeting at which all members entitled to vote

10

thereon were present and voting. The consents must be filed in

11

record form with the secretary of the corporation.

12

(c)  Effectiveness of action by partial consent.--An action

13

taken pursuant to subsection (b) shall not become effective

14

until after at least ten days' notice of the action has been

15

given to each member entitled to vote thereon who has not

16

consented thereto.

17

§ [5764] 5767.  Appointment of custodian of corporation on

18

deadlock or other cause.

19

(a)  General rule.--[The court, upon] Upon application of any

20

member, the court may appoint one or more persons to be

21

custodians of and for any nonprofit corporation when it [is made

22

to appear] appears that:

23

(1)  [that] at any meeting for the election of directors

24

or members of an other body, the members are so divided that

25

they have failed to elect successors to [directors] those 

26

whose terms have expired or would have expired upon the

27

qualification of their successors; or

28

(2)  [that] any of the conditions specified in section

29

5981 (relating to proceedings upon [petition of member, etc.)

30

exists] application of member or director), other than that

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1

it is beneficial to the interest of the members that the

2

corporation be wound up and dissolved, exist with respect to

3

the corporation.

4

(a.1)  Exception.--The court shall not appoint a custodian to

5

resolve a deadlock if the members by agreement or otherwise have

6

provided for the appointment of a provisional director or member

7

of an other body or other means for the resolution of the

8

deadlock, but the court shall enforce the remedy so provided if

9

appropriate.

10

(b)  Power and title of custodian.--A custodian appointed

11

under this section shall have all the power and title of a

12

receiver appointed under Subchapter G of Chapter 59 (relating to

13

involuntary liquidation and dissolution), but the authority of

14

the custodian shall be to continue the business of the

15

corporation and not to liquidate its affairs and distribute its

16

assets[,] except when the court shall otherwise order [and

17

except in cases arising under section 5981(1), (2) and (3)

18

(relating to proceedings upon petition of member, etc.)].

19

(c)  Cross reference.--See section 6145 (relating to

20

applicability of certain safeguards to foreign domiciliary

21

corporations).

22

§ [5765] 5768.  Reduction of membership below stated number.

23

Whenever the membership of a nonprofit corporation having a

24

stated number of members [shall be] is reduced below [such] that 

25

number by death, withdrawal[,] or otherwise, the corporation

26

shall not on that account be dissolved, but it shall be lawful

27

for the surviving or continuing members to continue the

28

corporate existence[,] unless otherwise restricted in the

29

bylaws.

30

§ [5766] 5769.  Termination and transfer of membership.

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1

(a)  General rule.--Membership in a nonprofit corporation

2

shall be terminated in the manner provided in a bylaw adopted by

3

the members. If [the] membership in any such corporation is

4

limited to persons who are members in good standing in another

5

corporation, or in any lodge, church, club, society or other

6

entity or organization, the bylaws shall in each case define

7

[such] the limitations, and may provide that failure on the part

8

of [any such] a member to keep himself in good standing in

9

[such] the other entity or organization shall be sufficient

10

cause for [expelling the member from] terminating the membership

11

of the member in the corporation requiring such eligibility.

12

(b)  Expulsion.--

13

(1)  [No] A member shall not be expelled from any

14

nonprofit corporation without notice, trial and conviction,

15

the form of which shall be prescribed by the bylaws.

16

(2)  Paragraph (1) [of this subsection] shall not apply

17

to termination of membership pursuant to section 5544[(c)] 

18

(relating to [enforcement of payment of fees,] dues and

19

assessments).

20

(3)  See section 6145 (relating to applicability of

21

certain safeguards to foreign domiciliary corporations).

22

(c)  Effect of termination of membership.--Unless otherwise

23

provided in the bylaws, the right of a member of a nonprofit

24

corporation to vote, and his right, title and interest in or to

25

the corporation or its property, shall cease [on the] upon 

26

termination of [his] membership.

27

(d)  Transfer of membership.--Unless otherwise provided in

28

the bylaws, [no] a member may not transfer his membership or any

29

right arising therefrom. The adoption of an amendment to the

30

articles or bylaws of a nonprofit corporation that changes the

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1

identity of some or all of the members or the criteria for

2

membership does not constitute a transfer for purposes of this

3

subsection.

4

§ [5767] 5770.  Voting powers and other rights of certain

5

securityholders and other entities.

6

[Such] The power to vote in respect to the corporate affairs

7

and management of a [nonprofit] membership corporation and other

8

membership rights as may be provided in a bylaw adopted by the

9

members may be conferred upon:

10

(1)  Registered holders of [securities evidencing

11

indebtedness] obligations issued or to be issued by the

12

corporation.

13

(2)  The United States of America, the Commonwealth, a

14

state, or any political subdivision [thereof or other] of any

15

of the foregoing, or any entity prohibited by law from

16

becoming a member of a corporation.

17

Section 37.  Sections 5791, 5792, 5793, 5911, 5913, 5914,

18

5921, 5923(a), 5924, 5925, 5926(2) and (4), 5928, 5930, 5951,

19

5956, 5957(b)(1)(ii) and (iv) and (h)(1) and (3), 5972(b),

20

5973(a), 5975(c), 5976(a), 5977(a) and 5978(b) of Title 15 are

21

amended to read:

22

§ 5791.  Corporate action subject to subchapter.

23

(a)  General rule.--This subchapter shall apply to, and the

24

term "corporate action" in this subchapter shall mean any of the

25

following actions:

26

(1)  The election, appointment, designation or other

27

selection and the suspension, removal or expulsion of

28

members, directors, members of an other body or officers of a

29

nonprofit corporation.

30

(2)  The taking of any action on any matter [which] that 

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1

is required under this [article] subpart or under any other

2

provision of law to be, or [which] that under the bylaws may

3

be, submitted for action to the members, directors, members

4

of an other body or officers of a nonprofit corporation.

5

(b)  Cross reference.--See section 6145 (relating to

6

applicability of certain safeguards to foreign domiciliary

7

corporations).

8

§ 5792.  Proceedings prior to corporate action.

9

(a)  General rule.--Where under applicable law or the bylaws

10

of a nonprofit corporation there has been a failure to hold a

11

meeting to take corporate action and [such] the failure has

12

continued for 30 days after the [date] designated or appropriate

13

[therefor] date, the court may summarily order a meeting to be

14

held upon the application of any person entitled, either alone

15

or in conjunction with other persons similarly seeking relief

16

under this section, to call a meeting to consider the corporate

17

action in issue.

18

(b)  Conduct of meeting.--The court may determine the right

19

to vote at [such] the meeting of persons claiming [such] that 

20

right, may appoint a master to hold [such] the meeting under

21

such orders and powers as the court [may deem proper,] deems

22

proper and may take [such action as may be] any action required

23

to give due notice of the meeting and to convene and conduct the

24

meeting in the interests of justice.

25

(c)  Cross reference.--See section 6145 (relating to

26

applicability of certain safeguards to foreign domiciliary

27

corporations).

28

§ 5793.  Review of contested corporate action.

29

(a)  General rule.--Upon [petition] application of any person

30

[whose status as, or whose rights or duties as, a member,

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1

director, member of an other body, officer or otherwise of a

2

nonprofit corporation are or may be affected] aggrieved by any

3

corporate action, the court may hear and determine the validity

4

of [such] the corporate action.

5

(b)  Powers and procedures.--[The court may make such orders

6

in any such case as may be just and proper, with power to] By

7

entering an appropriate order, the court may enforce the

8

production of any books, papers and records of the corporation

9

and other relevant evidence [which] that may relate to the

10

issue. The court shall provide for notice of the pendency of the

11

proceedings under this section to all persons affected thereby.

12

If it is determined that no valid corporate action has been

13

taken, the court may order a meeting to be held in accordance

14

with section 5792 (relating to proceedings prior to corporate

15

action).

16

(c)  Cross reference.--See section 6145 (relating to

17

applicability of certain safeguards to foreign domiciliary

18

corporations).

19

§ 5911.  Amendment of articles authorized.

20

(a)  General rule.--A nonprofit corporation, in the manner

21

[hereinafter] provided in this subchapter, may [from time to

22

time] amend its articles for one or more of the following

23

purposes:

24

(1)  To adopt a new name, subject to the restrictions

25

[heretofore] provided in this [article] subpart.

26

(2)  To modify any provision of the articles relating to

27

its term of existence.

28

(3)  To change, add to[,] or diminish its purposes[,] or

29

to set forth different or additional purposes.

30

(4)  To restate the articles in their entirety.

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1

(5)  [In] To make any and as many other [respects] 

2

changes as desired.

3

(b)  Exceptions.--[No] An amendment adopted under this

4

section shall not amend articles in such a way that as so

5

amended they would not be authorized by this [article] subpart 

6

as original articles of incorporation[,] except that:

7

(1)  Restated articles shall, subject to section 109

8

(relating to name of commercial registered office provider in

9

lieu of registered address), state the address of the current

10

instead of the initial registered office of the corporation

11

in this Commonwealth[,] and need not state the names and

12

addresses [of the first directors or] of the incorporators.

13

(2)  The corporation shall not be required to revise any

14

other provision of its articles if [such] the provision is

15

valid and operative immediately prior to the filing of [such] 

16

the amendment in the Department of State.

17

§ 5913.  Notice of meeting of members.

18

[Written notice shall, not less than ten days before the

19

meeting of members called for the purpose of considering the

20

proposed amendment,] (a)  General rule.--Notice in record form

21

of the meeting of members of a nonprofit corporation that will

22

act on the proposed amendment shall be given to each member of

23

record entitled to vote thereon. [There shall be included in, or

24

enclosed with, such notice] The notice shall include a copy of

25

the proposed amendment or a summary of the changes to be

26

effected thereby.

27

(b)  Cross reference.--See Subchapter A of Chapter 57

28

(relating to notice and meetings generally).

29

§ 5914.  Adoption of amendments.

30

(a)  General rule.--[The] Unless a bylaw adopted by the

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1

members or a specific provision of this subpart requires a

2

greater vote, a proposed amendment of the articles of a

3

nonprofit corporation shall be adopted upon receiving the

4

affirmative vote of the members present entitled to cast at

5

least a majority of the votes [which] that all members present

6

are entitled to cast thereon, and if any class of members is

7

entitled to vote thereon as a class, the affirmative vote of the

8

members present of such class entitled to cast at least a

9

majority of the votes [which] that all members present of such

10

class are entitled to cast thereon. Any number of amendments may

11

be submitted to the members and voted upon by them at one

12

meeting.

13

(a.1)  Adoption by board of directors or other body.--Unless

14

otherwise restricted in the bylaws, an amendment of articles

15

shall not require the approval of the members of the corporation

16

if:

17

(1)  the amendment is to provide for perpetual existence;

18

(2)  to the extent the amendment has not been approved by

19

the members, it restates without change all of the operative

20

provisions of the articles as theretofore amended or as

21

amended thereby; or

22

(3)  the amendment accomplishes any combination of

23

purposes specified in this subsection.

24

Whenever a provision of this subpart authorizes the board of

25

directors or other body to take any action without the approval

26

of the members and provides that a statement, certificate, plan

27

or other document relating to such action shall be filed in the

28

Department of State and shall operate as an amendment of the

29

articles, the board upon taking such action may, in lieu of

30

filing the statement, certificate, plan or other document, amend

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1

the articles under this subsection without the approval of the

2

members to reflect the taking of such action. The amendment

3

shall be deemed adopted by the corporation when it has been

4

adopted by the board of directors or other body in the manner

5

provided by subsection (b).

6

(b)  Adoption in absence of voting members.--If the

7

corporation has no members entitled to vote thereon, or no

8

members entitled to vote thereon other than persons who also

9

constitute the board of directors or other body, the amendment

10

shall be deemed adopted by the corporation when it has been

11

adopted by the board of directors or other body pursuant to

12

section 5912 (relating to proposal of amendments).

13

(c)  Termination of proposal.--[The resolution or petition

14

may contain a provision that at any time prior to the filing of

15

articles of amendment in the Department of State the proposal

16

may be terminated by the board of directors or other body

17

notwithstanding the adoption of the amendment by the

18

corporation.] Prior to the time when an amendment becomes

19

effective, the amendment may be terminated pursuant to

20

provisions for amendment, if any, set forth in the resolution or

21

petition. If articles of amendment have been filed in the

22

department prior to the termination, a statement under section

23

5902 (relating to statement of termination) shall be filed in

24

the department.

25

(d)  Amendment of voting provisions.--[Notwithstanding any

26

contrary provision of the articles or bylaws,] Unless otherwise

27

provided in the articles, whenever the articles [shall] require

28

for the taking of any action by the members or a class of

29

members a specific number or percentage of votes, the provision

30

of the articles setting forth [such] that requirement shall not

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1

be amended or repealed by any lesser number or percentage of

2

votes of the members or of [such] the class of members.

3

§ 5921.  Merger and consolidation authorized.

4

(a)  Domestic surviving or new corporation.--Any two or more

5

domestic nonprofit corporations, or any two or more foreign

6

nonprofit corporations [not-for-profit], or any one or more

7

domestic nonprofit corporations[,] and any one or more foreign

8

nonprofit corporations [not-for-profit], may, in the manner

9

provided in this subchapter, be merged into one of [such] the 

10

domestic nonprofit corporations, [hereinafter] designated in

11

this subchapter as the surviving corporation, or consolidated

12

into a new corporation to be formed under this [article, if

13

such] subpart, if the foreign corporations [not-for-profit] are

14

authorized by the [law or] laws of the jurisdiction under which

15

they are incorporated to effect [such] a merger or consolidation

16

with a corporation of another jurisdiction.

17

(b)  Foreign surviving or new corporation.--Any one or more

18

domestic nonprofit corporations, and any one or more foreign

19

nonprofit corporations [not-for-profit], may, in the manner

20

[hereinafter] provided in this subchapter, be merged into one of

21

[such foreign corporations not-for-profit, hereinafter] the

22

foreign nonprofit corporations, designated in this subchapter as

23

the surviving corporation, or consolidated into a new

24

corporation to be incorporated under the [law or] laws of the

25

jurisdiction under which one of the foreign nonprofit 

26

corporations [not-for-profit] is incorporated, if the laws of

27

[such] that jurisdiction authorize [such] a merger with or

28

consolidation into a corporation of another jurisdiction.

29

§ 5923.  Notice of meeting of members.

30

(a)  General rule.--[Written notice] Notice in record form of

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1

the meeting of members that will act on the proposed plan shall

2

be given to each member of record, whether or not entitled to

3

vote thereon, of each domestic nonprofit corporation that is a

4

party to the merger or consolidation. [There shall be included

5

in, or enclosed with, the notice] The notice shall include or be

6

accompanied by a copy of the proposed plan or a summary thereof.

7

The notice shall [state] provide that a copy of the bylaws of

8

the surviving or new corporation will be furnished to any member

9

on request and without cost.

10

* * *

11

§ 5924.  Adoption of plan.

12

(a)  General rule.--The plan of merger or consolidation shall

13

be adopted upon receiving the affirmative vote of the members

14

present entitled to cast at least a majority of the votes

15

[which] that all members present are entitled to cast thereon of

16

each of the [merging or consolidating] domestic nonprofit 

17

corporations[,] that is a party to the merger or consolidation 

18

and, if any class of members is entitled to vote thereon as a

19

class, the affirmative vote of the members present of such class

20

entitled to cast at least a majority of the votes [which] that 

21

all members present of such class are entitled to cast thereon.

22

(b)  Adoption in absence of voting members.--If [the] a 

23

merging or consolidating corporation has no members entitled to

24

vote thereon, or no members entitled to vote thereon other than

25

persons who also constitute the board of directors or other

26

body, a plan of merger or consolidation shall be deemed adopted

27

by the corporation when it has been adopted by the board of

28

directors or other body pursuant to section 5922 (relating to

29

plan of merger or consolidation).

30

(c)  Termination of plan.--[Any plan of merger or

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1

consolidation may contain a provision that at any time prior to

2

the filing of articles of merger or consolidation in the

3

Department of State the plan may be terminated by the board of

4

directors or other body of any corporation which is a party to

5

the plan notwithstanding adoption of the plan by all or any of

6

the corporations which are parties to the plan.] Prior to the

7

time when a merger or consolidation becomes effective, the

8

merger or consolidation may be terminated pursuant to provisions

9

for termination, if any, set forth in the plan. If articles of

10

merger or consolidation have been filed in the Department of

11

State prior to the termination, a statement under section 5902

12

(relating to statement of termination) shall be filed in the

13

department.

14

§ 5925.  Authorization by foreign corporations.

15

The plan of merger or consolidation shall be authorized,

16

adopted or approved by each foreign nonprofit corporation

17

[which] that desires to merge or consolidate[,] in accordance

18

with the laws of the jurisdiction in which it is incorporated[.] 

19

and, in the case of a foreign domiciliary corporation, in

20

accordance with the provisions of this subpart to the extent

21

provided by section 6145 (relating to applicability of certain

22

safeguards to foreign domiciliary corporations).

23

§ 5926.  Articles of merger or consolidation.

24

Upon the adoption of the plan of merger or consolidation by

25

the corporations desiring to merge or consolidate, as provided

26

in this subchapter, articles of merger or articles of

27

consolidation, as the case may be, shall be executed by each

28

corporation and shall, subject to section 109 (relating to name

29

of commercial registered office provider in lieu of registered

30

address), set forth:

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1

* * *

2

(2)  The name and address, including street and number,

3

if any, of the registered office of each other domestic

4

nonprofit corporation and qualified foreign nonprofit

5

corporation that is a party to the [plan] merger or

6

consolidation.

7

* * *

8

(4)  The manner in which the plan was adopted by each

9

domestic corporation and, if one or more foreign corporations

10

are parties to the [plan] merger or consolidation, the fact

11

that the plan was authorized, adopted or approved, as the

12

case may be, by each of the foreign corporations in

13

accordance with the laws of the jurisdiction in which it is

14

incorporated.

15

* * *

16

§ 5928.  Effective date of merger or consolidation.

17

Upon the filing of the articles of merger or the articles of

18

consolidation in the Department of State[,] or upon the

19

effective date specified in the plan of merger or consolidation,

20

whichever is later, the merger or consolidation shall be

21

effective. The merger or consolidation of one or more domestic

22

nonprofit corporations into a foreign nonprofit corporation

23

shall be effective according to the provisions of law of the

24

jurisdiction in which [such] the foreign corporation is

25

incorporated, but not until articles of merger or articles of

26

consolidation have been adopted and filed, as provided in this

27

subchapter.

28

§ 5930.  Voluntary transfer of corporate assets.

29

(a)  General rule.--[A nonprofit corporation shall not sell,

30

lease away or exchange all, or substantially all, its property

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1

and assets, with or without good will, unless and until a plan

2

of sale, lease or exchange of assets with respect thereto shall

3

have been adopted by the corporation in the manner provided in

4

this subchapter with respect to the adoption of a plan of

5

merger.] A sale, lease, exchange or other disposition of all, or

6

substantially all, of the property and assets, with or without

7

goodwill, of a nonprofit corporation, if not made pursuant to

8

Subchapter D of Chapter 19 (relating to division), may be made

9

only pursuant to a plan of asset transfer. The property or

10

assets of a direct or indirect subsidiary corporation that is

11

controlled by a parent corporation shall also be deemed the

12

property or assets of the parent corporation for purposes of

13

this subsection. The plan of asset transfer shall set forth the

14

terms and consideration of the sale, lease, exchange or other

15

disposition or may authorize the board of directors or other

16

body to fix any or all of the terms and conditions, including

17

the consideration to be received by the corporation. Any of the

18

terms of the plan may be made dependent upon facts ascertainable

19

outside of the plan if the manner in which the facts will

20

operate upon the terms of the plan is set forth in the plan. The

21

plan of asset transfer shall be proposed and adopted, and may be

22

amended after its adoption and terminated, by a nonprofit

23

corporation in the manner provided in this subchapter for the

24

proposal, adoption, amendment and termination of a plan of

25

merger. A copy or summary of the plan shall be included in, or

26

enclosed with, the notice of the meeting at which members will

27

act on the plan. In order to make effective any plan [of sale,

28

lease or exchange of assets] so adopted, it shall not be

29

necessary to file any articles or other document in the

30

Department of State, but the corporation shall comply with the

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1

requirements of section 5547(b) (relating to nondiversion of

2

certain property).

3

(b)  Exceptions.--Subsection (a) [of this section] shall not

4

apply to a sale, lease [away or], exchange or other disposition 

5

of all, or substantially all, the property and assets of a

6

nonprofit corporation [when made in connection with the

7

dissolution or liquidation of the corporation. Such a

8

transaction shall be governed by the provisions of Subchapter F

9

(relating to voluntary dissolution and winding up) or Subchapter

10

G (relating to involuntary liquidation and dissolution), as the

11

case may be.]:

12

(1)  that directly or indirectly owns all of the

13

outstanding shares or other ownership interest of another

14

corporation to the other corporation;

15

(2)  if made in connection with the dissolution or

16

liquidation of the corporation, which transaction shall be

17

governed by the provisions of Subchapter F (relating to

18

voluntary dissolution and winding up) or G of Chapter 19

19

(relating to involuntary liquidation and dissolution), as

20

appropriate; or

21

(3)  if made in connection with a transaction pursuant to

22

which all the assets sold, leased, exchanged or otherwise

23

disposed of are simultaneously leased back to the

24

corporation.

25

(c)  Mortgage.--A mortgage [or pledge], pledge or grant of a

26

security interest or dedication of property to the repayment of

27

indebtedness, with or without recourse, shall not be deemed a

28

sale, lease [or exchange], exchange or other disposition for the

29

purposes of this section.

30

(d)  Restrictions.--[Nothing in this] This section shall not 

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1

be construed to authorize the conversion or exchange of property

2

or assets in fraud of corporate creditors or in violation of

3

law.

4

§ 5951.  Division authorized.

5

(a)  Division of domestic corporation.--Any domestic

6

nonprofit corporation may, in the manner provided in this

7

subchapter, be divided into two or more domestic nonprofit

8

corporations incorporated or to be incorporated under this

9

article, or into one or more [such] domestic nonprofit

10

corporations and one or more foreign nonprofit corporations

11

[not-for-profit] to be incorporated under the laws of another

12

jurisdiction or jurisdictions, or into two or more [of such] 

13

foreign nonprofit corporations [not-for-profit], if the [law or] 

14

laws of [such] the other jurisdictions [authorized such] 

15

authorize the division.

16

(b)  Division of foreign corporation.--Any foreign nonprofit 

17

corporation [not-for-profit] may, in the manner provided in this

18

subchapter, be divided into one or more domestic nonprofit

19

corporations to be incorporated under this [article] subpart and

20

one or more foreign nonprofit corporations [not-for-profit] 

21

incorporated or to be incorporated under the laws of another

22

jurisdiction or jurisdictions, or into two or more [of such] 

23

domestic nonprofit corporations, if [such foreign] the foreign

24

nonprofit corporation [not-for-profit] is authorized under the

25

laws of the jurisdiction under which it is incorporated to

26

effect [such] a division.

27

(c)  Surviving and new corporations.--The corporation

28

effecting a division, if it [shall survive] survives the

29

division, is [hereinafter] designated in this subchapter as the

30

surviving corporation. All corporations originally incorporated

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1

by a division are [hereinafter] designated in this subchapter as

2

new corporations. The surviving corporation, if any, and the new

3

corporation or corporations are [hereinafter] collectively

4

designated in this subchapter as the resulting corporations.

5

§ 5956.  Effective date of division.

6

Upon the filing of articles of division in the Department of

7

State[,] or upon the effective date specified in the plan of

8

division, whichever is later, the division shall become

9

effective. The division of a domestic nonprofit corporation into

10

one or more foreign nonprofit corporations [not-for-profit] or

11

the division of a foreign nonprofit corporation [not-for-profit] 

12

shall be effective according to the laws of the jurisdictions

13

where [such] the foreign corporations are or are to be

14

incorporated and, in the case of a foreign domiciliary

15

corporation, the provisions of this subpart to the extent

16

provided by section 6145 (relating to applicability of certain

17

safeguards to foreign domiciliary corporations), but not until

18

articles of division have been adopted and filed[,] as provided

19

in this subchapter.

20

§ 5957.  Effect of division.

21

* * *

22

(b)  Property rights; allocations of assets and

23

liabilities.--

24

(1)  Except as otherwise provided by order, if any,

25

obtained pursuant to section 5547(b) (relating to

26

nondiversion of certain property):

27

* * *

28

(ii)  Upon the division becoming effective, the

29

resulting corporations shall each thenceforth be

30

responsible as separate and distinct corporations only

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1

for such liabilities as each corporation may undertake or

2

incur in its own name, but shall be liable for the

3

liabilities of the dividing corporation in the manner and

4

on the basis provided in [paragraphs (4) and (5)] 

5

subparagraphs (iv) and (v).

6

* * *

7

(iv)  [To] Except as provided in section 5952(f)

8

(relating to proposal and adoption of plan of division),

9

to the extent allocations of liabilities are contemplated

10

by the plan of division, the liabilities of the dividing

11

corporation shall be deemed without further action to be

12

allocated to and become the liabilities of the resulting

13

corporations on such a manner and basis and with such

14

effect as is specified in the plan; and one or more, but

15

less than all, of the resulting corporations shall be

16

free of the liabilities of the dividing corporation to

17

the extent, if any, specified in the plan, if in either

18

case:

19

(A)  no fraud on members without voting rights or

20

violation of law shall be effected thereby; and

21

(B)  the plan does not constitute a fraudulent

22

transfer under 12 Pa.C.S. Ch. 51 (relating to

23

fraudulent transfers).

24

* * *

25

(h)  Conflict of laws.--It is the intent of the General

26

Assembly that:

27

(1)  The effect of a division of a domestic [business] 

28

nonprofit corporation shall be governed solely by the laws of

29

this Commonwealth and any other jurisdiction under the laws

30

of which any of the resulting corporations is incorporated.

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1

* * *

2

(3)  The validity of any allocations of assets or

3

liabilities by a plan of division of a domestic [business] 

4

nonprofit corporation, regardless of whether [or not] any of

5

the new corporations is a foreign [business] nonprofit 

6

corporation, shall be governed solely by the laws of this

7

Commonwealth.

8

* * *

9

§ 5972.  Proposal of voluntary dissolution.

10

* * *

11

(b)  Submission to members.--The board of directors or other

12

body or the petitioning members shall direct that the [question

13

of] resolution recommending dissolution be submitted to a vote

14

of the members of the corporation entitled to vote thereon at a

15

regular or special meeting of the members.

16

* * *

17

§ 5973.  Notice of meeting of members.

18

(a)  General rule.--[Written notice] Notice in record form of

19

the meeting of members that will consider the [advisability of

20

voluntarily dissolving a] resolution recommending dissolution of

21

the nonprofit corporation shall be given to each member of

22

record entitled to vote thereon [and the purpose shall be

23

included]. The purpose of the meeting shall be stated in the

24

notice [of the meeting].

25

* * *

26

§ 5975.  Predissolution provision for liabilities.

27

* * *

28

(c)  Winding up and distribution.--The corporation shall, as

29

speedily as possible, proceed to collect all sums due it,

30

convert into cash all corporate assets the conversion of which

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1

into cash is required to discharge its liabilities and, out of

2

the assets of the corporation, discharge or make adequate

3

provision for the discharge of all liabilities of the

4

corporation, according to their respective priorities. Except as

5

otherwise provided in a bylaw adopted by the members or in this

6

subpart or by any other provision of law, any surplus remaining

7

after paying or providing for all liabilities of the corporation

8

shall be distributed to the shareholders, if any, pro rata, or

9

if there be no shareholders, among the members per capita. See

10

section [1972(a)] 5972(a) (relating to proposal of voluntary

11

dissolution).

12

§ 5976.  Judicial supervision of proceedings.

13

(a)  General rule.--A nonprofit corporation that has elected

14

to proceed under section [1975] 5975 (relating to predissolution

15

provision for liabilities), at any time during the winding up

16

proceedings, may apply to the court to have the proceedings

17

continued under the supervision of the court and thereafter the

18

proceedings shall continue under the supervision of the court as

19

provided in Subchapter G (relating to involuntary liquidation

20

and dissolution).

21

* * *

22

§ 5977.  Articles of dissolution.

23

(a)  General rule.--Articles of dissolution and the

24

certificates or statement required by section 139 (relating to

25

tax clearance of certain fundamental transactions) shall be

26

filed in the Department of State when:

27

(1)  all liabilities of the nonprofit corporation have

28

been discharged, or adequate provision has been made

29

therefor, in accordance with section 5975 (relating to

30

predissolution provision for liabilities), and all of the

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1

remaining assets of the corporation have been distributed as

2

provided in section 5975 or in case its assets are not

3

sufficient to discharge its liabilities, when all the assets

4

have been fairly and equitably applied, as far as they will

5

go, to the payment of such liabilities; or

6

(2)  an election to proceed under Subchapter H (relating

7

to postdissolution provision for liabilities) has been made.

8

[See section 134 (relating to docketing statement).]

9

* * *

10

§ 5978.  Winding up of corporation after dissolution.

11

* * *

12

(b)  Standard of care of directors, members of an other body

13

and officers.--The dissolution of the corporation shall not

14

subject its directors, members of an other body or officers to

15

standards of conduct different from those prescribed by or

16

pursuant to Chapter 57 (relating to officers, directors and

17

members). Directors and members of an other body of a dissolved

18

corporation who have complied with section 5975 (relating to

19

predissolution provision for liabilities) or Subchapter H

20

(relating to postdissolution provision for liabilities) and

21

governing persons of a successor entity who have complied with

22

Subchapter H shall not be personally liable to the creditors or

23

claimants of the dissolved corporation.

24

Section 38.  Section 5979(a) of Title 15 is amended and the

25

section is amended by adding a subsection to read:

26

§ 5979.  Survival of remedies and rights after dissolution.

27

(a)  General rule.--The dissolution of a nonprofit

28

corporation, either under this subchapter or under Subchapter G

29

(relating to involuntary liquidation and dissolution) or by

30

expiration of its period of duration or otherwise, shall not

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1

eliminate nor impair any remedy available to or against the

2

corporation or its directors, members of an other body, officers

3

or members for any right or claim existing, or liability

4

incurred, prior to the dissolution, if an action thereon is

5

brought on behalf of:

6

(1)  the corporation within the time otherwise limited by

7

law; or

8

(2)  any other person before or within two years after

9

the date of the dissolution or within the time otherwise

10

limited by this subpart or other provision of law, whichever

11

is less. See sections 5987 (relating to proofs of claims),

12

5993 (relating to acceptance or rejection of matured claims)

13

and 5994 (relating to disposition of unmatured claims).

14

[The actions or proceedings may be prosecuted against and

15

defended by the corporation in its corporate name.]

16

* * *

17

(e)  Conduct of actions.--An action or proceeding may be

18

prosecuted against and defended by a dissolved corporation in

19

its corporate name.

20

Section 39.  Title 15 is amended by adding a section to read:

21

§ 5980.  Dissolution by domestication.

22

Whenever a domestic nonprofit corporation has domesticated

23

itself under the laws of another jurisdiction by action similar

24

to that provided under section 6161 (relating to domestication)

25

and has authorized that action by the vote required by this

26

subchapter for the approval of a proposal that the corporation

27

dissolve voluntarily, the corporation may surrender its charter

28

under the laws of this Commonwealth by filing in the Department

29

of State articles of dissolution under this subchapter

30

containing the statements specified under section 5977(b)(1)

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1

through (4) (relating to articles of dissolution). If the

2

corporation as domesticated in the other jurisdiction qualifies

3

to do business in this Commonwealth either prior to or

4

simultaneously with the filing of the articles of dissolution

5

under this section, the corporation shall not be required to

6

file with the articles of dissolution the tax clearance

7

certificates that would otherwise be required under section 139

8

(relating to tax clearance of certain fundamental transactions).

9

Section 40.  Sections 5981, 5982, 5983, 5984, 5986, 5987,

10

5988, 5992(c)(2), 5997(d) and 6101(c) of Title 15 are amended to

11

read:

12

§ 5981.  Proceedings upon [petition] application of member[,

13

etc.] or director.

14

[The court may, upon petition] Upon application filed by a

15

member or director of a nonprofit corporation, the court may 

16

entertain proceedings for the involuntary winding up and

17

dissolution of the corporation[,] when any of the following [are

18

made to appear] occur:

19

(1)  [That the] The objects of the corporation have

20

wholly failed[;], or are entirely abandoned, or [that] their

21

accomplishment is impracticable.

22

(2)  [That the] The acts of the directors, or those in

23

control of the corporation, are illegal, oppressive[,] or

24

fraudulent[, and that] and it is beneficial to the interests

25

of the members that the corporation be wound up and

26

dissolved.

27

(3)  [That the] The corporate assets are being misapplied

28

or wasted[, and that] and it is beneficial to the interests

29

of the members that the corporation be wound up and

30

dissolved.

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1

(4)  [That the] The directors or other body are

2

deadlocked in the direction of the management of the

3

[corporate] business and affairs of the corporation and the

4

members are unable to break the deadlock[, and that] and 

5

irreparable injury to the corporation is being suffered or is

6

threatened by reason thereof. The court shall not appoint a

7

receiver or grant other similar relief under this paragraph

8

if the members by agreement or otherwise have provided for

9

appointment of a provisional director or member of an other

10

body or other means for the resolution of a deadlock, but the

11

court shall enforce the remedy provided by the members, if

12

appropriate.

13

§ 5982.  Proceedings upon [petition] application of creditor.

14

[The court may, upon petition] Upon application filed by a

15

creditor of a nonprofit corporation whose claim has either been

16

reduced to judgment and an execution thereon returned

17

unsatisfied[,] or whose claim is admitted by the corporation,

18

the court may entertain proceedings for the involuntary winding

19

up and dissolution of the corporation when, in either case, it

20

is made to appear that the corporation is unable to [pay its

21

debts and obligations] discharge its liabilities in the regular

22

course of business, as they mature, or is unable to afford

23

reasonable security to those who may deal with it.

24

§ 5983.  Proceedings upon petition of superior religious

25

organization.

26

The court may, in the case of any nonprofit corporation

27

organized for the support of public worship, upon [petition

28

filed by] application of the diocesan convention, presbytery,

29

synod, conference, council, or other supervising or controlling

30

organization of which the corporation is a member or with which

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1

it is in allegiance and to which it is subordinate, entertain

2

proceedings for the involuntary winding up and dissolution of

3

the corporation when it is made to appear that by reason of

4

shifting population, withdrawal of membership[,] or any other

5

cause whatsoever, the corporation has ceased to support public

6

worship within the intent and meaning of its articles[,] and the

7

dissolution of the corporation may be effected without prejudice

8

to the public welfare and the interests of the members of the

9

corporation.

10

§ 5984.  Appointment of receiver pendente lite and other interim

11

powers.

12

Upon the filing of [a petition] an application under this

13

subchapter, the court [shall have all the ordinary powers of a

14

court of equity to] may issue injunctions, [to] appoint a

15

receiver [or receivers,] pendente lite[,] with such powers and

16

duties as the court from time to time may direct[, to take such

17

other proceedings] and proceed as may be requisite to preserve

18

the corporate assets wherever situated and carry on the business

19

of the corporation until a full hearing can be had.

20

§ 5986.  Qualifications of receivers.

21

A receiver shall in all cases be a [resident of this

22

Commonwealth,] natural person of full age or a corporation

23

authorized to act as receiver, which corporation, if so

24

authorized, may be a domestic corporation for profit or not-for-

25

profit or a foreign corporation for profit or not-for-profit

26

authorized to do business in this Commonwealth, and shall give

27

such bond, if any, as the court may direct, with such sureties,

28

if any, as the court may require.

29

§ 5987.  Proofs of claims.

30

(a)  General rule.--In a proceeding under this subchapter,

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1

the court may require all creditors of the nonprofit corporation

2

to file with the [prothonotary] office of the clerk of the court

3

of common pleas, or with the receiver, in such form as the court

4

may prescribe, verified proofs[, under oath,] of their

5

respective claims. If the court requires the filing of claims,

6

it shall fix a date, which shall not be less than [four months] 

7

120 days from the date of the order, as the last day for filing

8

of claims[,] and shall prescribe the notice that shall be given

9

to creditors and claimants of the date so fixed. Prior to or

10

after the date so fixed, the court may extend the time for the

11

filing of claims. Creditors and claimants [failing to] who do

12

not file proofs of claim on or before the date so fixed may be

13

barred, by order of court, from participating in the

14

distribution of the assets of the corporation.

15

(b)  Cross reference.--See section 5979 (relating to survival

16

of remedies and rights after dissolution).

17

§ 5988.  Discontinuance of proceedings; reorganization.

18

[The proceedings under this subchapter may be discontinued at

19

any time during the winding up proceedings, in the following

20

manner:

21

(1)  If the proceedings shall have been instituted by a

22

member or director and it is made to appear to the court that

23

the deadlock in the corporate affairs has been broken or the

24

management or control of the corporation has been changed,

25

the court, in its discretion, may dismiss the proceeding and

26

direct the receiver to redeliver to the corporation all its

27

remaining assets.

28

(2)  If the proceedings shall have been instituted by a

29

creditor and it is made to appear that the debts of the

30

corporation have been paid or provided for, and that there

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1

remain or can be obtained sufficient funds to enable the

2

corporation to resume its business, the court, in its

3

discretion, may dismiss the proceeding and direct the

4

receiver to redeliver to the corporation all its remaining

5

assets.

6

(3)  When a compromise or reorganization of the

7

corporation is proposed, whether the proceedings shall have

8

been instituted by a member or director or by a creditor, the

9

court, upon the summary application of any member, director,

10

creditor, or receiver, may order a meeting of the creditors,

11

or members to be summoned in such manner as the court may

12

direct. If a majority in number, representing 75% in value of

13

the creditors or if 75% of the members present in person, or

14

if a majority in number, representing 75% in value of any

15

class of creditors, or if 75% of the members of any class

16

present in person, as the case may be, agree to any

17

compromise or reorganization of the corporation, such

18

compromise or reorganization, if approved by the court as

19

fair and feasible, shall be binding on all creditors or on

20

all members, or both, or on the class of creditors or class

21

of members, or both, as the case may be, and also on the

22

corporation and its receiver, if any.

23

(4)  If the proceedings shall have been instituted by a

24

superior religious organization and it is made to appear that

25

appropriate arrangements for the conduct of the affairs of

26

the corporation have been made, the court, in its discretion,

27

may dismiss the proceedings and direct the receiver to

28

redeliver to the corporation its remaining assets.]

29

The proceedings under this subchapter may be discontinued at

30

any time if it is established that cause for liquidation no

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1

longer exists, in which event the court shall dismiss the

2

proceedings and direct the receiver to redeliver to the

3

nonprofit corporation all its remaining property and assets.

4

§ 5992.  Notice to claimants.

5

* * *

6

(c)  Publication and service of notices.--

7

* * *

8

(2)  Concurrently with or preceding the publication, the

9

corporation or successor entity shall send a copy of the

10

notice by certified or registered mail, return receipt

11

requested, to each:

12

(i)  known creditor or claimant;

13

(ii)  holder of a claim described in subsection (b);

14

and

15

(iii)  municipal corporation in which [the registered

16

office or principal] a place of business of the

17

corporation in this Commonwealth was located at the time

18

of filing the articles of dissolution in the department.

19

* * *

20

§ 5997.  Payments and distributions.

21

* * *

22

[(d)  Liability of directors.--Directors or members of an

23

other body of a dissolved corporation or governing persons of a

24

successor entity that has complied with this section shall not

25

be personally liable to the claimants of the dissolved

26

corporation.]

27

§ 6101.  Application of article.

28

* * *

29

(c)  Admitted foreign fraternal benefit society exclusion.--

30

This article shall not apply to any foreign corporation not-for-

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1

profit qualified to do business in this Commonwealth under

2

section [603 of the act of July 29, 1977 (P.L.105, No.38) known

3

as the Fraternal Benefit Society Code.] 2455 of the act of May

4

17, 1921 (P.L.682, No.284), known as The Insurance Company Law

5

of 1921.

6

Section 41.  Title 15 is amended by adding sections to read:

7

§ 6102.  Foreign domiciliary corporations.

8

A foreign nonprofit corporation is a foreign domiciliary

9

corporation if it is a corporation:

10

(1)  which derived more than one-half of its revenues for

11

the preceding three fiscal years, or such portion thereof as

12

the corporation was in existence, from sources in this

13

Commonwealth and was at any time during that period doing

14

business in this Commonwealth on the basis of the most

15

minimal contacts with this Commonwealth permitted under the

16

Constitution of the United States; or

17

(2)  at least a majority of the bona fide members of

18

which are residents of this Commonwealth.

19

§ 6103.  Acquisition of foreign domiciliary corporation status.

20

(a)  General rule.--A foreign nonprofit corporation shall

21

become a foreign domiciliary corporation under section 6102

22

(relating to foreign domiciliary corporations) on the first day

23

of the month following the month in which the corporation first

24

has knowledge that either test has been met or upon entry of an

25

order by any court of competent jurisdiction declaring that

26

either test has been met.

27

(b)  Newly incorporated corporations.--Where the test or

28

tests under section 6102 are met at the time of the admission of

29

the first members of the corporation and continuously

30

thereafter, foreign domiciliary corporation status when

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1

established shall be retroactive to the incorporation of the

2

corporation.

3

§ 6104.  Termination of foreign domiciliary corporation status.

4

A foreign domiciliary corporation shall cease to have that

5

status on the first day of the month following the month in

6

which the corporation first has knowledge that it no longer

7

meets either test under section 6102 (relating to foreign

8

domiciliary corporations) or upon entry of an order of any court

9

of competent jurisdiction declaring that the corporation no

10

longer meets either test.

11

Section 42.  Sections 6122(b)(3), 6123(b), 6141, 6142, 6143,

12

6145, 8102(b)(2) and 8105 of Title 15 are amended to read:

13

§ 6122.  Excluded activities.

14

* * *

15

(b)  Exceptions.--The specification of activities in

16

subsection (a) does not establish a standard for activities that

17

may subject a foreign corporation to:

18

* * *

19

(3)  The provisions of section 6145 (relating to

20

applicability of certain safeguards to foreign domiciliary 

21

corporations).

22

§ 6123.  Requirements for foreign corporation names.

23

* * *

24

(b)  Exceptions.--

25

(1)  The provisions of section 5303(b) (relating to

26

duplicate use of names) shall not prevent the issuance of a

27

certificate of authority to a foreign nonprofit corporation

28

setting forth a name that is [confusingly similar to] not

29

distinguishable upon the records of the department from the

30

name of any other domestic or foreign corporation for profit

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1

or [corporation] not-for-profit, [or of any domestic or

2

foreign limited partnership that has filed a certificate or

3

qualified under Chapter 85 (relating to limited partnerships)

4

or corresponding provisions of prior law,] or of any

5

corporation or other association then registered under 54

6

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

7

names) or to any name reserved or registered as provided in

8

this part, if the foreign nonprofit corporation applying for

9

a certificate of authority files in the department [one of

10

the following:

11

(i)  A] a resolution of its board of directors or

12

other body adopting a fictitious name for use in

13

transacting business in this Commonwealth, which

14

fictitious name is [not confusingly similar to] 

15

distinguishable upon the records of the department from 

16

the name of the other corporation or other association

17

[or to] and from any name reserved or registered as

18

provided in this part [and] that is otherwise available

19

for use by a domestic nonprofit corporation.

20

[(ii)  The written consent of the other corporation

21

or other association or holder of a reserved or

22

registered name to use the same or confusingly similar

23

name and one or more words are added to make the name

24

applied for distinguishable from the other name.]

25

(2)  The provisions of section 5303(c) (relating to

26

required approvals or conditions) shall not prevent the

27

issuance of a certificate of authority to a foreign nonprofit

28

corporation setting forth a name that is prohibited by that

29

subsection if the foreign nonprofit corporation applying for

30

a certificate of authority files in the department a

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1

resolution of its board of directors or other body adopting a

2

fictitious name for use in transacting business in this

3

Commonwealth that is available for use by a domestic

4

nonprofit corporation.

5

§ 6141.  Penalty for doing business without certificate of

6

authority.

7

(a)  Right to bring actions suspended.--[No] A nonqualified

8

foreign nonprofit corporation doing business in this

9

Commonwealth within the meaning of Subchapter B [of this

10

chapter] (relating to qualification) shall not be permitted to

11

maintain any action or proceeding in any court of this

12

Commonwealth until [such] the corporation [shall have] has 

13

obtained a certificate of authority. [Nor, except] Except as

14

provided in subsection (b) [of this section, shall any action],

15

an action or proceeding may not be maintained in any court of

16

this Commonwealth by any successor or assignee of [such] the 

17

corporation on any right, claim or demand arising out of the

18

doing of business by [such] the corporation in this Commonwealth

19

until a certificate of authority [shall have] has been obtained

20

by [such] the corporation or by a corporation [which] that has

21

acquired all or substantially all of its assets.

22

(a.1)  Contracts, property and defense against actions

23

unaffected.--The failure of a foreign nonprofit corporation to

24

obtain a certificate of authority to transact business in this

25

Commonwealth shall not impair the validity of any contract or

26

act of [such] the corporation [and], shall not prevent [such] 

27

the corporation from defending any action in any court of this

28

Commonwealth and shall not render escheatable any of its real or

29

personal property.

30

[(b)  Title to real property.--The title to any real estate

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1

situate in this Commonwealth which is derived through any

2

nonqualified foreign corporation not authorized under the laws

3

of this Commonwealth to hold the same, and which has vested or

4

vests in any foreign corporation for profit or not-for-profit

5

authorized to hold such real estate or in any citizen or

6

citizens of the United States or domestic corporation for profit

7

or not-for-profit shall be good and valid and free and clear of

8

any right of escheat by the Commonwealth; and the holder thereof

9

may convey an estate indefeasible as to any right of escheat

10

which the Commonwealth might otherwise have by reason of the

11

unauthorized holding and conveyance by such nonqualified foreign

12

corporation.]

13

§ 6142.  General powers and duties of qualified foreign

14

corporations.

15

(a)  General rule.--A qualified foreign nonprofit 

16

corporation, so long as its certificate of authority [shall] is 

17

not [be] revoked, shall enjoy the same rights and privileges as

18

a domestic nonprofit corporation, but no more, and, except as in

19

this [part] subpart otherwise provided, shall be subject to the

20

same liabilities, restrictions, duties and penalties now in

21

force or hereafter imposed upon domestic nonprofit corporations,

22

to the same extent as if it had been incorporated under this

23

[part to transact the business set forth in its certificate of

24

authority] subpart.

25

(b)  Agricultural lands.--Interests in agricultural land

26

shall be subject to the restrictions of, and escheatable as

27

provided by, the act of April 6, 1980 (P.L.102, No.39), referred

28

to as the Agricultural Land Acquisition by Aliens Law.

29

§ 6143.  General powers and duties of nonqualified foreign

30

corporations.

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1

(a)  Acquisition of real and personal property.--Every

2

nonqualified foreign nonprofit corporation[, the activities of

3

which in this Commonwealth do not constitute doing business in

4

this Commonwealth for the purposes of Subchapter B of this

5

chapter (relating to qualification),] may acquire, hold,

6

mortgage, lease and transfer real and personal property in this

7

Commonwealth, in the same manner and subject to the same

8

limitations as [domestic] a qualified foreign nonprofit

9

[corporations] corporation.

10

(b)  Duties.--[A] Except as provided in section 6141(a)

11

(relating to penalty for doing business without certificate of

12

authority), a nonqualified foreign nonprofit corporation doing

13

business in this Commonwealth within the meaning of Subchapter B

14

[of this chapter] (relating to qualification) shall be subject

15

to the same liabilities, restrictions, duties and penalties now

16

or hereafter imposed upon a qualified foreign nonprofit 

17

corporation.

18

§ 6145.  Applicability of certain safeguards to foreign

19

domiciliary corporations.

20

[(a)  Application.--This section shall be applicable to any

21

qualified or nonqualified foreign corporation:

22

(1)  which derived more than one-half of its revenues for

23

the preceding three fiscal years, or such portion thereof as

24

the corporation was in existence, from sources within this

25

Commonwealth and was at any time during such period doing

26

business within this Commonwealth on the basis of the most

27

minimal contacts with this Commonwealth permitted under the

28

Constitution of the United States; or

29

(2)  at least a majority of the bona fide members of

30

which are residents of this Commonwealth.]

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1

(b)  Internal affairs doctrine not applicable.--The General

2

Assembly hereby finds and determines that [the] foreign

3

domiciliary corporations [to which this section applies] 

4

substantially affect this Commonwealth. [No court] The courts of

5

this Commonwealth shall [hereafter] not dismiss or stay any

6

action or proceeding brought by a member[, director, officer or

7

agent of such a] or representative of a foreign domiciliary 

8

corporation, as such, against [such] the corporation or any one

9

or more of the members[, directors, officers or agents] or

10

representatives thereof, as such, on the ground that [such] the 

11

corporation is a foreign corporation not-for-profit or that the

12

cause of action relates to the internal affairs thereof, but

13

every such action shall proceed with like effect as if [such] 

14

the corporation were a domestic corporation. Except as provided

15

in subsection (c) [of this section], the court having

16

jurisdiction of the action or proceeding shall apply the law of

17

the jurisdiction under which the foreign domiciliary corporation

18

was incorporated.

19

(c)  Minimum safeguards.--The following provisions of this

20

subpart shall be applicable to foreign domiciliary corporations

21

[to which this section applies], except that nothing in this

22

subsection shall require the filing of any document in the

23

Department of State as a prerequisite to the validity of any

24

corporate action or the doing of any corporate action by the

25

foreign domiciliary corporation which is impossible under the

26

laws of its domiciliary jurisdiction:

27

[(1)]  Section 5504(b) (relating to adoption and contents

28

of bylaws).

29

[(2)]  Section 5508 (relating to corporate records;

30

inspection by members).

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1

[(3)]  Section [5553] 5554 (relating to annual report of

2

directors or other body).

3

[(4)]  Section 5743 (relating to mandatory

4

indemnification).

5

[(5)]  Section 5755 (relating to time of holding meetings

6

of members).

7

[(6)]  Section 5758(e) (relating to [voting lists] voting

8

rights of members).

9

[(7)]  Section [5759(b) (relating to minimum

10

requirements)] 5759(c) (relating to voting and other action

11

by proxy).

12

[(8)]  Section [5762] 5765 (relating to judges of

13

election).

14

[(9)]  Section [5764] 5767 (relating to appointment of

15

custodian of corporation on deadlock or other cause).

16

[(10)]  Section [5766(b)] 5769(b) (relating to

17

[expulsion] termination and transfer of membership).

18

[(11)  Subchapter G of Chapter 57 (relating to judicial

19

supervision of corporate action).]

20

[(12)]  Chapter 59 (relating to fundamental changes).

21

For the purposes of this subsection, corporate action shall not

22

be deemed to be impossible under the laws of the domiciliary

23

jurisdiction of a foreign corporation merely because prohibited

24

or restricted by the terms of the articles, certificate of

25

incorporation, bylaws or other organic law of the corporation,

26

but the court may require the corporation to amend such organic

27

law so as to be consistent with the minimum safeguards

28

prescribed by this subsection.

29

(d)  Section exclusive.--[No provision of this article] The

30

provisions of this subpart, other than the provisions of this

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1

section, shall not be construed to regulate the incorporation or

2

internal affairs of a foreign corporation not-for-profit.

3

§ 8102.  Interchangeability of partnership, limited liability

4

company and corporate forms of organization.

5

* * *

6

(b)  Exceptions.--Subsection (a) shall not:

7

* * *

8

(2)  [Apply to a] Authorize the conduct of the business

9

of banking [institution, credit union,] or insurance

10

[corporation or savings association,] unless the laws

11

relating thereto or this part expressly [contemplate] permit 

12

the conduct of [the regulated] that business in partnership

13

or limited liability company form. See section 8911 (relating

14

to purposes).

15

* * *

16

§ 8105.  Ownership of certain professional partnerships.

17

Except as otherwise provided by statute, rule or regulation

18

applicable to a particular profession, all of the ultimate

19

beneficial owners of the partnership interests in a partnership

20

that renders one or more restricted professional services shall

21

be licensed persons. As used in this section, the term

22

"restricted professional services" shall have the meaning

23

specified in section 8903 (relating to definitions [and index of

24

definitions]).

25

Section 42.1.  Section 8201(e) of Title 15 is amended and

26

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

27

§ 8201.  Scope.

28

(a)  Application of subchapter.--This subchapter applies to a

29

general or limited partnership formed under the laws of this

30

Commonwealth that registers under this section. Any partnership

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1

that desires to register under this subchapter or to amend or

2

terminate its registration shall file in the Department of State

3

a statement of registration, amendment or termination, as the

4

case may be, which shall be signed by a general partner and

5

shall set forth:

6

* * *

7

(5)  If the partnership is a restricted professional

8

partnership, a statement that it renders one or more

9

restricted professional services.

10

* * *

11

(e)  Prohibited termination.--A registration under this

12

subchapter may not be terminated while the partnership is a

13

bankrupt [as that term is defined in section 8903 (relating to

14

definitions and index of definitions)]. See section 8221(f)

15

(relating to annual registration).

16

* * *

17

Section 42.2.  Section 8202 of Title 15 is amended by adding

18

definitions to read:

19

§ 8202.  Definitions.

20

The following words and phrases when used in this chapter

21

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

22

context clearly indicates otherwise:

23

* * *

24

"Restricted professional partnership."  A domestic or foreign

25

registered limited liability partnership that renders one or

26

more restricted professional services. The restrictions in

27

section 8996 (relating to restrictions) do not apply to a

28

restricted professional partnership.

29

"Restricted professional services."  The following

30

professional services: chiropractic, dentistry, law, medicine

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1

and surgery, optometry, osteopathic medicine and surgery,

2

podiatric medicine, public accounting, psychology or veterinary

3

medicine.

4

Section 42.3.  Section 8204 of Title 15 is amended to read:

5

§ 8204.  Limitation on liability of partners.

6

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

7

a]:

8

(1)  A partner in a registered limited liability

9

partnership that is not a restricted professional partnership 

10

shall not be [individually] liable directly or indirectly,

11

whether by way of indemnification, contribution, assessment 

12

or otherwise, [for debts and obligations] under an order of

13

court or in any other manner for a debt, obligation or

14

liability of, or chargeable to, the partnership, whether

15

sounding in contract or tort or otherwise, that [arise] 

16

arises from any negligent or wrongful acts or misconduct

17

committed by another partner or other representative of the

18

partnership while the registration of the partnership under

19

this subchapter is in effect.

20

(2)  A partner in a restricted professional partnership

21

shall not be liable directly or indirectly, whether by way of

22

indemnification, contribution, assessment or otherwise, under

23

an order of court or in any other manner for a debt,

24

obligation or liability of any kind of, or chargeable to, the

25

partnership that arises while the partnership has the status

26

of a restricted professional partnership or for acts of

27

another partner or other representative of the partnership

28

committed while the partnership has the status of a

29

restricted professional partnership.

30

(b)  Exceptions.--

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1

(2)  Subsection (a) shall not affect the liability of a

2

partner:

3

(i)  Individually for any negligent or wrongful acts

4

or misconduct committed by him or by any person under his

5

direct supervision and control.

6

(ii)  For any debts [or], obligations or liabilities

7

of the partnership[:

8

(A)  arising from any cause other than those

9

specified in subsection (a); or

10

(B)]  as to which the partner has agreed in

11

[writing] record form to be liable.

12

(iii)  To the extent expressly undertaken in the

13

partnership agreement or the certificate of limited

14

partnership.

15

(3)  Subsection (a) shall not affect in any way:

16

(i)  the liability of the partnership itself for all

17

its debts [and], obligations and liabilities;

18

(ii)  the availability of the entire assets of the

19

partnership to satisfy its debts [and obligations],

20

obligations and liabilities; or

21

(iii)  any obligation undertaken by a partner in

22

[writing] record form to individually indemnify another

23

partner of the partnership or to individually contribute

24

toward a liability of another partner.

25

(4)  Subsection (a)(1) shall not affect the liability of

26

a partner for any debts, obligations or liabilities of the

27

partnership arising from any cause other than those specified

28

in subsection (a)(1).

29

(5)  Subsection (a)(2) shall not apply to debts,

30

obligations or liabilities arising, or acts committed, before

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1

(the Legislative Reference Bureau shall insert here the

2

effective date of subsection (a)(2)). This paragraph shall

3

not adversely affect a limitation on liability under this

4

section available to a partner in a restricted professional

5

partnership before (the Legislative Reference Bureau shall

6

insert here the effective date of subsection (a)(2)).

7

(c)  Continuation of limited liability.--Neither the

8

termination of the registration of a partnership under this

9

subchapter nor the dissolution of the partnership shall affect

10

the limitation on the liability of a partner in the partnership

11

under this section [with respect to negligent or wrongful acts

12

or misconduct occurring] for debts, obligations or liabilities

13

that arose while the registration under this subchapter was in

14

effect.

15

(c.1)  Proper parties.--A partner in a registered limited

16

liability partnership is not a proper party to an action or

17

proceeding by or against the partnership, the object of which is

18

to recover damages or enforce debts, obligations or liabilities

19

for which the partner is not liable under this section.

20

(d)  Cross reference.--See section 103 (relating to

21

subordination of title to regulatory laws).

22

Section 42.4.  Section 8205(a) and (b)(2), (5) and (7) of

23

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

24

subsection to read:

25

§ 8205.  Liability of withdrawing partner.

26

(a)  General rule.--Except as provided in subsection (b), if

27

the business of a registered limited liability partnership is

28

continued without liquidation of the partnership affairs

29

following the dissolution of the partnership as a result of the

30

withdrawal for any reason of a partner, the withdrawing partner

- 143 -

 


1

shall not be [individually] liable directly or indirectly,

2

whether by way of indemnification, contribution, assessment or

3

otherwise, under an order of court or in any other manner for

4

any of the debts [and], obligations or liabilities of any kind 

5

of either the dissolved partnership or any partnership

6

continuing the business if a statement of withdrawal is filed as

7

provided in this section.

8

(b)  Exceptions.--Subsection (a) shall not affect the

9

liability of a partner:

10

* * *

11

(2)  For any debts [or], obligations or liabilities of

12

the partnership as to which the withdrawing partner has

13

agreed in [writing] record form to be liable.

14

* * *

15

(5)  To the extent a debt [or], obligation or liability

16

of the partnership has been expressly undertaken by the

17

partner in the partnership agreement or the certificate of

18

limited partnership.

19

* * *

20

(7)  For any obligation undertaken by a partner in

21

[writing] record form to individually indemnify another

22

partner of the partnership or to individually contribute

23

toward a liability of another partner.

24

* * *

25

(h.1)  Proper parties.--A partner in a registered limited

26

liability partnership is not a proper party to an action or

27

proceeding by or against the partnership, the object of which is

28

to recover damages or enforce debts, obligations or liabilities

29

for which the partner is not liable under this section.

30

* * *

- 144 -

 


1

Section 42.5.  Section 8211(b)(1) and (c) of Title 15 are

2

amended to read:

3

§ 8211.  Foreign registered limited liability partnerships.

4

* * *

5

(b)  Registration to do business.--A foreign registered

6

limited liability partnership, regardless of whether or not it

7

is also a foreign limited partnership, shall be subject to

8

Subchapter K of Chapter 85 (relating to foreign limited

9

partnerships) as if it were a foreign limited partnership,

10

except that:

11

(1)  Its application for registration shall state that it

12

is a registered limited liability partnership[.] and, if the

13

partnership is a restricted professional partnership, shall

14

also include a statement that it renders one or more

15

restricted professional services.

16

* * *

17

(c)  Exception.--The liability of the partners in a foreign

18

registered limited liability partnership shall be governed by

19

the laws of the jurisdiction under which it is organized, except

20

that the partners in a foreign registered limited liability

21

partnership that is not a restricted professional partnership 

22

shall not be entitled to greater protection from liability than

23

is available to the partners in a domestic registered limited

24

liability partnership that is not a restricted professional

25

partnership.

26

Section 42.6.  Section 8221(f) of Title 15 is amended to

27

read:

28

§ 8221.  Annual registration.

29

* * *

30

(f)  Exception for bankrupt partnerships.--A partnership that

- 145 -

 


1

would otherwise be required to pay the annual registration fee

2

set forth in subsection (b) shall not be required to pay that

3

fee with respect to any year during any part of which the

4

partnership is a bankrupt [as defined in section 8903 (relating

5

to definitions and index of definitions)]. The partnership

6

shall, instead, indicate on its certificate of annual

7

registration for that year that it is exempt from payment of the

8

annual registration fee pursuant to this subsection. If the

9

partnership fails to file timely a certificate of annual

10

registration, a lien shall be entered on the records of the

11

department pursuant to subsection (e) which shall not be removed

12

until the partnership files a certificate of annual registration

13

indicating its entitlement to an exemption from payment of the

14

annual registration fee as provided in this subsection. See

15

section 8201(e) (relating to scope).

16

Section 42.7.  The definition of "bankrupt" in section 8302

17

of Title 15 is amended to read:

18

§ 8302.  Definitions.

19

The following words and phrases when used in this chapter

20

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

21

context clearly indicates otherwise:

22

["Bankrupt."  Includes bankrupt under the Bankruptcy Code (11

23

U.S.C. § 101 et seq.) or insolvent under any State insolvency

24

act.]

25

* * *

26

Section 42.8.  Section 8304 of Title 15 is amended by adding

27

a subsection to read:

28

§ 8304.  Rules of construction.

29

* * *

30

(c)  Validation of prohibition of assignments.--

- 146 -

 


1

(1)  The provisions of 13 Pa.C.S. §§ 9406 (relating to

2

discharge of account debtor; notification of assignment;

3

identification and proof of assignment; restrictions on

4

assignment of accounts, chattel paper, payment intangibles

5

and promissory notes ineffective) and 9408 (relating to

6

restrictions on assignment of promissory notes, health-care-

7

insurance receivables and certain general intangibles

8

ineffective) shall not apply to any interest in a domestic

9

partnership, including any right, power and interest arising

10

under a partnership agreement or this part.

11

(2)  This subsection shall be construed to prevail over

12

13 Pa.C.S. §§ 9406 and 9408.

13

Section 42.9.  Section 8503(b) of Title 15 is amended by

14

adding a definition to read:

15

§ 8503.  Definitions and index of definitions.

16

* * *

17

(b)  Index of definitions.--Other definitions applying to

18

this chapter and the sections in which they appear are:

19

* * *

20

"Bankrupt."  Section 102.

21

* * *

22

Section 42.10.  Title 15 is amended by adding a section to

23

read:

24

§ 8511.1.  Advertisement.

25

(a)  Requirement.--The prospective partners or the limited

26

partnership must officially publish a notice of intent to file

27

or of filing a certificate of limited partnership.

28

(b)  Time.--The notice may appear prior to or after the

29

certificate is filed with the department.

30

(c)  Content.--The notice shall set forth briefly:

- 147 -

 


1

(1)  The name of the limited partnership.

2

(2)  The fact that the limited partnership is formed

3

under Chapter 85 (relating to limited partnerships).

4

(d)  Transitional rule.--This section does not apply to a

5

limited partnership whose certificate of limited partnership was

6

filed on or before (the Legislative Reference Bureau shall

7

insert here the effective date of this section).

8

Section 42.11.  Section 8562(a) of Title 15 is amended and

9

the section is amended by adding subsections to read:

10

§ 8562.  Assignment of partnership interest.

11

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

12

partnership agreement:

13

(1)  a partnership interest is assignable in whole or in

14

part;

15

(2)  an assignment of a partnership interest does not

16

dissolve a limited partnership or entitle the assignee to

17

become or to exercise any rights of a partner;

18

(3)  an assignment entitles the assignee to share in such

19

profits and losses, to receive such distributions, and to

20

receive such allocations of income, gain, loss, deduction, or

21

credit or similar item to which the assignor was entitled, to

22

the extent assigned; [and]

23

(4)  a partner ceases to be a partner and to have the

24

power to exercise any rights or powers of a partner upon

25

assignment of all of his partnership interest[.]; and

26

(5)  the pledge of, or granting of a security interest,

27

lien or other encumbrance in or against, any or all of the

28

partnership interest of a partner shall not cause the partner

29

to cease to be a partner or to have the power to exercise any

30

rights or powers of a partner.

- 148 -

 


1

* * *

2

(d)  Validation of prohibition of assignments.--

3

(1)  The provisions of 13 Pa.C.S. §§ 9406 (relating to

4

discharge of account debtor; notification of assignment;

5

identification and proof of assignment; restrictions on

6

assignment of accounts, chattel paper, payment intangibles

7

and promissory notes ineffective) and 9408 (relating to

8

restrictions on assignment of promissory notes, health-care-

9

insurance receivables and certain general intangibles

10

ineffective) shall not apply to any interest in a domestic

11

limited partnership, including any right, power and interest

12

arising under a partnership agreement or this part.

13

(2)  This subsection shall be construed to prevail over

14

13 Pa.C.S. §§ 9406 and 9408.

15

(e)  Bearer certificates prohibited.--A limited partnership

16

may not issue certificates of partnership interest in bearer

17

form. This subsection may not be varied by the certificate of

18

limited partnership or partnership agreement.

19

Section 42.12.  Title 15 is amended by adding a section to

20

read:

21

§ 8573.1.  Advertisement.

22

(a)  Requirement.--The limited partnership must promptly

23

cause notice of the winding up proceedings to be officially

24

published.

25

(b)  Content.--The notice shall set forth briefly:

26

(1)  The name of the limited partnership.

27

(2)  The fact that winding up of the limited partnership

28

has commenced.

29

(c)  Transitional rule.--This section does not apply to

30

winding up of a limited partnership that iswas commenced on or

<--

- 149 -

 


1

before (the Legislative Reference Bureau shall insert here the

2

effective date of this section).

3

Section 42.13.  Section 8585 of Title 15 is amended by adding

4

a subsection to read:

5

§ 8585.  Changes and amendments.

6

* * *

7

(b.1)  Registered office.--A qualified foreign limited

8

partnership may, from time to time, change the address of its

9

registered office in the manner provided by section 8506(b)

10

(relating to registered office).

11

* * *

12

Section 42.14.  Title 15 is amended by adding a section to

13

read:

14

§ 8590.1.  Advertisement.

15

(a)  Registration.--

16

(1)  A foreign limited partnership must officially

17

publish notice of its intention to apply or its application

18

for registration as a foreign limited partnership.

19

(2)  The notice may appear prior to or after the

20

application for registration has been filed with the

21

department.

22

(3)  The notice shall set forth briefly:

23

(i)  The name of the foreign limited partnership and

24

the jurisdiction under the laws of which it is formed.

25

(ii)  The fact that the foreign limited partnership

26

will apply or has applied for registration under

27

Subchapter K of Chapter 85 (relating to foreign limited

28

partnerships).

29

(iii)  The address, including street and number, if

30

any, of its principal office under the laws of the

- 150 -

 


1

jurisdiction in which it is formed.

2

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

3

commercial registered office provider in lieu of

4

registered address), the address, including street and

5

number, if any, of its proposed registered office in this

6

Commonwealth.

7

(4)  This subsection does not apply to an application for

8

registration that was filed on or before (the Legislative

9

Reference Bureau shall insert here the effective date of this

10

section).

11

(b)  Withdrawal.--

12

(1)  A qualified foreign limited partnership must

13

officially publish notice of its intention to withdraw from

14

doing business in this Commonwealth.

15

(2)  The notice shall set forth briefly:

16

(i)  The name of the foreign limited partnership and

17

the jurisdiction under the laws of which it is formed.

18

(ii)  The address, including street and number, if

19

any, of its principal office under the laws of the

20

jurisdiction in which it is formed.

21

(iii)  Subject to section 109, the address, including

22

street and number, if any, of its last registered office

23

in this Commonwealth.

24

(3)  This subsection does not apply to a qualified

25

foreign limited partnership that withdrew from doing business

26

in this Commonwealth on or before (the Legislative Reference

27

Bureau shall insert here the effective date of this section).

28

Section 42.15.  Section 8903 heading and the definitions of

29

"bankrupt," "event of dissociation" and "obligation" in

30

subsection (a) and subsection (b) are amended to read:

- 151 -

 


1

§ 8903.  Definitions [and index of definitions].

2

(a)  [Definitions] General definitions.--The following words

3

and phrases when used in this chapter shall have the meanings

4

given to them in this section unless the context clearly

5

indicates otherwise:

6

["Bankrupt."  A person who is the subject of:

7

(1)  an order for relief or a voluntary case under 11

8

U.S.C. (relating to bankruptcy);

9

(2)  a comparable order or case under a successor statute

10

of general application; or

11

(3)  a comparable order or case under a State insolvency

12

act.]

13

* * *

14

"Event of dissociation."  An event that causes a person to

15

cease to be a member of a limited liability company. [See

16

section 8971(a)(4) (relating to dissolution).]

17

* * *

18

["Obligation."  Includes a note or other form of

19

indebtedness, whether secured or unsecured.]

20

* * *

21

(b)  Index of other definitions.--Other definitions applying

22

to this chapter and the sections in which they appear are:

23

"Act" or "action."  Section 102.

24

"Bankrupt."  Section 102.

25

"Department."  Section 102.

26

"Licensed person."  Section 102.

27

"Obligation."  Section 102.

28

"Professional services."  Section 102.

29

Section 42.16.  Title 15 is amended by adding a section to

30

read:

- 152 -

 


1

§ 8909.  Validation of prohibitions of assignments.

2

(a)  General rule.--The provisions of 13 Pa.C.S. §§ 9406 

3

(relating to discharge of account debtor; notification of

4

assignment; identification and proof of assignment; restrictions

5

on assignment of accounts, chattel paper, payment intangibles

6

and promissory notes ineffective) and 9408 (relating to

7

restrictions on assignment of promissory notes, health-care-

8

insurance receivables and certain general intangibles

9

ineffective) shall not apply to any interest in a domestic

10

limited liability company, including any right, power and

11

interest arising under an operating agreement or this part.

12

(b)  Construction.--This section shall be construed to

13

prevail over 13 Pa.C.S. §§ 9406 and 9408.

14

Section 42.16a.  Section 8911(a) of Title 15 is amended by

15

adding a paragraph and the section is amended by adding a

16

subsection to read:

17

§ 8911.  Purposes.

18

(a)  General rule.--Limited liability companies may be

19

organized under this chapter for any lawful purpose, except for

20

the purpose of banking or insurance. Unless otherwise restricted

21

in its certificate of organization, every limited liability

22

company has as its purpose the engaging in all lawful business

23

for which limited liability companies may be organized under

24

this chapter. Nothing in this section shall prohibit the

25

following:

26

* * *

27

(3)  A limited liability company managed by one or more

28

managers exercising any of the fiduciary or other

29

representative powers described in Chapter 4 of the act of

30

November 30, 1965 (P.L.847, No.356), known as the Banking

- 153 -

 


1

Code of 1965.

2

(a.1)  Serving as trust company.--A limited liability company

3

that exercises fiduciary or other representative powers as

4

authorized by subsection (a)(3) shall be subject to regulation

5

under the Banking Code of 1965 as if it were an "institution" as

6

defined in section 102(r) of the Banking Code of 1965. For

7

purposes of applying the provisions of the Banking Code of 1965,

8

the managers, members, certificate of organization, operating

9

agreement and membership interests of the limited liability

10

company shall be deemed to be directors, shareholders, articles

11

of incorporation, bylaws and shares of an institution,

12

respectively. If the limited liability company does not have

13

officers, the managers shall also be deemed to be officers.

14

* * *

15

Section 42.16b.  Title 15 is amended by adding a section to

16

read:

17

§ 8912.1.  Advertisement.

18

(a)  Requirement.--The organizers or the limited liability

19

company must officially publish a notice of intent to file or of

20

filing a certificate of organization.

21

(b)  Time.--The notice may appear prior to or after the

22

certificate is filed with the department.

23

(c)  Content.--The notice shall set forth briefly:

24

(1)  The name of the company.

25

(2)  The fact that the company is organized under the act

26

of December 7, 1994 (P.L.703, No.106), known as the Limited

27

Liability Company Act.

28

(d)  Transitional rule.--This section does not apply to a

29

limited liability company whose certificate of organization was

30

filed on or before (the Legislative Reference Bureau shall

- 154 -

 


1

insert here the effective date of this section).

2

Section 42.17.  Sections 8916(a) and (b) of Title 15 are

3

amended to read:

4

§ 8916.  Operating agreement.

5

(a)  General rule.--The operating agreement of a limited

6

liability company need not be in [writing] record form except

7

where this chapter refers to a [written] provision of the

8

operating agreement in writing or record form. If a [written] 

9

provision in record form of an operating agreement provides that

10

[it] the operating agreement cannot be amended or modified

11

except in writing or record form, an oral agreement, amendment

12

or modification shall not be enforceable. The certificate of

13

organization or operating agreement may not authorize an oral

14

agreement on any subject that this chapter requires to be dealt

15

with in writing or record form. See section 107(b) (relating to

16

form of records).

17

(b)  Freedom of contract.--An operating agreement may contain

18

any provision adopted by the members for the regulation of the

19

internal affairs of a limited liability company [adopted by the

20

members], whether or not specifically authorized by or in

21

contravention of this chapter, except where this chapter:

22

(1)  refers only to a rule as set forth in the

23

certificate of organization; or

24

(2)  expressly provides that the operating agreement

25

shall not relax or contravene any provision on a specified

26

subject.

27

* * *

28

Section 42.17a.  Section 8924 of Title 15 is amended by

29

adding a subsection to read:

30

§ 8924.  Limited transferability of membership interest.

- 155 -

 


1

* * *

2

(c)  Bearer certificates prohibited.--A limited liability

3

company may not issue a certificate of membership interest in

4

bearer form. This subsection may not be varied by the

5

certificate of organization or operating agreement.

6

Section 42.17b.  Sections 8941(b), 8948 and 8971 of Title 15

7

are amended to read:

8

§ 8941.  Management.

9

* * *

10

(b)  Managers.--The certificate of organization may provide

11

that management of a company shall be vested, to the extent

12

provided in, or pursuant to, the certificate of organization, in

13

one or more managers.

14

* * *

15

§ 8948.  Limitation on dissociation [or assignment of membership

16

interest].

17

[Notwithstanding anything to the contrary set forth in this

18

part, an operating agreement may provide that a member may not] 

19

(a)  General rule.--A member may voluntarily dissociate from

20

[the] a limited liability company [or assign his membership

21

interest] prior to the dissolution and winding-up of the

22

company[, and an attempt by a member to dissociate voluntarily

23

from the company or to assign his membership interest in

24

violation of the operating agreement shall be ineffective.] only

25

at the time or upon the happening of events specified in record

26

form in the operating agreement.

27

(b)  Transitional rule.--This section applies to all limited

28

liability companies formed after December 31, 2010. If the

29

operating agreement of a company formed before January 1, 2011,

30

did not on December 31, 2010, specify in record form the time or

- 156 -

 


1

the events upon the happening of which a member could dissociate

2

or a definite time for the dissolution and winding up of the

3

company, the provisions of this section that were in effect

4

prior to January 1, 2011, shall apply until such time, if any,

5

as the operating agreement is amended in record form after

6

January 1, 2011, to specify:

7

(1)  a time or the events upon the happening of which a

8

member may dissociate;

9

(2)  a definite time for the dissolution and winding up

10

of the company; or

11

(3)  that this section as effective January 1, 2011,

12

shall apply to the company.

13

§ 8971.  Dissolution.

14

(a)  General rule.--A limited liability company is dissolved

15

and its affairs shall be wound up upon the happening of the

16

first to occur of the following events:

17

(1)  At the time or upon the happening of events

18

specified in the certificate of organization.

19

(2)  At the time or upon the happening of events

20

specified in [writing] record form in the operating

21

agreement.

22

(3)  Except as otherwise provided in the operating

23

agreement, by the [unanimous written agreement] vote or

24

consent of [all] the members.

25

[(4)  Except as otherwise provided in writing in the

26

operating agreement, upon a member becoming a bankrupt or

27

executing an assignment for the benefit of creditors or the

28

death, retirement, insanity, resignation, expulsion or

29

dissolution of a member or the occurrence of any other event

30

that terminates the continued membership of a member in the

- 157 -

 


1

company unless the business of the company is continued by

2

the vote or consent of a majority in interest, or such

3

greater number as shall be provided in writing in the

4

operating agreement, of the remaining members given within

5

180 days following such event.]

6

(5)  Entry of an order of judicial dissolution under

7

section 8972 (relating to judicial dissolution).

8

(b)  Perpetual existence.--[The certificate of organization

9

may provide that the company shall have perpetual existence, in

10

which case subsection (a)(4) shall not be applicable to the

11

company.] Except as otherwise provided in record form in the

12

operating agreement, a limited liability company has perpetual

13

existence, subject to the power of the General Assembly under

14

the Constitution of Pennsylvania.

15

Section 42.18.  Title 15 is amended by adding a section to

16

read:

17

§ 8973.1.  Advertisement.

18

(a)  Requirement.--The limited liability company must

19

promptly cause notice of the winding up proceedings to be

20

officially published.

21

(b)  Content.--The notice shall set forth briefly:

22

(1)  The name of the limited liability company.

23

(2)  The fact that winding up of the company has

24

commenced.

25

(c)  Transitional rule.--This section does not apply to

26

winding up of a limited liability company that was commenced on

27

or before (the Legislative Reference Bureau shall insert here

28

the effective date of this section).

29

Section 42.19.  Sections 8974 and 8975(a) of Title 15 are

30

amended to read:

- 158 -

 


1

§ 8974.  Distribution of assets upon dissolution.

2

(a)  General rule.--In settling accounts after dissolution,

3

the liabilities of the limited liability company shall be

4

entitled to payment in the following order:

5

(1)  Those to creditors, including members or managers

6

who are creditors, in the order of priority as provided by

7

law, in satisfaction of the liabilities of the company,

8

whether by payment or the making of [reasonable] adequate 

9

provision for payment thereof, other than liabilities for

10

distributions to members under section 8932 (relating to

11

distributions and allocation of profits and losses) or 8933

12

(relating to distributions upon an event of dissociation).

13

(2)  Unless otherwise provided in the operating

14

agreement, to members and former members in satisfaction of

15

liabilities for distributions under section 8932 or 8933.

16

(3)  Unless otherwise provided in the operating

17

agreement, to members in respect of:

18

(i)  Their contributions to capital.

19

(ii)  Their share of the profits and other

20

compensation by way of income on their contributions.

21

(b)  Provision for claims.--A company that has dissolved

22

shall pay or make [reasonable] adequate provision to pay all

23

claims and obligations, including all contingent, conditional or

24

unmatured claims and obligations, known to the company and all

25

claims and obligations that are known to the company but for

26

which the identity of the claimant is unknown. If there are

27

sufficient assets, such claims and obligations shall be paid in

28

full, and any such provision for payment made shall be made in

29

full. If there are insufficient assets, such claims and

30

obligations shall be paid or provided for according to their

- 159 -

 


1

priority and, among claims and obligations of equal priority,

2

ratably to the extent of assets available therefor. Unless

3

otherwise provided in the operating agreement, any remaining

4

assets shall be distributed as provided in this chapter. Any

5

liquidating trustee or other person winding up the affairs of a

6

company who has complied with this section shall not be

7

personally liable to the claimants of the dissolved company by

8

reason of his actions in winding up the company.

9

§ 8975.  Certificate of dissolution.

10

(a)  General rule.--When all debts, liabilities and

11

obligations of the limited liability company have been paid and

12

discharged or adequate provision has been made therefor and all

13

of the remaining property and assets of the company have been

14

distributed to the members, or in case its assets are not

15

sufficient to discharge its debts, liabilities and obligations,

16

when all the assets have been fairly and equitably applied, as

17

far as they will go, to the payment of such debts, liabilities

18

and obligations, a certificate of dissolution shall be executed

19

by the company. The certificate of dissolution shall set forth:

20

(1)  The name of the company.

21

(2)  [That] A statement that:

22

(i)  all debts, obligations and liabilities of the

23

company have been paid and discharged or that adequate

24

provision has been made therefor[.]; or

25

(ii)  the assets of the company are not sufficient to

26

discharge its debts, liabilities and obligations, and

27

that all the assets of the company have been fairly and

28

equitably applied, as far as they will go, to the payment

29

of such debts, liabilities and obligations.

30

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

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1

company have been distributed among its members in accordance

2

with their respective rights and interests.

3

(4)  That there are no actions pending against the

4

company in any court or that adequate provision has been made

5

for the satisfaction of any judgment that may be entered

6

against it in any pending action.

7

* * *

8

Section 42.20.  Title 15 is amended by adding a section to

9

read:

10

§ 8983.  Advertisement.

11

(a)  Registration.--

12

(1)  A foreign limited liability company must officially

13

publish notice of its intention to apply or its application

14

for registration as a foreign limited liability company.

15

(2)  The notice may appear prior to or after the

16

application for registration has been filed with the

17

department.

18

(3)  The notice shall set forth briefly:

19

(i)  The name of the company and the jurisdiction

20

under the laws of which it is organized.

21

(ii)  The fact that the company will apply or has

22

applied for registration under Subchapter J of Chapter 89

23

(relating to foreign companies).

24

(iii)  The address, including street and number, if

25

any, of its principal office under the laws of the

26

jurisdiction in which it is organized.

27

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

28

commercial registered office provider in lieu of

29

registered address), the address, including street and

30

number, if any, of its proposed registered office in this

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1

Commonwealth.

2

(4)  This subsection does not apply to an application for

3

registration that was filed on or before (the Legislative

4

Reference Bureau shall insert here the effective date of this

5

section).

6

(b)  Withdrawal.--

7

(1)  A qualified foreign limited liability company must

8

officially publish notice of its intention to withdraw from

9

doing business in this Commonwealth.

10

(2)  The notice shall set forth briefly:

11

(i)  The name of the foreign limited liability

12

company and the jurisdiction under the laws of which it

13

is organized.

14

(ii)  The address, including street and number, if

15

any, of its principal office under the laws of the

16

jurisdiction in which it is organized.

17

(iii)  Subject to section 109, the address, including

18

street and number, if any, of its last registered office

19

in this Commonwealth.

20

(3)  This subsection does not apply to a qualified

21

foreign limited liability company that withdrew from doing

22

business in this Commonwealth on or before (the Legislative

23

Reference Bureau shall insert here the effective date of this

24

section).

25

Section 43.  Section 9503(e) of Title 15 is amended and the

26

section is amended by adding a subsection to read:

27

§ 9503.  Documentation of trust.

28

* * *

29

(d.1)  Bearer certificates prohibited.--A business trust may

30

not issue a certificate of beneficial interest in bearer form.

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1

This subsection may not be varied by the instrument or other

2

documentation of the business trust.

3

(e)  Cross [reference] references.--See [section] sections 

4

134 (relating to docketing statement) and 135 (relating to

5

requirements to be met by filed documents).

6

Section 43.1.  Section 9506(f) of Title 15 is amended to

7

read:

8

§ 9506.  Liability of trustees and beneficiaries.

9

* * *

10

(f)  Permissible beneficiaries.--Except as otherwise provided

11

by a statute, rule or regulation applicable to a particular

12

profession, all of the ultimate beneficial owners of interests

13

in a business trust that renders one or more restricted

14

professional services shall be licensed persons. As used in this

15

subsection, the term "restricted professional services" shall

16

have the meaning specified in section 8903 (relating to

17

definitions [and index of definitions]).

18

* * *

19

Section 43.2.  The definition of "domestic corporation not-

20

for-profit" in section 101 of Title 54 is amended to read:

21

§ 101.  Definitions.

22

Subject to additional definitions contained in subsequent

23

provisions of this title which are applicable to specific

24

provisions of this title, the following words and phrases when

25

used in this title shall have, unless the context clearly

26

indicates otherwise, the meanings given to them in this section:

27

* * *

28

"Domestic corporation not-for-profit."  A domestic

29

corporation [not-for-profit as defined in 15 Pa.C.S. § 1103 

30

(relating to definitions).] not incorporated for a purpose or

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1

purposes involving pecuniary profit, incidental or otherwise.

2

* * *

3

Section 43.3.  Section 501(a)(5) and (7) of Title 54 are

4

amended to read:

5

§ 501.  Register established.

6

(a)  General rule.--A register is established by this chapter

7

which shall consist of such of the following names as are not

8

deleted therefrom by operation of section 504 (relating to

9

effect of failure to make filings) or 506 (relating to voluntary

10

termination of registration by corporations and other

11

associations):

12

* * *

13

(5)  In the case of a business trust which exists subject

14

to 15 Pa.C.S. Ch. 95 (relating to business trusts), the name

15

of the trust as set forth in the:

16

(i)  instrument filed in the department under 15

17

Pa.C.S. § 9503 (relating to documentation of trust); or

18

(ii)  application for registration filed under 15

19

Pa.C.S. § 9507 (relating to foreign business trusts).

20

* * *

21

[(7)  In the case of a business trust which exists

22

subject to 15 Pa.C.S. Ch. 95 (relating to business trusts),

23

the name of the trust as set forth in the instrument filed in

24

the department under 15 Pa.C.S. § 9503 (relating to

25

documentation of trust), or in the application for

26

registration filed pursuant to 15 Pa.C.S. § 9507 (relating to

27

foreign business trusts).]

28

* * *

29

Section 44.  Repeals are as follows:

30

(1)  The General Assembly declares as follows:

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1

(i)  The repeal under paragraph (2)(i) is necessary

2

because the material is supplied by 15 Pa.C.S. § 1511.

3

(ii)  The repeal under paragraph (2)(ii) is necessary

4

to effectuate the amendment of 15 Pa.C.S. §§ 153(a) and

5

155(a).

6

(iii)  The repeal under paragraph (2)(iii) is

7

necessary because the material is supplied by 40 Pa.C.S.

8

§ 6322(f).

9

(iv)  The repeal under paragraph (2)(iv) is necessary

10

because the material is supplied by 40 Pa.C.S. § 6301.

11

(v)  The repeal under paragraph (2)(v) is necessary

12

because the material is supplied by 15 Pa.C.S. § 1106(b)

13

(2).

14

(vi)  The repeal under paragraph (2)(vi) is necessary

15

because the material is supplied by 40 Pa.C.S. § 6322(f).

16

(vii)  The repeal under paragraph (2)(vii) is

17

necessary because the material is supplied by 1 Pa.C.S. §

18

1978.

19

(2)  The following acts and parts of acts are repealed:

20

(i)  Act of April 27, 1855 (P.L.365, No.383),

21

entitled "An act extending the right of Trial by Jury to

22

certain cases."

23

(ii)  Sections 618-A(2) and 814 of the act of April

24

9, 1929 (P.L.177, No.175), known as The Administrative

25

Code of 1929.

26

(iii)  Act of April 18, 1949 (P.L.583, No.123),

27

entitled "An act to further amend the act, approved the

28

fifth day of May, one thousand nine hundred thirty-three

29

(Pamphlet Laws 289), entitled 'An act relating to

30

nonprofit corporations; defining and providing for the

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1

organization, merger, consolidation, and dissolution of

2

such corporations; conferring certain rights, powers,

3

duties, and immunities upon them and their officers and

4

members; prescribing the conditions on which such

5

corporations may exercise their powers; providing for the

6

inclusion of certain existing corporations of the first

7

class within the provisions of this act; prescribing the

8

terms and conditions upon which foreign nonprofit

9

corporations may be admitted or may continue to do

10

business within the Commonwealth; conferring powers and

11

imposing duties on the courts of common pleas,

12

prothonotaries of such courts, recorders of deeds, and

13

certain State departments, commissions, and officers;

14

authorizing certain local public officers and State

15

departments to collect fees for services required to be

16

rendered by this act; imposing penalties; and repealing

17

certain acts and parts of acts relating to corporations,'

18

by making further provisions relating to nonprofit

19

medical service corporations; by extending the provisions

20

of said act relating to the furnishing of medical

21

services by nonprofit medical service corporations so as

22

to include the furnishing of osteopathic services by

23

doctors of osteopathy to subscribers and their

24

dependents, and by providing that the articles of

25

incorporation of existing nonprofit medical service

26

corporations are amended by the provisions of this act so

27

as to authorize the furnishing of such osteopathic

28

services by doctors of osteopathy."

29

(iv)  Act of December 9, 1955 (P.L.818, No.238),

30

entitled "An act amending the act of May five, one

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1

thousand nine hundred thirty-three (Pamphlet Laws 289),

2

entitled 'An act relating to nonprofit corporations;

3

defining and providing for the organization, merger,

4

consolidation, and dissolution of such corporations;

5

conferring certain rights, powers, duties, and immunities

6

upon them and their officers and members; prescribing the

7

conditions on which such corporations may exercise their

8

powers; providing for the inclusion of certain existing

9

corporations of the first class within the provisions of

10

this act; prescribing the terms and conditions upon which

11

foreign nonprofit corporations may be admitted or may

12

continue to do business within the Commonwealth;

13

conferring powers and imposing duties on the courts of

14

common pleas, prothonotaries of such courts, recorders of

15

deeds, and certain State departments, commissions, and

16

officers; authorizing certain local public officers and

17

State departments to collect fees for services required

18

to be rendered by this act; imposing penalties; and

19

repealing certain acts and parts of acts relating to

20

corporations,' providing for the incorporation and

21

regulation of nonprofit dental service corporations

22

furnishing dental services only to certain subscribers

23

and their dependents."

24

(v)  Act of September 30, 1965 (P.L.570, No.294),

25

entitled "An act amending the act of May 5, 1933 (P.L.

26

289), entitled 'An act relating to nonprofit

27

corporations; defining and providing for the

28

organization, merger, consolidation, and dissolution of

29

such corporations; conferring certain rights, powers,

30

duties, and immunities upon them and their officers and

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1

members; prescribing the conditions on which such

2

corporations may exercise their powers; providing for the

3

inclusion of certain existing corporations of the first

4

class within the provisions of this act; prescribing the

5

terms and conditions upon which foreign nonprofit

6

corporations may be admitted or may continue to do

7

business within the Commonwealth; conferring powers and

8

imposing duties on the courts of common pleas,

9

prothonotaries of such courts, recorders of deeds, and

10

certain State departments, commissions, and officers;

11

authorizing certain local public officers and State

12

departments to collect fees for services required to be

13

rendered by this act; imposing penalties; and repealing

14

certain acts and parts of acts relating to corporations,'

15

requiring approval by the State Registration Board for

16

Professional Engineers prior to the use of certain words

17

in corporate names."

18

(vi)  Act of December 27, 1965 (P.L.1250, No.507),

19

entitled "An act amending the act of May 5, 1933 (P.L.

20

289), entitled 'An act relating to nonprofit

21

corporations; defining and providing for the

22

organization, merger, consolidation, and dissolution of

23

such corporations; conferring certain rights, powers,

24

duties, and immunities upon them and their officers and

25

members; prescribing the conditions on which such

26

corporations may exercise their powers; providing for the

27

inclusion of certain existing corporations of the first

28

class within the provisions of this act; prescribing the

29

terms and conditions upon which foreign nonprofit

30

corporations may be admitted or may continue to do

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1

business within the Commonwealth; conferring powers and

2

imposing duties on the courts of common pleas,

3

prothonotaries of such courts, recorders of deeds, and

4

certain State departments, commissions, and officers;

5

authorizing certain local public officers and State

6

departments to collect fees for services required to be

7

rendered by this act; imposing penalties; and repealing

8

certain acts and parts of acts relating to corporations,'

9

making further provisions relating to nonprofit medical,

10

dental and osteopathic service corporations; extending

11

the provisions of said act relating to the furnishing of

12

medical, dental and osteopathic services by nonprofit

13

medical, dental and osteopathic service corporations so

14

as to include the furnishing of optometric services to

15

subscribers and their dependents, and providing that the

16

articles of incorporation of existing nonprofit medical,

17

dental and osteopathic service corporations are amended

18

by the provisions of this act so as to authorize the

19

furnishing of optometric services by doctors of

20

optometry."

21

(vii)  Section 2 of the act of November 15, 1972

22

(P.L.1063, No.271), entitled "An act amending the act of

23

November 25, 1970 (No.230), entitled 'An act codifying

24

and compiling a part of the law of the Commonwealth,'

25

adding provisions relating to burial grounds,

26

corporations, including corporations not-for-profit,

27

educational institutions, private police, certain

28

charitable or eleemosynary institutions, certain

29

nonprofit insurers, service of process on certain

30

nonresident persons, names, prescribing penalties and

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1

making repeals."

2

(3)  The act of November 30, 1965 (P.L.847, No.356),

3

known as the Banking Code of 1965, is repealed to the extent

4

that it is inconsistent with 15 Pa.C.S. § 8911.

5

Section 45.  When the Department of State is ready to provide

6

expedited services under the addition of 15 Pa.C.S. § 153(a)

7

(15), it shall transmit notice of that fact to the Legislative

8

Reference Bureau for publication as a notice in the Pennsylvania

9

Bulletin.

10

Section 46.  Notwithstanding 1 Pa.C.S. § 1957, it is declared

11

to be the intent of the former act of December 21, 1988 (P.L.

12

1444, No.177), known as the General Association Act of 1988, the

13

act of December 19, 1990 (P.L.834, No.198), known as the GAA

14

Amendments Act of 1990, the act of December 18, 1992 (P.L.1333,

15

No.169), known as the GAA Amendments Act of 1992, the act of

16

June 22, 2001 (P.L.418, No.34), known as the GAA Amendments Act

17

of 2001, and this act cumulatively to restore all provisions of

18

15 Pa.C.S. added by the act of November 15, 1972 (P.L.1063, No.

19

271), entitled "An act amending the act of November 25, 1970

20

(No.230), entitled 'An act codifying and compiling a part of the

21

law of the Commonwealth,' adding provisions relating to burial

22

grounds, corporations, including corporations not-for-profit,

23

educational institutions, private police, certain charitable or

24

eleemosynary institutions, certain nonprofit insurers, service

25

of process on certain nonresident persons, names, prescribing

26

penalties and making repeals," to their status prior to the

27

partial repeal effected by section 905 of the former act of July

28

29, 1977 (P.L.105, No.38), known as the Fraternal Benefit

29

Society Code, except as otherwise expressly provided by such

30

provisions as reenacted and amended by the former General

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1

Association Act of 1988, the GAA Amendments Act of 1990, the GAA

2

Amendments Act of 1992, the GAA Amendments Act of 2001, and this

3

act.

4

Section 47.  Section 46 of this act shall apply retroactively

5

to January 30, 1978.

6

Section 48.  This act shall take effect as follows:

7

(1)  The following provisions shall take effect

8

immediately:

9

(i)  Section 45 of this act.

10

(ii)  This section.

11

(2)  The addition of 15 Pa.C.S. § 153(a)(15) shall take

12

effect upon publication of the notice under section 45 of

13

this act.

14

(3)  The remainder of this act shall take effect in 60

15

days.

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